AGREEMENT OF SHARE EXCHANGE AND PLAN OF REORGANIZATION
THIS AGREEMENT made and entered into as of the 3rd day of April, 2000, by
and between ▇▇▇.▇▇▇ Inc., a Nevada corporation (hereinafter called "RC"), and
▇▇▇▇▇▇ Computer, Inc., an Arizona corporation (hereinafter called "▇▇▇▇▇▇").
WITNESSETH THAT:
A. RC is a recently formed corporation.
▇. ▇▇▇▇▇▇ is a private company which serves as a computer software/hardware
consultant.
C. Subject to the approval of the Board of Directors of RC and ▇▇▇▇▇▇, ▇▇
and ▇▇▇▇▇▇ shall enter into an Agreement of Exchange (hereinafter called the
"Exchange Agreement") in substantially the form attached hereto and made a part
hereof as Exhibit A, which provides, among other things, for the issuance by RC
of 3,400,000 of its restricted common stock shares to the shareholders of ▇▇▇▇▇▇
(the "Exchange").
D. Following the Exchange under the Exchange Agreement, ▇▇▇▇▇▇ will be a
wholly-owned subsidiary of RC.
E. It is intended that the transactions contemplated by this Agreement
shall constitute an exchange conforming to the provisions of Section 368(a)(2)
of the Internal Revenue Code of 1954.
NOW THEREFORE, in consideration of the mutual covenants and agreements and
the benefits to be realized by each of the parties, the following transactions
are hereby agreed to, subject to the conditions hereinafter stated:
1. THE EXCHANGE
(a) In accordance with the Exchange Agreement, on the Closing Date
hereinafter referred to, and in exchange for all of the then issued and
outstanding shares of capital stock of ▇▇▇▇▇▇ (the "▇▇▇▇▇▇ Capital Stock"), RC
shall issue the number of fully paid and nonassessable shares of voting RC
common stock, $.001 par value per share (hereinafter called "RC Common Stock")
in order to permit the Exchange to be effected in accordance with the terms of
the Exchange Agreement, on the basis of One Thousand Seven Hundred (1,700)
shares of RC Common Stock for each One (1.0) share of ▇▇▇▇▇▇ Capital Stock.
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If between the date hereof and the Closing Date, RC shall effect any
reclassification, recapitalization, subdivision, combination or exchange of
shares, in respect of the outstanding shares of common stock of RC or a stock
dividend thereon shall be declared with a record date within said period, the
per share amounts of RC Common Stock to be issued and delivered in the Exchange
shall be appropriately adjusted.
(b) RC shall issue and deliver as and when required by the Exchange
Agreement, certificates representing the shares of RC Common Stock for which the
shares of ▇▇▇▇▇▇ Capital Stock outstanding immediately prior to the effective
time of the Exchange shall have been exchanged as provided in the Exchange
Agreement.
(c) ▇▇▇▇▇▇ shall submit this Agreement and the Exchange Agreement to
its shareholders for unanimous written consent, in accordance with Arizona law.
▇▇▇▇▇▇ shall use its best efforts to receive such consents on or before April 6,
2000, or as soon thereafter as practical. ▇▇▇▇▇▇ shall use its best efforts to
obtain the affirmative vote of shareholders required to approve this Agreement,
the Exchange Agreement and the transactions contemplated herein and therein.
(d) RC is not required under Nevada corporate law to submit this
Agreement and the Exchange Agreement to its shareholders for approval. However,
RC shall use its best efforts on or before April 6, 2000, or as soon thereafter
as practical, to obtain the written consent of its sole shareholder.
(e) Following the approval of the Exchange by the stockholders of
▇▇▇▇▇▇, and upon execution of the Exchange Agreement by the officers of RC and
▇▇▇▇▇▇, a certificate of Exchange containing the information required by Nevada
and Arizona corporate law shall be executed by the appropriate officers of RC.
2. CLOSING
(a) The closing of all the transactions contemplated hereby (herein
called the "Closing" or the "Closing Date") shall take place at the offices of
▇▇▇▇▇▇ in Scottsdale, Arizona at 9:00 a.m. on a date within five (5) business
days after all of the conditions described in paragraphs 13 and 14 hereof have
been satisfied or, to the extent permitted in paragraph 15 hereof, their
satisfaction has been waived. RC and ▇▇▇▇▇▇ will use their best efforts to
obtain the approvals specified in paragraph 7 hereof and any other of the
consents, waivers or approvals necessary or desirable to accomplish the
transactions contemplated by this Agreement and the Exchange Agreement. All
documents required to be delivered by each of the parties hereto shall be duly
delivered to the respective recipient thereof at or prior to the Closing. In no
event shall the Closing Date be later than April 30, 2000, and if it is delayed
beyond said date the either party shall have the right to terminate this
Agreement upon notice to that effect.
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(b) At the Closing, RC and ▇▇▇▇▇▇ shall jointly direct that the
Certificate of Exchange be duly filed, and it shall in accordance with such
direction be filed, in the Office of the Secretary of States of Nevada and
Arizona so that the Exchange shall be effective on the Closing Date.
