AGREEMENT AND PLAN OF REORGANIZATION
Dated as of
August 27, 1999
between and among
XML - TECHNOLOGIES, INC.
and
INTERNATIONAL CAPITAL FUNDING, INC.
and
The Shareholders of XML - TECHNOLOGIES, INC.
TABLE OF CONTENTS
SECTION 1: GENERAL DEFINITIONS -1-
1.1 Best Knowledge. -1-
1.2 Code. -1-
1.3 ERISA. -1-
1.4 Exchange Act. -2-
1.5 Fiscal Year. -2-
1.6 Governmental Authority. -2-
1.7 Governmental Requirement. -2-
1.8 Legal Requirements. -2-
1.9 IRS. -2-
1.10 Ownership Interest. -2-
1.11 Person. -2-
1.12 Section. -2-
1.13 Securities Act. -2-
1.14 Taxes. -2-
SECTION 2: EXCHANGE OF STOCK -3-
2.1 -3-
2.2 Income Tax Considerations. -3-
SECTION 3: CLOSING -3-
3.1 General Procedure. -3-
3.2 Time and Place. -3-
3.3 Covenants Regarding Closing. -3-
3.4 Conditions to Obligation of ICF. -4-
3.5 Conditions to Obligation of XML and Shareholders. -4-
3.6 Specific Items to be Delivered at the Closing. -5-
3.7 Escrow and Redemption Option -7-
3.8 Election of Directors and Executive Officers of XML. -10-
SECTION 4: REPRESENTATIONS AND WARRANTIES BY XML AND SHAREHOLDERS -10-
4.1 Organization and Standing. -10-
4.2 Subsidiaries, etc. -10-
4.3 Qualification. -11-
4.4 Financial Statements. -11-
4.5 Capitalization of the Corporation. -11-
4.6 No Defaults. -11-
4.7 Taxes. -11-
4.8 No Actions, Proceedings, etc. -12-
4.9 Post Balance Sheet Changes. -12-
4.10 No Breaches. -12-
4.11 Corporate Acts and Proceedings. -12-
4.12 Registered Rights and Proprietary Information. -13-
4.13 No Liens or Encumbrances. -14-
SECTION 5: COVENANTS OF XML -14-
5.1 Preservation of Business. -14-
5.2 Ordinary Course. -14-
5.3 Negative Covenants. -15-
5.4 Access to Books and Records, Premises, etc. -15-
5.5 Compensation. -15-
SECTION 6: REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS -15-
6.1 Share Ownership. -15-
6.2 Rights Ownership. -15-
6.3 Restriction on Future Transfer. -16-
6.4 Unregistered Stock. -16-
6.5 Stock Acquired for Investment; Limitations on Dispositions. -16-
SECTION 7: REPRESENTATIONS AND WARRANTIES OF ICF -17-
7.1 Organization and Standing. -17-
7.2 Subsidiaries, etc. -17-
7.3 Qualification. -17-
7.4 Financial Statements -17-
7.5 Capitalization of the Corporation -17-
7.6 No Defaults. -18-
7.7 Taxes. -18-
7.8 No Actions, Proceedings, etc. -18-
7.9 Post Balance Sheet Changes. -18-
7.10 No Breaches. -19-
7.11 Corporate Acts and Proceedings. -19-
7.12 Labor Matters. -19-
7.13 Compliance with Reporting Requirements. -19-
SECTION 8: COVENANTS OF ICF -19-
8.1 Preservation of Business. -19-
8.2 Ordinary Course. -20-
8.3 Negative Covenants. -20-
8.4 Access to Books and Records, Premises, etc. -20-
8.5 Compensation. -21-
SECTION 9: INDEMNIFICATION AND REMEDIES FOR BREACH -21-
9.1 Indemnification by ICF. -21-
9.2 Indemnification by Shareholders. -22-
9.3 Indemnification by XML. -22-
9.4 Additional Notice. -23-
9.5 Determination of Damages and Related Matters. -23-
9.6 Remedies for Breach. -24-
SECTION 10: NONDISCLOSURE OF CONFIDENTIAL INFORMATION -24-
SECTION 11: EXPENSES -25-
SECTION 12: MISCELLANEOUS -25-
12.1 Attorney's Fees. -25-
12.2 Survival and Incorporation of Representations. -25-
12.3 Incorporation by Reference. -26-
12.4 Parties in Interest. -26-
12.5 Amendments and Waivers. -26-
12.6 Waiver. -26-
12.7 Governing Law - Construction. -26-
12.8 Limitation of Actions. -26-
12.9 Notices. -26-
12.10 Fax/Counterparts. -27-
12.11 Captions. -28-
12.12 Severability. -28-
12.13 Jurisdiction and Venue. -28-
12.14 Good Faith Cooperation and Additional Documents. -28-
12.15 Specific Performance. -28-
12.16 Assignment. -28-
12.17 Authority to Sign. -29-
12.18 Execution of Documents. -29-
12.19 Time. -29-
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT is made and entered into effective this 27th day of
August, 1999, by and between the undersigned individuals in their
capacities as Shareholders of XML - Technologies, Inc., a Nevada
corporation, ("Shareholders"), XML - TECHNOLOGIES, INC., a Nevada
corporation, ("XML") and INTERNATIONAL CAPITAL FUNDING, INC., a Colorado
corporation, ("ICF"). (XML and ICF may hereafter sometimes collectively be
referred to as the "Companies".)
WITNESSETH
WHEREAS, Shareholders are the actual and beneficial owners of shares,
constituting one hundred percent (100%) of the issued and outstanding
shares of common stock of XML; and
WHEREAS, ICF desires to acquire all of the issued and outstanding
shares of common stock of XML owned by Shareholders, as well as any and all
other equity rights, options, warrants and the like owned by Shareholders
subject to the terms and conditions set forth in this Agreement; and
WHEREAS, Shareholders desire to exchange all of their shares of common
stock and other rights in XML, subject to the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, and other good
and valuable consideration, the receipt and adequacy whereof is hereby
acknowledged, the parties agree as follows:
SECTION 1: GENERAL DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
1.1 Best Knowledge. "Best Knowledge" shall mean both what a Person
knew as well as what the Person should have known had the Person exercised
reasonable diligence. When used with respect to a Person other than a
natural person, the term "Best Knowledge" shall include matters that are
known to the current directors, officers, partners, trustees,
administrators, executors, managers, employees, consultants and agents of
the Person, as well as past directors, officers, partners, managers and
employees of the Person.
1.2 Code. "Code" means the Internal Revenue Code of 1986, as
amended.
1.3 ERISA. "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
1.4 Exchange Act. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
1.5 Fiscal Year. "Fiscal Year" shall mean a twelve-month period
beginning January 1;
1.6 Governmental Authority. "Governmental Authority" shall mean any
and all foreign, federal, state or local governments, governmental
institutions, public authorities and governmental entities of any nature
whatsoever, and any subdivisions or instrumentalities thereof, including,
but not limited to, departments, boards, bureaus, commissions, agencies,
courts, administrations and panels, and any division or instrumentalities
thereof, whether permanent or ad hoc and whether now or hereafter
constituted or existing.
1.7 Governmental Requirement. "Governmental Requirement" shall mean
any and all laws (including, but not limited to, applicable common law
principles), statutes, ordinances, codes, rules regulations,
interpretations, guidelines, directions, orders, judgments, writs,
injunctions, decrees, decisions or similar items or pronouncements,
promulgated, issued, passed or set forth by any Governmental Authority.
1.8 Legal Requirements. "Legal Requirements" means applicable common
law and any statute, ordinance, code or other laws, rule, regulation,
order, technical or other standard, requirement, judgment, or procedure
enacted, adopted, promulgated, applied or followed by any governmental
authority, including, without limitation, any order, decree, award,
verdict, findings of fact, conclusions of law, decision or judgment,
whether or not final or appealable, of any court, arbitrator, arbitration
board or administrative agency.
1.9 IRS. "IRS" means the Internal Revenue Service.
1.10 Ownership Interest. "Ownership Interest" shall mean any form of
direct or indirect interest in the ownership, equity or profits of XML or
ICF, whether certificated or non-certificated, issued or unissued,
contingent or otherwise, including, without limitation, the following:
Shares, or the right thereto, executory rights to receive Shares, options,
warrants, instruments or obligations convertible into Shares or profit
interests.
1.11 Person. "Person" shall mean any natural person, any Governmental
Authority and any entity the separate existence of which is recognized by
any Governmental Authority or Governmental Requirement, including, but not
limited to, corporations, partnerships, joint ventures, joint stock
companies, trusts, estates, companies and associations, whether organized
for profit or otherwise.
1.12 Section. Unless otherwise stated herein, the term "Section" when
used in this Agreement shall refer to the Sections of this Agreement.
1.13 Securities Act. "Securities Act" shall mean the Securities Act
of 1933, as amended.
1.14 Taxes. "Tax" and "Taxes" shall mean any and all income, excise,
franchise or other taxes and all other charges or fees imposed or collected
by any Governmental Authority or pursuant to any Governmental Requirement,
and shall also include any and all penalties, interest, deficiencies,
assessments and other charges with respect thereto.
