EXCHANGE AGREEMENT
Between
SRM NETWORKS, INC.
and
HY-TECH COMPUTER SYSTEMS, INC.
Dated January 31, 2003
TABLE OF CONTENTS
ARTICLE I REPRESENTATIONS, COVENANTS, AND WARRANTIES OF HY-TECH COMPUTER SYSTEMS
1.01 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.03 Subsidiaries and Predecessor Corporations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.04 Financial Statements
1.05 Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.06 Options and Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.07 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.08 Title and Related Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.09 Litigation and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.11 Material Contract Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 No Conflict With Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.13 Governmental Authorizations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 Compliance With Laws and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.15 Approval of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 Material Transactions or Affiliations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 Hy-Tech Computer Systems Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.18 Valid Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II REPRESENTATIONS, COVENANTS, AND WARRANTIES OF SRM NETWORKS
2.01 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.02 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.03 Subsidiaries and Predecessor Corporations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.04 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.05 Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.06 Options and Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.07 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.08 Title and Related Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.09 Litigation and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.10 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.11 Material Contract Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.12 No Conflict With Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.13 Governmental Authorizations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.14 Compliance With Laws and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.15 Approval of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.16 Continuity of Business Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.17 Material Transactions or Affiliations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.18 SRM Networks Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.19 Valid Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III PLAN OF EXCHANGE
3.01 The Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.02 Anti-Dilution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.03 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.04 Closing Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.05 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV SPECIAL COVENANTS
4.01 Access to Properties and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.02 Delivery of Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.03 Third Party Consents and Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.04 Accredited Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.05 Consent of Hy-Tech Computer Systems Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.06 Designation of Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.07 Exclusive Dealing Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.08 Actions Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.09 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.10 Limitation of Subsequent Corporate Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.11 Indemnification of Subsequent Corporate Actions
4.12 Name Change
4.13 Financial Statements
ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF SRM NETWORKS
5.01 Accuracy of Representations and Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.02 Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.03 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.04 Approval by Hy-Tech Computer Systems Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.05 No Governmental Prohibitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.06 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.07 Other Items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.08 Accredited Status of Hy-Tech Computer Systems
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF HY-TECH COMPUTER SYSTEMS AND THE HY-TECH COMPUTER SYSTEMSSHAREHOLDERS
6.01 Accuracy of Representations and Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.02 Officer's Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.03 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.04 No Governmental Prohibition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.05 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.06 Other Items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII MISCELLANEOUS
7.01 No Bankruptcy and No Criminal Convictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.02 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.03 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.04 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.05 Attorney's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.06 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.07 Public Announcements and Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.08 Schedules; Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.09 Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.12 Survival; Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.14 Amendment or Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.15 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.16 Faxed Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement") is
entered into as of this 31st day of January, 2003 by and between SRM NETWORKS,
INC., a Delaware corporation (hereinafter referred to as the "Company") and
HY-TECH COMPUTER SYSTEMS, INC., a Florida corporation (hereinafter referred to
as "Hy-Tech"), upon the following premises:
Premises
--------
WHEREAS, the Company is a publicly held corporation organized under the
laws of the State of Delaware;
WHEREAS, Hy-Tech is a privately held corporation organized under the laws
of the State of Florida;
WHEREAS, management of the constituent corporations have determined that it
is in the best interest of the parties that the Company acquire 100% of the
issued and outstanding securities of Hy-Tech in exchange for the issuance of
certain shares of the Company (the "Exchange") and Hy-Tech agrees to use its
best efforts to cause its shareholders (the " Hy-Tech Shareholders") to exchange
their securities of Hy-Tech on the terms described herein; and
WHEREAS, the Company and Hy-Tech desire to set forth the terms of the
Exchange, which is intended to constitute a tax-free reorganization pursuant to
the provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986.
Agreement
---------
NOW THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF HY-TECH
As an inducement to, and to obtain the reliance of the Company, except as
set forth on the Hy-Tech Schedules (as hereinafter defined), Hy-Tech represents
and warrants as follows:
Section 1.01 Organization. Hy-Tech is a corporation duly organized,
------------
validly existing, and in good standing under the laws of the State of Florida
and has the corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, including
qualification to do business as a foreign corporation in the states or countries
in which the character and location of the assets owned by it or the nature of
the business transacted by it requires qualification, except where failure to be
so qualified would not have a material adverse effect on its business. Included
in the Hy-Tech Schedules are complete and correct copies of the articles of
incorporation, and bylaws of Hy-Tech as in effect on the date hereof. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of Hy-Tech 's
articles of incorporation or bylaws. Hy-Tech has taken all actions required by
law, its articles of incorporation, or otherwise to authorize the execution and
delivery of this Agreement. Hy-Tech has full power, authority, and legal right
and has taken all action required by law, its articles of incorporation, and
otherwise to consummate the transactions herein contemplated.
Section 1.02 Capitalization. The authorized capitalization of Hy-Tech
--------------
consists of 10,000 shares of common stock, $1.00 par value, of which 5,051
shares are currently issued and outstanding. All issued and outstanding shares
are legally issued, fully paid, and non-assessable and not issued in violation
of the preemptive or other rights of any person.
Section 1.03 Subsidiaries and Predecessor Corporations. Hy-Tech does
------------------------------------------
1
not have any predecessor corporation(s) or subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation, except as
disclosed in Schedule 1.03. For purposes hereinafter, the term "Hy-Tech" also
-------------
includes those subsidiaries, if any, set forth on Schedule 1.03.
--------------
Section 1.04 Financial Statements.
--------------------
(a) Included in the Hy-Tech Schedules are the reviewed Hy-Tech
balance sheet as of December 31, 2000 and December 31, 2001, and the
related statements of operations and cash flows for the period from
January 1, 2000 through December 31, 2001 as well as the unaudited
balance sheet as of December 31, 2002.
(b) Hy-Tech has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any
deficiencies, interest or penalties), except for taxes accrued but not
yet due and payable.
(c) Hy-Tech has filed all state, federal or local income and/or
franchise tax returns required to be filed by it from inception to the
date hereof. Each of such income tax returns reflects the taxes due
for the period covered thereby, except for amounts which, in the
aggregate, are immaterial.
(d) The books and records, financial and otherwise, of Hy-Tech
are in all material respects complete and correct and have been
maintained in accordance with good business and accounting practices.
(e) All of Hy-Tech's assets are reflected on its financial
statements, and, except as set forth in the Hy-Tech Schedules or the
financial statements of Hy-Tech or the notes thereto, Hy-Tech has no
material liabilities, direct or indirect, matured or unmatured,
contingent or otherwise.
Section 1.05 Information. The information concerning Hy-Tech set forth
-----------
in this Agreement and in the Hy-Tech Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading. In addition,
Hy-Tech has fully disclosed in writing to the Company (through this Agreement or
the Hy-Tech Schedules) all information relating to matters involving Hy-Tech or
its assets or its present or past operations or activities which (i) indicated
or may indicate, in the aggregate, the existence of a greater than $25,000
liability or diminution in value, (ii) have led or may lead to a competitive
disadvantage on the part of Hy-Tech or (iii) either alone or in aggregation with
other information covered by this Section, otherwise have led or may lead to a
material adverse effect on the transactions contemplated herein or on Hy-Tech,
its assets, or its operations or activities as presently conducted or as
contemplated to be conducted after the Closing Date, including, but not limited
to, information relating to governmental, employee, environmental, litigation
and securities matters and transactions with affiliates.
Section 1.06 Options or Warrants. There are no existing options,
---------------------
warrants, calls, or commitments of Hy-Tech of any character relating to the
authorized and unissued Hy-Tech common stock, except options, warrants, calls or
commitments, if any, to which Hy-Tech is not a party and by which it is not
bound.