3. INVESTIGATION BY THE PARTIES
RC and ▇▇▇▇▇▇ each may, prior to the Closing Date, make or cause to be made
such investigation of the properties of the other and its subsidiaries and of
its financial and legal condition as the party making such investigation deems
necessary or advisable to familiarize itself with such properties and other
matters, provided, that such investigation shall not interfere with normal
operations. RC and ▇▇▇▇▇▇ each agrees to permit the other and its authorized
agents or representatives to have, after the date of execution hereof, full
access to its premises and to all of its books and records at reasonable hours,
and its subsidiaries and officers will furnish the party making such
investigation with such financial and operating data and other information with
respect to the business and properties of it and its subsidiaries as the party
making such investigation shall from time to time reasonably request. No
investigation by RC or ▇▇▇▇▇▇ shall affect the representations and warranties of
the other and each such representation and warranty shall survive any such
investigation. Each party further agrees that in the event that the transactions
contemplated by this Agreement shall not be consummated it and its officers,
employees, accountants, attorneys, engineers and other representatives will not
disclose or make available to any other person or use for any purpose unrelated
to the consummation of this Agreement any information, whether written or oral,
with respect to the other party and its subsidiaries or their business which it
obtained pursuant to this Agreement. Such information shall remain the property
of the party providing it and shall not be reproduced or copies without the
consent of such party. In the event that the transactions contemplated by this
Agreement shall not be consummated, all such written information shall be
returned to the party providing it.
4. SHAREHOLDERS OF ▇▇▇▇▇▇
Prior to the Closing Date, ▇▇▇▇▇▇ agrees to obtain from each of its
shareholders an agreement to the effect that: (a) such shareholder is acquiring
the RC Common Stock to be received by him hereunder for his own account, not
with a view toward distribution and through to a private placement by RC
pursuant to Rule 506 of the Securities and Exchange Commission; and (b) such
shareholder will not sell any portion of his RC Common Stock for a period of two
years after the Closing Date.
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5. STATE SECURITIES LAWS
RC and ▇▇▇▇▇▇ will each take such steps as may be necessary on their
respective parts to comply with any state securities or so- called Blue Sky laws
applicable to the action to be taken by them in connection with the Exchange and
the delivery by RC to ▇▇▇▇▇▇ shareholders of the RC Common Stock pursuant to
this Agreement and the Exchange Agreement.
6. BUSINESS PENDING THE CLOSING
(a) From the date of this Agreement to and including the Closing Date,
except as may be first approved by ▇▇▇▇▇▇ or as is otherwise permitted or
contemplated by this Agreement: (i) RC (which term shall, where applicable in
this paragraph 6, also refer to the subsidiaries of ▇▇▇▇▇▇ specified in
paragraph 10 hereof) shall conduct its business only in the usual and ordinary
course without the creation of any additional indebtedness for money borrowed
maturing in more than one year; (ii) no change shall be made in the authorized
capitalization of RC except as contemplated by this Agreement; (iii) no shares
of capital stock of ▇▇▇▇▇▇ shall be authorized for issuance or issued and no
agreement or commitment for the issuance hereof shall be entered into; (iv) no
rights or elections shall be created or granted to purchase stock under any
employee stock bonus, thrift or purchase plan or otherwise; (v) no amendment
shall be made to RC's Articles of Incorporation or Bylaws, except as
contemplated by this Agreement; (vi) no modification shall be made in RC's
present employee benefit programs or in its present policies in regard to the
payment of salaries or compensation to its personnel and no increase shall be
made in the compensation of its personnel; (vii) no contract or commitment shall
be entered into by or on behalf of RC and no sale or purchase of assets shall be
made except in the ordinary course of business; (viii) RC will use all
reasonable and proper efforts to preserve its business organization intact, to
keep available the services of its present employees and to maintain
satisfactory relationships between RC and its suppliers, customers, regulatory
agencies, and other having business relations with it; (ix) RC shall make no
amendments or contributions to any profit sharing plan; and (x) the Board of
Directors of RC will not declare any dividends on, or otherwise make any
distribution in respect of, its outstanding shares of capital stock;
(b) From the date of this Agreement to and including the Closing Date,
except as may be first approved by RC or as is otherwise permitted or
contemplated by this Agreement: (i) ▇▇▇▇▇▇ (which term shall, where applicable
in this paragraph 6, also refer to the subsidiaries of ▇▇▇▇▇▇ specified in
paragraph 11 hereof) shall conduct its business only in the usual and ordinary
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course without the creation of any additional indebtedness exceeding $10,000 for
money borrowed maturing in more than one year, except for the lease of capital
equipment pursuant to leasing company commitments outstanding prior to the date
of this Agreement; (ii) no change shall be made in the authorized capitalization
of ▇▇▇▇▇▇, except as contemplated by this Agreement; (iii) no shares of capital
stock of ▇▇▇▇▇▇ shall be authorized for issuance or issued and no agreement or
commitment for the issuance thereof shall be entered into; (iv) no rights or
elections shall be created or granted to purchase stock under any employee stock
bonus, thrift or purchase plan or otherwise; (v) no amendment shall be made to
▇▇▇▇▇▇'▇ Articles of Incorporation or Bylaws, except as contemplated by this
Agreement; (vi) no modification shall be made in ▇▇▇▇▇▇'▇ present employee
benefit programs or in its present policies in regard to the payment of salaries
or compensation to its personnel and no increase shall be made in the
compensation of its personnel, provided that nothing herein shall preclude, (1)
the continuation of ▇▇▇▇▇▇'▇ present practice of periodically reviewing the
salaries of its personnel and granting normal increase in such salaries or
compensation to such personnel, or (2) the hiring of new personnel at a salary
or compensation deemed reasonable in the ordinary course of business; (vii) no
contract or commitment shall be entered into by or on behalf of ▇▇▇▇▇▇ and no
sale or purchase of assets shall be made except in the ordinary course of
business; (viii) ▇▇▇▇▇▇ will use all reasonable and proper efforts to preserve
its business organization intact, to keep available the services of its present
employees and to maintain satisfactory relationships between ▇▇▇▇▇▇ and its
suppliers, customers, regulatory agencies, and others having business relations
with it; (ix) ▇▇▇▇▇▇ shall make no amendments or contributions to its profit
sharing plan; and (x) the Board of Directors of ▇▇▇▇▇▇ will not declare any
dividends on, or otherwise make any distribution in respect of, its outstanding
shares of capital stock.