SECTION 2: EXCHANGE OF STOCK
2.1 Subject to the terms and conditions hereinafter set forth, on the
Closing Date, Shareholders shall deliver to ICF, and ICF shall accept from
Shareholders, the shares of XML common stock set forth on Exhibit 2.1 in
exchange for an aggregate of 12,500,000 shares of ICF $0.0001 par value
common stock ("ICF Shares" or "Exchange Shares"), pro rata, which Exchange
Shares shall be issued to Shareholders pro rata (hereinafter the
"Exchange"). The Exchange Shares shall be delivered into escrow in
accordance with Section 3.8 hereof at Closing upon the delivery to ICF by
Shareholders of their certificates representing shares of common stock of
XML, which shares shall constitute one hundred percent (100%) of the issued
and outstanding shares of common stock of XML, said certificates duly
endorsed by Shareholders in favor of ICF in such form to be acceptable for
transfer:
2.2 Income Tax Considerations. It is the intention of the parties
hereto that the exchange of stock contemplated by this Agreement will
qualify for treatment as a tax-free reorganization under Section 368(a)(1)(B)
of the Internal Revenue Code of 1986, as amended, and the parties hereby
agree to undertake all actions necessary both before and after the
consummation of the Exchange to effect such treatment.
SECTION 3: CLOSING
3.1 General Procedure. At the Closing each party shall deliver such
documents, instruments and materials as may be reasonably required in order
to effectuate the intent and provisions of this Agreement, and all such
documents, instruments and materials shall be satisfactory in form and
substance to counsel for the other parties.
3.2 Time and Place. The Closing shall take place in the offices of
ICF, as soon as practicable but in no event later than (i) five (5)
business days from the date of the satisfaction or waiver of all conditions
precedent set forth in Sections 3.5 and 3.6 or (ii) August 31, 1999, or
such time and place as shall be mutually acceptable to the parties, subject
to the following provisions:
3.3 Covenants Regarding Closing. The Companies hereby covenant and
agree that they shall (i) use reasonable efforts to cause each of their
respective Exhibits to be prepared and exchanged with the other party, and
its legal counsel, within ten (10) business days following the execution of
this Agreement, except to the extent the express terms of this Agreement
provide for a different time period for such delivery to be accomplished,
(ii) use reasonable efforts to cause all of their respective
representations and warranties set forth in this Agreement, and Exhibits
hereto, to be true on and as of the Closing Date, (iii) use reasonable
efforts to cause all of their respective obligations that are to be
fulfilled on or prior to the Closing Date to be so fulfilled, (iv) use
reasonable efforts to cause all conditions to the Closing set forth in this
Agreement to be satisfied on or prior to the Closing Date, and (v) use
reasonable efforts to deliver to each other at the Closing the
certificates, updated lists, notices, consents, authorizations, approvals,
agreements, transfer documents, receipts and amendments contemplated hereby
(with such additions or exceptions to such items as are necessary to make
the statements set forth in such items accurate and acceptable, provided
that if any such additions or exceptions cause any of the conditions to the
Companies' obligations hereunder as set forth hereinbelow not to be
fulfilled, such additions and exceptions shall in no way limit the rights
of the parties hereto to terminate this Agreement or refuse to consummate
the transactions contemplated hereby).
3.4 Conditions to Obligation of ICF. The obligation of ICF to
complete the Exchange on the Closing date on the terms set forth in this
Agreement is, at the option of ICF, subject to the satisfaction or waiver
by ICF of each of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties made by Shareholders and XML in this
Agreement shall be correct in all material respects on and as of the
Closing date with the same force and effect as though such representations
and warranties had been made on the Closing date.
(b) Compliance with Covenants. All covenants which Shareholders
and/or XML are required to perform or comply with on or before the Closing
date shall have been fully complied with or performed in all material
respects.
(c) Corporate Approvals. The Board of Directors of XML and its
Shareholders, if necessary, shall have approved and ratified this
Agreement and shall have authorized the appropriate officers of XML to
execute same and fully perform its terms.
(d) Consents and Approvals. To the extent that any material
lease, mortgage, deed of trust, contract or agreement to which XML is a
party shall require the consent of any person to the exchange of XML's
shares of common stock or any other transaction provided for herein, such
consent shall have been obtained; provided, however, that XML shall not
make, as a condition for the obtaining of any such consent, any agreements
or undertakings not approved in writing by ICF to the extent that such
condition otherwise has an effect on ICF.
(e) Other Documents. The parties shall have delivered or caused
to be delivered all other documents, agreements, resolutions, certificates
or declarations as each respective party or its attorneys may have
reasonably requested.
(f) Audited Financial Statements. At Closing, XML shall deliver
to ICF its affirmative undertaking to obtain and deliver to ICF within
sixty (60) days following the Closing, its audited financial statements
accompanied by a report of its independent certified public accountants
containing audited balance sheets of XML for a minimum of one (1) fiscal
year, or until inception, whichever is shorter, together with statements of
operations for XML for a minimum of two (2) fiscal years, or to the date of
inception, whichever is shorter, which financial statements and the report
of auditors shall be in such form as to fully comply with all requirements
of Regulation SB and any other applicable securities laws, and which
financial statements and the report of auditors shall be in all respects
satisfactory to ICF and its legal counsel.
3.5 Conditions to Obligation of XML and Shareholders. The
obligations of Shareholders and/or XML, respectively, to complete the
Exchange on the Closing date on the terms set forth in this Agreement is,
at the option of XML and Shareholders, subject to the satisfaction or
waiver by Shareholders and/or XML, respectively, of each of the following
conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties made by ICF in this Agreement shall be
correct in all material respects on and as of the Closing date with the
same force and effect as though such representations and warranties had
been made on the Closing date.
(b) Compliance with Covenants. All covenants which ICF is
required to perform or comply with on or before the Closing date shall have
been fully complied with or performed in all material respects.
(c) Corporate Approvals. The Board of Directors of ICF and its
Shareholders, if necessary, shall have approved and ratified this Agreement
and shall have authorized the appropriate officers to execute same and
fully perform its terms.
(d) Consents and Approvals. To the extent that any material
lease, mortgage, deed of trust, contract or agreement to which ICF is a
party shall require the consent of any person to the exchange of ICF's
shares of common stock or any other transaction provided for herein, such
consent shall have been obtained; provided, however, that ICF shall not
make, as a condition for the obtaining of any such consent, any agreements
or undertakings not approved in writing by XML to the extent that such
condition otherwise has an effect on XML or ICF.
(e) Other Documents. The parties shall have delivered or caused
to be delivered all other documents, agreements, resolutions, certificates
or declarations as each respective party or its attorneys may have
reasonably requested.
3.6 Specific Items to be Delivered at the Closing. The parties shall
deliver the following items to the appropriate party at the Closing of the
transactions contemplated by this Agreement.
(a) To be delivered by XML:
(i) Copy of corporate resolutions authorizing the execution
of this Agreement, and the consummation by XML of the
transactions contemplated by this Agreement.
(ii) A certificate of the President of XML stating that the
representations and warranties of XML set forth in this
Agreement are true and correct. Said certificate shall
further verify and affirm that all consents or waivers,
if any, which may be necessary to execute and deliver
this Agreement have been obtained and are in full force
and effect.
(iii) A certificate dated the Closing Date, signed by the
Chief Executive Officer and the Chief Financial Officer
of XML, in form and substance satisfactory to the other
party and its legal counsel, certifying that all
conditions precedent set forth in this Agreement to the
obligations of XML to close, have been fulfilled, and
that no event of default hereunder and no event which,
with the giving of notice or passage of time, or both,
would be an event of default, has occurred as of such
date.
(iv) Certificates dated the Closing Date, signed by the
Secretary of XML, (i) certifying resolutions duly
adopted by the Board of Directors and Shareholders of
XML, authorizing the execution of this Agreement and
all of the other transactions to be consummated
pursuant thereto; (ii) certifying the names and
incumbency of the officers of XML who are empowered to
execute the foregoing documents for and on behalf of
such company; (iii) certifying the authenticity of
copies of the Articles of Incorporation and Bylaws of
XML; and (iv) certifying the authenticity of a
reasonably current Certificate of Good Standing, from
all jurisdictions in which the company is qualified to
conduct business.
(b) To be delivered by Shareholders:
(i) Certificate or certificates representing 100% of the
issued and outstanding common shares of XML, which
stock certificates shall be endorsed in favor of ICF.
(ii) Assignments, if any, with unconditional warranties of
title, duly executed by Shareholders, assigning to ICF
any and all equity rights, including, but not limited
to, options, warrants, puts and so forth, which
Shareholders may own in XML at the time of Closing.
(iii) Certificate of Shareholders in which they state that
they own the shares and other rights of XML free and
clear of all liens, encumbrances, security interests
and limitations on transfer whatsoever.
(iv) Certificate of Shareholders confirming the accuracy, as
of the Closing date, of the representations and
warranties of Shareholders set forth in this Agreement.
(v) Irrevocable Stock Powers to be placed in escrow
pursuant to Section 3.7 hereof.