Section 1.07 Absence of Certain Changes or Events. Except as set forth
------------------------------------
in this Agreement or the Hy-Tech Schedules, since December 31, 2002:
(a) there has not been (i) any material adverse change in the
business, operations, properties, assets, or condition of Hy-Tech or
(ii) any damage, destruction, or loss to Hy-Tech (whether or not
covered by insurance) materially and adversely affecting the business,
operations, properties, assets, or condition of Hy-Tech;
(b) Hy-Tech has not (i) amended its articles of incorporation or
bylaws, except to increase the number of authorized shares; (ii)
declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed, or agreed to purchase or
redeem, any of its capital stock; (iii) waived any rights of value
which in the aggregate are outside of the ordinary course of business
or material considering the business of Hy-Tech; (iv) made any
material change in its method of management, operation or accounting;
(v) entered into any other material transaction other than sales in
the ordinary course of its business; (vi) made any accrual or
arrangement for payment of bonuses or special compensation of any kind
or any severance or termination pay to any present or former officer
or employee; (vii) increased the rate of compensation payable or to
become payable by it to any of its officers or directors or any of its
salaried employees whose monthly compensation exceeds $1,000; or
(viii) made any increase in any profit sharing, bonus, deferred
compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement made to, for, or with its
officers, directors, or employees;
2
(c) Hy-Tech has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability
(absolute or contingent) except as disclosed herein and except
liabilities incurred in the ordinary course of business; (ii) paid or
agreed to pay any material obligations or liability (absolute or
contingent) other than current liabilities, and current liabilities
incurred in the ordinary course of business and professional and other
fees and expenses in connection with the preparation of this Agreement
and the consummation of the transactions contemplated hereby; (iii)
sold or transferred, or agreed to sell or transfer, any of its assets,
properties, or rights (except assets, properties, or rights not used
or useful in its business which, in the aggregate have a value of less
than $5,000), or canceled, or agreed to cancel, any debts or claims
(except debts or claims which in the aggregate are of a value of less
than $1,000); or (iv) made or permitted any amendment or termination
of any contract, agreement, or license to which it is a party if such
amendment or termination is material, considering the business of
Hy-Tech; and
(d) To the best knowledge of Hy-Tech, Hy-Tech has not become
subject to any law or regulation which materially and adversely
affects, or in the future may adversely affect the business,
operations, properties, assets, or condition of Hy-Tech.
Section 1.08 Title and Related Matters. Hy-Tech has good and
----------------------------
marketable title to all of its properties, inventory, interests in properties,
and assets, real and personal, or acquired after that date (except properties,
inventory, interests in properties, and assets sold or otherwise disposed of
since such date in the ordinary course of business) free and clear of all liens,
pledges, charges, or encumbrances except (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will not
materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and (c) as described in the
Hy-Tech Schedules. Except as set forth in the Hy-Tech Schedules, Hy-Tech owns,
free and clear of any liens, claims, encumbrances, royalty interests, or other
restrictions or limitations of any nature whatsoever, any and all products it is
currently manufacturing, including the underlying technology and data, and all
procedures, techniques, marketing plans, business plans, methods of management,
or other information utilized in connection with Hy-Tech 's business. Except as
set forth in the Hy-Tech Schedules, no third party has any right to, and Hy-Tech
has not received any notice of infringement of or conflict with asserted rights
of others with respect to any product, technology, data, trade secrets,
know-how, propriety techniques, trademarks, service marks, trade names, or
copyrights which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a materially adverse effect
on the business, operations, financial condition, income, or business prospects
of Hy-Tech or any material portion of its properties, assets, or rights.
Section 1.09 Litigation and Proceedings. Except as set forth in the
----------------------------
Hy-Tech Schedules, there are no actions, suits, proceedings, or investigations
pending or, to the knowledge of Hy-Tech after reasonable investigation,
threatened by or against Hy-Tech or affecting Hy-Tech or its properties, at law
or in equity, before any court or other governmental agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind. Hy-Tech does not
have any knowledge of any material default on its part with respect to any
judgment, order, injunction, decree, award, rule, or regulation of any court,
arbitrator, or governmental agency or instrumentality or of any circumstances
which, after reasonable investigation, would result in the discovery of such a
default. It is acknowledged by the parties that Hy-Tech has provided
information to the Company involving a lawsuit with Sun Trust.
Section 1.10 Contracts.
---------
(a) Except as included or described in the Hy-Tech Schedules,
there are no "material" contracts, agreements, franchises, license
agreements, debt instruments or other commitments to which Hy-Tech is
a party or by which it or any of its assets, products, technology, or
properties are bound other than those incurred in the ordinary course
of business (as used in this Agreement, a "material" contract,
agreement, franchise, license agreement, debt instrument or commitment
is one which (i) will remain in effect for more than six (6) months
after the date of this Agreement or (ii) involves aggregate
obligations of at least fifty thousand dollars ($50,000));
3
(b) All contracts, agreements, franchises, license agreements,
and other commitments to which Hy-Tech is a party or by which its
properties are bound and which are material to the operations of
Hy-Tech taken as a whole are valid and enforceable by Hy-Tech in all
respects, except as limited by bankruptcy and insolvency laws and by
other laws affecting the rights of creditors generally;
(c) Hy-Tech is not a party to or bound by, and the properties of
Hy-Tech are not subject to any contract, agreement, other commitment
or instrument; any charter or other corporate restriction; or any
judgment, order, writ, injunction, decree, or award which materially
and adversely affects, the business operations, properties, assets, or
condition of Hy-Tech; and
(d) Except as included or described in the Hy-Tech Schedules,
Hy-Tech is not a party to any oral or written (i) contract for the
employment of any officer or employee which is not terminable on 30
days, or less notice; (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension benefit or
retirement plan, (iii) agreement, contract, or indenture relating to
the borrowing of money, (iv) guaranty of any obligation, other than
one on which Hy-Tech is a primary obligor, for the borrowing of money
or otherwise, excluding endorsements made for collection and other
guaranties of obligations which, in the aggregate do not exceed more
than one year or providing for payments in excess of $25,000 in the
aggregate; (v) collective bargaining agreement; or (vi) agreement with
any present or former officer or director of Hy-Tech.
Section 1.11 Material Contract Defaults. Hy-Tech is in default with
----------------------------
Sun Trust pursuant to the information provided in Schedule 1.09. Other than
that, Hy-Tech is not in default in any material respect under the terms of any
outstanding contract, agreement, lease, or other commitment which is material to
the business, operations, properties, assets or condition of Hy-Tech and there
is no event of default in any material respect under any such contract,
agreement, lease, or other commitment in respect of which Hy-Tech has not taken
adequate steps to prevent such a default from occurring.
Section 1.12 No Conflict With Other Instruments. The execution of this
----------------------------------
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
an event of default under, or terminate, accelerate or modify the terms of any
material indenture, mortgage, deed of trust, or other material contract,
agreement, or instrument to which Hy-Tech is a party or to which any of its
properties or operations are subject, other than an agreement with Sun Trust.
It is acknowledged by the parties that this Agreement will breach an agreement
with Sun Trust.
Section 1.13 Governmental Authorizations. Except as set forth in the
----------------------------
Hy-Tech Schedules, Hy-Tech has all licenses, franchises, permits, and other
governmental authorizations that are legally required to enable it to conduct
its business in all material respects as conducted on the date hereof. Except
for compliance with federal and state securities and corporation laws, as
hereinafter provided, no authorization, approval, consent, or order of, or
registration, declaration, or filing with, any court or other governmental body
is required in connection with the execution and delivery by Hy-Tech of this
Agreement and the consummation by Hy-Tech of the transactions contemplated
hereby.
Section 1.14 Compliance With Laws and Regulations. Except as set forth
------------------------------------
in the Hy-Tech Schedules, to the best of its knowledge Hy-Tech has complied with
all applicable statutes and regulations of any federal, state, or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets, or condition of Hy-Tech or except to the extent that noncompliance would
not result in the occurrence of any material liability for Hy-Tech.
Section 1.15 Approval of Agreement. The board of directors of Hy-Tech
---------------------
has authorized the execution and delivery of this Agreement by Hy-Tech and has
approved this Agreement and the transactions contemplated hereby, and will
recommend to the Hy-Tech Shareholders that the Exchange be accepted by them.