7. EFFORTS TO OBTAIN APPROVALS AND CONSENTS
In addition to RC and ▇▇▇▇▇▇ obtaining the requisite shareholder approval
as described in paragraph 1 hereof, RC and ▇▇▇▇▇▇ will use all reasonable and
proper efforts to obtain, where required, the approval and consent: (i) of any
governmental authorities having jurisdiction over the transactions contemplated
in this Agreement; and (ii) of such other persons whose consent is required to
the transactions contemplated by this Agreement.
8. COOPERATION BETWEEN PARTIES
RC and ▇▇▇▇▇▇ shall fully cooperate with each other and with their
respective counsel and accountants in connection with any steps required to be
taken as part of their obligations under this Agreement, including the
preparation of financial statements and the supplying of information.
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9. NO TAX RULING
RC and ▇▇▇▇▇▇ agree that they will not attempt to obtain ruling from the
United States Internal Revenue Service to the effect that for Federal income tax
purposes no gain or loss will be recognized to the holders of ▇▇▇▇▇▇ Capital
Stock upon the receipt of RC Common Stock in exchange for their ▇▇▇▇▇▇ shares in
accordance with the provisions of this Agreement.
10. REPRESENTATIONS OF RC
RC represents, warrants and agrees that:
(a) RC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and it and its subsidiaries are
duly qualified to do business and in good standing in every jurisdiction in
which the nature of its business of the character of its properties makes such
qualification necessary. RC's subsidiaries and a list of jurisdictions in which
Rc or its subsidiaries is so qualified is set forth in a memorandum prepared by
RC and previously furnished to ▇▇▇▇▇▇. RC and each of its subsidiaries has the
corporate power and any necessary governmental authority to own or lease their
respective properties now owned and to carry on their respective business as now
being conducted. RC owns 100% of the outstanding capital stock of each of its
subsidiaries.
(b) As of March 31, 2000, the capitalization of RC and its
subsidiaries is as set forth in financial statements previously furnished to
▇▇▇▇▇▇. The outstanding capital stock of RC has been duly authorized and issued
and is fully paid and nonassessable. RC has no commitment to issue nor will it
issue any shares of its capital stock or any securities or obligations
convertible into or exchangeable for, or giving any person any right to acquire
from RC, any shares of its capital stock, except for those shares issued in
conformity with paragraph 6(a)(iii) above.
(c) The shares of RC Common Stock which are to be issued and delivered
to the ▇▇▇▇▇▇ shareholders pursuant to the terms of this Agreement and the
Exchange Agreement, when so issued and delivered, will be validly authorized and
issued and will be fully paid and non-assessable. No stockholder of RC, or other
person, will have any preemptive rights in respect to the RC Common stock.
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(d) All of the above financial statements present fairly the
consolidated financial position of RC subsidiaries, at the periods indicated,
and the consolidated results of their operations and changes in their financial
position for the year and periods then ended in conformity with generally
accepted accounting principles applied on a consistent basis. RC has no material
liabilities or commitments other than as listed or noted on the aforesaid
financial statements, or as incurred in the ordinary course of business. Since
March 31, 2000 to the date of this Agreement, there has been no material adverse
change in the assets or liabilities or in the business or condition, financial
or otherwise, of RC or its subsidiaries, except in the ordinary course of
business or as contemplated by this Agreement nor has RC or its subsidiaries,
except in the ordinary course of business or as contemplated by this Agreement
nor has RC or its subsidiaries incurred any indebtedness for money borrowed. All
tax returns and reports of RC and its subsidiaries required by law to be filed
have been duly filed and all taxes, assessments and other governmental charges
now due (other than any still payable without penalty) upon RC and its
subsidiaries or upon any of their properties or assets. All amounts which have
been reflected as liabilities on the books of RC and its subsidiaries in respect
of taxes are considered adequate and RC does not know of any actual or proposed
additional assessments in respect of taxes, against either it or its
subsidiaries.
