23 May 2000
AGREEMENT AND PLAN OF MERGER
between
EXPLORE TECHNOLOGIES, INC.
("Explore")
and
CASHSURFERS INC.
("XXXX.XXX")
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AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered into
on May __, 2000, by and among EXPLORE TECHNOLOGIES, INC., a Nevada
corporation (hereinafter referred to as "Explore") and CASHSURFERS,
INC., a California corporation (hereinafter referred to as
"XXXX.XXX").
R E C I T A L S:
----------------
WHEREAS, the parties believe that a business combination between
XXXX.XXX and Explore is in the best interest of the parties to this
Agreement and their respective stockholders; and
WHEREAS, the respective Boards of Directors and shareholders of the
parties have approved, or will meet to consider and approve, the
merger of XXXX.XXX with and into Explore, upon the terms and
conditions set forth in this Agreement and Plan of Merger and in
accordance with the California Corporations Code and Chapter 78
"Private Corporations" and Chapter 92A "Mergers and Exchanges of
Interest" of the Nevada Revised Statutes (the "Nevada Corporation
Law");
WHEREAS, each party hereto wishes to adopt this Agreement and Plan
of Merger, together with the forms of Certificates of Merger
attached hereto as Exhibit A (the "Certificates of Merger") as a
"plan of reorganization" within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and to
cause the Merger to qualify as a reorganization under the provision
of Section 368(a)(1)(A) of the Code, whereby each share of capital
stock of XXXX.XXX will be canceled and whereby Explore will be the
surviving entity of a merger with XXXX.XXX; and
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound hereby,
agree as follows:
ARTICLE I. THE MERGER
1.01 The Merger. At the Effective Time (as defined in Section 1.03
hereof) and subject to and upon the terms and conditions of this
Agreement, XXXX.XXX will be merged with and into Explore (the
"Merger"). Following the Merger, Explore will continue as the
surviving entity under the name "XXxxxXxxx.xxx, Inc." and the
separate corporate existence of XXXX.XXX will cease. (Explore and
XXXX.XXX are sometimes referred to collectively herein as the
"Constituent Companies").
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1.02 Effects of the Merger. At the Effective Time, Explore will,
without any other action, possess all the rights, privileges,
powers and franchises, of a public as well as of a private nature,
and be subject to all the restrictions, disabilities and duties of
each of the Constituent Companies; and all rights, privileges,
powers and franchises of each of the Constituent Companies, and all
property, real, personal and mixed, and all debts due to either of
the Constituent Companies on whatever account, will be vested in
Explore; and all property, rights, privileges, powers and
franchises, and all and every other interest will be thereafter as
effectually the property of Explore as they were of the Constituent
Companies, and the title to any real estate vested by deed or
otherwise in the Constituent Companies will not revert or be in any
way impaired by reason of the Merger; but all rights of creditors
and all liens upon any property of either of the Constituent
Companies will be preserved unimpaired, and all debts, liabilities
and duties of either of the Constituent Companies will thenceforth
attach to Explore, and may be enforced against it to the same
extent as if said debts, liabilities and duties had been incurred
or contracted by it.
1.03 Closing; Effective Time and Transaction Effective Date. The
closing of the Merger (the "Closing") will take place on a date to
be specified by the parties, but in no event more than ten (10)
business days following approval of the Merger by the shareholders
of Explore (the "Closing Date"), subject to satisfaction or waiver
of the conditions set forth in this Agreement, at the offices of
Cane & Company in Las Vegas, Nevada. The Merger will become
effective at the time of the filing of the Certificates of Merger
with the offices of the Secretaries of State of the States of
California and Nevada in accordance with the provisions of
applicable law, which Certificates of Merger will be so filed as
soon as practicable after the Closing. The date and time when the
Merger will become effective shall be at such time as the
Certificates of Merger are duly filed with the California and
Nevada Secretaries of State or such later date as mutually
agreeable to the Constituent Companies and specified in the
Certificates of Merger (the "Effective Time").
1.04 Certificate of Incorporation. The Articles of Incorporation
and Bylaws of Explore in effect immediately prior to the Effective
Time will remain the Articles of Incorporation and Bylaws of
Explore until amended in accordance with the provisions of the
applicable corporate law.
ARTICLE II. STATUS AND CONVERSION OF SECURITIES;
MERGER CONSIDERATION
2.01 Conversion of Securities. At the Effective Time, each share
of the common stock of XXXX.XXX (the "XXXX.XXX Common Stock")
issued and outstanding immediately prior to the Effective Time
will, by virtue of the Merger and without any action on the part of
the holders thereof, automatically be canceled, retired and
extinguished, and each outstanding share of XXXX.XXX Common Stock
will be converted into the right to receive the Merger
Consideration (as defined in Section 2.02 hereof) as described
below.
2.02 Merger Consideration. As of the Effective Time, each issued
and outstanding share of XXXX.XXX Common Stock held by the
Stockholders of XXXX.XXX (collectively, the "XXXX.XXX
Stockholders"), comprising all of the issued and outstanding shares
of XXXX.XXX Common Stock as of the Effective Time, will be
converted into a right to
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receive one thousand two hundred sixty (1,260) shares of the common
stock of Explore such that Explore will issue an aggregate of twelve
million eight hundred forty nine thousand four hundred eighty
(12,849,480) shares of its common stock on Closing (the "Explore
Common Stock" and in aggregate, the "Merger Consideration").
Since as of the Effective Time all shares of the XXXX.XXX Common
Stock will no longer be outstanding, will automatically be cancelled
and retired, and will cease to exist, each holder of shares of
XXXX.XXX Common Stock will cease to have any rights with respect
thereto, except the right to receive the Merger Consideration and
any cash in lieu of fractional shares of Explore Common Stock to
be issued or paid in consideration therefore upon surrender of
such certificate in accordance with Section 2.03.
2.03 Delivery of Merger Consideration. Explore shall deliver the
Merger Consideration to each holder of XXXX.XXX Common Stock within
five (5) business days of Closing or within five (5) business days
after surrender of certificates (the "Certificates") representing
all shares of XXXX.XXX Common Stock owned by such individual,
whichever is later.
(1) Certificates. The Certificates shall forthwith be
canceled upon surrender. Until surrendered as
contemplated by this Section 2.03, each such Certificate
shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender
that pro rata portion of the Merger Consideration
applicable thereto. No interest will be paid or will
accrue on any portion of the Merger Consideration. In
the event any such Certificate is not duly surrendered
within six (6) months of Closing, the holder thereof will
automatically forfeit all rights therein, including the
right to receive any Merger Consideration, and any
obligation of Explore or either Constituent Company with
respect to such Certificate will be rendered null and
void.
(2) No Further Ownership Rights in XXXX.XXX Common Stock. All
shares of Explore Common Stock issued upon the surrender
for exchange of the Certificates in accordance with the
terms of this Article II shall be deemed to have been
issued (and paid) in full satisfaction of all rights
pertaining to XXXX.XXX Common Stock theretofore
represented by such Certificates, and there shall be no
further registration or transfer of the shares of
XXXX.XXX Common Stock after the Effective Time.
(3) No Fractional Shares. No certificates or scrip
representing fractional shares of Explore Common Stock
shall be issued upon the surrender of certificates of
XXXX.XXX Common Stock for exchange, and such fractional
share interests will not entitle the owner thereof to
vote or to any rights as a stockholder of Explore.
Notwithstanding any other provision of this Agreement,
each holder of XXXX.XXX Common Stock exchanged pursuant
to the Merger who would otherwise have been entitled to
receive a fraction of a share of Explore Common Stock
(after taking into account all Certificates delivered by
such holder) will promptly receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional
part of a share of Explore Common Stock multiplied by the
per share closing price of such Explore Common Stock as
reported on the NASD Over-The-Counter Bulletin Board on
the date of the Effective Time.
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(4) Lost Certificates. In the event any Certificates have
been lost, stolen or destroyed, upon the making of an
affidavit of that fact, in form and substance reasonably
satisfactory to Explore, by the person claiming such
certificate to be lost, stolen or destroyed, Explore will
issue in exchange for such lost, stolen or destroyed
Certificate the shares of Explore Common Stock and cash
in lieu of fractional shares, deliverable in respect
thereof pursuant to this Agreement.