(c) To be delivered by ICF:
(i) Certificate or certificates representing 12,500,000
shares of ICF Common Stock, which stock certificates
shall be issued in the name of Shareholders; and
(ii) Copy of corporate resolution authorizing the execution
of this Agreement and the consummation by ICF of the
transactions contemplated by this Agreement, including,
but not limited to, the issuance of ICF Common Stock in
the amounts and manner set forth in Section 2.1 above;
and
(iii) A certificate dated the Closing Date, signed by the
Chief Executive Officer and the Chief Financial Officer
of ICF, in form and substance satisfactory to the other
party and its legal counsel, certifying that all
conditions precedent set forth in this Agreement to the
obligations of ICF to close, have been fulfilled, and
that no event of default hereunder and no event which,
with the giving of notice or passage of time, or both,
would be an event of default, has occurred as of such
date.
(iv) Certificates dated the Closing Date, signed by the
Secretary of ICF, (i) certifying resolutions duly
adopted by the Board of Directors of ICF, authorizing
the execution of this Agreement and all of the other
transactions to be consummated pursuant thereto; (ii)
certifying the names and incumbency of the officers of
XML who are empowered to execute the foregoing
documents for and on behalf of such company; (iii)
certifying the authenticity of copies of the Articles
of Incorporation and Bylaws of ICF; and (iv) certifying
the authenticity of a reasonably current Certificate of
Good Standing, from all jurisdictions in which the
company is qualified to conduct business.
3.7 Escrow and Redemption Option.
(a) Escrow Deposit. On the Closing Date, ICF shall cause the
certificates representing the 12,500,000 Exchange Shares issuable to
Shareholders pursuant to Section 2.1 together with Irrevocable Stock Powers
duly executed and delivered by Shareholders pursuant to Section 3.7(b)(v)
to be delivered to the ICF acting corporate Secretary ("Escrow Agent") to
be held, in escrow, in accordance with the terms and conditions of this
Section 3.7.
(b) Terms of Escrow.
(i) Notwithstanding the delivery of said shares to the
Escrow Agent, the ICF stock transfer book shall reflect
that such shares have been lawfully and validly issued
to and are beneficially owned by Shareholders subject
to the terms of this escrow.
(ii) Upon the first to occur of (i) the delivery to ICF's
legal counsel of a certificate executed by the
independent accountant examining the financial
statements of XML that those financial statements can
and will be audited, and a report thereon issued
without condition or qualification in accordance with
the requirements of Regulation SB and Regulation S-X;
or (ii) the completion and delivery to ICF's legal
counsel of the audited financial statements and pro
forma financial information of XML required to enable
ICF to file and otherwise comply with the requirements
of Form 8-K under the Exchange Act, the Escrow Agent
shall release and deliver to Shareholders the Exchange
Shares. In connection with such release, the Escrow
Agent may rely upon the representations and
instructions of ICF's legal counsel that the foregoing
condition has been satisfied.
(iii) In the event the Exchange Shares are not released in
accordance with the provisions of Section 3.8(b)(ii)
prior to sixty (60) days from the Closing Date
("Delivery Date"), due to the failure to satisfy the
condition precedent provided for therein, the Exchange
Shares shall become subject to a right of redemption
provided for in Section 3.8(c). In the event the
Escrow Agent receives written notification that the
Board of Directors of ICF has exercised its right and
option to repurchase and redeem the Exchange Shares in
accordance with the provisions of Section 3.7(c), and
that the redemption price therefor has been paid to
Shareholders, the Escrow Agent shall cancel the
certificates being held in escrow and shall return the
Exchange Shares to the authorized and unissued capital
stock of ICF.
(iv) While the Exchange Shares are being retained in escrow,
such shares may not be transferred or encumbered by
Shareholders. Notwithstanding the foregoing, while the
Exchange Shares are being retained in escrow,
Shareholders shall be entitled to exercise all voting
rights with respect to the Exchange Shares.
(c) Redemption Option.
(i) In the event that audited financial statements from
inception and pro forma financial information of XML in
form and substance satisfactory to comply with Form 8-K
under the Exchange Act are not delivered, to ICF's
legal counsel on or before the Delivery Date, then ICF
shall have the irrevocable right and option to
repurchase and redeem from Shareholders at a purchase
price of $.000001 per share, any or all Exchange
Shares. ICF shall exercise this option, if at all, by
delivering to Shareholders, any time after Delivery
Date, the following:
A. Written notice of ICF's exercise of its Redemption
Option;
B. Payment of the Redemption Price, in cash or
certified funds; and
C. A certificate representing all of the shares of
XML common stock previously owned by Shareholders
and exchanged for the Exchange Shares pursuant to
Section 2.1 of this Agreement.
(ii) The Company is hereby authorized by Shareholders to
transfer record ownership of the Exchange Shares being
held in escrow upon the exercise by ICF of the
foregoing repurchase option. At the closing,
Shareholders shall deliver executed Irrevocable Stock
Powers to ICF to be held in escrow for subsequent use
in effecting transfer of ownership of such shares upon
the exercise of such option.
(iii) In the event the Company exercises its Redemption
Option provided for in this Section 3.7(c), XML
covenants and agrees that it shall be liable for the
repayment to ICF of any and all sums of money and the
value of any and all property and services provided by
ICF, or its affiliates, and received by XML, regardless
of its form, description or characterization. Said
obligation shall include, without limitation, the value
of any and all equity investment, loans, tangible or
intangible property, services whether provided directly
or paid for by ICF and the like. The principal amount
of such obligation shall be due and owing by XML to
ICF, together with interest calculated at the rate of
twelve percent (12%) per annum accruing from the date
of this Agreement. Said sums shall be due and payable
sixty (60) days from the date the Exchange Shares are
redeemed and, if not paid when due, the principal
amount, together with all accrued and unpaid interest,
shall accrue interest at a default rate of fifteen
percent (15%) per annum and Shareholders shall, in
addition to all other damages suffered by ICF, be
liable for any collection costs incurred by ICF,
including its reasonable attorneys' fees.
(iv) Notwithstanding the provisions of Section 3.7(c)(i),
the Redemption Option granted to ICF pursuant to this
Section 3.7(c) shall terminate and shall be null, void,
and of no legal force and effect in the event audited
financial statements and pro forma financial
information of XML as provided for herein are delivered
to ICF's legal counsel after the Delivery Date but
before ICF exercises its Redemption Option. In such
event, the Exchange Shares shall be delivered by Escrow
Agent to Shareholders pursuant to the provisions of
Section 3,7(b)(ii) hereof.
(v) In the event ICF exercises its Redemption Option
granted herein, said exercise shall be deemed to
likewise constitute the resignation by Shareholders
from any position, office or directorship held by such
Shareholders as well as the termination of any
consultation or employment agreement between the
Company on the one hand and the Shareholders on the
other. Upon exercise of such Redemption Option, ICF,
its affiliates, shareholders, officers and directors,
shall be deemed released and forever discharged from
any debt, obligation or liability, whether accrued or
executory, to XML or Shareholders. Upon exercise of
such Redemption Option, XML and Shareholders, jointly
and severally, agree to indemnify and hold harmless ICF
from any debt, claim, liability or other obligation
incurred by XML or Shareholders during the period of
time that XML was a wholly owned subsidiary of ICF.
3.8 Election of Directors and Executive Officers of XML.
(a) At Closing, the Board of Directors of XML shall be
reconstituted so as to be comprised of the following persons:
Xxxxxxx Xxxxxxxxx
Xxxxx Xxxxxxx
Xxxxxxx Xxxxxxxxxx
(b) At Closing, the Board of Directors shall nominate and elect
the following persons to serve as executive officers of XML until the
regular annual meeting of XML's Board of Directors:
Xxxxx Xxxxxxx - President
Xxxxx Xxxxxxx - Secretary
Xxxxxxx Xxxxxxxxxx - Treasurer
SECTION 4: REPRESENTATIONS AND WARRANTIES BY XML AND SHAREHOLDERS
As a material inducement to ICF to enter into this Agreement and with
the understanding and expectations that ICF will be relying thereon in
consummating the Exchange contemplated hereunder, XML (hereinafter referred
to as the "Corporation" or "XML " for the purposes of this Section 4 only),
and Shareholders, hereby jointly and severally represent and warrant as
follows:
4.1 Organization and Standing. XML is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada
and has all requisite corporate power and authority to own its assets and
properties and to carry on its business as it is now being conducted.
4.2 Subsidiaries, etc. The Corporation does not have any direct or
indirect ownership interest in any corporation, partnership, joint venture,
association or other business enterprise except:
XML Global Research, Inc.
Walkabout Web Design Ltd.
4.3 Qualification. The Corporation is not qualified to engage in
business as a foreign corporation in any state and there is no other
jurisdiction wherein the character of the properties presently owned by the
Corporation or the nature of the activities presently conducted by the
Corporation makes necessary the qualification, licensing or domestication
of the Corporation as a foreign corporation.
4.4 Financial Statements. The following statements shall be provided
to ICF within ten days of the date hereof as Exhibit 4.4:
Unaudited financial statements of the corporation containing
balance sheets and statements of operations covering the period from
inception through and as of June 30, 1999.