(e) Except for changes resulting from the ordinary course of its
business, RC and its subsidiaries own, and will on the Closing Date own, the
full right, title and interest in and to all their property and assets
(excluding property leased from others) in each case free and clear of all
mortgages, liens, restrictions, charges and other encumbrances and defects of
title (other than easements, rights of way, reservations and other conditions of
title, encumbrances and defects of title which are not individually or in the
aggregate materially adverse to the business of RC and its subsidiaries).
(f) Subsequent to March 31, 2000, RC has not declared or paid any
dividend on its outstanding shares of common stock or declared or made any
distribution on, or directly or indirectly redeemed, purchased or otherwise
acquired any of its outstanding stock or authorized the creation or issuance of,
or issued any additional shares of stock, or agreed to take any such action,
except as expressly provided for in Paragraph 6(a)iii above this Agreement. RC
will not take any such action during the period between the date hereof and the
Closing Date except as provided herein.
(g) Neither RC nor any of its subsidiaries is engaged in or a party
to, or to the knowledge of RC threatened with, any material legal action or
other proceeding before any court or administrative agency, except as set forth
and described in a memorandum prepared by RC and previously furnished to ▇▇▇▇▇▇.
Neither RC nor any of its subsidiaries, to the knowledge of RC, has been charged
7
with, and is not under investigation with regard to, any charge concerning any
presently pending material violation of any provision of Federal, State or other
applicable law or administrative regulations in respect of its business except
as set forth in said memorandum.
(h) There has not been, since March 31, 2000, and will not be prior to
the Closing Date, a purchase or sale or any other acquisition, transfer or
distribution of any assets or properties on the part of RC or its subsidiaries
except in the ordinary course of business.
(i) RC and its subsidiaries have adequate franchises, permits or
operating rights without unusual restrictions to allow them to conduct the
business in which they are presently engaged except in certain instances where
in the reasonably exercised judgment of RC the lack of a current franchise,
permit or operating right has no adverse effect on the conduct of such business.
(j) Except in each case as set forth in a memorandum prepared by RC
and previously furnished to ▇▇▇▇▇▇, as of the date of this Agreement neither RC
nor any of its subsidiaries is a holder of or a party to any: (i) written or
oral contract for employment of any officer or other person, (ii) contract with
any labor union, (iii) bonus, pension, profit sharing, retirement, stock
purchase, stock option, insurance, or similar plan or practice in effect with
respect to its employees or other person, (iv) indenture of mortgage, debenture,
indenture, loan or borrowing agreement, (v) bonding arrangement, including
performance bond, (vi) continuing contract for future purchase, sale, lease or
distribution of materials, services, supplied, products, or equipment involving
annual payments in excess of $10,000, (vi) lease or other commitment for the
rental of office space, storage or other facilities, (viii) contract or lease
agreement for the acquisition or lease of motor vehicles, (ix) patent, patent
application, patent right, patentable inventions, trademark, trademark
registration and applications therefor, trade name, copyright, copyright
registration and application therefor, patent license granted to or by RC or its
subsidiaries and in force or contracts with employees or others relating in
whole or in part to disclosure, assignment or patenting of any inventions,
discoveries improvements, shop rights, processes, formulae or other know-how,
presently owned or held, in whole or in part, by RC or its subsidiaries, (x)
insurance policy covering its properties, buildings, machinery, equipment,
furniture, fixtures or operations, or the life of any person, (xi) agreement
between a present employee of RC and persons, firms or corporations other than
RC relating in whole or in part to disclosure, assignment or patenting of
inventions, discoveries, improvements, shop rights, processes, formulae or other
know-how, including without limitation thereto, to the best knowledge of RC,
agreements entered into by such employees prior to the time they became
employees of RC, or (xii) material contract or commitment not made in the
ordinary course of business.
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(k) The execution and carrying out of this Agreement and compliance
with the terms and provisions hereof by RC will not conflict with or result in
any material breach of any of the terms, conditions, or provision of, or
constitute a default under, or result in the creation of, any lien, charge or
encumbrance upon any of the property or assets of RC or any of its subsidiaries
pursuant to any corporate charter, bylaw, indenture, mortgage, agreement (other
than that which is created by virtue of this Agreement), or other instrument to
which RC or any of its subsidiaries is a party or by which they are bound or
affected.
(l) This Agreement and the memoranda and documents furnished hereunder
on behalf of RC do not contain any untrue statement of a material fact nor omit
to state a material fact necessary to be stated in order to make the statements
contained herein and therein not misleading; and there is no fact which
materially adversely affects or in the future (so far as RC can now foresee)
will materially adversely affect the business operations, affairs or condition
of RC or its subsidiaries or any of the properties or assets which has not been
set forth in this Agreement and other documents and papers furnished hereunder.