2.04 Cancellation of Treasury Shares. Any authorized but unissued
shares of XXXX.XXX Common Stock as of the Effective Time shall
automatically be canceled and retired and shall cease to exist, and
no Explore Common Stock, cash or other consideration will be
delivered in exchange therefor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXX.XXX
As an inducement to Explore to enter into this Agreement and to
consummate the Merger, XXXX.XXX represents and warrants to Explore,
which representations and warranties will be true and correct at
Closing and will survive Closing, as follows:
3.01 Organization, Qualification and Authority. XXXX.XXX is a
corporation duly organized, validly existing and in good standing
in the State of California and is qualified as a foreign
corporation in each jurisdiction in which its business requires it
to be qualified. Since the date of its organization and
incorporation, XXXX.XXX has consistently observed and operated
within the corporate formalities of the jurisdictions in which it
is incorporated and/or conducts its business, and has consistently
observed and complied with the general corporation law of such
jurisdictions. True and complete copies of the Charter and Bylaws,
as currently in effect, of XXXX.XXX have been delivered to Explore.
No amendments to any such Charter or Bylaws have been authorized.
XXXX.XXX has the full corporate power and authority to own, lease
and operate its properties and assets as presently owned, leased
and operated and to carry on its business as it is now being
conducted. XXXX.XXX has the full right, power and authority to
execute, deliver and carry out the terms of this Agreement and all
documents and agreements necessary to give effect to the provisions
of this Agreement. Subject to obtaining requisite approval of the
shareholders of XXXX.XXX, execution, delivery and consummation of
this Agreement and all other agreements and documents executed in
connection herewith by XXXX.XXX have been duly authorized by all
necessary corporate action on the part of XXXX.XXX and no other
action on the part of XXXX.XXX or any other person or entity is
necessary to authorize the execution, delivery and consummation of
this Agreement and all other agreements and documents executed in
connection herewith. This Agreement and all other agreements and
documents executed in connection herewith by XXXX.XXX, upon due
execution and delivery thereof, will constitute the valid and
binding obligations of XXXX.XXX, enforceable in accordance with
their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and by general principles of equity.
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3.02 Capitalization and Stock Ownership.
(a) Common Stock. The authorized capital stock of XXXX.XXX
consists of fifteen thousand (15,000) shares of common
stock (the "XXXX.XXX Stock"). The issued and outstanding
securities of XXXX.XXX consist of ten thousand one
hundred ninety eight (10,198) shares of XXXX.XXX Stock,
each of which shares is duly authorized, validly issued,
fully paid and non-assessable. The XXXX.XXX Stock is not
subject to preemptive or comparable rights. The XXXX.XXX
Stock has been issued in accordance with all applicable
federal and state securities laws.
(b) Other Securities. There are not any existing options,
warrants, calls, subscriptions or other rights or
agreements or commitments obligating XXXX.XXX to issue,
transfer or sell any of its capital stock or any other
security convertible into or evidencing the right to
subscribe for any such stock.
(c) Related Agreements. There are no voting trusts, voting
agreements, shareholders' agreements or other comparable
commitments or understandings to which XXXX.XXX is a
party or by which XXXX.XXX is bound with respect to the
voting of any XXXX.XXX Stock.
3.03 Absence of Default. The execution, delivery and consummation
of this Agreement, and all other agreements and documents executed
in connection herewith by XXXX.XXX will not constitute a violation
of, be in conflict with, or, with or without the giving of notice
or the passage of time, or both, result in a breach of, constitute
a default under, or create (or cause the acceleration of the
maturity of) any debt, indenture, obligation or liability or result
in the creation or imposition of any security interest, lien,
charge or other encumbrance upon any of the assets of XXXX.XXX
under: (a) any term or provision of the Charter or Bylaws of
XXXX.XXX; (b) any material contract, lease, purchase order,
agreement, document or other commitment, oral or written, to which
XXXX.XXX is a party or by which XXXX.XXX is bound (collectively,
the "XXXX.XXX Contracts") (for purposes of categorizing contracts,
"material" is defined to exclude any contract, lease, purchase
order, agreement, document or commitment which both (y) in terms of
payments, costs, services or other measure does not exceed
$10,000.00 in the aggregate, and (z) is terminable without penalty
upon ninety (90) days' written notice or less); (c) any judgment,
decree, order, writ, injunction or rule of any court or regulatory
authority; or (d) to the knowledge of XXXX.XXX, any law, statute,
rule or regulation to which XXXX.XXX is subject.
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3.04 Financial Statements. Attached hereto as Exhibit 3.04 are
true and correct copies of audited financial statements of the
business of XXXX.XXX, as a division of Peacekeeper Enterprises, LLC
("Peacekeeper") for the year ending December 31, 1999 (the
"XXXX.XXX Financial Statements"). The XXXX.XXX Financial
Statements are based on the books and records of XXXX.XXX and
present fairly and accurately the assets, liabilities and financial
position of XXXX.XXX as of, and the results of its operations for,
the respective periods specified. The XXXX.XXX Financial
Statements have been prepared in accordance with generally accepted
accounting principles. XXXX.XXX will prepare and deliver to
Explore audited financial statements for the period ending March
31, 2000 by no later than June 10, 2000. Upon receipt by Explore,
the audited financial statements will deem to be included as part
of the XXXX.XXX Financial Statements for the purposes of
interpreting XXXX.XXX's representations and warranties under this
Agreement.
3.05 Operations Since December 31, 1999. Since December 31, 1999
and except as contemplated by this Agreement and as a result of the
execution of the agreements referred to in Section 3.07 of this
Agreement, there has been no:
(1) change in the assets, liabilities or financial condition
of XXXX.XXX which has a material adverse effect on
XXXX.XXX's assets or business;
(2) material loss, damage or destruction of or to any of the
assets of XXXX.XXX, whether or not covered by insurance;
(3) sale, lease, transfer or other disposition by XXXX.XXX
of, or mortgages or pledges of or the imposition of any
lien, charge or encumbrance on, any material portion of
the assets of XXXX.XXX, other than those made in the
ordinary course of business;
(4) substantial increase in the compensation payable by
XXXX.XXX to any of its employees, directors, independent
contractors or agents, or increase in, or institution of,
any bonus, insurance, pension, profit-sharing or other
employee benefit plan or arrangements made to, for or
with the employees, directors, independent contractors or
agents of XXXX.XXX;
(5) payment by XXXX.XXX of any dividend or other distribution
to its stockholders;
(6) material change in the accounting methods or practices
employed by XXXX.XXX or change in adopted depreciation or
amortization policies; or
(7) strike, work stoppage or other labor dispute by or with
XXXX.XXX employees which materially adversely affects
XXXX.XXX's operations.
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3.06 Licenses. XXXX.XXX has all local, state and federal
licenses, permits, registrations, certificates, contracts,
consents, accreditations and approvals (collectively, the
"Licenses") necessary for it to occupy, operate and conduct its
business, and there do not exist any waivers or exemptions relating
thereto. To the knowledge of XXXX.XXX, there is no material
default on the part of XXXX.XXX under any of the Licenses and there
exist no grounds for revocation, suspension or limitation of any of
the Licenses. Neither the execution nor delivery of this Agreement
nor the consummation of any of the transactions contemplated
hereunder will result in any revocation or termination of any
License.
3.07 Contracts.
XXXX.XXX has provided to Explore copies of all material contracts
to which XXXX.XXX is a party (the "XXXX.XXX Contracts"), including
(i) the agreement dated January 18, 2000 between XXXX.XXX,
Peacekeeper and Xxxx Xxxxxxxx; (ii) the agreement dated April 5,
2000 between XXXX.XXX and Imedia Holdings AVV, Barracuda
Enterprises, Radco Investments Ltd., Ryerson Corporation AVV, Mecca
Holdings AVV and Island Corporation (together, the "UWantCash
Sellers") (the "UWantCash Agreement"); (iii) a management
consulting agreement between Peacekeeper and XXXX.XXX whereby the
services of Xxxx Xxxxxxxx, Xxxx Xxxxxxxx and Xxx Xxxxxxxx will be
provided to XXXX.XXX; and (iv) management consulting agreement
dated April 5, 2000 between XXXX.XXX and each of Xxxxxx Xxxxxxx,
Xxxxxxx Xxxxxxx and Xxx Xxx. No XXXX.XXX Contract has been modified
or amended from the form that has been provided to Explore for
review. No event or condition has happened or presently exists
which constitutes a default or breach or, after notice or lapse of
time or both, would constitute a default or breach by XXXX.XXX
under any XXXX.XXX Contract. No XXXX.XXX Contract has been entered
into with any affiliate of XXXX.XXX. The consummation of the
transactions contemplated hereunder will not default, alternate or
terminate any XXXX.XXX Contract.