Section 1.16 Material Transactions or Affiliations. Set forth in the
--------------------------------------
Hy-Tech Schedules is a description of every contract, agreement, or arrangement
between Hy-Tech and any predecessor and any person who was at the time of such
contract, agreement, or arrangement an officer, director, or person owning of
record, or known by Hy-Tech to own beneficially, 5% or more of the issued and
outstanding common stock of Hy-Tech and which is to be performed in whole or in
part after the date hereof or which was entered into not more than three years
prior to the date hereof. Except as disclosed in the Hy-Tech Schedules or
otherwise disclosed herein, no officer, director, or 5% shareholder of Hy-Tech
has, or has had since inception of Hy-Tech, any known interest, direct or
indirect, in any transaction with Hy-Tech which was material to the business of
Hy-Tech. There are no commitments by Hy-Tech, whether written or oral, to lend
any funds, or to borrow any money from, or enter into any other transaction
with, any such affiliated person.
4
Section 1.17 Hy-Tech Schedules. Hy-Tech has delivered to the Company
------- ---------
the following schedules, which are collectively referred to as the " Hy-Tech
Schedules" and which consist of separate schedules dated as of the date of
execution of this Agreement, all certified by the chief executive officer of
Hy-Tech as complete, true, and correct as of the date of this Agreement in all
material respects:
(a) a schedule containing complete and correct copies of the
articles of incorporation, and bylaws of Hy-Tech in effect as of the
date of this Agreement;
(b) a schedule containing the financial statements of Hy-Tech
identified in paragraph 1.04(a);
(c) a Schedule 1.17(c) containing a list indicating the name and
address of each shareholder of Hy-Tech together with the number of
shares owned by him, her or it;
(d) a schedule containing a description of all real property
owned by Hy-Tech, together with a description of every mortgage, deed
of trust, pledge, lien, agreement, encumbrance, claim, or equity
interest of any nature whatsoever in such real property;
(e) copies of all licenses, permits, and other governmental
authorizations (or requests or applications therefor) pursuant to
which Hy-Tech carries on or proposes to carry on its business (except
those which, in the aggregate, are immaterial to the present or
proposed business of Hy-Tech);
(f) a schedule setting forth a description of any material
adverse change in the business, operations, property, inventory,
assets, or condition of Hy-Tech since December 31, 2002, required to
be provided pursuant to section 1.07 hereof; and
(g) a schedule setting forth any other information, together with
any required copies of documents, required to be disclosed in the
Hy-Tech Schedules by Sections 1.01 through 1.17.
Hy-Tech shall cause the Hy-Tech Schedules and the instruments and data
delivered to the Company hereunder to be promptly updated after the date hereof
up to and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by Hy-Tech. Hy-Tech shall
have until February 17, 2003 to provide such schedules. If Hy-Tech cannot or
fails to do so, or if the Company acting reasonably finds any such schedules or
updates provided after the date hereof to be unacceptable according to the
criteria set forth below, the Company may terminate this Agreement by giving
written notice to Hy-Tech within five (5) days after the schedules or updates
were due to be produced or were provided. For purposes of the foregoing, the
Company may consider a disclosure in the Hy-Tech Schedules to be "unacceptable"
only if that item would have a material adverse impact on the financial
condition of Hy-Tech, taken as a whole.
Section 1.18 Valid Obligation. This Agreement and all agreements and
-----------------
other documents executed by Hy-Tech in connection herewith constitute the valid
and binding obligation of Hy-Tech, enforceable in accordance with its or their
terms, except as may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought.
5
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE COMPANY
As an inducement to, and to obtain the reliance of Hy-Tech and the Hy-Tech
Shareholders, except as set forth in the Company Schedules (as hereinafter
defined), the Company represents and warrants as follows:
Section 2.01 Organization. The Company is a corporation duly
------------
organized, validly existing, and in good standing under the laws of the State of
Delaware and has the corporate power and is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations, ordinances, and
orders of public authorities to own all of its properties and assets, to carry
on its business in all material respects as it is now being conducted, and
except where failure to be so qualified would not have a material adverse effect
on its business, there is no jurisdiction in which it is not qualified in which
the character and location of the assets owned by it or the nature of the
business transacted by it requires qualification. Included in the Company
Schedules are complete and correct copies of the certificate of incorporation
and bylaws of the Company as in effect on the date hereof. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, violate any provision of the Company's certificate
of incorporation or bylaws. The Company has taken all action required by law,
its certificate of incorporation, its bylaws, or otherwise to authorize the
execution and delivery of this Agreement, and the Company has full power,
authority, and legal right and has taken all action required by law, its
certificate of incorporation, bylaws, or otherwise to consummate the
transactions herein contemplated.
Section 2.02 Capitalization. The Company's authorized capitalization
--------------
consists of 50,000,000 shares of common stock, par value $.001 of which
24,000,000 shares will be issued and outstanding within ten days of the Closing
as defined in Section 3.03 (the "Original Company Shares"), which number does
not include 13,888,889 shares collateralizing a potential bridge loan, and
5,000,000 shares of preferred stock, $.001 par value of which no shares of
preferred stock are issued and outstanding. All issued and outstanding shares
are legally issued, fully paid, and non-assessable and not issued in violation
of the preemptive or other rights of any person.
Section 2.03 Subsidiaries and Predecessor Corporations. The Company
-------------------------------------------
does not have any predecessor corporation(s) or subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation, except as
disclosed in Schedule 2.03. For purposes hereinafter, the term "Company" also
-------------
includes those subsidiaries, if any, set forth on Schedule 2.03.
--------------
Section 2.04 Financial Statements.
----------------------
(a) Included in the Company Schedules are (i) the audited balance
sheets of the Company and the related statements of operations and
cash flows as of and for the twelve months ended December 31, 2001 and
(ii) the unaudited balance sheets of the Company and the related
statements of operations and cash flows for the nine months ended
September 30, 2002.
(b) All such financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved. The Company balance sheets
present fairly as of their respective dates the financial condition of
the Company. As of the date of such balance sheets, except as and to
the extent reflected or reserved against therein, the Company had no
liabilities or obligations (absolute or contingent) which should be
reflected in the balance sheets or the notes thereto prepared in
accordance with generally accepted accounting principles, and all
assets reflected therein are properly reported and present fairly the
value of the assets of the Company, in accordance with generally
accepted accounting principles. The statements of operations,
stockholders' equity and cash flows reflect fairly the information
required to be set forth therein by generally accepted accounting
principles.
(c) The Company has no liabilities with respect to the payment of
any federal, state, county, local or other taxes (including any
deficiencies, interest or penalties), except for taxes accrued but not
yet due and payable.
(d) The books and records, financial and otherwise, of the
Company are in all material aspects complete and correct and have been
maintained in accordance with good business and accounting practices.
6
Section 2.05 Information. The information concerning the Company set forth
------------
in this Agreement and the Company Schedules is complete and accurate in all
material respects and does not contain any untrue statements of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading. In addition,
the Company has fully disclosed in writing to Hy-Tech (through this Agreement or
the Company Schedules) all information relating to matters involving the Company
or its assets or its present or past operations or activities which (i)
indicated or may indicate, in the aggregate, the existence of a greater than
$5,000 liability or diminution in value, (ii) have led or may lead to a
competitive disadvantage on the part of the Company or (iii) either alone or in
aggregation with other information covered by this Section, otherwise have led
or may lead to a material adverse effect on the transactions contemplated herein
or on the Company, its assets, or its operations or activities as presently
conducted or as contemplated to be conducted after the Closing Date, including,
but not limited to, information relating to governmental, employee,
environmental, litigation and securities matters and transactions with
affiliates.