11. REPRESENTATIONS OF ▇▇▇▇▇▇
▇▇▇▇▇▇ represents, warrants and agrees that:
(a) ▇▇▇▇▇▇ is a corporation duly organized, validly existing and in
good standing under the laws of the State of Arizona. ▇▇▇▇▇▇ has the corporate
power and any necessary governmental authority to own or lease its properties
now owned or leased and to carry on its business as now being conducted. ▇▇▇▇▇▇
is duly qualified to do business and in good standing in every jurisdiction in
which the nature of its business or the character of its properties makes such
qualification necessary.
(b) As of September 30 and December 31, 1999, the capitalization of
▇▇▇▇▇▇ is as set forth in financial statements previously furnished to RC.
▇▇▇▇▇▇ has no commitment to issue nor will it issue any shares of its capital
stock or any securities or obligations convertible into or exchangeable for, or
giving any person any right to acquire from ▇▇▇▇▇▇, any shares of its capital
stock, except for those shares issued or to be issued in conformity with
paragraph 6(b)(iii) above.
(c) ▇▇▇▇▇▇ has furnished RC with copies of its 1997 and 1998 federal
tax returns which contain certain financial information of ▇▇▇▇▇▇ for said year.
All of the above financial statements present fairly the consolidated financial
position of ▇▇▇▇▇▇ at the periods indicated, and the consolidated results of
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operations and changes in financial position for the periods then ended in
conformity with generally accepted accounting principles applied on a consistent
basis. ▇▇▇▇▇▇ has no material liabilities or commitments other than as listed or
noted on the aforesaid financial statements, or as incurred in the ordinary
course of business since the date of said financial statements, except under
agreements described in the memorandum referred to in paragraph 11(i) hereof.
Since December 31, 1999, there has been no material adverse change in the assets
or liabilities or in the business or condition, financial or otherwise, of
▇▇▇▇▇▇ or its consolidated subsidiaries, and no change except in the ordinary
course of business or as contemplated by this Agreement. All tax returns and
reports of ▇▇▇▇▇▇ and its subsidiaries required by law to be filed have been
duly filed and all taxes, assessments and other governmental charges now due
(other than any still payable without penalty) upon ▇▇▇▇▇▇ and its subsidiaries
or upon any of their properties or assets have been paid. All amounts which have
been reflected as liabilities on the books of ▇▇▇▇▇▇ and its subsidiaries in
respect of taxes are considered adequate and ▇▇▇▇▇▇ does not know of any actual
or proposed additional assessments in respect of taxes, against either it or its
subsidiaries.
(d) Except for changes resulting from the ordinary course of its
business and except for the mortgages, liens, restrictions, charges and other
encumbrances set forth in a memorandum prepared by ▇▇▇▇▇▇ and previously
furnished to RC, ▇▇▇▇▇▇ and its subsidiaries own, and will on the Closing Date
own, the full right, title and interest in and to all their property and assets
(excluding property leased from others) in each case free and clear of all
mortgages, liens, restrictions, charges and other encumbrances and defects of
title (other than easements, rights of way, reservations and other conditions of
title, encumbrances and defects of title which are not individually or in the
aggregate materially adverse to the business of ▇▇▇▇▇▇ and its subsidiaries).
(e) Subsequent to December 31, ▇▇▇▇, ▇▇▇▇▇▇ has not declared or paid any
dividend on its outstanding shares of common stock or declared or made any
distribution on, or directly or indirectly redeemed, purchased or otherwise
acquired any of its outstanding stock or authorized the creation or issuance of,
or issued any additional shares of stock, or agreed to take any such action,
except as expressly provided for in this Agreement. ▇▇▇▇▇▇ will not take any
such action during the period between the date hereof and the Closing Date
except as provided herein.
(f) Neither ▇▇▇▇▇▇ nor any of its subsidiaries is engaged in or a
party to, or to the knowledge of ▇▇▇▇▇▇ threatened with, any material legal
action or other proceeding before court or administrative agency except as set
forth in a memorandum prepared by ▇▇▇▇▇▇ and previously furnished to RC. Neither
▇▇▇▇▇▇ nor any of its subsidiaries, to the knowledge of ▇▇▇▇▇▇, has been charged
with, or is under investigation with respect to, any charge concerning any
10
presently pending material violation of any provision of Federal, State or other
applicable law or administrative regulations in respect of its business except
as set forth in said memorandum.
(g) There has not been, since December 31, 1999, and will not be prior
to the Closing Date, a purchase or sale or any other acquisition, transfer or
distribution of any assets or properties on the part of ▇▇▇▇▇▇ or its
subsidiaries, except in the ordinary course of business.
(h) ▇▇▇▇▇▇ and its subsidiaries have adequate franchises, permits or
operating rights without unusual restrictions to allow them to conduct the
business in which they are presently engaged, except in certain instances where
in the reasonably exercised judgment of ▇▇▇▇▇▇ the lack of a current franchise,
permit or operating right has no adverse effect on the conduct of such business.