XXXX.XXX has completed the acquisition of the business and business
assets comprising the Xxxxxxxxxxx.xxx division of Peacekeeper on
January 18, 2000 in consideration for (i) 100 shares of the common
stock of XXXX.XXX issued to Peacekeeper and Xxxx Xxxxxxxx; and (ii)
a promissory note issued to Peacekeeper and Xxxx Xxxxxxxx in the
principal amount of $1,000,000 (the "CashSurfer Promissory Note").
XXXX.XXX has completed the payment of the amount of $500,000 to
Peacekeeper and Xxxx Xxxxxxxx owing pursuant to the CashSurfer
Promissory Note such that the principal amount outstanding under
the CashSurfer Promissory Note is $500,000 as of the date of
execution of this Agreement. The following agreements have been
duly and validly assigned to XXXX.XXX by Peacekeeper, with required
third party consents:
(1) Agreement dated January 11, 2000 between Peacekeeper and
Flycast Communications Corporation and all other
agreements between Peacekeeper and Flycast Communications
Corporation;
(2) Agreement dated December 7, 1999 between Peacekeeper and
TVMV, Inc.;
(3) Agreement dated November 26, 1999 between Peacekeeper and
Adsmart Corporation.
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XXXX.XXX has completed the acquisition of the business and business
assets comprising the "UWantCash" business from the UWantCash
Sellers pursuant to the UWantCash Agreement.
3.08 Environmental Matters.
(1) Hazardous Substances. As used in this Section, the term
"Hazardous Substances" means any hazardous or toxic
substances, materials or wastes, including but not
limited to those substances, materials, and wastes
defined in Paragraph 101 of the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), listed in the United States
Department of Transportation Table (49 CFR 172.101) or by
the Environmental Protection Agency as hazardous
substances pursuant to 40 CFR Part 302, or which are
regulated under any other Environmental Law (as such term
is defined herein), and any of the following:
hydrocarbons, petroleum and petroleum products, asbestos,
polychlorinated biphenyls, formaldehyde, radioactive
substances (other than naturally occurring materials in
place), flammables and explosives.
(2) Compliance with Laws and Regulations. All operations or
activities of XXXX.XXX on, and any use or occupancy by
XXXX.XXX of, the real estate necessary to operate the
business of XXXX.XXX are in material compliance with any
and all laws, regulations, orders, codes, judicial
decisions, decrees, licenses, permits and other
applicable requirements of governmental authorities with
respect to Hazardous Substances, pollution or protection
of human health and safety (collectively, "Environmental
Law"), including but not limited to the release,
emission, discharge, storage and removal of Hazardous
Substances. To the knowledge of XXXX.XXX, without
inquiry, all prior owners, operators and occupants of
such real estate complied with Environmental Law.
XXXX.XXX is not aware of any pending or threatened claim,
lawsuit, investigation or inquiry regarding non-
compliance with Environmental Law pertaining to the
operations of, or real estate leased by, XXXX.XXX.
3.09 Litigation. There are no lawsuits, proceedings, actions,
arbitrations, governmental investigations, claims, inquiries or
proceedings pending or, to the knowledge of XXXX.XXX, threatened
involving XXXX.XXX. XXXX.XXX knows of no basis for any lawsuits,
proceedings, actions, arbitrations, governmental investigations,
claims, inquiries or proceedings involving XXXX.XXX.
3.10 Employees.
(a) Exhibit 3.10 attached hereto sets forth a complete list
of all XXXX.XXX officers with their rates of pay, job
titles and employment start dates.
(b) XXXX.XXX is not a party to any labor contract, collective
bargaining agreement, contract, letter of understanding,
or any other arrangement, formal or informal, with any
labor union or organization which obligates it to
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compensate its employees at prevailing rates or union
scale, nor are any of such employees represented by any
labor union or organization. There is no pending or, to
the knowledge of XXXX.XXX, threatened labor dispute, work
stoppage, unfair labor practice complaint, strike,
administrative or court proceeding or order between
XXXX.XXX and any of its employees. There is no pending
or, to the knowledge of XXXX.XXX, threatened suit,
action, investigation or claim between XXXX.XXX and any
of its present or former employees. XXXX.XXX knows of
no labor union organizing activity at any location of
XXXX.XXX within the last three (3) years.
3.11 Insurance. XXXX.XXX will upon the initial advance of funds
under Section 8.01 obtain insurance coverage for all of its
operations, personnel and assets.
3.12 Broker's or Finder's Fee. XXXX.XXX has not employed, and is
not liable for the payment of any fee to, any finder, broker or
similar person in connection with the transactions contemplated
under this Agreement.
3.13 Conflicts of Interest. To the knowledge of XXXX.XXX and with
the exception of the Peacekeeper Management Agreement, none of the
following is either a supplier of goods or services to XXXX.XXX
(other than as an employee), or directly or indirectly controls or
is a director or officer of any corporation, firm, association,
partnership or other business entity that is a supplier of goods or
services to XXXX.XXX: (a) any director or officer of XXXX.XXX or,
(b) any entity under common control with XXXX.XXX.
3.14 Employee Benefit Plans. Other than health and comparable
insurance, XXXX.XXX does not maintain or contribute to, or is
required to maintain or contribute to, any "employee welfare
benefit plan" or any "employee pension benefit plan" as each is
defined in the Employee Retirement Income Security Act of 1974 as
amended. Further, no such benefit plans covered employees of
XXXX.XXX during the period of their employment with any predecessor
of XXXX.XXX, including any multi-employer pension plan as defined
under the Code. Accordingly, there are no unfunded liabilities of
XXXX.XXX under any benefit plans.
3.15 Compliance with Laws. The business of XXXX.XXX has been and
is currently operated in material compliance with all applicable
laws, rules and regulations of each jurisdiction in which the
business of XXXX.XXX is conducted. XXXX.XXX has not made any
kickback, bribe or payment to any person or entity, directly or
indirectly, for referring, recommending or arranging business or
patients with, to or for XXXX.XXX which action could have a
material adverse effect on the business of XXXX.XXX. No bulk sales
or similar statute under the laws of any state applies to the
transactions contemplated under this Agreement.
3.16 WARN Act. Since ninety (90) days prior to Closing, XXXX.XXX
has not temporarily or permanently closed or shut down any single
site of employment or any facility or any operating unit,
department or service within a single site of employment, as such
terms are used in the Worker Adjustment and Retraining Notification
Act, 29 U.S.C. 2102, et seq. ("WARN").
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3.17 Tax Returns; Taxes.
(a) XXXX.XXX has filed all federal, state and local tax
returns and tax reports required by such authorities to
be filed as of the date hereof. XXXX.XXX has paid all
taxes, assessments, governmental charges, penalties,
interest and fines due or claimed to be due as of the
time of Closing (including, without limitation, taxes on
properties, income, franchises, licenses, sales and
payrolls) by any federal, state or local authority.
Additionally, the reserves for taxes reflected in the
XXXX.XXX Financial Statements are adequate to cover all
tax liabilities accrued as of the respective dates
thereof. There is no pending tax examination or audit
of, nor any action, suit, investigation or claim asserted
or, to the knowledge of XXXX.XXX, threatened against
XXXX.XXX by any federal, state or local authority; and
XXXX.XXX has not requested or been granted any extension
of the limitation period applicable to any tax claims.
(b) XXXX.XXX has complied with all applicable laws, rules and
regulations relating to the payment and withholding of
taxes and has timely withheld from employee wages and
paid over to the proper governmental authorities all
amounts required to be so withheld and paid over. No
agreements have been made by XXXX.XXX to waive the
statute of limitations for the assessment or payment of
any taxes. To the knowledge of XXXX.XXX, XXXX.XXX has
not committed any violation of any federal, state or
local tax laws.
3.18 Tax Reorganization. XXXX.XXX has neither taken nor failed to
take any action which would prevent the Merger from being treated
as a tax-free merger under Section 721 of the Code, or the Merger
from constituting a reorganization within the meaning of Section
368(a)(1)(A) of the Code.