As of the date hereof, and as of Closing, the Corporation does
not have any liabilities or payables (absolute or contingent, known or
unknown) except for liabilities or payables set forth on XML's financial
statements or otherwise disclosed in writing to ICF, or except for
liabilities and payables incurred in the ordinary course of business.
4.5 Capitalization of the Corporation. The authorized capital stock
of the Corporation consists entirely of 20,000,000 shares common stock
having $.001 par value per share. As of the date of this Agreement, and as
of the Closing,12,500,000 shares of common stock and no shares of preferred
stock are issued and outstanding. All outstanding shares of the
Corporation's capital stock have been validly issued and are fully paid and
nonassessable. There are no other equity securities of the Corporation
authorized, issued or outstanding, and there are no authorized, issued or
outstanding subscriptions, options, warrants, contracts, calls, commitments
or other purchase rights of any nature or character relating to any of the
Corporation's capital stock, equity securities, debt or other securities
convertible into stock or equity securities of the Corporation.
4.6 No Defaults. Each of the leases, contracts, agreements and
insurance policies to which XML is a party is in full force and effect as
of the date hereof with no material defaults existing thereunder.
4.7 Taxes. The Corporation has filed (or has obtained extensions for
filing) all income, excise, sales, corporate franchise, property, payroll
and other tax returns or reports required to be filed by it, as of the date
hereof by the United States of America, any state or other political
subdivision thereof or any foreign country and has paid all Taxes or
assessments relating to the time periods covered by such returns or
reports. To the Best Knowledge of the Corporation and the Shareholders,
except as set forth in Exhibit 4.7, the amounts set up as provisions for
Taxes in the Latest Financial Statements are sufficient for the payment of
all unpaid federal, foreign, state or local Taxes of the Corporation
accrued for or applicable to all periods ended on or prior to the date of
this Agreement, or which may subsequently be determined to be owing by the
Corporation with respect to all periods ending on or prior to the Closing
date, subject to normal year-end adjustments, which will not be material.
There are no present disputes as to Taxes of any nature payable by the
Corporation.
4.8 No Actions, Proceedings, etc. There is no action or proceeding
(whether or not purportedly on behalf of the Corporation) pending or
threatened by or against the Corporation, nor does there exist any basis
therefor, which might result in any material adverse change in the
condition, financial or otherwise, of the Corporation's business or assets.
No order, writ or injunction or decree has been issued by, or requested of
any court or governmental agency which does nor may result in any material
adverse change in the Corporation's assets or properties or in the
financial condition or the business of the Corporation. The Corporation is
not liable for damages to any employee or former employee as a result of
any violation of any state, federal or foreign laws directly or indirectly
relating to such employee or former employee.
4.9 Post Balance Sheet Changes. Since the date of the latest
financial statements through the date of this Agreement, the Corporation
has not (a) issued, bought, redeemed or entered into any agreements,
commitments or obligations to sell, buy or redeem any shares of its capital
stock; (b) incurred any obligation or liability (absolute or contingent),
other than current liabilities incurred, and obligations under contracts
entered into, in the ordinary course of business; (c) discharged or
satisfied any lien or encumbrance or paid any obligation or liability
(absolute or contingent), other than current liabilities incurred in the
ordinary course of business; (d) mortgaged, pledged or subjected to lien
charges, or other encumbrance any of its assets, other than the lien of
current or real property taxes not yet due and payable; (e) waived any
rights of substantial value, whether or not in the ordinary course of
business; (f) suffered any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting its assets or its
business; (g) made or suffered any amendment or termination of any material
contract or any agreement which adversely affects its business; (h)
received notice or had knowledge of any labor trouble other than routine
grievance matters, none of which is material; (i) increased the salaries or
other compensation of any of its directors, officers or employees or made
any increase in other benefits to which employees may be entitled; (j)
sold, transferred or otherwise disposed of any of its assets, other than in
the ordinary course of business; (k) declared or made any distribution or
payments to any of its Shareholders, officers or employees, other than
wages and salaries made to employees in the ordinary course of business;
(l) revalued any of its assets; or (m) entered into any transactions not in
the ordinary course of business.
4.10 No Breaches. The Corporation is not in violation of, and the
consummation of the transactions contemplated hereby do not and will not
result in any material breach of, any of the terms or conditions of any
mortgage, bond, indenture, agreement, contract, license or other instrument
or obligation to which the Corporation is a party or by which its assets
are bound; nor will the consummation of the transactions contemplated
hereby cause XML or the Shareholders to violate any statute, regulation,
judgment, writ, injunction or decree of any court, threatened or entered in
a proceeding or action in which the Corporation is, was or may be bound or
to which any of the Corporations assets are subject.
4.11 Corporate Acts and Proceedings. This Agreement has been duly
authorized by all necessary corporate action on behalf of XML, has been
duly executed and delivered by authorized officers of XML, and is a valid
and binding Agreement on the part of XML that is enforceable against XML in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and
to judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies.
4.12 Registered Rights and Proprietary Information.
(a) Exhibit 4.12 hereto contains a true and complete list of
all patents, letters patent and patent applications, service marks,
trademark and service xxxx registrations and applications, copyright,
copyright registrations and applications, grants of licenses and rights to
XML with respect to the foregoing, both domestic and foreign, claimed by
XML or used or proposed to be used by XML in the conduct of its business
(collectively herein, "Registered Rights"). Exhibit 4.12 hereto also
contains a true and complete list of all computer files comprising software
owned by XML (hereafter collectively the "Proprietary Information"). XML
is not obligated or under any liability whatever to make any payments by
way of royalties, fees or otherwise to any owner or licensor of, or other
claimant to, any Registered Right or Proprietary Information with respect
to the use thereof in the conduct of the business of XML or otherwise.
(b) XML owns and has the unrestricted right to use the
Registered Rights and Proprietary Information required for or incident to
the design, development, manufacture, operation, sale and use of all
products and services sold or rendered or proposed to be sold or rendered
by XML or relating to the conduct or proposed conduct of the business of
XML, free and clear of any right, title, interest, equity or claim of
others. XML has taken all necessary steps (including without limitation
entering into appropriate confidentiality, assignment of rights and non-
competition agreements with all officers, directors, employees and
consultants of XML and others with access to or knowledge of the
Proprietary Information) to safeguard and maintain the secrecy and
confidentiality of, and its proprietary rights in, the Proprietary
Information and all related documentation and intellectual property rights
therein necessary for the conduct or proposed conduct of the business of
XML.
(c) XML has not sold, transferred, assigned, licensed or
subjected to any right, lien, encumbrance or claim of others, any
Proprietary Information, including without limitation any Registered Right,
or any interest therein, related to or required for the design,
development, manufacture, operation, sale or use of any product or service
currently under development or manufactured, or proposed to be developed,
sold or manufactured, by XML. Exhibit 4.12 contains a true and complete
list and description of all licenses of Proprietary Information granted to
XML by others or to others by XML. Except as described in Exhibit 4.12
hereto, there are no claims or demands of any person pertaining to, or any
proceedings that are pending or threatened, which challenge the rights of
XML in respect of any Proprietary Information used in the conduct of the
business of XML.
(d) XML owns and on the Closing Date shall own exclusively all
right, title and interest in the Registered Rights and Proprietary
Information, free and clear of all liens, encumbrances, restrictions,
claims and equities of any kind whatsoever, has and shall have the
exclusive right to use, sell, license or dispose of, and has and shall have
the exclusive right to bring action for the infringement of the Registered
Rights and the Proprietary Information. The marketing, promotion,
distribution or sale by XML of any products or interests subject to the
Registered Rights or making use of Proprietary Information shall not
constitute an infringement of any patent, copyright, trademark, service
xxxx or misappropriation or violation of any other party's proprietary
rights or a violation of any license or agreement by XML. To the knowledge
of XML after due inquiry no facts or circumstances exist that could result
in the invalidation of any of the Registered Rights.
4.13 No Liens or Encumbrances. The Corporation has good and
marketable title to all of the property and assets, tangible and
intangible, employed in the operations of its business, free of any
material mortgages, security interests, pledges, easements or encumbrances
of any kind whatsoever except for such property and assets as may be leased
by the Corporation.
SECTION 5: COVENANTS OF XML
5.1 Preservation of Business. Until Closing, XML shall use its best
efforts to:
(a) preserve intact the present business organization of XML;
(b) maintain its property and assets in its present state of
repair, order and condition, reasonable wear and tear excepted;
(c) preserve and protect the goodwill and advantageous
relationships of XML with its customers and all other persons having
business dealings with XML;
(d) preserve and maintain in force all licenses, permits,
registrations, franchises, patents, trademarks, tradenames, trade secrets,
service marks, copyrights, bonds and other similar rights of XML; and
(e) comply with all laws applicable to the conduct of its
business.
5.2 Ordinary Course. XML shall conduct its business only in the
usual, regular and ordinary course, in substantially the same manner as
previously, and shall not make any substantial change to its methods of
management or operation in respect of such business or property. Without
limiting the foregoing, XML shall not, with respect to XML:
(a) sell, mortgage, pledge or encumber or agree to sell,
mortgage, pledge or encumber, any of its property or assets, other than in
the ordinary course of business;
(b) incur any obligation (contingent or otherwise) or purchase,
acquire, transfer, or convey, any material assets or property or enter into
any contract or commitment, except in the ordinary course of business;
(c) discuss, solicit negotiate, enter into an agreement
concerning any merger, consolidation or sale of all or substantially all of
its assets except as contemplated by this Agreement.