(i) Except in each case as set forth in a memorandum prepared by
▇▇▇▇▇▇ and previously furnished to RC, as of the date of this Agreement neither
▇▇▇▇▇▇ nor any of its subsidiaries is a holder of or a party to any written or
oral (i) contract for employment of any officer or other person other than its
officers and Directors, (ii) contract with any labor union, (iii) bonus,
pension, profit sharing, retirement, stock purchase, stock option, insurance, or
similar plan or practice in effect with respect to its employees or other
persons, (iv) indenture of mortgage, debenture, indenture, loan or borrowing
agreement, (v) bonding arrangement, including performance bond, (vi) continuing
contract for future purchase, sales, lease or distribution of materials,
services, supplies, products, or equipment involving annual payments in excess
of $10,000, (vii) lease or other commitment for the rental of office space,
storage or other facilities, (viii) contract or lease agreement for the
acquisition or lease of motor vehicles, (ix) patent, patent application, patent
right, patentable inventions, trademark, trademark registration and applications
therefor, trade name, copyright, copyright registration and application
therefor, patent license granted to or by ▇▇▇▇▇▇ or its subsidiaries and in
force or contracts with employees or others relating in whole or in part to
disclosure, assignment or patenting of any inventions, discoveries,
improvements, shop rights, processes, formulae or other know-how, presently
owned or held, in whole or in part, by ▇▇▇▇▇▇ or its subsidiaries, (x) insurance
policy covering its properties, buildings machinery, equipment, and persons,
firms or operations, or the life of any person other than ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ and
▇▇. ▇▇▇▇▇▇▇, (xi) agreement between a present employee of ▇▇▇▇▇▇ and persons,
firms or corporations other than ▇▇▇▇▇▇ relating in whole or in art to
disclosure, assignment or patenting of inventions, discoveries, improvements,
shop rights, processes, formulae or other know-how, including without limitation
thereto, to the best knowledge of ▇▇▇▇▇▇, agreements entered into by such
11
employees prior to the time they became employees of ▇▇▇▇▇▇, or (xii) material
contract or commitment not made in the ordinary course of business.
(j) ▇▇▇▇▇▇ has the corporate power to enter into this Agreement, the
execution and delivery and performance of this Agreement have been duly
authorized by all requisite corporate action, and this Agreement constitutes the
valid and binding obligation of ▇▇▇▇▇▇.
(k) The execution and carrying out of this Agreement and compliance
with the terms and provisions hereof by ▇▇▇▇▇▇ will not conflict with or result
in any beach of any of them terms, conditions or provisions of, or constitute a
default under, or result in the creation of, any lien, charge, or encumbrance
upon any of the properties or assets of ▇▇▇▇▇▇ or any of its subsidiaries
pursuant to any corporate charter, indenture, mortgage, agreement (other than
that which is created by virtue of this Agreement) or other instrument to which
▇▇▇▇▇▇ or any of its subsidiaries is a party or by which it or any of its
subsidiaries is bound or affected.
(l) This Agreement and the memoranda and documents furnished hereunder
on behalf of ▇▇▇▇▇▇ do not contain any untrue statement of a material fact nor
omit to state a material fact necessary to be stated in order to make the
statements contained herein and therein not misleading; and there is no fact
which materially adversely affects or in the future (so far as ▇▇▇▇▇▇ can now
foresee) will materially adversely affect the business operations, affairs or
condition of vitro or any of its subsidiaries or any of its or their properties
or assets which has not been set forth in this Agreement or other documents and
papers furnished hereunder.
12. SURVIVAL OF WARRANTIES
The representations and warranties made herein by RC and ▇▇▇▇▇▇ shall
survive the Closing hereunder.
13. CONDITIONS TO THE OBLIGATIONS OF RC
The obligations of RC hereunder are subject to the satisfaction on or
before the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved by the unanimous written consent of the outstanding shares of
▇▇▇▇▇▇ Capital Stock and ▇▇▇▇▇▇'▇ Board of Directors.
12
(b) Each shareholder of ▇▇▇▇▇▇ will have properly executed and
delivered the shareholders agreement described in paragraph 4 hereof.
(c) The representations and warranties of ▇▇▇▇▇▇ contained in this
Agreement shall be true in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of such date, except for changes permitted by this Agreement or those
incurred in the ordinary course of business, and RC shall have received from
▇▇▇▇▇▇ at the Closing a certificate, dated the Closing Date, of the President of
▇▇▇▇▇▇ to that effect.
(d) Each and all of the respective agreements of ▇▇▇▇▇▇ to be
performed on or before the Closing Date pursuant to the terms hereof shall in
all material respects have been duly performed and ▇▇▇▇▇▇ shall have delivered
to RC a certificate dated the Closing Date, of the President of ▇▇▇▇▇▇ to that
effect.
14. CONDITIONS TO THE OBLIGATIONS OF ▇▇▇▇▇▇
The obligations of ▇▇▇▇▇▇ hereunder are subject to the satisfaction on or
before the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved by the unanimous written consent of the outstanding shares of RC
Common Stock and RC's Board of Directors.
(b) All the terms and covenants of this Agreement to be complied with
or performed by RC shall have been fully complied with and performed.
(c) All representations and warranties of RC contained in this
Agreement shall be true on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date,
and RC shall have delivered to ▇▇▇▇▇▇ a certificate dated the Closing Date of
the President of RC to that effect.
(d) The necessary approvals described in paragraph 7 hereof shall have
been granted.