3.19 Title to and Conditions of Assets. XXXX.XXX is the sole legal
and beneficial owner of the personal property used in operating its
business, including (i) all personal property reflected in the
XXXX.XXX Financial Statements; and (ii) all personal property
acquired pursuant to the UWantCash Agreement. All such personal
property is owned by XXXX.XXX free and clear of all liens, security
interests, charges and encumbrances, except as disclosed in the
XXXX.XXX Financial Statements. XXXX.XXX owns no real property, but
is in lawful possession of the real estate it leases. XXXX.XXX is
in material compliance with respect to all leases of real estate
entered into for the conduct of its business. All equipment owned
or leased by XXXX.XXX performs the respective functions they are
supposed to perform and are in good working order, ordinary wear
and tear accepted. The inventory of XXXX.XXX is, in the aggregate,
of a quality and quantity customarily used in the ordinary course
of business. All URL addresses, trademarks, service marks, trade
names, inventions, patents, processes, copyrights and applications
therefore, registered or at common law (collectively, the
"Intellectual Property") used by XXXX.XXX in its business are owned
by XXXX.XXX as the sole legal and beneficial owner of such
Intellectual Property. No proceedings have been instituted or
pending or, to the knowledge of XXXX.XXX, threatened which
challenge the validity of the ownership or use by XXXX.XXX of any
such Intellectual Property. XXXX.XXX has not licensed any
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third party to use any such Intellectual Property, and XXXX.XXX has
no knowledge of the unlawful use or infringement of any such
Intellectual Property by any other person.
3.20 No Omissions or Misstatements. There is no fact material to
the assets, businesses, liabilities or prospects of XXXX.XXX as a
whole which has not been set forth or described in this Agreement
or in the Exhibits hereto and which is material to the conduct,
prospects, operations or financial condition of XXXX.XXX. None of
the information included in this Agreement and Exhibits hereto, or
other documents furnished or to be furnished by XXXX.XXX contains
any untrue statement of a material fact or is misleading in any
material respect or omits to state any material fact necessary in
order to make any of the statements herein or therein not
misleading in light of the circumstances in which they were made.
Copies of all documents referred to in any Exhibit hereto have been
delivered or made available to Explore and constitute true, correct
and complete copies thereof and include all amendments, exhibits,
schedules, appendices, supplements or modifications thereto or
waivers thereunder.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF EXPLORE
As an inducement to the other parties hereto to enter into this
Agreement and to consummate the Merger, Explore represents and
warrants to XXXX.XXX, which representations and warranties will be
true and correct at Closing, as follows.
4.01 Organization, Qualification and Authority. Explore is a
corporation duly organized, validly existing and in good standing
in the State of Nevada, and is not required to be qualified to do
business as a foreign corporation in any other jurisdiction.
Explore does not own stock or equity interest in and does not
control, directly or indirectly, any corporation, partnership,
joint venture, association or business organization. Since the
date of its organization and incorporation or formation, Explore
has consistently observed and operated within the corporate
formalities of the jurisdictions in which it is organized and/or
conducts its business, has consistently observed and complied with
the general corporation law of such jurisdictions and has been duly
qualified to do business as a foreign corporation in all relevant
jurisdictions. Explore has the full right, power and authority to
own, lease and operate its properties and assets as presently
owned, leased and operated and to carry on its business as it is
now being conducted. Subject to obtaining requisite approval of the
shareholders of Explore, Explore has the full right, power and
authority to execute, deliver and carry out the terms of this
Agreement and all documents and agreements necessary to give effect
to the provisions of this Agreement, to consummate the transactions
contemplated on the part of Explore hereby, and to take all actions
necessary to permit or approve the actions of Explore taken in
connection with this Agreement. Subject to obtaining requisite
approval of the shareholders of Explore, the execution, delivery
and consummation of this Agreement and all other agreements and
documents executed in connection herewith by Explore have been duly
authorized by all necessary corporate action on the part of
Explore, respectively. No other action on the part of Explore, or
any other person or entity is necessary to authorize the execution,
delivery and consummation of this Agreement and all other
agreements and documents executed in connection herewith, other
than such shareholder approval. This Agreement and all other
agreements and documents executed in connection herewith by Explore
and, upon due
12
execution and delivery thereof, will constitute the
valid and binding obligations of Explore, enforceable in accordance
with their respective terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and by general principles of equity.
4.02 Capitalization and Stock Ownership.
(1) Common Stock. The authorized capital stock of Explore
(the "Explore Common Stock") consists of 25,000,000
shares, $0.001 par value, of common stock, of which
6,050,000 shares are issued and outstanding as of the
date hereof. The Explore Common Stock constitutes all
current issued and outstanding securities of Explore, and
are duly authorized, validly issued, fully paid and non-
assessable. The Explore Common Stock is not subject to
preemptive or comparable rights. The Explore Common
Stock and all other currently or previously outstanding
securities of Explore have been issued in accordance with
all applicable federal, state and foreign securities
laws.
(2) Other Securities. Explore does not have any existing
options, warrants, calls, subscriptions, stock
appreciation rights or other rights or agreements or
commitments obligating Explore to issue, transfer or sell
any capital stock or any other security convertible into
or evidencing the right to subscribe for any such
security.
(3) Explore Common Stock. On the Closing Date, Explore will
have a sufficient number of authorized but unissued
and/or treasury shares of Explore Common Stock available
for issuance to the XXXX.XXX Stockholders in accordance
with the provisions of this Agreement. The Explore
Common Stock to be issued as Merger Consideration
pursuant to the Agreement will, when so delivered, be
duly and validly issued in accordance with all applicable
federal and state securities laws, will be exempt from
registration requirements of the 1933 Act and state "blue
sky" laws, will be fully paid and non-assessable, and
will be free and clear of preemptive or comparable
rights.
4.03 Absence of Default. The execution, delivery and consummation
of this Agreement, and all other agreements and documents executed
in connection herewith by Explore will not constitute a violation
of, be in conflict with, or, with or without the giving of notice
or the passage of time, or both, result in a breach of, constitute
a default under, or create (or cause the acceleration of the
maturity of) any debt, indenture, obligation or liability or result
in the creation or imposition of any security interest, lien,
charge or other encumbrance upon any of the assets of Explore
under: (a) any term or provision of the Charter or Bylaws of
Explore; (b) any material contract, lease, purchase order,
agreement, document or other commitment, oral or written, to which
Explore is a party or by which Explore is bound (collectively the
"Explore Contracts") (for purposes of categorizing contracts,
"material" being defined to exclude any contract, lease, purchase
order, agreement, document or commitment which both (y) in terms of
payments, costs, services or other measure does not exceed
$10,000.00 in the aggregate and (z) is terminable without penalty
upon ninety (90) days' written notice or less); (c) any judgment,
decree, order, writ, injunction or rule of
13
any court or regulatory authority; or (d), to the knowledge of Explore,
any law, statute, rule or regulation to which Explore is subject.
4.04 Litigation. There are no lawsuits, proceedings, actions,
arbitrations, governmental investigations, claims, inquiries or
proceedings pending or, to the knowledge of Explore, threatened
involving Explore and Explore knows of no basis for any lawsuits,
proceedings, actions, arbitrations, governmental investigations,
claims, inquiries or proceedings involving Explore.
4.05 SEC Information. Explore Stock is traded only on the NASD
O.T.C. Bulletin Board. Explore has provided to XXXX.XXX true and
complete copies, as filed with the Securities Exchange Commission
("SEC"), of Explore's Form 10-SB registration statement, Quarterly
Reports on Form 10-QSB (or other form) for the fiscal quarters
ending July 31, 1999 and October 31, 1999 and Annual Report on Form
10-KSB for the fiscal year ending January 31, 2000 (the "Explore
Public Reports"). Each of the Explore Public Reports, at the time
it was filed with the appropriate authorities or otherwise issued
or distributed, was prepared, filed and distributed timely and in
accordance in all material respects with the applicable rules and
regulations of such authorities and applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
and did not, at the time they were so filed or mailed, contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading. As of their respective dates,
the financial statements of Explore contained in the Explore Public
Reports (the "Explore Financial Statements") were prepared in
accordance with, and complied as to form in all material respects
with, applicable accounting requirements and with the published
rules and regulations of the applicable authorities with respect
thereto, were prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the
periods indicated except to the extent required by changes in
generally accepted accounting principles and as may be indicated in
the notes thereto and fairly presented the consolidated balance
sheet and the consolidated assets, liabilities and financial
position of Explore as at the dates thereof and the consolidated
results of operations and cash flows of Explore for the periods
then ended. There is no fact material to the assets, businesses,
liabilities or prospects of Explore as a whole which has not been
set forth or described the Explore Public Reports, in this
Agreement or in the Exhibits hereto and which is material to the
conduct, prospects, operations or financial condition of Explore.
4.06 Environmental Matters.
(a) Hazardous Substances. As used in this Section, the term
"Hazardous Substances" means any hazardous or toxic
substances, materials or wastes, including but not limited to
those substances, materials, and wastes defined in Paragraph
101 of the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA"), listed in
the United States Department of Transportation Table (49 CFR
172.101) or by the Environmental Protection Agency as
hazardous substances pursuant to 40 CFR Part 302, or which are
regulated under any other Environmental Law (as such term is
defined herein), and any of the following: hydrocarbons,
petroleum and petroleum products, asbestos, polychlorinated
14
biphenyls, formaldehyde, radioactive substances (other than
naturally occurring materials in place), flammables and
explosives.