5.3 Negative Covenants. Except as disclosed in Exhibits to this
Agreement, from the date hereof until the Closing date, unless and until
ICF otherwise consents in writing, XML will not (a) change or alter the
physical contents or character of the inventories of its business, so as to
materially affect the nature of XML's business or materially and adversely
change the total dollar valuation of such inventories from that reflected
on the financial statements referred to in Section 4.4 other than in the
ordinary course of business; (b) incur any obligations or liabilities
(absolute or contingent) other than current liabilities incurred and
obligations under contracts entered into in the ordinary course of
business; (c) mortgage, pledge or voluntarily subject to lien, charge or
other encumbrance any assets, tangible or intangible, other than the lien
of current property taxes not due and payable; (d) sell, assign or transfer
any of its assets or cancel any debts or claims, other than in the ordinary
course of business; (e) waive any right of any substantial value; (f)
declare or make any payment or distribution to Shareholders or issue,
purchase or redeem any shares of its capital stock or other equity
securities or issue or sell any rights to acquire the same; (g) grant any
increase in the salary or other compensation of any of its directors,
officers, or employees or make any increase in any benefits to which such
employees might be entitled; (h) institute any bonus, benefit, profit
sharing, stock option, pension, retirement plan or similar arrangement, or
make any changes in any such plans or arrangements presently existing; or
(i) enter into any transactions or series of transactions other than in the
ordinary course of business.
5.4 Access to Books and Records, Premises, etc. From the date of
this Agreement through the Closing date, XML will grant ICF and its
authorized representatives access to its books and records, premises,
products, employees and customers and other parties with whom it has
contractual relations during reasonable business hours and in a manner not
to disrupt or interfere with XML's business relationships for purposes of
enabling ICF to fully investigate the business of XML. XML will also
deliver copies of its monthly statements of operations and financial
condition for the period subsequent to the latest financial statements to
ICF as soon as such statements are available.
5.4 Compensation. XML shall not enter into or agree to enter into
any employment contract or agreement for consulting, professional, or other
services which will adversely and materially affect the operation of XML
prior to the Closing Date.
SECTION 6: REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Shareholders severally represent and warrant to ICF that, as of the
date of this Agreement, and as of the date of Closing, the following are
true and accurate:
6.1 Share Ownership. Each Shareholder owns the number of shares of
the common stock of XML, a Nevada corporation, set forth in Section 2.1
hereof, which shares are fully paid, nonassessable and will be transferred
and assigned to ICF free and clear of any claims, liens, and encumbrances
or other restrictions which would in any way impair their right to
effectively sell or transfer such shares.
6.2 Rights Ownership. Each Shareholder is the beneficial owner of
the equity rights, including, but not limited to, options, warrants, puts
and the like, in XML, as are set forth on Exhibit 6.2 hereto. The rights
set forth on Exhibit 6.2 are owned by Shareholders and will be assigned to
ICF free and clear of any claims, liens, and encumbrances or other
restrictions which would in any way impair the entitlements represented
thereby.
6.3 Restriction on Future Transfer. There are no restrictions on the
transferability of the shares of XML common stock being transferred to ICF
imposed by or pursuant to the company's Articles of Incorporation, Bylaws
or by any other agreements to which Shareholders or XML are a party, except
for restrictions imposed by or on account of federal and state securities
laws.
6.4 Unregistered Stock. Shareholders represent that they understand
that the ICF Common Stock has not been registered for sale under federal or
state securities laws and that said securities are being issued to
Shareholders pursuant to a claimed exemption from the registration
requirements of such laws. Shareholders understand that in order to
maintain such exemption it must be acquiring the stock with no view to
making a public distribution of said securities, and the representations
and warranties contained in this Section 6 are given with the intention
that ICF may rely thereon for purposes of claiming such exemption; and that
they understand that they must bear the economic risk of their investment
in the ICF Common Stock for a substantial period of time, because the ICF
Common Stock has not been registered under the federal or state securities
laws, and, cannot be sold unless subsequently registered under such laws or
unless an exemption from such registration is available.
6.5 Stock Acquired for Investment; Limitations on Dispositions. Each
Shareholder represents that he is acquiring the ICF Common Stock for its
own account and for investment and not with a view to, or for sale in
connection with, any distribution thereof in violation of the Securities
Act of 1933, as amended. Shareholders agree that the stock will not be
offered for sale, sold or otherwise transferred for value and that no
transfer thereof will be made by it unless (a) a registration statement
with respect thereto has become effective under the Securities Act of 1933,
as amended, or (b) there is presented to ICF an opinion of counsel for
Shareholders reasonably satisfactory to ICF that such registration is not
required, or (c) there is presented to ICF a letter from the Securities and
Exchange Commission (said Commission having been informed of all relevant
circumstances) to the effect that in the event the stock is transferred by
Shareholders without such registration, the Commission or the staff will
not recommend any action. Shareholders further agrees that the stock will
not be offered for sale, sold or otherwise transferred unless, in the
opinion of legal counsel for ICF, such sale or disposition does not, and
will not, violate any provisions of any other federal or state securities
law or regulation. Shareholders consents that any transfer agent of ICF
may be instructed not to transfer any of the stock unless it receives
satisfactory evidence of compliance with the foregoing provisions and that
there may be endorsed upon any certificates (or instruments issued in
substitution therefor), ICF's regular legend regarding the sale of
restricted securities.
SECTION 7: REPRESENTATIONS AND WARRANTIES OF ICF
7.1 Organization and Standing. ICF is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Colorado and has all requisite corporate power and authority to own its
assets and properties and to carry on its business as it is now being
conducted.
7.2 Subsidiaries, etc. The Corporation does not have any direct or
indirect ownership interest in any corporation, partnership, joint venture,
association or other business enterprise.
7.3 Qualification. The Corporation is not qualified to engage in
business as a foreign corporation in any state other than Colorado and
Florida and there is no other jurisdiction wherein the character of the
properties presently owned by the Corporation or the nature of the
activities presently conducted by the Corporation makes necessary the
qualification, licensing or domestication of the Corporation as a foreign
corporation.
7.4 Financial Statements. The following statements will be attached
to this Agreement within ten (10) days of the date hereof Exhibit 7.4:
(a) Audited financial statements of the Corporation accompanied
by a report of its independent certified public accountants containing
audited balance sheets of ICF as December 31, 1998, together with
statements of operations for ICF from inception to and including December
31, 1998;
(b) Unaudited financial statements of the corporation containing
balance sheets and statements of operations for ICF covering the period
from the end of the period covered by the most recent audited financial
statements of the corporation through June 30, 1999.
To the Best Knowledge of ICF, such financial statements, together
with and subject to the disclosures and notes thereto, (i) are in
accordance with the books and records of the Corporation; (ii) present
fairly and accurately the financial condition of the Corporation; as of the
dates of the balance sheets; (iii) present fairly and accurately the
results of operations for the periods covered by such statements; (iv) have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis; (v) include all adjustments (consisting of
only normal recurring accruals) which are necessary for a fair presentation
of the financial condition of the Corporation, and of the results of
operations of the Corporation for the periods covered by such statements;
and (vi) fully comply with all requirements of Regulation SB and all
applicable securities laws.
As of the date hereof, and as of Closing, the Corporation does
not have any liabilities or payables (absolute or contingent, known or
unknown) except for liabilities or payables set forth on ICF's financial
statements or otherwise disclosed in writing to ICF, or except for
liabilities and payables incurred in the ordinary course of business.
7.5 Capitalization of the Corporation. The authorized capital stock
of the Corporation consists entirely of 500,000,000 shares common stock
having a par value of $.0001 per share, and 100,000,000 shares of preferred
stock having a par value of $.01 per share. As of the date of this
Agreement, 5,000,000 shares of common stock are issued and outstanding.
There are no other equity securities of the Corporation authorized, issued
or outstanding, and there are no authorized, issued or outstanding
subscriptions, options, warrants, contracts, calls, commitments or other
purchase rights of any nature or character relating to any of the
Corporation's capital stock, equity securities, debt or other securities
convertible into stock or equity securities of the Corporation.
7.6 No Defaults. Each of the leases, contracts, agreements and
insurance policies to which ICF is a party is in full force and effect as
of the date hereof with no material defaults existing thereunder.
7.7 Taxes. The Corporation has filed (or has obtained extensions for
filing) all income, excise, sales, corporate franchise, property, payroll
and other tax returns or reports required to be filed by it, as of the date
hereof by the United States of America, any state or other political
subdivision thereof or any foreign country and has paid all Taxes or
assessments relating to the time periods covered by such returns or
reports. The amounts set up as provisions for Taxes in the Latest
Financial Statements are sufficient for the payment of all unpaid federal,
foreign, state or local Taxes of the Corporation accrued for or applicable
to all periods ended on or prior to the date of this Agreement, or which
may subsequently be determined to be owing by the Corporation with respect
to all periods ending on or prior to the Closing date, subject to normal
year-end adjustments, which will not be material. There are no present
disputes as to Taxes of any nature payable by the Corporation.