Section 2.06 Options or Warrants. The Company is currently in
----------------------
negotiations to receive a bridge loan which provides for the issuance of up to
325,000 two year warrants to purchase 325,000 shares of Company common stock
with an exercise price of $1.50 per share and the bridge loan is convertible at
$1.00 per share into Company common stock. In addition, the Company has
authorized the grant of 1,000,000 two year warrants to purchase 1,000,000 shares
of Company common stock with an exercise price of $1.00 per share, with such
grants to be designated by Imperium Capital, Inc. There are no existing
options, warrants, calls, or commitments of any character relating to the
authorized and unissued stock of the Company, other than those disclosed above.
Section 2.07 Absence of Certain Changes or Events. Except as disclosed
-------------------------------------
in Exhibit 2.07, or permitted in writing by Hy-Tech, since the date of the most
recent Company balance sheet:
(a) there has not been (i) any material adverse change in the
business, operations, properties, assets or condition of the Company
or (ii) any damage, destruction or loss to the Company (whether or not
covered by insurance) materially and adversely affecting the business,
operations, properties, assets or condition of the Company;
(b) The Company has not and will not (i) amend its certificate of
incorporation or bylaws, except to effect a reverse stock split and
name change; (ii) declare or make, or agree to declare or make any
payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchase or redeem, or agree to purchase
or redeem, any of its capital stock; (iii) waive any rights of value
which in the aggregate are outside of the ordinary course of business
or material considering the business of the Company; (iv) make any
material change in its method of management, operation, or accounting;
(v) enter into any transaction or agreement other than in the ordinary
course of business; (vi) make any accrual or arrangement for or
payment of bonuses or special compensation of any kind or any
severance or termination pay to any present or former officer or
employee; (vii) increase the rate of compensation payable or to become
payable by it to any of its officers or directors or any of its
salaried employees whose monthly compensation exceed $1,000; or (viii)
make any increase in any profit sharing, bonus, deferred compensation,
insurance, pension, retirement, or other employee benefit plan,
payment, or arrangement, made to, for or with its officers, directors,
or employees;
(c) The Company has not (i) granted or agreed to grant any
options or warrants except as disclosed in Section 2.06 above; (ii)
borrowed or agreed to borrow any funds or incurred, or become subject
to, any material obligation or liability (absolute or contingent)
except liabilities incurred in the ordinary course of business except
as provided in Section 2.06 above; (iii) paid or agreed to pay any
material obligations or liabilities (absolute or contingent) other
than current liabilities reflected in or shown on the most recent the
Company balance sheet and current liabilities incurred since that date
in the ordinary course of business and professional and other fees and
expenses in connection with the preparation of this Agreement and the
consummation of the transaction contemplated hereby; (iv) sold or
transferred, or agreed to sell or transfer, any of its assets,
properties, or rights (except assets, properties, or rights not used
or useful in its business which, in the aggregate have a value of less
than $1,000), or canceled, or agreed to cancel, any debts or claims
(except debts or claims which in the aggregate are of a value less
than $1,000); and (v) made or permitted any amendment or termination
of any contract, agreement, or license to which it is a party if such
amendment or termination is material, considering the business of the
Company; and
(d) to the best knowledge of the Company, it has not become
subject to any law or regulation which materially and adversely
affects, or in the future, may adversely affect, the business,
operations, properties, assets or condition of the Company.
7
Section 2.08 Title and Related Matters. The Company has good and
-----------------------------
marketable title to all of its properties, inventory, interest in properties,
and assets, real and personal, which are reflected in the most recent Company
balance sheet or acquired after that date (except properties, inventory,
interest in properties, and assets sold or otherwise disposed of since such date
in the ordinary course of business), free and clear of all liens, pledges,
charges, or encumbrances except (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will not
materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and (c) as described in the
Company Schedules. Except as set forth in the Company Schedules, the Company
owns, free and clear of any liens, claims, encumbrances, royalty interests, or
other restrictions or limitations of any nature whatsoever, any and all products
it is currently manufacturing, including the underlying technology and data, and
all procedures, techniques, marketing plans, business plans, methods of
management, or other information utilized in connection with the Company's
business. Except as set forth in the Company Schedules, no third party has any
right to, and the Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to any product, technology,
data, trade secrets, know-how, proprietary techniques, trademarks, service
marks, trade names, or copyrights which, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a
materially adverse effect on the business, operations, financial condition,
income, or business prospects of the Company or any material portion of its
properties, assets, or rights.
Section 2.09 Litigation and Proceedings. There are no actions, suits,
---------------------------
proceedings or investigations pending or, to the knowledge of the Company after
reasonable investigation, threatened by or against the Company or affecting the
Company or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind except a lawsuit against weComm Limited which is
contemplated involving an investment of $700,000 by Bank ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. & Cie
(Schweiz). Hy-Tech, the current management of Hy-Tech, and the new management
of the Company acknowledge and agree to use reasonable efforts to carry on the
lawsuit to return the $700,000 to Bank ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. & Cie (Schweiz). It is
understood that Bank ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. & Cie (Schweiz) shall receive the amount
that is recovered, less the amount of attorneys fees and out of pocket expenses
which are not recovered. In the event the Company recovers less than $700,000,
Bank ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. & Cie (Schweiz) shall be entitled to receive the amount
that is recovered less un-recovered out of pocket expenses and legal expenses,
with the remaining balance owed to Bank ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. & Cie (Schweiz)
payable in restricted shares of Company common stock at $2.00 per share. In the
event the Company does not proceed with litigation for reasonable business
reasons, the Company shall have the right to issue Bank ▇▇▇ ▇▇▇▇▇▇▇▇▇ & jr. Cie
(Schweiz) 350,000 newly issued restricted shares of Company common stock in
settlement of the $700,000. The issuance of such 350,000 shares of Company
common stock would be in addition to the shares of Company common stock
outstanding at the closing of this Agreement as agreed upon herein. The Company
has no knowledge of any default on its part with respect to any judgment, order,
writ, injunction, decree, award, rule or regulation of any court, arbitrator, or
governmental agency or instrumentality or any circumstance which after
reasonable investigation would result in the discovery of such default.
Section 2.10 Contracts.
----------
(a) The Company is not a party to, and its assets, products,
technology and properties are not bound by, any material contract,
franchise, license agreement, agreement, debt instrument or other
commitments whether such agreement is in writing or oral, except as
disclosed in Schedule 2.10. -------------
(b) All contracts, agreements, franchises, license agreements,
and other commitments to which the Company is a party or by which its
properties are bound and which are material to the operations of the
Company taken as a whole are valid and enforceable by the Company in
all respects, except as limited by bankruptcy and insolvency laws and
by other laws affecting the rights of creditors generally;
(c) The Company is not a party to or bound by, and the properties
of the Company are not subject to any contract, agreement, other
commitment or instrument; any charter or other corporate restriction;
or any judgment, order, writ, injunction, decree, or award which
materially and adversely affects, the business operations, properties,
assets, or condition of the Company; and
8
(d) Except as included or described in the Company Schedules or
reflected in the most recent Company balance sheet, the Company is not
a party to any oral or written (i) contract for the employment of any
officer or employee which is not terminable on 30 days, or less
notice; (ii) profit sharing, bonus, deferred compensation, stock
option, severance pay, pension benefit or retirement plan, (iii)
agreement, contract, or indenture relating to the borrowing of money,
(iv) guaranty of any obligation, other than one on which the Company
is a primary obligor, for the borrowing of money or otherwise,
excluding endorsements made for collection and other guaranties of
obligations which, in the aggregate do not exceed more than one year
or providing for payments in excess of $25,000 in the aggregate; (v)
collective bargaining agreement; or (vi) agreement with any present or
former officer or director of the Company.
Section 2.11 Material Contract Defaults. The Company is not in default
--------------------------
in any material respect under the terms of any outstanding contract, agreement,
lease, or other commitment which is material to the business, operations,
properties, assets or condition of the Company and there is no event of default
in any material respect under any such contract, agreement, lease, or other
commitment in respect of which the Company has not taken adequate steps to
prevent such a default from occurring.