(b) Compliance with Laws and Regulations. All operations or
activities of Explore on, and any use or occupancy by Explore
of, the real estate necessary to operate the business of
Explore are in material compliance with any and all laws,
regulations, orders, codes, judicial decisions, decrees,
licenses, permits and other applicable requirements of
governmental authorities with respect to Hazardous Substances,
pollution or protection of human health and safety
(collectively, "Environmental Law"), including but not limited
to the release, emission, discharge, storage and removal of
Hazardous Substances. To the knowledge of Explore, without
inquiry, all prior owners, operators and occupants of such
real estate complied with Environmental Law. Explore is not
aware of any pending or threatened claim, lawsuit,
investigation or inquiry regarding non-compliance with
Environmental Law pertaining to the operations of, or real
estate leased by, Explore.
ARTICLE V. COVENANTS OF PARTIES PENDING CLOSING
5.01 Proxy Statement/Prospectus.
(a) As soon as practicable after the execution of this
Agreement, XXXX.XXX and Explore shall mutually cooperate
in jointly preparing and filing with the United States
Securities and Exchange Commission (the "Commission") of
a proxy statement and prospectus on the appropriate form
of registration statement required under the Securities
Act of 1933 (the "Proxy Statement/Prospectus"). The Proxy
Statement/Prospectus shall constitute a disclosure
document for the offer and issuance of the shares of
Explore Common Stock to be received by the holders of the
capital stock of XXXX.XXX in the Merger and for the other
transactions contemplated by this Agreement. As promptly
as practicable after comments, if any, are received from
the Commission with respect to such Proxy
Statement/Prospectus and after the furnishing by XXXX.XXX
and Explore of all information required to be contained
therein, XXXX.XXX and Explore shall prepare and file with
the Commission the Registration Statement, in which the
Proxy Statement/Prospectus shall be included, in
connection with the registration under the Securities Act
of the shares of Explore Common Stock to be issued to the
holders of the capital stock of XXXX.XXX pursuant to the
Merger. Explore and XXXX.XXX shall use all reasonable
efforts to have or cause the Registration Statement to
become effective as promptly as practicable, and shall
take all or any action required under any applicable
federal or state securities laws in connection with the
issuance of Explore Common Stock pursuant to the Merger.
As promptly as practicable after the Registration
Statement shall have become effective, Explore and
XXXX.XXX shall each mail or cause to be mailed the Proxy
Statement/Prospectus to their respective stockholders.
(b) Explore and XXXX.XXX shall each use its best efforts to
cause the Proxy
15
Statement/Prospectus to comply with
applicable federal and state securities laws
requirements. Each of Explore and XXXX.XXX agrees to
provide promptly to the other such information concerning
its business and financial statements and affairs as, in
the reasonable judgment of the providing party or its
counsel, may be required or appropriate for inclusion in
the Proxy Statement/Prospectus, or in any amendments or
supplements thereto, and to cause its counsel and
auditors to cooperate with the other's counsel and
auditors in the preparation of the Proxy
Statement/Prospectus. The information supplied by each of
Explore and XXXX.XXX for inclusion in the Proxy
Statement/Prospectus and Registration Statement shall
not, at (i) the time the Registration Statement is
declared effective, (ii) the time the Proxy
Statement/Prospectus is first mailed to the holders of
capital stock of XXXX.XXX, (iii) the time of the XXXX.XXX
Stockholders' Meeting, (iv) the time of the Explore
Stockholders' meeting, and (v) the Effective Time,
contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein
or necessary in order to make the statements therein not
misleading. XXXX.XXX will promptly advise Explore, and
Explore will promptly advise XXXX.XXX, in writing if at
any time prior to the Effective Time either XXXX.XXX or
Explore shall obtain knowledge of any facts that might
make it necessary or appropriate to amend or supplement
the Proxy Statement/Prospectus in order to make the
statements contained or incorporated by reference therein
not misleading or to comply with applicable law.
(c) The Proxy Statement/Prospectus shall contain the
unanimous recommendation of the Board of Directors of
XXXX.XXX that the XXXX.XXX stockholders approve the
Merger and this Agreement and the conclusion of the Board
of Directors that the terms and conditions of the Merger
are fair and reasonable to the stockholders of XXXX.XXX.
The Proxy Statement/Prospectus shall contain the
unanimous recommendation of the Board of Directors of
Explore that the Explore stockholders approve the
issuance of Common Stock to the XXXX.XXX stockholders and
this Agreement and the conclusion of the Board of
Directors that the terms and conditions of the Merger are
fair and reasonable to the stockholders of Explore.
Anything to the contrary contained herein
notwithstanding, XXXX.XXX shall not include in the Proxy
Statement/Prospectus any information with respect to
Explore or its affiliates or associates, the form and
content of which information shall not have been approved
by Explore prior to such inclusion. Anything to the
contrary contained herein notwithstanding, Explore shall
not include in the Proxy Statement/Prospectus any
information with respect to XXXX.XXX or its affiliates or
associates, the form and content of which information
shall not have been approved by XXXX.XXX prior to such
inclusion.
5.02 Stockholder Meetings.
(a) Promptly after the date hereof, XXXX.XXX will take all
action necessary in accordance with the California Law
and its Certificate of Incorporation and
16
Bylaws to convene the XXXX.XXX Stockholders' Meeting to be
held as promptly as practicable, and in any event (to the extent
permissible under applicable law) within fifteen (15)
days after the declaration of effectiveness of the
Registration Statement, for the purpose of voting upon
this Agreement and the Merger or the issuance of shares
of Explore Common Stock pursuant to the Merger,
respectively. XXXX.XXX will use its commercially
reasonable efforts to solicit from its stockholders
proxies in favor of the adoption and approval of this
Agreement and the approval of the Merger and will take
all other action necessary or advisable to secure the
vote or consent of its stockholders required by
California Law to obtain such approvals. Notwithstanding
anything to the contrary contained in this Agreement,
XXXX.XXX may adjourn or postpone XXXX.XXX Stockholders'
Meeting to the extent necessary to ensure that any
necessary supplement or amendment to the Proxy
Statement/Prospectus is provided to XXXX.XXX's
stockholders in advance of a vote on the Merger and this
Agreement or, if as of the time for which XXXX.XXX
Stockholders' Meeting is originally scheduled (as set
forth in the Proxy Statement/Prospectus) there are
insufficient shares of XXXX.XXX capital stock represented
(either in person or by proxy) to constitute a quorum
necessary to conduct the business of the XXXX.XXX's
Stockholders' Meeting. XXXX.XXX shall ensure that the
XXXX.XXX Stockholders' Meeting is called, noticed,
convened, held and conducted and that all proxies
solicited by the XXXX.XXX in connection with the XXXX.XXX
Stockholders' Meeting are solicited, in compliance with
the California Law, its Certificate of Incorporation and
Bylaws, and all other applicable legal requirements.
(b) Promptly after the date hereof, Explore will take all
action necessary in accordance with the Nevada Statute
and its Certificate of Incorporation and Bylaws to
convene the Explore Stockholders' Meeting to be held as
promptly as practicable, and in any event (to the extent
permissible under applicable law) within fifteen (15)
days after the declaration of effectiveness of the
Registration Statement, for the purpose of voting upon
this Agreement and the Merger and the issuance of shares
of Explore Common Stock pursuant to the Merger,
respectively. Explore will use its commercially
reasonable efforts to solicit from its stockholders
proxies in favor of the adoption and approval of this
Agreement and the approval of the Merger and will take
all other action necessary or advisable to secure the
vote or consent of its stockholders required by Nevada
Law to obtain such approvals. Notwithstanding anything to
the contrary contained in this Agreement, Explore may
adjourn or postpone Explore Stockholders' Meeting to the
extent necessary to ensure that any necessary supplement
or amendment to the Proxy Statement/Prospectus is
provided to Explore's stockholders in advance of a vote
on the Merger and this Agreement or, if as of the time
for which Explore Stockholders' Meeting is originally
scheduled (as set forth in the Proxy
Statement/Prospectus) there are insufficient shares of
Explore capital stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the
business of the Explore's Stockholders' Meeting. Explore
shall ensure that the Explore Stockholders' Meeting is
called, noticed, convened, held and conducted that
17
all proxies solicited by the Explore in connection with the
Explore Stockholders' Meeting are solicited, in
compliance with the Nevada Law, its Certificate of
Incorporation and Bylaws, and all other applicable legal
requirements.