7.8 No Actions, Proceedings, etc. There is no action or proceeding
(whether or not purportedly on behalf of the Corporation) pending or
threatened by or against the Corporation, nor does there exist any basis
therefor, which might result in any material adverse change in the
condition, financial or otherwise, of the Corporation's business or assets.
No order, writ or injunction or decree has been issued by, or requested of
any court or governmental agency which does nor may result in any material
adverse change in the Corporation's assets or properties or in the
financial condition or the business of the Corporation. The Corporation is
not liable for damages to any employee or former employee as a result of
any violation of any state, federal or foreign laws directly or indirectly
relating to such employee or former employee.
7.9 Post Balance Sheet Changes. Since the date of the latest
financial statements through the date of this Agreement, the Corporation
has not without the prior written consent of XML and the Shareholders, (a)
issued, bought, redeemed or entered into any agreements, commitments or
obligations to sell, buy or redeem any shares of its capital stock; (b)
incurred any obligation or liability (absolute or contingent), other than
current liabilities incurred, and obligations under contracts entered into,
in the ordinary course of business; (c) discharged or satisfied any lien or
encumbrance or paid any obligation or liability (absolute or contingent),
other than current liabilities incurred in the ordinary course of business;
(d) mortgaged, pledged or subjected to lien charges, or other encumbrance
any of its assets, other than the lien of current or real property taxes
not yet due and payable; (e) waived any rights of substantial value,
whether or not in the ordinary course of business; (f) suffered any damage,
destruction or loss, whether or not covered by insurance, materially and
adversely affecting its assets or its business; (g) made or suffered any
amendment or termination of any material contract or any agreement which
adversely affects its business; (h) received notice or had knowledge of any
labor trouble other than routine grievance matters, none of which is
material; (i) increased the salaries or other compensation of any of its
directors, officers or employees or made any increase in other benefits to
which employees may be entitled; (j) sold, transferred or otherwise
disposed of any of its assets, other than in the ordinary course of
business; (k) declared or made any distribution or payments to any of its
Shareholders, officers or employees, other than wages and salaries made to
employees in the ordinary course of business; (l) revalued any of its
assets; or (m) entered into any transactions not in the ordinary course of
business.
7.10 No Breaches. The Corporation is not in violation of, and the
consummation of the transactions contemplated hereby do not and will not
result in any material breach of, any of the terms or conditions of any
mortgage, bond, indenture, agreement, contract, license or other instrument
or obligation to which the Corporation is a party or by which its assets
are bound; nor will the consummation of the transactions contemplated
hereby cause ICF to violate any statute, regulation, judgment, writ,
injunction or decree of any court, threatened or entered in a proceeding or
action in which the Corporation is, was or may be bound or to which any of
the Corporations assets are subject.
7.11 Corporate Acts and Proceedings. This Agreement has been duly
authorized by all necessary corporate action on behalf of ICF, has been
duly executed and delivered by authorized officers of ICF, and is a valid
and binding Agreement on the part of ICF that is enforceable against ICF in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and
to judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies. All corporate action necessary
to issue and deliver to the Shareholders the common shares (as described in
Section 2.1) has been taken by ICF.
7.12 Labor Matters. There are no strikes, slowdowns, stoppages,
organizational efforts, discrimination charges or other labor disputes
pending or, to the knowledge of ICF or any of its agent or employees,
threatened against ICF.
7.13 Compliance with Reporting Requirements. ICF represents, warrants
and agrees that, as of the date of Closing, ICF has filed all forms,
reports and documents with the Securities and Exchange Commission (the
"Commission") required to be filed by it pursuant to the Securities Act and
the Exchange Act, including, without limitation, all reporting requirements
of Section 13(a) of the Exchange Act. The reports filed with the Commission,
to ICF's Best Knowledge, did not contain, as of their respective dates, any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
SECTION 8: COVENANTS OF ICF
8.1 Preservation of Business. Until Closing, ICF shall use its best
efforts to :
(a) preserve intact the present business organization of ICF;
(b) maintain its property and assets in its present state of
repair, order and condition, reasonable wear and tear excepted;
(c) preserve and protect the goodwill and advantageous
relationships of ICF with its customers and all other persons having
business dealings with ICF;
(d) preserve and maintain in force all licenses, permits,
registrations, franchises, patents, trademarks, tradenames, trade secrets,
service marks, copyrights, bonds and other similar rights of ICF; and
(e) comply with all laws applicable to the conduct of its
business.
8.2 Ordinary Course. ICF shall not, without the prior written
consent of XML or the Shareholders:
(a) sell, mortgage, pledge or encumber or agree to sell,
mortgage, pledge or encumber, any of its property or assets;
(b) incur any obligation (contingent or otherwise) or purchase,
acquire, transfer, or convey, any material assets or property or enter into
any contract or commitment;
(c) discuss, solicit negotiate, enter into an agreement
concerning any merger, consolidation or sale of all or substantially all of
its assets except as contemplated by this Agreement.
8.3 Negative Covenants. From the date hereof until the Closing date,
unless and until XML otherwise consents in writing, ICF will not (a) change
or alter the physical contents or character of the inventories of its
business, so as to materially affect the nature of the Corporation's
business or materially and adversely change the total dollar valuation of
such inventories from that reflected on the financial statements referred
to in Section 4.4 other than in the ordinary course of business; (b) incur
any obligations or liabilities (absolute or contingent) other than current
liabilities incurred and obligations under contracts entered into in the
ordinary course of business; (c) mortgage, pledge or voluntarily subject to
lien, charge or other encumbrance any assets, tangible or intangible, other
than the lien of current property taxes not due and payable; (d) sell,
assign or transfer any of its assets or cancel any debts or claims, other
than in the ordinary course of business; (e) waive any right of any
substantial value; (f) declare or make any payment or distribution to
Shareholders or issue, purchase or redeem any shares of its capital stock
or other equity securities or issue or sell any rights to acquire the same;
(g) grant any increase in the salary or other compensation of any of its
directors, officers, or employees or make any increase in any benefits to
which such employees might be entitled; (h) institute any bonus, benefit,
profit sharing, stock option, pension, retirement plan or similar
arrangement, or make any changes in any such plans or arrangements
presently existing; or (i) enter into any transactions or series of
transactions other than in the ordinary course of business.
8.4 Access to Books and Records, Premises, etc. From the date of
this Agreement through the Closing date, ICF will grant ICF and its
authorized representatives access to its books and records, premises,
products, employees and customers and other parties with whom it has
contractual relations during reasonable business hours for purposes of
enabling ICF to fully investigate the business of ICF. ICF will also
deliver copies of its monthly statements of operations and financial
condition for the period subsequent to the latest financial statements to
XML as soon as such statements are available.
8.5 Compensation. ICF shall not enter into or agree to enter into
any employment contract or agreement for consulting, professional, or other
services which will adversely and materially affect the operation of ICF
prior to the Closing Date.
SECTION 9: INDEMNIFICATION AND REMEDIES FOR BREACH
9.1 Indemnification by ICF.
(a) ICF shall defend, indemnify and hold Shareholders and XML
harmless against and in respect of any damage, loss, liability, cost or
expense, including expert witness fees and reasonable attorneys' fees,
whether or not recoverable under applicable state law, resulting or arising
from or incurred in connection with:
(i) any misrepresentation, breach of warranty, or
nonfulfillment or nonperformance of any agreement on
the part of ICF under this Agreement, or any
misrepresentation or omission from any exhibit,
schedule, list, certificate or other instrument
furnished or to be furnished by it under this
Agreement, or any noncompliance on the part of ICF with
applicable law.
(ii) any and all liabilities of ICF of any nature
whatsoever, whether accrued, absolute, contingent or
otherwise and whether known or unknown, except to the
extent that any such liability arises from
Shareholders' failure to perform or discharge, when
due, Shareholders' and XML's future obligations; and
(iii) any actions, suits, proceedings, damages, assessments,
judgments, costs or expenses incident to any of the
foregoing.
(b) Promptly after the receipt by Shareholders and/or XML of
notice of any claim asserted by a third party that may give rise to ICF's
liability to Shareholders and/or XML under this Section, Shareholders
and/or XML shall give to ICF written notice of such claim, and ICF shall be
entitled to participate at its own expense in the defense of any such
claim. Shareholders and/or XML shall not pay, acknowledge, compromise or
settle any such claim without the written consent of ICF, unless such
payment, acknowledgement, compromise or settlement results in a full and
complete release and discharge of ICF from any liability.
9.2 Indemnification by Shareholders.
(a) Shareholders shall defend, indemnify and hold ICF harmless
against and in respect of any damage, loss, liability, cost or expense,
including expert witness fees and reasonable attorneys' fees, whether or
not recoverable under applicable state law, resulting or arising from or
incurred in connection with:
(i) any misrepresentation, breach of warranty, or
nonfulfillment or nonperformance of any agreement on
the part of Shareholders under this Agreement, or any
misrepresentation or omission from any exhibit,
schedule, list, certificate or other instrument
furnished or to be furnished by him under this
Agreement.