Section 2.12 No Conflict With Other Instruments. The execution of this
-----------------------------------
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
a default under, or terminate, accelerate or modify the terms of, any indenture,
mortgage, deed of trust, or other material agreement or instrument to which the
Company is a party or to which any of its assets or operations are subject.
Section 2.13 Governmental Authorizations. The Company has all
-----------------------------
licenses, franchises, permits, and other governmental authorizations, that are
legally required to enable it to conduct its business operations in all material
respects as conducted on the date hereof. Except for compliance with federal
and state securities or corporation laws, as hereinafter provided, no
authorization, approval, consent or order of, of registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby.
Section 2.14 Compliance With Laws and Regulations. To the best of its
-------------------------------------
knowledge, the Company has complied with all applicable statutes and regulations
of any federal, state, or other applicable governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
the Company or except to the extent that noncompliance would not result in the
occurrence of any material liability. This compliance includes, but is not
limited to, the filing of all reports to date with federal and state securities
authorities.
Section 2.15 Approval of Agreement. The board of directors of the
------------------------
Company has authorized the execution and delivery of this Agreement by the
Company and has approved this Agreement and the transactions contemplated
hereby.
Section 2.16 Continuity of Business Enterprises. The Company has no
-------------------------------------
commitment or present intention to liquidate Hy-Tech or sell or otherwise
dispose of a material portion of Hy-Tech's business or assets following the
consummation of the transactions contemplated hereby.
Section 2.17 Material Transactions or Affiliations. Except as
-----------------------------------------
disclosed herein and in the Company Schedules, there exists no contract,
agreement or arrangement between the Company and any predecessor and any person
who was at the time of such contract, agreement or arrangement an officer,
director, or person owning of record or known by the Company to own
beneficially, 5% or more of the issued and outstanding common stock of the
Company and which is to be performed in whole or in part after the date hereof
or was entered into not more than three years prior to the date hereof. Neither
any officer, director, nor 5% shareholder of the Company has, or has had since
inception of the Company, any known interest, direct or indirect, in any such
transaction with the Company which was material to the business of the Company.
The Company has no commitment, whether written or oral, to lend any funds to,
borrow any money from, or enter into any other transaction with, any such
affiliated person.
Section 2.18 The Company Schedules. The Company has delivered to
------------------------
Hy-Tech the following schedules, which are collectively referred to as the
"Company Schedules" and which consist of separate schedules, which are dated the
date of this Agreement, all certified by the chief executive officer of the
Company to be complete, true, and accurate in all material respects as of the
date of this Agreement:
(a) a schedule containing complete and accurate copies of the
certificate of incorporation and bylaws of the Company as in effect as
of the date of this Agreement;
9
(b) a schedule containing the financial statements of the Company
identified in paragraph 2.04(b);
(c) a schedule containing a description of all real property
owned by the Company, together with a description of every mortgage,
deed of trust, pledge, lien, agreement, encumbrance, claim, or equity
interest of any nature whatsoever in such real property;
(d) copies of all licenses, permits, and other governmental
authorizations (or requests or applications therefor) pursuant to
which the Company carries on or proposes to carry on its business
(except those which, in the aggregate, are immaterial to the present
or proposed business of the Company);
(e) a schedule setting forth a description of any material
adverse change in the business, operations, property, inventory,
assets, or condition of the Company since December 31, 2002 required
to be provided pursuant to section 2.07 hereof; and
(f) a schedule setting forth any other information, together with
any required copies of documents, required to be disclosed in the
Company Schedules by Sections 2.01 through 2.18.
The Company shall cause the Company Schedules and the instruments and data
delivered to Hy-Tech hereunder to be promptly updated after the date hereof up
to and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by the Company. The
Company shall have until February 17, 2003 to provide such schedules. If the
Company cannot or fails to do so, or if Hy-Tech acting reasonably finds any such
schedules or updates provided after the date hereof to be unacceptable according
to the criteria set forth below, Hy-Tech may terminate this Agreement by giving
written notice to the Company within five (5) days after the schedules or
updates were due to be produced or were provided. For purposes of the
foregoing, Hy-Tech may consider a disclosure in the Company Schedules to be
"unacceptable" only if that item would have a material adverse impact on the
financial statements listed in Section 2.04(b), taken as a whole.
Section 2.19 Valid Obligation. This Agreement and all agreements and
-----------------
other documents executed by the Company in connection herewith constitute the
valid and binding obligation of the Company, enforceable in accordance with its
or their terms, except as may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought.
ARTICLE III
PLAN OF EXCHANGE
Section 3.01 The Exchange. On the terms and subject to the conditions
-------------
set forth in this Agreement, on the Closing Date (as defined in Section 3.03),
each Hy-Tech Shareholder who shall elect to accept the exchange offer described
herein (the "Accepting Shareholders"), shall assign, transfer and deliver, free
and clear of all liens, pledges, encumbrances, charges, restrictions or known
claims of any kind, nature, or description, the number of shares of common stock
of HY-TECH set forth on Schedule 1.17(c) attached hereto, in the aggregate
-----------------
constituting a minimum of 80% of the issued and outstanding shares of common
stock of Hy-Tech held by each of such shareholders; the objective of such
Exchange being the acquisition by the Company of 100% of the issued and
outstanding common stock of Hy-Tech. In exchange for the transfer of such
securities by the Hy-Tech Shareholders, the Company shall issue to the Hy-Tech
Shareholders an aggregate of up to 16,000,000 shares of common stock of the
Company (the "Initial Shares"), which Initial Shares shall not be reduced when
calculating the number of shares outstanding pursuant to Sections 2.02 and 6.01.
At the Closing, each Hy-Tech Shareholder shall, on surrender of his certificate
or certificates representing such Hy-Tech shares to the Company or its registrar
or transfer agent, be entitled to receive a certificate or certificates
evidencing his proportionate interest in the Initial Shares. Upon consummation
of the transaction contemplated herein, assuming participation by all of the
Hy-Tech Shareholders, all of the shares of capital stock of Hy-Tech shall be
held by the Company.
10
Section 3.02 Anti-Dilution. The number of shares of the Company's
--------------
common stock issuable upon exchange pursuant to Section 3.01 shall be
appropriately adjusted to take into account any other stock split, stock
dividend, reverse stock split, recapitalization, or similar change in the
Company common stock which may occur (i) between the date of the execution of
this Agreement and the Closing Date, as to the Initial Shares, and (ii) between
the date of the execution of this Agreement and the release date, as to the
Additional Shares.
Section 3.03 Closing. The closing ("Closing") of the transactions
--------
contemplated by this Agreement shall be on a date and at such time as the
parties may agree ("Closing Date") but not later than January 31, 2003, subject
to the right of the Company or Hy-Tech to extend such Closing Date by up to an
additional ten (10) days. Such Closing shall take place at a mutually agreeable
time and place.
Section 3.04 Closing Events. At the Closing, the Company, Hy-Tech and
---------------
each of the Hy-Tech Accepting Shareholders shall execute, acknowledge, and
deliver (or shall ensure to be executed, acknowledged, and delivered) any and
all certificates, opinions, financial statements, schedules, agreements,
resolutions, rulings or other instruments required by this Agreement to be so
delivered at or prior to the Closing, together with such other items as may be
reasonably requested by the parties hereto and their respective legal counsel in
order to effectuate or evidence the transactions contemplated hereby. Among
other things, the Company shall provide an opinion of counsel acceptable to
Hy-Tech as to such matters as Hy-Tech may reasonably request, which shall
include, but not be limited to, a statement, to the effect that to such
counsel's best knowledge, after reasonable investigation, from inception until
the Closing Date, the Company has complied with all applicable statutes and
regulations of any federal, state, or other applicable governmental entity or
agency thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
the Company or except to the extent that noncompliance would not result in the
occurrence of any material liability (such compliance including, but not being
limited to, the filing of all reports to date with federal and state securities
authorities).
Section 3.05 Termination.