5.03 Preservation of Business and Assets. From the date hereof
until the Closing, each of Explore and XXXX.XXX will use its best
efforts and will do or cause to be done all such acts and things as
may be necessary to preserve, protect and maintain intact the
operation of its business and assets as a going concern consistent
with prior practice and not other than in the ordinary course of
business, including preserving, protecting and maintaining the
goodwill of its suppliers, employees, clientele, patients and
others having business relations with each party. Each party will
use its best efforts to retain its employees in their current
positions up to Closing. Through Closing, neither party will
acquire or sell or agree to acquire or sell by merging or
consolidating with, or by purchasing or selling a substantial
equity interest in or a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership,
association or other business organization or division thereof.
Each party will use its best efforts to facilitate the consummation
of the Merger as contemplated hereunder, including obtaining
requisite approval of stockholders. Through Closing and except as
contemplated by this Agreement, neither party will issue, deliver
or sell, or authorize or propose to issue, deliver or sell, any
shares of its capital stock of any class, any voting securities or
any securities convertible into, or any rights, warrants or options
to acquire, any such shares, voting securities or convertible
securities. Through Closing, neither party will split, combine or
reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or
repurchase, redeem or otherwise acquire any shares of its capital
stock. From the date hereof until the Closing, neither party will
pay any dividend or distribution to its stockholders as such, and
neither party will sell, discard or dispose of any of its assets.
5.04 Material Transactions. Except as contemplated by this
Agreement, prior to the Effective Time, neither party will, without
first obtaining the written consent of the other party:
(1) dispose of or encumber any asset or enter into any
transaction or make any contract commitment relating to
the properties, assets and business of such entity, other
than in the ordinary course of business or as otherwise
disclosed herein;
(2) enter into any employment contract which is not at will
or terminable upon notice of thirty (30) days or less,
without penalty;
(3) enter into any contract or agreement (i) which cannot be
performed within three months or less, or (ii) which
involves the expenditure of over $10,000.00;
(4) except as stipulated herein, issue or sell, or agree to
issue or sell, any shares of capital stock or other
securities of such entity;
18
(5) make any payment or distribution under any bonus,
pension, profit-sharing or retirement plan or incur any
obligation to make any such payment or contribution which
is not in accordance with such entities usual past
practice, or make any payment or contributions or incur
any obligation pursuant to or in respect of any other
plan or contract or arrangement of providing for bonuses,
executive incentive compensation, pensions, deferred
compensation, retirement payments, profit-sharing or the
like, establish or enter into any such plan, contract or
arrangement, or terminate any plan;
(6) extend credit to anyone except in the ordinary course of
business consistent with prior practice;
(7) guarantee the obligation of any person, firm or
corporation;
(8) amend its operating agreement, charter or bylaws, or
applicable organizational documents;
(9) set aside or pay any cash dividend or any other
distribution on or in respect of its capital stock or any
redemption, retirement or purchase with respect to its
capital stock or issue any additional shares of its
capital stock; or engage in any stock split,
recapitalization, reorganization or comparable
transaction;
(10) discharge or satisfy any lien, charge, encumbrance or
indebtedness outside the ordinary course of business;
(11) institute, settle or agree to settle any litigation,
action or proceeding before any court or governmental
body;
(12) authorize any compensation increase of any kind
whatsoever for any employee, consultant or other
representative; or
(13) engage in any extraordinary transaction.
5.05 Legal Conditions to Merger. Each party hereto will take all
reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to the Merger
and will promptly cooperate with and furnish information to each
other party in connection with any such requirements imposed upon
either or any of them in connection with the Merger.
5.06 Preserve Accuracy of Representations and Warranties. Each
party hereto will refrain from taking any action which would render
any of its representations and warranties contained in this
Agreement untrue, inaccurate or misleading as of Closing and the
Effective Time. Through Closing, each party will promptly notify
the other parties of any lawsuit, claim, audit, investigation,
administrative action or other proceeding asserted or commenced
against such party that may involve or relate in any way to another
party to this Agreement. Each party hereto will promptly notify
the other parties of any facts or circumstances that come to its
attention and that cause, or through the passage of time
19
may cause, any of a party's representations, warranties or covenants
to be untrue or misleading at any time from the date hereof through
Closing.
5.07 Notice of Subsequent Events. Each party hereto shall notify
the other parties of any changes, additions or events of which it
has knowledge which would cause any material change in or material
addition to this Agreement (including but not limited to the
Exhibits attached hereto and thereto) promptly after occurrence of
the same. If the effect of such change or addition would,
individually or in the aggregate with the effect of changes or
additions previously disclosed pursuant to this Section, constitute
a material adverse effect on the notifying party, any non-notifying
party may, within ten (10) days after receipt of such notice, elect
to terminate this Agreement. If no non-notifying party gives
written notice of such termination with such 10-day period, the
non-notifying parties shall be deemed to have consented to such
change or addition and shall not be entitled to terminate this
Agreement by reason thereof.
5.08 Current Return Filing. Each party will be responsible for the
preparation and filing of all of such party's own tax returns which
were due on or before the Closing, and the payment of all taxes
due.
5.09 Maintain Books and Accounting Practices. From the date hereof
until the Closing, each party will maintain its books of account in
the usual, regular and ordinary manner on a basis consistent with
prior years and will make no change in its accounting methods or
practices.
5.10 Compliance with Laws and Regulatory Consents. From the date
hereof until the Closing, (a) each party will comply with all
applicable statutes, laws, ordinances and regulations, (b) each
party will keep, hold and maintain all Licenses, (c) each party
will use its reasonable efforts and will cooperate fully with the
other parties hereto to obtain all consents, stockholder and other
approvals, exemptions and authorizations of third parties, whether
governmental or private, necessary to consummate the Merger, and
(d) each party will make and cause to be made all filings and give
and cause to be given all notices which may be necessary or
desirable on their part under all applicable laws and under their
respective contracts, agreements and commitments in order to
consummate the Merger.
ARTICLE VI. CLOSING
6.01 Closing Deliveries. At Closing, the parties hereto will
deliver or cause to be delivered the following, fully executed and
in form and substance reasonably satisfactory to the receiving
party(ies):
(1) XXXX.XXX will deliver to Explore stock certificates of
XXXX.XXX, duly endorsed by the XXXX.XXX Stockholders or
with stock powers attached, representing all of the
issued and outstanding shares of XXXX.XXX Common Stock.
20
(2) Explore will deliver to the XXXX.XXX Stockholders'
certificates representing the shares of Explore Common
Stock comprising the Merger Consideration set forth in
Article II.
(3) Explore will pay Peacekeeper and Xxxx Xxxxxxxx the
principal amount of $500,000 as full and final repayment
of all liabilities and obligations under the XXXX.XXX
Promissory Note.
(4) Each will deliver to the other parties a certificate of
an officer, dated as of Closing, certifying that (a) each
covenant and obligation of the delivering party has been
complied with, and (b) each representation, warranty and
covenant of the delivering party is true and correct at
the Closing as if made on and as of the Closing.
(5) Each party will deliver an opinion of its legal counsel,
in form and substance reasonably acceptable to the
receiving party(ies).
(6) Each party will deliver the Certificates of Merger in
form acceptable for filing with the applicable
Secretaries of State.
(7) Each party shall deliver such customary certificates of
its officers and such other customary closing
documentation as may be reasonably requested by the other
parties, including without limitation:
(i) Certificates of Existence and/or "Good Standing"
regarding the delivering party and its subsidiaries,
certified by the appropriate Secretary of State and
dated within (10) business days of Closing;
(ii) Incumbency Certificates certifying the identity of
the officers of the delivering party and its
subsidiaries; and
(iii) Charters, Operating Agreement or Certificates of
Incorporation, as certified by the appropriate
Secretary of State within ten (10) business days of
Closing, and Bylaws, as certified by an appropriate
officer as of Closing, of the delivering party and
its subsidiaries.
(8) Explore will deliver evidence of the appointment of
Xxxxxx Xxxxxxx, Xxx Xxx and Xxxxx Xxxxxx to the board of
directors of Explore and the resignations of Xxxxx Xxxx,
Xxxx Xxxxxx-Xxxx and Xxxx Xxxxxx as directors of Explore.