(ii) any and all liabilities of Shareholders of any nature
whatsoever, whether accrued, absolute, contingent or
otherwise and whether known or unknown, except to the
extent that any such liability arises from ICF's
failure to perform or discharge, when due, ICF's future
obligations;
(iii) any actions, suits, proceedings, damages, assessments,
judgments, costs or expenses incident to any of the
foregoing.
(b) Promptly after the receipt by ICF of notice of any claim
asserted by a third party that may give rise to Shareholders' liability to
ICF under this Section, ICF shall give to Shareholders written notice of
such claim and Shareholders shall be entitled to participate at its own
expense in the defense of any such claim. ICF shall not pay, acknowledge,
compromise or settle any such claim without the written consent of
Shareholders, unless such payment, acknowledgement, compromise or
settlement results in a full and complete release and discharge of
Shareholders from any liability.
9.3 Indemnification by XML.
(a) XML shall defend, indemnify and hold ICF harmless against
and in respect of any damage, loss, liability, cost or expense, including
expert witness fees and reasonable attorneys' fees, whether or not
recoverable under applicable state law, resulting or arising from or
incurred in connection with:
(i) any misrepresentation, breach of warranty, or
nonfulfillment or nonperformance of any agreement on
the part of XML under this Agreement, or any
misrepresentation or omission from any exhibit,
schedule, list, certificate or other instrument
furnished or to be furnished by it under this
Agreement.
(ii) any and all liabilities of XML of any nature
whatsoever, whether accrued, absolute, contingent or
otherwise and whether known or unknown, except to the
extent that any such liability arises from ICF's
failure to perform or discharge, when due, ICF's future
obligations;
(iii) any actions, suits, proceedings, damages, assessments,
judgments, costs or expenses incident to any of the
foregoing.
(b) Promptly after the receipt by ICF of notice of any claim
asserted by a third party that may give rise to XML's liability to ICF
under this Section, ICF shall give to XML written notice of such claim and
XML shall be entitled to participate at its own expense in the defense of
any such claim. ICF shall not pay, acknowledge, compromise or settle any
such claim without the written consent of XML, unless such payment,
acknowledgement, compromise or settlement results in a full and complete
release and discharge of XML from any liability.
9.4 Additional Notice. Notwithstanding the provisions of Sections
9.1, 9.2 or 9.3 above, promptly after the receipt by any party hereto of
notice of any claim asserted by a third party that may give rise to the
liability of any party for which the right to indemnification may be
claimed under this Section, such party shall give to each other party
written notice of such claim as soon as practicable. The provisions of
this Section 9.4 in addition to and not in lieu of the covenants of the
parties contained in Sections 9.1, 9.2 or 9.3 above.
9.5 Determination of Damages and Related Matters.
(a) Upon the occurrence of any event which would give rise to a
claim by ICF against, or to a right of defense and indemnity against
Shareholders pursuant to this Section 9, or in the event that any suit,
action, investigation, claim or proceeding is begun, made or instituted as
a result of which Shareholders may become obligated to ICF hereunder, ICF
shall give notice to Shareholders of the occurrence of such event and shall
identify ICF's choice of counsel to represent such investigation, claim or
proceedings, provided that the failure of ICF to give notice shall not
affect the indemnification obligations of Shareholders hereunder. ICF (i)
shall have the exclusive right to so defend, contest or protect against
such matter utilizing the counsel of ICF's choice (who shall be reasonably
acceptable to a representative of Shareholders), and (ii) without further
notice may set off or apply against all amounts due Shareholders hereunder,
or their affiliates, under any instrument or pursuant to any obligation
other than an obligation to pay Shareholders compensation for services
rendered on behalf of ICF, the full amount for which indemnification
hereunder is provided. Shareholders shall have the right, but not the
obligation, to participate, at its own expense, in the defense thereof by
counsel of their choice.
(b) As ICF incurs expenses for which indemnification hereunder
is provided and after any final judgment or award shall have been rendered
by a court, arbitration board or administrative agency of competent
jurisdiction, and the expiration of the time in which to appeal therefrom,
or a settlement shall have been consummated, ICF shall forward to
Shareholders notice of any sums due and owing by them pursuant to this
Agreement with respect to such matter and they shall be required to pay all
of the sums so due and owing to ICF by certified or bank cashier's check
within ten (10) days of such notice.
(c) Upon the occurrence of any event which would give rise to a
claim by XML and/or Shareholders against, or to a right of defense and
indemnity against ICF pursuant to this Section 9, or in the event that any
suit, action, investigation, claim or proceeding is begun, made or
instituted as a result of which ICF may become obligated to XML and/or
Shareholders hereunder, XML and/or Shareholders shall give notice to ICF of
the occurrence of such event and shall identify their choice of counsel to
represent such investigation, claim or proceedings, provided that the
failure of either or both of them to give notice shall not affect the
indemnification obligations of ICF hereunder. XML and/or Shareholders (i)
shall have the exclusive right to so defend, contest or protect against
such matter utilizing the counsel of their choice (who shall be reasonably
acceptable to a representative of ICF), and (ii) without further notice may
set off or apply against all amounts due ICF hereunder, or their
affiliates, under any instrument or pursuant to any obligation, the full
amount for which indemnification hereunder is provided. ICF shall have the
right, but not the obligation, to participate, at its own expense, in the
defense thereof by counsel of its choice.
(d) As XML and/or Shareholders incur expenses for which
indemnification hereunder is provided and after any final judgment or award
shall have been rendered by a court, arbitration board or administrative
agency of competent jurisdiction, and the expiration of the time in which
to appeal therefrom, or a settlement shall have been consummated, XML
and/or Shareholders shall forward to ICF notice of any sums due and owing
by it pursuant to this Agreement with respect to such matter and shall be
required to pay all of the sums so due and owing to XML and/or Shareholders
by certified or bank cashier's check within ten (10) days of such notice.
9.6 Remedies for Breach. In the event of any breach of any of the
provisions of this Agreement, including but not limited to any breach of
any covenant, warranty or representation made by any party hereto, the
breaching or defaulting party shall be liable pursuant to the provisions of
9.1, 9.2 or 9.3 above. In the event of any material breach by any party
of any provision under this Agreement, either party may file suit. Nothing
contained in this Agreement shall be deemed to preclude a party to xxx for
or seek specific performance of the provisions of this Agreement in the
appropriate circumstance.
SECTION 10: NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Each of the parties hereto recognizes and acknowledges that it has and
will have access to certain nonpublic information of the others which shall
be deemed the confidential information of the other Companies that is
included in the Assets (including, but not limited to, business plans,
costs, trade secrets, licenses, research projects, profits, markets, sales,
customer lists, strategies, plans for future development, financial
information and any other information of a similar nature) that after the
consummation of the transactions contemplated hereby will be valuable,
special and unique property of the Companies. Information shall not be
deemed Confidential Information and afforded the protections of this
Section 10 if, on the Closing Date, such information has been (i) developed
by the receiving party independently of the disclosing party, (ii)
rightfully obtained without restriction by the receiving party from a third
party, provided that the third party had full legal authority to possess
and disclose such information, (iii) publicly available other than through
the fault or negligence of the receiving party, (iv) released without
restriction by the disclosing party to anyone, including the United States
government, or (v) properly and lawfully known to the receiving party at
the time of its disclosure, as evidenced by written documentation
conclusively established to have been in the possession of the receiving
party on the date of such disclosure. Each of the parties hereto agrees
that it shall not disclose, and that it shall use its best efforts to
prevent disclosure by any other Person of, any such confidential
information to any Person for any purpose or reason whatsoever, except to
authorized representatives of the Companies. Notwithstanding, a party may
use and disclose any such confidential information to the extent that a
party may become compelled by Legal Requirements to disclose any such
information; provided, however, that such party shall use all reasonable
efforts and shall have afforded the other Companies the opportunity to
obtain an appropriate protective order or other satisfactory assurance of
confidential treatment for any such information compelled to be disclosed.
In the event of termination of this Agreement, each party shall use all
reasonable efforts to cause to be delivered to the other parties, and to
retain no copies of, any documents, work papers and other materials
obtained by such party or on such party's behalf during the conduct of the
matters provided for in this Agreement, whether so obtained before or after
the execution hereof. Each of the Companies recognizes and agrees that
violation of any of the agreements contained in this Section 10 will cause
irreparable damage or injury to the Companies, the exact amount of which
may be impossible to ascertain, and that, for such reason, among others,
the Companies shall be entitled to an injunction, without the necessity of
posting bond therefor, restraining any further violation of such
agreements. Such rights to any injunction shall be in addition to, and not
in limitation of, any other rights and remedies the Companies may have
against each other.
SECTION 11: EXPENSES
Each of the parties will pay all costs and expenses of its performance
and compliance with this Agreement. Notwithstanding the foregoing, if the
Agreement is not consummated by reason of a default of one of the
Companies, then the expenses of each of the Companies in connection with
the transaction contemplated herein shall be paid by such defaulting
Company.