(e) On the Closing Date, RC shall have furnished ▇▇▇▇▇▇ with a copy of
Board of Director Minutes which state that Messrs. King, Korndorffer, and
▇▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ have been appointed as officers and Directors of RC
and such individuals have been granted options for an aggregate of 1,750,000
shares of RC's common stock pursuant to a duly authorized stock option plan.
13
15. TERMINATION AND MODIFICATION RIGHTS
(a) This Agreement (except for the last three sentences of paragraph 3
hereof) may be terminated at any time prior to the Closing Date by (1) mutual
consent of the parties hereto authorized by their respective Boards of Directors
or (2) upon written notice to the other party, by either party upon
authorization of its Board of Directors:
(i) if in its reasonably exercised judgment there shall have
occurred a material adverse change in the financial condition or business of the
other party or the other party shall have suffered a material loss or damage to
any of its property or assets, which change, loss or damage materially affects
or impairs the ability of the other party to conduct its business, or if any
previously undisclosed condition which materially adversely affects the earning
power or assets of either party comes to the attention of the other party;
(ii) if the terms, covenants or conditions of this Agreement to
be complied with or performed by one of the other parties at or before the
Closing Date shall not have been materially complied with or performed at the
time required for such compliance or performance and such noncompliance or
nonperformance shall not have been waived by the party giving notice of
termination; and
(iii) if any action or proceeding shall have been instituted or
threatened before a court or other governmental body or by any public authority
to restrain or prohibit the transaction contemplated by this Agreement or if the
consummation of such transactions would subject either of such parties to
liability for breach of any law or regulation.
(b) As provided in paragraph 2(a), this Agreement may be terminated by
either party upon notice to the other in the event the Closing shall not be held
by April 30, 2000.
(c) Any term or condition of this Agreement may be waived at any time
by the party hereto which is entitled to the benefit thereof, by action taken by
the Board of Directors of such party; and any such term or condition may be
amended at any time, by an agreement in writing executed by the chairman of the
Board or the President of each of the parties pursuant to authorization by the
respective Boards of Directors; provided however, that no amendment of any
principal term of the Exchange shall be effected after approval of this
Agreement by the shareholders of ▇▇▇▇▇▇, unless such amendment is approved by
such shareholders in accordance with the respective state corporation law.
14
(d) This Agreement has been entered into with the understanding that
after the Closing, RC, without any placement assistance from ▇▇▇▇▇▇, will
conduct two private placements of common stock simultaneously in New York, New
Jersey, Florida, Arizona and such other states as to be determined and will sell
up to 1,000,000 shares of free trading RC common stock at $.30 per share to
accredited investors and will sell up to 500,000 shares of restricted RC common
stock at $.10 per share to investors who are not accredited investors (the
"Private Placements"). The Private Placement to accredited investors will have a
minimum escrow amount of $240,000 (800,000 shares) and the Private Placement to
non- accredited investors will have a minimum escrow amount of $10,000 (100,000
shares). Therefore, the total gross proceeds from the Private Placements will be
no less than $250,000 and no more than $350,000. In the event RC fails to raise
the Private Placement minimum of $250,000 and fails to break the escrow by June
15, 2000, a majority of the shareholders of ▇▇▇▇▇▇ may elect to terminate this
Agreement and return all of the RC Common Stock to RC and receive the return of
all of the ▇▇▇▇▇▇ Captial Stock. Notice of such election by a majority of the
▇▇▇▇▇▇ shareholders must be delivered to RC on or before June 30, 2000. During
the period the Private Placements are being conducted by RC, ▇▇▇▇▇▇ and RC shall
refrain form incurring any debts in the name of the other company.
16. EXPENSES
In the event this Agreement is terminated without consummation at the
Closing, RC and ▇▇▇▇▇▇ shall each pay all of its respective expenses incurred
for the purpose of carrying this Agreement into effect, except that each party
hereto, in addition to its own expenses, shall pay all of the non-breaching
party's reasonable out-of-pocket expenses if termination is caused by a breach
of any representation or warranty made in this Agreement or a default by said
party in performance of any obligation hereunder. In addition to its own
expenses, RC shall be solely liable for and shall bear the sole responsibility
for paying the fees of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP for its services in auditing ▇▇▇▇▇▇
and RC.
17. FINDERS
Each of the parties represents that no broker, agent, finder or similar
person has been retained or paid and that no brokerage fee or other commission
has been agreed to be paid for or on account of this Agreement.
18. GOVERNING LAW AND VENUE
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Arizona, United States of America. The parties hereby
expressly agree that the proper venue for any claim or cause of action by the
parties shall be district Court for Maricopa County, Arizona and the each party
15
upon execution of this Agreement consents to the service of process from such
court.
19. NOTICES
Any notices or other communications required or permitted hereunder shall
be sufficiently given if sent by certified mail, postage prepaid, addressed as
follows:
▇▇▇.▇▇▇ Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Computer, Inc.
▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
20. BINDING NATURE AND ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, but it may not be assigned by
any party without the consent of the other.
21. ASSIGNMENT
Rights and obligations of a party to this Agreement may not be assigned or
transferred without the other party's prior written consent thereto.