ARTICLE VII. CONDITIONS TO CLOSING
7.01 Conditions to Each Party's Obligation to Effect the Merger.
The obligation of each party hereto to effect the Merger shall be
subject to the fulfillment at or prior to the Closing of the
following conditions:
21
(1) This Agreement and the transactions contemplated
hereunder shall have been approved by shareholders of
XXXX.XXX in the manner required by the applicable laws of
the State of California and the Charter and Bylaws of
XXXX.XXX.
(2) This Agreement and the transactions contemplated
hereunder shall have been approved by shareholders of
Explore in the manner required by the applicable laws of
the State of Nevada and the Charter and Bylaws of
Explore.
(3) Each party hereto shall have received from the other
parties copies of all resolutions and/or consent actions
adopted by or on behalf of the boards of directors and
shareholders of such other parties hereto, certified as
of the date of Closing and evidencing approval of this
Agreement and the transactions contemplated hereunder.
(4) No action or proceeding before a court or other
governmental body by any governmental agency or public
authority shall have been instituted or threatened to
restrain or prohibit the transactions contemplated under
this Agreement or to obtain an amount of damages or other
material relief in connection with the execution of this
Agreement or any related agreements or the consummation
of the Merger; and no governmental agency shall have
given notice to any party hereto to the effect that
consummation of the transactions contemplated under this
Agreement would constitute a violation of any law or that
it intends to commence proceedings to restrain
consummation of the Merger.
(5) All consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental
commission, board or other regulatory body or any other
third party (including lenders and lessors) required in
connection with the execution, delivery and performance
of this Agreement shall have been obtained or made.
(6) The Registration statement shall have become effective in
accordance with the provisions of the Securities Act, and
no stop order shall have been issued by the Commission
with respect to the Registration Statement.
(7) Explore will have received all required state securities
or "Blue Sky" permits and authorizations necessary to
issue shares of Explore Common Stock pursuant to the
Merger, including any permit required by the California
Department of Corporations.
7.02 Further Conditions to Obligation of Explore to Effect the
Merger. The obligation of Explore to effect the Merger shall also
be subject to the fulfillment at or prior to the Closing of the
following conditions:
(1) XXXX.XXX shall have performed its obligations contained
in this Agreement required to be performed on or prior to
the Closing, including delivery of the
22
closing items set forth in Section 6.01, and the representations
and warranties of XXXX.XXX contained in this Agreement and in
any document delivered in connection herewith shall be
true and correct as of the Closing.
(2) The XXXX.XXX Stockholders will have approved the Merger
by no later than September 1, 2000.
(3) Explore and its representatives shall have had reasonable
access of inspection of the business of XXXX.XXX in
connection with Explore's due diligence review, and the
results of Explore's inspection and due diligence review
shall be acceptable to it. Further, should any such due
diligence reveal a matter reasonably related to any
representation, warranty or covenant herein or any
exhibit hereto, Explore may require appropriate
amendment(s) to address such matter.
(4) XXXX.XXX will have delivered to Explore audited financial
statements for the period ending March 31, 2000 by no
later than June 10, 2000, which financial statements will
not show any material adverse changes from the audited
financial statements of Xxxxxxxxxxx.xxx as a division of
Peacekeeper for the period ending December 31, 1999 and
which will not show any material transactions except the
transactions referred to in this Agreement.
(5) Explore will have amended the existing office
administration services agreement between Explore and
Senate Capital to provide for a minimum term of one year
from the date of closing with a fee equal to $6,000 US
per month.
7.03 Further Conditions to Obligation of XXXX.XXX to Effect the
Merger. The obligations of XXXX.XXX to effect the Merger shall
also be subject to the fulfillment at or prior to the Closing of
the following conditions:
(1) Explore shall have performed its obligations contained in
this Agreement, required to be performed on or prior to
the Closing, including delivery of the closing items set
forth in Section 6.01, and the representations and
warranties of Explore contained in this Agreement and in
any document delivered in connection herewith shall be
true and correct as of the Closing.
(2) The Explore shareholders shall have properly approved of
the Merger by September 1, 2000.
(3) XXXX.XXX and its representatives shall have had
reasonable access of inspection of the business of
Explore in connection with XXXX.XXX's due diligence
review, and the results of XXXX.XXX's inspection and due
diligence review shall be acceptable to it. Further,
should any such due diligence reveal a matter reasonably
related to any representation, warranty or covenant
herein or any exhibit hereto, XXXX.XXX may require
appropriate amendment(s) to address such matter.
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(4) The directors or officers of Explore will consist of the
following persons upon completion of the Merger:
Directors Officers
--------- --------
Xxxxxx Xxxxxxx Chief Executive Officer
Xxx Xxx President
Xxxxx Xxxxxx Secretary
(5) Explore will have completed a private placement or public
financing of its common stock in which Explore has raised
total proceeds in an amount of at least $2,500,000 within
fifteen (15) days from the date of this Agreement,
provided that XXXX.XXX acknowledges and agrees that
Explore may be required to register the common stock to
be issued on closing of the financing. XXXX.XXX
acknowledges and agrees that Explore may, at its option,
register the common stock to be issued or grant
registration rights and that Explore may register this
common stock on the registration statement filed with the
SEC to register the common stock of Explore to be issued
the shareholders of XXXX.XXX on completion of the Merger
or on a separate registration statement filed with the
SEC.
ARTICLE VIII. INTERIM LOANS AND SENATE CAPITAL
8.01 Interim Loans. Explore agrees to make loan advances to
XXXX.XXX during the period from the date of this Agreement to the
Closing Date from the proceeds of the private placement
contemplated in Section 7.03(5) of this Agreement on the following
terms and subject to the following conditions:
(a) all advances will accrue interest at a rate equal to
10% per annum until paid in full. Interest will be
paid on all unpaid interest. All interest will be
compounded monthly;
(b) each advance will be evidenced by a promissory note
executed by XXXX.XXX, which promissory note will be
delivered to Explore prior to the date of the
advance;
(c) all advances will be secured by a first priority
general security agreement granted by XXXX.XXX
against all property and assets of XXXX.XXX.
XXXX.XXX will execute all documentation required in
order to perfect Explore's security prior to any
advance;
(d) all advances will be applied to the development of
the XXXX.XXX Business in accordance with the pro
forma statement of cash flows attached as Schedule
8.01 to this Agreement, provided that no advances
will be applied to the items denoted "Acquisition of
24
CashSurfers" and "Acquisition Cost - Sellers" on the
pro forma statement. Advances will be made on the
following schedule:
a. $1,060,000 within three days of the closing of
the private placement referred to Section
7.03(5) or as soon as funds are in the Explore
treasury, whichever is sooner;
b. $450,000 on the date which is forty five (45)
days from the date of this Agreement;
c. $350,000 on the date which is seventy five (75)
days from the date of this Agreement;
(e) all advances to XXXX.XXX will remain outstanding in
the event of termination of this Agreement for any
reason and will be evidenced by the promissory notes
executed by XXXX.XXX in favor of Explore, each of
which will survive termination and continue as an
enforceable obligation of XXXX.XXX.
8.02 Senate Capital. Explore will make payment of the amount of
$72,000 US to Senate Capital as payment in advance under the
amended management services agreement between Explore and Senate
Capital within three days of the closing of the private placement
referred to Section 7.03(5).
ARTICLE IX. TERMINATION; AMENDMENT; EXTENSION AND WAIVER
9.01 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, before or after the approval of this Agreement by
the shareholders of XXXX.XXX and/or Explore, by the mutual consent
of the Boards of Directors of XXXX.XXX and Explore.
9.02 Termination by Certain Parties. Any party hereto may
terminate this Agreement at any time, if entitled to terminate, in
accordance with Section 5.07. This Agreement may be terminated and
the Merger may be abandoned by action of the Board of Directors of
XXXX.XXX or Explore if (a) the Merger shall not have been
consummated by September 30, 2000; (b) the approval of the Merger
by XXXX.XXX's shareholders shall not have been obtained by
September 1, 2000; (c) the approval of the Merger by Explore's
shareholders shall not have been obtained by September 1, 2000 at a
meeting duly convened therefor or at any adjournment thereof; or
(d) a United States federal or state court of competent
jurisdiction or United States federal or state governmental,
regulatory or administrative agency or commission shall have issued
an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable; provided,
that the party seeking to terminate this Agreement pursuant to this
clause (d) shall have used all reasonable efforts to remove such
injunction, order or decree.
9.03 Termination by Explore. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective
Time, before or after the adoption and approval by the shareholders
of Explore, by action by the Board of Directors of Explore, if
25
(a) there has been a breach by XXXX.XXX of any representation or
warranty contained in this Agreement which would have or would be
reasonably likely to have a material adverse effect on the
operations of XXXX.XXX; or (b) there has been a breach of any of
the covenants or agreements set forth in this Agreement on the part
of XXXX.XXX, which breach is not curable or, if curable, is not
cured within thirty (30) days after written notice of such breach
is given by Explore to XXXX.XXX.