SECTION 12: MISCELLANEOUS
12.1 Attorney's Fees. In any action at law or in equity or in any
arbitration proceeding, for declaratory relief or to enforce any of the
provisions or rights or obligations under this Agreement, the unsuccessful
party to such proceeding, shall pay the successful party or parties all
statutorily recoverable costs, expenses and reasonable attorneys' fees
incurred by the successful party or parties including without limitation
costs, expenses, and fees on any appeals and the enforcement of any award,
judgment or settlement obtained, such costs, expenses and attorneys' fees
shall be included as part of the judgment. The successful party shall be
that party who obtained substantially the relief or remedy sought, whether
by judgment, compromise, settlement or otherwise.
12.2 Survival and Incorporation of Representations. The
representations, warranties, covenants and agreements made herein or in any
certificates or documents executed in connection herewith shall survive the
execution and delivery thereof, and all statements contained in any
certificate or other document delivered by any party hereunder or in
connection herewith shall be deemed to constitute representations and
warranties made by that party to this Agreement.
12.3 Incorporation by Reference. All appendices to this Agreement and
all documents delivered pursuant to or referred to in this Agreement are
herein incorporated by reference and made a part hereof.
12.4 Parties in Interest. Nothing in this Agreement, whether express
or implied, is intended to, or shall, confer any rights or remedies under,
or by reason of, this Agreement, on any person other than the parties
hereto and their respective and proper successors and assigns. Nor shall
anything in this Agreement act to relieve or discharge the obligation or
liability of any third persons to any party to this Agreement.
12.5 Amendments and Waivers. This Agreement may not be amended, nor
may compliance with any term, covenant, agreement, condition or provision
set forth herein be waived (either generally or in a particular instance
and either retroactively or prospectively) unless such amendment or waiver
is agreed to in writing by all parties hereto.
12.6 Waiver. No waiver of any breach of any one of the agreements,
terms, conditions, or covenants of this Agreement by the parties shall be
deemed to imply or constitute a waiver of any other agreement, term,
condition, or covenant of this Agreement. The failure of any party to
insist on strict performance of any agreement, term, condition, or
covenant, herein set forth, shall not constitute or be construed as a
waiver of the rights of either or the other thereafter to enforce any other
default of such agreement, term, condition, or covenant; neither shall such
failure to insist upon strict performance be deemed sufficient grounds to
enable either party hereto to forego or subvert or otherwise disregard any
other agreement, term, condition, or covenants of this Agreement.
12.7 Governing Law - Construction. This Agreement, and the rights and
obligations of the respective parties, shall be governed by and construed
in accordance with the laws of the State of Colorado, excluding conflict of
law provisions which would act to apply the laws of another state.
Notwithstanding the preceding sentence, it is acknowledged that each party
hereto is being represented by, or has waived the right to be represented
by, independent counsel. Accordingly, the parties expressly agree that no
provision of this Agreement shall be construed against any party on the
ground that the party or its counsel drafted the provision. Nor may any
provision of this Agreement be construed against any party on the grounds
that party caused the provision to be present.
12.8 Limitation of Actions. No action may be brought by any party to
this Agreement to enforce any covenant made by any party hereto or to seek
damages or equitable relief arising from any claimed breach or
nonperformance of a covenant, representation, warranty or other performance
provided for herein unless such action is commenced within one (1) year of
the date of Closing. The parties hereto agree to be bound by the aforesaid
limitation of actions notwithstanding the provisions of any applicable
statutory limitation of actions to the contrary.
12.9 Notices. Any notice, communication, offer, acceptance, request,
consent, reply, or advice (herein severally and collectively, for
convenience, called "Notice"), in this Agreement provided or permitted to
be given, served, made, or accepted by any party or person to any other
party or parties, person or persons, hereunder must be in writing,
addressed to the party to be notified at the address set forth below, or
such other address as to which one party notifies the other in writing
pursuant to the terms of this Section, and must be served by (1) telefax or
other similar electronic method, or (2) depositing the same in the United
States mail, certified, return receipt requested and postage paid to the
party or parties, person or persons to be notified or entitled to receive
same, or (3) delivering the same in person to such party.
Notice shall be deemed to have been given immediately when sent
by telefax or other electronic method and seventy-two hours after being
deposited in the United States mail, or when personally delivered in the
manner hereinabove described. Notice provided in any manner not specified
above shall be effective only if and when received by the party or parties,
person or persons to be, or provided to be notified.
All notices, requests, demands and other communications required
or permitted under this Agreement shall be addressed as set forth below:
If ICF, to: International Capital Funding, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0 XXXXXX
Attention: Xxxxx Xxxxxxx
With copy to: Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxxx, LLC
0000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
If Shareholders of
XML, to: XML Global Technologies
0000 Xxxxx Xxxxxx
Xxxxxxxxx, X.X. X0X 0X0 XXXXXX
Attention: Xxxxx Xxxxxxx
With copy to: Xxxxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxxx, LLC
0000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Any party receiving a facsimile transmission shall be entitled to rely upon
a facsimile transmission to the same extent as if it were an original. Any
party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this Section for the giving of notice.
12.10 Fax/Counterparts. This Agreement may be executed by telex,
telecopy or other facsimile transmission, and such facsimile transmission
shall be valid and binding to the same extent as if it were an original.
Further, this Agreement may be signed in one or more counterparts, all of
which when taken together shall constitute the same documents. For all
evidentiary purposes, any one complete counter set of this Agreement shall
be considered an original.
12.11 Captions. The caption and heading of various sections and
paragraphs of this Agreement are for convenience only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
12.12 Severability. Wherever there is any conflict between any
provision of this Agreement and any statute, law, regulation or judicial
precedent, the latter shall prevail, but in such event the provisions of
this Agreement thus affected shall be curtailed and limited only to the
extent necessary to bring it within the requirement of the law. In the
event that any part, section, paragraph or clause of this Agreement shall
be held by a court of proper jurisdiction to be invalid or unenforceable,
the entire Agreement shall not fail on account thereof, but the balance of
the Agreement shall continue in full force and effect unless such
construction would clearly be contrary to the intention of the parties or
would result in unconscionable injustice.
12.13 Jurisdiction and Venue. Jurisdiction over any action,
proceeding or arbitration shall be proper only if filed and maintained in
Colorado and venue shall be proper therefor only in the County of Boulder,
Colorado. Arbitration shall be commenced and maintained only in the City
and County of Denver, Colorado.
12.14 Good Faith Cooperation and Additional Documents. The parties
shall use their best good faith efforts to fulfill all of the conditions
set forth in this Agreement over which it has control or influence. Each
party covenants and agrees to cooperate in good faith and to enter into and
deliver such other documents and papers as the other party reasonably shall
require in order to consummate the transactions contemplated hereby,
provided in each instance, any such document is in form and substance
approved by the parties and their respective legal counsel.
12.15 Specific Performance. The obligations of the parties under
Section 10 are unique. If either party should default in its obligations
under said section(s), the parties each acknowledge that it would be
extremely difficult and impracticable to measure the resulting damages;
accordingly, the non-defaulting party, in addition to any other available
rights and remedies, may xxx in equity for injunction (mandatory or
prohibitive) or specific performance (all without the need to post a bond
or undertaking of any nature), and the parties each expressly waive the
defense that a remedy at law in damages is adequate.
12.16 Assignment. Neither party may directly or indirectly assign or
delegate, by operation of law or otherwise, all or any portion of
its/their/his rights, obligations or liabilities under this Agreement
without the prior written consent of all other parties, which consent may
be withheld in their respective sole and absolute discretion.
For purposes of this Section, the term "Agreement" shall include
this Agreement and the Exhibits and other documents attached hereto or
described in this Section 12. This Agreement, and other documents
delivered pursuant to this Agreement, contain all of the terms and
conditions agreed upon by the parties relating to the subject matter of
this Agreement and supersede all prior and contemporaneous agreements,
letters of intent, representations, warranties, disclosures, negotiations,
correspondence, undertakings and communications of the parties, oral or
written, respecting that subject matter.
12.17 Authority to Sign. Each of the persons signing below on behalf
of any party hereby represents and warrants that s/he or it is signing with
full and complete authority to bind the party on whose behalf of whom s/he
or it is signing, to each and every term of this Agreement.
12.18 Execution of Documents. The parties hereto agree to execute and
deliver any and all other documents necessary and convenient to effectuate
the exchange of stock herein provided for, and Shareholders and XML as an
inducing condition, represent that they have the authority to enter into
this Agreement and to make the foregoing commitments for themselves.
12.19 Time. Time is of the essence of this Agreement and each of its
provisions.
IN WITNESS WHEREOF, the parties have signed the Agreement the date and
year first above written.
INTERNATIONAL CAPITAL FUNDING, INC.,
a Colorado corporation,
ATTEST:
By:
------------------------------ ----------------------------------
Secretary
XML - TECHNOLOGIES, INC.,
a Nevada corporation,
ATTEST:
By:
------------------------------ -----------------------------------
Secretary
SHAREHOLDERS OF XML - TECHNOLOGIES,
INC.
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EXHIBIT 4.12
PATENT APPLICATIONS IN PROGRESS
Hybrid HTML Documents
System for processing embedded instructions
TRADEMARKS APPLICATIONS
XOSP
XOP
LECART
GOXML
HXML
CUSTOMER LIST
SUPPLIER LIST