------------
(a) This Agreement may be terminated by the board of directors of
either the Company or Hy-Tech at any time prior to the Closing Date
if:
(i) there shall be any actual or threatened action or
proceeding before any court or any governmental body which shall
seek to restrain, prohibit, or invalidate the transactions
contemplated by this Agreement and which, in the judgment of such
board of directors, made in good faith and based upon the advice
of its legal counsel, makes it inadvisable to proceed with the
Exchange; or
(ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions (which does not include
the Securities and Exchange Commission) or in the judgment of
such board of directors, made in good faith and based on the
advice of counsel, there is substantial likelihood that any such
approval will not be obtained or will be obtained only on a
condition or conditions which would be unduly burdensome, making
it inadvisable to proceed with the Exchange.
In the event of termination pursuant to this paragraph (a) of Section 3.05, no
obligation, right or liability shall arise hereunder, and each party shall bear
all of the expenses incurred by it in connection with the negotiation, drafting,
and execution of this Agreement and the transactions herein contemplated.
(b) This Agreement may be terminated by the board of directors of
the Company at any time prior to the Closing Date if:
(i) the board of directors of the Company determines in good
faith that one or more of the Company's conditions to Closing has
not occurred, through no fault of the Company.
(ii) The Company takes the termination action specified in
Section 1.17 as a result of Hy-Tech Schedules or updates thereto
which the Company finds unacceptable; or
(iii) Hy-Tech shall fail to comply in any material respect
with any of its covenants or agreements contained in this
Agreement or if any of the representations or warranties of
Hy-Tech contained herein shall be inaccurate in any material
respect, where such noncompliance or inaccuracy has not been
cured within ten (10) days after written notice thereof.
11
If this Agreement is terminated pursuant to this paragraph (b) of Section 3.05,
this Agreement shall be of no further force or effect, and no obligation, right
or liability shall arise hereunder, except that Purchaser shall bear the costs
in connection with the negotiation, preparation, and execution of this Agreement
and qualifying the offer and sale of securities to be issued in the Exchange
under the registration requirements, or exemption from the registration
requirements, of state and federal securities laws.
(c) This Agreement may be terminated by the board of directors of
Hy-Tech at any time prior to the Closing Date if:
(i) there shall have been any change after the date of the
latest balance sheet of the Company in the assets, properties,
business or financial condition of the Company, which could have
a material adverse effect on the financial statements of the
Company listed in Section 2.04(b) taken as a whole, except any
changes disclosed in the Company Schedules;
(ii) the board of directors of Hy-Tech determines in good
faith that one or more of Hy-Tech's conditions to Closing has not
occurred, through no fault of Hy-Tech;
(iii) Hy-Tech takes the termination action specified in
Section 2.18 as a result of the Company Schedules or updates
thereto which Hy-Tech finds unacceptable;
(iv) on or before January 31, 2003, Hy-Tech notifies the
Company that Hy-Tech's investigation pursuant to Section 4.01
below has uncovered information which it finds unacceptable by
the same criteria set forth in Section 2.18; or
(v) The Company shall fail to comply in any material respect
with any of its covenants or agreements contained in this
Agreement or if any of the representations or warranties of the
Company contained herein shall be inaccurate in any material
respect, where such noncompliance or inaccuracy has not been
cured within ten (10) days after written notice thereof.
If this Agreement is terminated pursuant to this paragraph (c) of Section 3.05,
this Agreement shall be of no further force or effect, and no obligation, right
or liability shall arise hereunder, except that the Company shall bear the costs
as well as the reasonable costs of the Company incurred in connection with the
negotiation, preparation and execution of this Agreement.
ARTICLE IV
SPECIAL COVENANTS
Section 4.01 Access to Properties and Records. The Company and Hy-Tech
--------------------------------
Will each afford to the officers and authorized representatives of the other
Full access to the properties, books and records of the Company or, as the case
May be, in order that each may have a full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of the other, and each
will furnish the other with such additional financial and operating data and
other information as to the business and properties of the Company or Hy-Tech,
as the case may be, as the other shall from time to time reasonably request.
Without limiting the foregoing, as soon as practicable after the end of each
fiscal quarter (and in any event through the last fiscal quarter prior to the
Closing Date), the Company shall provide Hy-Tech with quarterly internally
prepared and unaudited financial statements.
Section 4.02 Delivery of Books and Records. At the Closing, Hy-Tech
--------------------------------
shall deliver to the Company copies of the corporate minute books, books of
account, contracts, records, and all other books or documents of Hy-Tech now in
the possession of Hy-Tech or its representatives.
Section 4.03 Third Party Consents and Certificates. The Company and
----------------------------------------
Hy-Tech agree to cooperate with each other in order to obtain any required third
party consents to this Agreement and the transactions herein contemplated.
12
Section 4.04 Accredited Status. All of the Hy-Tech Shareholders
-------------------
participating in the Share Exchange must represent that they are accredited
investors as that term is defined in Rule 501 of Regulation D promulgated under
the Securities Act of 1933, except as otherwise provided.
Section 4.05 Consent ofHy-Tech Shareholders. Hy-Tech shall use its
----------- -------------
best efforts to obtain the consent of all Hy-Tech Shareholders to participate in
the Exchange.
Section 4.06 Designation of Directors and Officers.On or before the
-----------------------------------------
Closing Date, the Company's board of directors shall consist of three directors,
of which one director shall be appointed by Imperium Capital, Inc. which shall
include ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and ______________. ▇▇▇▇ ▇. ▇▇▇▇▇▇
shall be elected Chief Executive Officer of the Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
shall be elected President.
Section 4.07 Exclusive Dealing Rights. Until 5:00 P.M. Eastern
---------------------------
Daylight Time on February 17, 2003.
(a) In recognition of the substantial time and effort which the
Company has spent and will continue to spend in investigating Hy-Tech
and its business and in addressing the matters related to the
transactions contemplated herein, each of which may preempt or delay
other management activities, neither Hy-Tech, nor any of its officers,
employees, representatives or agents will directly or indirectly
solicit or initiate any discussions or negotiations with, or, except
where required by fiduciary obligations under applicable law as
advised by counsel, participate in any negotiations with or provide
any information to or otherwise cooperate in any other way with, or
facilitate or encourage any effort or attempt by, any corporation,
partnership, person or other entity or group (other than the Company
and its directors, officers, employees, representatives and agents)
concerning any merger, sale of substantial assets, sale of shares of
capital stock, (including without limitation, any public or private
offering of the common stock of Hy-Tech) or similar transactions
involving Hy-Tech (all such transactions being referred to as "
Hy-Tech Acquisition Transactions"). If Hy-Tech receives any proposal
with respect to a Hy-Tech Acquisition Transaction, it will immediately
communicate to the Company the fact that it has received such proposal
and the principal terms thereof.
(b) In recognition of the substantial time and effort which
Hy-Tech has spent and will continue to spend in investigating the
Company and its business and in addressing the matters related to the
transactions contemplated herein, each of which may preempt or delay
other management activities, neither the Company, nor any of its
officers, employees, representatives or agents will directly or
indirectly solicit or initiate any discussions or negotiations with,
or, except where required by fiduciary obligations under applicable
law as advised by counsel, participate in any negotiations with or
provide any information to or otherwise cooperate in any other way
with, or facilitate or encourage any effort or attempt by, any
corporation, partnership, person or other entity or group (other than
Hy-Tech and its directors, officers, employees, representatives and
agents) concerning any merger, sale of substantial assets, sale of
shares of capital stock, (including without limitation, any public or
private offering of the common stock of the Company or similar
transactions involving the Company (all such transactions being
referred to as "Company Acquisition Transactions"). If the Company
receives any proposal with respect to a Company Acquisition
Transaction, it will immediately communicate to Hy-Tech the fact that
it has received such proposal and the principal terms thereof.
Section 4.08 Actions Prior to Closing.