9.04 Termination by XXXX.XXX. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time
by action of the Board of Directors of XXXX.XXX, if (a) there has
been a breach by Explore of any representation or warranty
contained in this Agreement which would have or would be reasonably
likely to have a material adverse effect on the operations of
Explore, or (b) there has been a breach of any of the covenants or
agreements set forth in this Agreement on the part of Explore,
which breach is not curable or, if curable, is not cured within
thirty (30) days after written notice of such breach is given by
XXXX.XXX to Explore.
9.05 Effect of Termination and Abandonment. Upon termination of
this Agreement pursuant to Section 5.07 or this Article IX, this
Agreement and all agreements and documents (including legal
opinions) related hereto, other than the promissory notes executed
by XXXX.XXX in favor of Explore pursuant to Section 8.01 of this
Agreement, shall be void and of no force or effect, and there shall
be no liability by reason of this Agreement or the termination
thereof on the part of any party hereto, or on the part of the
respective directors, officers, managers, employees, agents,
representatives or shareholders of any of them; provided that this
Section 9.05 will not relieve any party from liability for damages
incurred as a result of any willful breach by such party or by an
affiliate of such party of any of its respective representations,
warranties, covenants or obligations set forth in this Agreement.
9.06 Amendment. This Agreement may be amended by the parties at any
time before or after any required approval of matters presented in
connection with the Merger by the Explore shareholders or the
XXXX.XXX Stockholders; provided, that any amendments requiring the
approval of the Explore shareholders or the Original XXXX.XXX
Stockholders will not become effective until the amendment is
approved by said holders. This Agreement may not be amended except
by an instrument in writing signed on behalf of all the parties
hereto.
9.07 Extension; Waiver. At any time prior to the Effective Time,
any party hereto, by action taken by its Board of Directors
evidenced in writing, may, to the extent legally allowed, (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 made to such party contained
herein or in any document delivered pursuant hereto, and (c) waive
compliance with any of the agreements or conditions for the benefit
of such party 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.
26
ARTICLE X. SURVIVAL OF PROVISIONS AND INDEMNIFICATION
10.01 Survival. The covenants, obligations, representations
and warranties of each party contained in this Agreement, or in any
certificate or document delivered pursuant to this Agreement, will
be deemed to be material and to have been relied upon by the other
parties notwithstanding any investigation prior to the Closing,
will not be merged into any documents delivered in connection with
the Closing, and will terminate two (2) years after Closing. The
indemnification obligations will not expire with respect to such
claim(s) until the same are resolved as contemplated hereunder.
10.02 Indemnification by Explore. Subject to the provisions of
Section 10.01, Explore shall indemnify, defend and hold XXXX.XXX
and its officers, directors, employees, agents and representatives
harmless against any and all losses, costs and expenses (including
reasonable cost of investigation, court costs and legal fees
actually incurred) and other damages resulting from any breach by
Explore of any of their covenants, obligations, representations or
warranties or breach or untruth of any representation, warranty,
fact or conclusion contained in this Agreement or any certificate
or document of Explore.
10.03 Indemnification by XXXX.XXX. Subject to the provisions
of Section 10.01, XXXX.XXX shall indemnify, defend and hold Explore
and its respective officers, directors, employees and
representatives harmless against any and all losses, costs and
expenses (including reasonable cost of investigation, court costs
and legal fees actually incurred) and other damages resulting from
(a) any breach by XXXX.XXX of any of its covenants, obligations,
representations or warranties or breach or untruth of any
representation, warranty, fact or conclusion contained in this
Agreement or any certificate or document of XXXX.XXX delivered
pursuant to this Agreement, and (b) any claim that is brought or
asserted by any third party(ies) arising out of the ownership,
licensing, operation or conduct of XXXX.XXX through Closing.
ARTICLE XI. MISCELLANEOUS
11.01 Other Expenses. Except as otherwise provided in this
Agreement, each party will pay all of its expenses in connection
with the negotiation, execution, and implementation of the
transactions contemplated under this Agreement.
11.02 Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this
Agreement will be in writing and will be deemed to have been duly
given: (a) if delivered personally or sent by facsimile, on the
date received, (b) if delivered by overnight courier, on the day
after mailing, and (c) if mailed, five days after mailing with
postage prepaid. Any such notice will be sent as follows:
To XXXX.XXX:
CASHSURFERS, INC.
0000 X Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxx 00000
27
Facsimile: (000) 000-0000
with a courtesy copy to:
Xx. Xxxxxxxxxxx X. Xxxxxxxx
0000-00xx Xxxxxx, #000
Xxxxxxxxxxx, XX 00000
- and to -
Xx. Xxxxxxxxx Xxxxxxxx
XXXXX, XXXXXX
800 - 000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Facsimile: (000) 000-0000
To Explore
EXPLORE TECHNOLOGIES, INC.
Xxxxx 000, 0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Facsimile: (000) 000-0000
with courtesy copies to:
Xxxxxxx X. Xxxxxx Xxxxxxx X. Cane
X'XXXXX & COMPANY CANE & COMPANY, LLC
Xxxxx 0000, Xxxxx Xxxxxx Xxxxx 0000
0000 Xxxx Xxxxxxx Street, Box 11122 000 Xxxxxxxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx Las Vegas, Nevada
Canada V6E 3P3 USA 89109
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
11.03 Prohibition on Trading. XXXX.XXX agrees not to trade in
the securities of Explore based upon any nonpublic information.
11.04 Controlling Law. This Agreement will be construed,
interpreted and enforced in accordance with the substantive laws of
the Province of British Columbia, without giving effect to its
conflicts of laws provisions. All references to any monetary
amounts are in U.S. dollars, except if expressly indicated to the
contrary.
11.05 Headings. Any table of contents and Section headings in
this Agreement are for convenience of reference only and will not
be considered or referred to in resolving questions of
interpretation.
28
11.06 Benefit. This Agreement will be binding upon and will
inure to the exclusive benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns.
No party hereto may assign any rights or delegate any duties
hereunder without the prior written consent of the other parties
hereto and any prohibited assignment or delegation will be deemed
null and void.
11.07 Partial Invalidity. The invalidity or unenforceability
of any particular provision of this Agreement will not affect the
other provisions hereof, and this Agreement will be construed in
all respects as if such invalid or unenforceable provisions were
omitted. Further, there will be automatically substituted for such
invalid or unenforceable provision a provision as similar as
possible which is valid and enforceable.
11.08 Counterparts and Facsimiles This Agreement may be
executed simultaneously in two (2) or more counterparts each of
which will be deemed an original and all of which together will
constitute but one and the same instrument. The signature page to
this Agreement and all other documents required to be executed at
Closing may be delivered by facsimile and the signatures thereon
will be deemed effective upon receipt by the intended receiving
party.
11.09 Interpretation. All pronouns and any variation thereof
will be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the person or entity, or the
context, may require. Further, it is acknowledged by the parties
that this Agreement has undergone several drafts with the
negotiated suggestions of both; and, therefore, no presumptions
will arise favoring either party by virtue of the authorship of any
of its provisions or the changes made through revisions.
11.10 Entire Agreement; Waivers. This Agreement, including the
Exhibits and Attachments hereto and those portions incorporated
herein by reference, constitutes the entire agreement between the
parties hereto with regard to the matters contained herein and it
is understood and agreed that all previous undertakings,
negotiations, letter of intent and agreements between the parties
are merged herein. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise will not
constitute a waiver of such rights. Neither the failure nor any
delay on the part of any party hereto in exercising any rights,
power or remedy hereunder will operate as a waiver thereof or of
any right, power or remedy; nor will any single or partial exercise
of any right, power or remedy preclude any further or other
exercise thereof, or the exercise of any other right, power or
remedy.
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11.11 Legal Fees and Costs. In the event any party hereto
incurs legal expenses to enforce or interpret any provision of this
Agreement, the prevailing party will be entitled to recover such
legal expenses, including, without limitation, attorney's fees,
costs and disbursements, in addition to any other relief to which
such party will be entitled.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and Plan of Merger as of the date first above written.
"XXXX.XXX":
CASHSURFERS, INC.
/s/Xxx Xxx
By: ____________________________
President
Title: __________________________
"EXPLORE":
EXPLORE TECHNOLOGIES, INC.
/s/ Xxxxx Xxxx
By: _____________________________
President
Title: __________________________