----------------------------
(a) From and after the date of this Agreement until the Closing
Date and except as set forth in the Company Schedules or Hy-Tech
Schedules or as permitted or contemplated by this Agreement, the
Company (subject to paragraph (d) below) and Hy-Tech respectively,
will each:
(i) carry on its business in substantially the same manner
as it has heretofore;
(ii) maintain and keep its properties in states of good
repair and condition as at present, except for depreciation due
to ordinary wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable
in amount and in scope of coverage to that now maintained by it;
13
(iv) perform in all material respects all of its obligations
under material contracts, leases, and instruments relating to or
affecting its assets, properties, and business;
(v) use its best efforts to maintain and preserve its
business organization intact, to retain its key employees, and to
maintain its relationship with its material suppliers and
customers; and
(vi) fully comply with and perform in all material respects
all obligations and duties imposed on it by all federal and state
laws and all rules, regulations, and orders imposed by federal or
state governmental authorities.
(b) From and after the date of this Agreement until the Closing Date,
neither the Company nor Hy-Tech will:
(i) make any changes in their articles or certificate of
incorporation or bylaws, except as otherwise provided in this
Agreement;
(ii) take any action described in Section 1.07 in the case of
Hy-Tech, or in Section 2.07, in the case of the Company (all except as
permitted therein or as disclosed in the applicable party's
schedules);
(iii) enter into or amend any contract, agreement, or other
instrument of any of the types described in such party's schedules,
except that a party may enter into or amend any contract, agreement,
or other instrument in the ordinary course of business involving the
sale of goods or services; or
(iv) sell any assets or discontinue any operations (other than
the Divestiture), sell any shares of capital stock (other than as
contemplated in Section 4.06 hereof and the sale of securities
underlying existing warrants or options of the Company) or conduct any
similar transactions other than in the ordinary course of business.
Section 4.09 Indemnification.
----------------
(a) Hy-Tech hereby agrees to indemnify the Company and each of
the officers, agents and directors of the Company as of the date of
execution of this Agreement against any loss, liability, claim,
damage, or expense (including, but not limited to, any and all expense
whatsoever reasonably incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any
claim whatsoever), to which it or they may become subject arising out
of or based on any inaccuracy appearing in or misrepresentations made
under Article I of this Agreement. The indemnification provided for in
this paragraph shall survive the Closing and consummation of the
transactions contemplated hereby and termination of this Agreement.
(b) The Company hereby agrees to indemnify Hy-Tech and each of
the officers, agents, and directors of Hy-Tech and each of the Hy-Tech
Shareholders as of the date of execution of this Agreement against any
loss, liability, claim, damage, or expense (including, but not limited
to, any and all expense whatsoever reasonably incurred in
investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever), to which it or they
may become subject arising out of or based on any inaccuracy appearing
in or misrepresentation made under Article II of this Agreement. The
indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and
termination of this Agreement.
Section 4.10 Limitation of Subsequent Corporate Actions.
-----------------------------------------------
It is expressly understood and agreed that the Company, the shareholders of
Hy-Tech, and their affiliates, will take all steps necessary to ensure that:
14
(1) there shall be no reverse split of the Company's common stock for a period
of twelve months following this Agreement;
(2) that the assets of Hy-Tech shall remain in the Company as part of its
business operations; and
(3) that no shares of the Company's common stock shall be registered pursuant
to an S-8 registration statement for a period of twelve months following
this Agreement.
Notwithstanding items (1), (2), and (3), Imperium Capital, Inc. may waive such
conditions stated above, with a written waiver.
Section 4.11 Indemnification of Subsequent Corporate Actions.
----------------------------------------------------
(a) No officer, director, controlling shareholder, agent or representative of
the Company, or any other person currently affiliated with the Company, has
offered or agreed to assist in the promotion, market making, development,
enhancement, or support of the Company's business, capital raising, or
securities market.
(2) Hy-Tech hereby represents and warrants that it will indemnify and hold
harmless any officer, director, controlling shareholder, agent or
representative of the Company, or any other person affiliated with the
Company, from any decisions, activities, or conduct of the Company
contemporaneous with, or subsequent to this Agreement.
Section 4.12 Name Change. Prior to Closing, the Company shall amend its
------------
certificate of incorporation to effect a name change to Hy-Tech Technology
Group, Inc.
Section 4.13 Audited Financial Statements. The Company shall file audited
------------------------------
financial statements of Hy-Tech as required by the Securities and Exchange
Commission within 75 days from the Closing.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.01 Accuracy of Representations and Performance of Covenants.
---------------------------------------------------------
The representations and warranties made by Hy-Tech in this Agreement were true
when made and shall be true at the Closing Date with the same force and effect
as if such representations and warranties were made at and as of the Closing
Date (except for changes therein permitted by this Agreement). Hy-Tech shall
have performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by Hy-Tech prior to or at the
Closing. The Company shall be furnished with a certificate, signed by a duly
authorized executive officer of Hy-Tech and dated the Closing Date, to the
foregoing effect.
Section 5.02 Officer's Certificate. The Company shall have been
-----------------------
furnished with a certificate dated the Closing Date and signed by a duly
authorized officer of Hy-Tech to the effect that no litigation, proceeding,
investigation, or inquiry is pending, or to the best knowledge of Hy-Tech
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement, or, to the
extent not disclosed in the Hy-Tech Schedules, by or against Hy-Tech, which
might result in any material adverse change in any of the assets, properties,
business, or operations of Hy-Tech.
Section 5.03 No Material Adverse Change. Prior to the Closing Date,
-----------------------------
there shall not have occurred any change in the financial condition, business,
or operations of Hy-Tech nor shall any event have occurred which, with the lapse
of time or the giving of notice, is determined to be unacceptable using the
criteria set forth in Section 1.06.
Section 5.04 Approval byHy-Tech Shareholders. The Exchange shall have
----------- -------------
been approved, and shares delivered in accordance with Section 3.01, by the
holders of not less than eighty percent (80%) of the outstanding common stock of
Hy-Tech, unless a lesser number is agreed to by the Company.
15
Section 5.05 No Governmental Prohibition. No order, statute, rule,
------------------------------
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 5.06 Consents. All consents, approvals, waivers or amendments
---------
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of the Company and Hy-Tech after the Closing Date on the basis as
presently operated shall have been obtained.
Section 5.07 Other Items.
-------------
(a) The Company shall have received a list of Hy-Tech 's
shareholders containing the name, address, and number of shares held
by each Hy-Tech shareholder as of the date of Closing, certified by an
executive officer of Hy-Tech as being true, complete and accurate; and
(b) The Company shall have received such further opinions,
documents, certificates or instruments relating to the transactions
contemplated hereby as the Company may reasonably request.
Section 5.08 Accredited Status. All of the Hy-Tech Shareholders
-------------------
participating in the Share Exchange must represent that they are accredited
investors as that term is defined in Rule 501 of Regulation D promulgated under
the Securities Act of 1933, other than otherwise disclosed.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF HY-TECH
AND THE HY-TECH SHAREHOLDERS
The obligations of Hy-Tech and the Hy-Tech Shareholders under this
Agreement are subject to the satisfaction, at or before the Closing Date, of the
following conditions:
Section 6.01 Accuracy of Representations and Performance of Covenants.
---------------------------------------------------------
The representations and warranties made by the Company in this Agreement were
true when made and shall be true as of the Closing Date (except for changes
therein permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing Date.
Additionally, the Company shall have performed and complied with all covenants
and conditions required by this Agreement to be performed or complied with by
the Company and shall have satisfied the conditions described below prior to or
at the Closing:
(a) Within ten days following the Closing, the Company shall have
no more than an aggregate of 24,000,000 shares of common stock issued
and outstanding, not counting 13,888,889 shares collateralizing a
possible bridge loan, and 0 shares of preferred stock, excluding any
shares issuable pursuant to the Exchange.
(b) The directors of the Company shall have approved the Exchange
and the related transactions described herein.
Hy-Tech shall have been furnished with certificates, signed by duly authorized
executive officers of the Company and dated the Closing Date, to the foregoing
effect.
Section 6.02 Officer's Certificate and Lawyer's Certificate. Hy-Tech
------------------------------------------------
shall have been furnished with certificates dated the Closing Date and signed by
the duly authorized executive officer and legal counsel of the Company, to the
effect that no litigation, proceeding, investigation or inquiry is pending, or
to the best knowledge of the Company threatened, which might result in an action
to enjoin or prevent the consummation of the transactions contemplated by this
Agreement or, to the extent not disclosed in the Company Schedules, by or
against the Company, which might result in any material adverse change in any of
the assets, properties or operations of the Company.
16
Section 6.03 No Material Adverse Change. Prior to the Closing Date,
-----------------------------
there shall not have occurred any change in the financial condition, business or
operations of the Company nor shall any event have occurred which, with the
lapse of time or the giving of notice, is determined to be unacceptable using
the criteria set forth in Section 2.18.
Section 6.04 No Governmental Prohibition. No order, statute, rule,
------------------------------
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 6.05 Consents. All consents, approvals, waivers or amendments
---------
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of the Company and Hy-Tech after the Closing Date on the basis as
presently operated shall have been obtained.
Section 6.06 Other Items. Hy-Tech shall have received further
-------------
opinions, documents, certificates, or instruments relating to the transactions
contemplated hereby as Hy-Tech may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.01 No Bankruptcy and No Criminal Convictions.
----------------------------------------------
None of the Parties to the Agreement, nor their officers, directors or
affiliates, promoter or control person, nor any predecessor, thereof have been
subject to the following:
(3) Any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer within the past five
years;
(4) Any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
(5) Being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; and
(6) Being found by a court of competent jurisdiction (in a civil action),
the Securities and Exchange Commission (the "SEC") or the Commodity
Futures Trading Commission to have violated a federal or state
securities or commodities law, and the judgment has not been reversed,
suspended, or vacated.
Section 7.02 Brokers. The Company and Hy-Tech agree that, except as
--------
set out on Schedule 7.02 attached hereto, there were no brokers or finders
involved in bringing the parties together or who were instrumental in the
negotiation, execution or consummation of this Agreement. The Company and
Hy-Tech each agree to indemnify the other against any claim by any third person
other than those described above for any commission, brokerage, or finder's fee
arising from the transactions contemplated hereby based on any alleged agreement
or understanding between the indemnifying party and such third person, whether
express or implied from the actions of the indemnifying party.
Section 7.03 Governing Law. This Agreement shall be governed by,
---------------
enforced, and construed under and in accordance with the laws of the United
States of America and, with respect to the matters of state law, with the laws
of the State of Delaware without giving effect to principles of conflicts of law
thereunder. Each of the parties (a) irrevocably consents and agrees that any
legal or equitable action or proceedings arising under or in connection with
this Agreement shall be brought exclusively in the federal courts of the United
States, (b) by execution and delivery of this Agreement, irrevocably submits to
and accepts, with respect to any such action or proceeding, generally and
unconditionally, the jurisdiction of the aforesaid court, and irrevocably waives
any and all rights such party may now or hereafter have to object to such
jurisdiction.
17
Section 7.04 Notices. Any notice or other communications required
--------
or permitted hereunder shall be in writing and shall be sufficiently given if
personally delivered to it or sent by telecopy, overnight courier or registered
mail or certified mail, postage prepaid, addressed as follows:
If to the Company, to: SRM NETWORKS, INC.
Attn: Jan Barickowski
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Phone (212) 752) 9700
Fax (▇▇▇) ▇▇▇-▇▇▇▇
If to HY-TECH, to: HY-TECH COMPUTER SYSTEMS, INC.
Attn: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Phone (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇ ▇. ▇▇▇▇, Attorney at Law
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given (i) upon receipt, if personally delivered, (ii) on
the day after dispatch, if sent by overnight courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3)
days after mailing, if sent by registered or certified mail.
Section 7.05 Attorney's Fees. In the event that either party
-----------------
institutes any action or suit to enforce this Agreement or to secure relief from
any default hereunder or breach hereof, the prevailing party shall be reimbursed
by the losing party for all costs, including reasonable attorney's fees,
incurred in connection therewith and in enforcing or collecting any judgment
rendered therein.
Section 7.06 Confidentiality. Each party hereto agrees with the other
----------------
that, unless and until the transactions contemplated by this Agreement have been
consummated, it and its representatives will hold in strict confidence all data
and information obtained with respect to another party or any subsidiary thereof
from any representative, officer, director or employee, or from any books or
records or from personal inspection, of such other party, and shall not use such
data or information or disclose the same to others, except (i) to the extent
such data or information is published, is a matter of public knowledge, or is
required by law to be published; or (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement. In the event of the termination of this
Agreement, each party shall return to the other party all documents and other
materials obtained by it or on its behalf and shall destroy all copies, digests,
work papers, abstracts or other materials relating thereto, and each party will
continue to comply with the confidentiality provisions set forth herein.
Section 7.07 Public Announcements and Filings. Unless required by
------------------------------------
applicable law or regulatory authority, none of the parties will issue any
report, statement or press release to the general public, to the trade, to the
general trade or trade press, or to any third party (other than its advisors and
representatives in connection with the transactions contemplated hereby) or file
any document, relating to this Agreement and the transactions contemplated
hereby, except as may be mutually agreed by the parties. Copies of any such
filings, public announcements or disclosures, including any announcements or
disclosures mandated by law or regulatory authorities, shall be delivered to
each party at least one (1) business day prior to the release thereof.
18
Section 7.08 Schedules; Knowledge. Each party is presumed to have full
---------------------
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
Section 7.09 Third Party Beneficiaries. This contract is strictly
----------------------------
between the Company and Hy-Tech, and, except as specifically provided, no
director, officer, stockholder (other than the Hy-Tech Shareholders), employee,
agent, independent contractor or any other person or entity shall be deemed to
be a third party beneficiary of this Agreement.
Section 7.10 Expenses. Subject to Sections 3.05 and 7.05 above,
---------
whether or not the Exchange is consummated, the Company will bear the expenses,
including legal, accounting and professional fees, incurred in connection with
the Exchange or any of the other transactions contemplated hereby.
Section 7.11 Entire Agreement. This Agreement represents the entire
------------------
agreement between the parties relating to the subject matter thereof and
supersedes all prior agreements, understandings and negotiations, written or
oral, with respect to such subject matter.
Section 7.12 Survival; Termination. The representations, warranties,
-----------------------
and covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for a period of two years.
Section 7.13 Counterparts. This Agreement may be executed in multiple
-------------
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 7.14 Amendment or Waiver. Every right and remedy provided
----------------------
herein shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently herewith, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may by amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance may be extended by a writing
signed by the party or parties for whose benefit the provision is intended.
Section 7.15 Best Efforts. Subject to the terms and conditions herein
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provided, each party shall use its best efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by it under this
Agreement so that the transactions contemplated hereby shall be consummated as
soon as practicable. Each party also agrees that it shall use its best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective this Agreement and the transactions contemplated
herein.
Section 7.16 Faxed Copies. For purposes of this Agreement, a faxed
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signature will constitute an original signature.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be executed by their respective officers, hereunto duly authorized, as of the
date first-above written.
SRM NETWORKS, INC.
BY:/s/ Jan Barickowski
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Chief Executive Officer
HY-TECH COMPUTER SYSTEMS, INC.
BY:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Chief Executive Officer
The undersigned Hy-Tech Shareholders hereby agree to participate in the Exchange
on the terms set forth above. Subject to Section 7.12 above, each of the
undersigned hereby represents and affirms that he has read each of the
representations and warranties of Hy-Tech set out hereof and that, to the best
of his knowledge, all of such representations and warranties are true and
correct. PLEASE RETURN ORIGINAL STOCK CERTIFICATE ALONG WITH THIS EXCHANGE
AGREEMENT.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, individually No. of Shares 2500
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▇▇▇▇ ▇. ▇▇▇▇▇▇, Printed Name
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, individually No. of Shares 2500
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Printed Name
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, individually No. of Shares 51
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Printed Name
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19