22. MODIFICATION
No modification or amendment of this Agreement shall be valid unless it is
in writing and signed by both parties hereto.
23. COMPLETE AGREEMENT
This Agreement constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings between the parties.
24. WAIVER
The waiver by either party of a breach of any term of this Agreement shall
not operate as, or be construed as, a waiver of any subsequent breach.
16
25. HEADINGS
The headings in this Agreement are inserted for convenience only and shall
not be considered in interpreting the provisions hereof.
26. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
17
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto by their respective officers thereunto duly authorized by a majority of
their directors as of the date first above written.
▇▇▇.▇▇▇ INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. Hair
-------------------------------------
▇▇▇▇▇▇▇ ▇. Hair, President
▇▇▇▇▇▇ COMPUTER, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, Chairman
18
EXHIBIT A
AGREEMENT OF EXCHANGE
OF
▇▇▇.▇▇▇ INC.
AND
▇▇▇▇▇▇ COMPUTER, INC.
AGREEMENT OF EXCHANGE made as of the 6th of April 2000, by and between
▇▇▇.▇▇▇ Inc., a Nevada corporation (herein "RC"), and ▇▇▇▇▇▇ Computer, Inc., an
Arizona corporation (herein "▇▇▇▇▇▇"). RC and ▇▇▇▇▇▇ are sometimes hereinafter
collectively referred to as the "Constituent Corporations".
RECITALS:
RC is a Nevada corporation organized on February 14, 2000 and its
authorized capital stock consists of 20,000,000 shares of common stock, $.001
par value (the "RC Common Stock") and 10,000,000 shares of preferred stock,
$.001 par value (the "RC Preferred Stock"), of which 200,000 shares of RC Common
Stock and 0 shares of RC Preferred Stock were issued and outstanding as of April
6, 2000 and no shares of RC Common Stock were reserved for issuance upon
exercise of any outstanding common or preferred stock purchase warrants or
options.
▇▇▇▇▇▇ is an Arizona corporation organized on June 14, 1991 and its
authorized capital stock consists of 1,000,000 shares of common stock, no par
value (the "▇▇▇▇▇▇ Common Stock") of which 2,000 shares of ▇▇▇▇▇▇ Common Stock
were issued and outstanding as of April 6, 2000 and no shares of ▇▇▇▇▇▇ Common
Stock were reserved for issuance upon exercise of any outstanding common stock
purchase warrants or options.
RC and ▇▇▇▇▇▇ have entered into an Agreement Of Share Exchange and Plan of
Reorganization dated April 3, 2000 (the "Reorganization Agreement") setting
forth certain representations, warranties, agreements and conditions in
connection with the exchange provided for herein.
The respective Board of Directors of RC and ▇▇▇▇▇▇ have, by resolution,
duly approved the execution of and the transaction contemplated by the
Reorganization Agreement and this Agreement of Exchange and directed that they
be submitted to the shareholders of ▇▇▇▇▇▇ for adoption and approval.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto have agreed and do
hereby agree, subject to the terms and conditions hereinafter set forth, as
follows:
1
I
EXCHANGE
1.1 In accordance with the provisions of this Agreement and Section 1(a) of
Reorganization Agreement, each of the 2,000 shares of ▇▇▇▇▇▇ Common Stock
outstanding as the Effective Date of the Exchange shall be exchanged for One
Thousand Seven Hundred (1,700) shares of Rc Common Stock to be issued upon the
Effective Date of the Exchange. RC shall be and is herein sometimes referred to
as the "Acquiring Corporation".
1.2 Upon the Effective Date of the Exchange (as defined in Article III
hereof) ▇▇▇▇▇▇ shall become a wholly-owned subsidiary of RC, (i) shall continue
to possess all of its rights and property as constituted immediately prior to
the Effective Date of the Exchange and (ii) shall continue subject to all of its
debts and liabilities as the same shall have existed immediately prior to the
Effective Date of the Exchange. All rights of creditors and all liens upon the
property of each of the Constituent Corporations shall be preserved unimpaired.
1.3 RC hereby agrees that at and after the time when the Exchange shall
become effective and as and when required by the provisions of the
Reorganization Agreement, RC will issue certificates representing that number of
shares of common stock, $.001 par value, of RC (collectively, "Exchange Shares")
for which shares of ▇▇▇▇▇▇ Common Stock issued and outstanding immediately prior
to the Effective Date of the Exchange will, as of the Effective Date of the
Exchange and by virtue of the Exchange, be exchanged as hereinafter provided.
1.4 The Exchange shall not become effective until the following actions
shall have been completed: (i) this Agreement of Exchange shall have been
adopted and approved by unanimous written consent of the shareholders of ▇▇▇▇▇▇
in accordance with the requirements of Arizona corporate law; and (ii) all of
the other conditions precedent to the consummation of the Exchange specified in
the Reorganization Agreement shall have been satisfied or duly waived by the
party entitled to satisfaction thereof.
II
EXCHANGE OF SHARES
The manner and basis of exchanging shares of ▇▇▇▇▇▇ Common Stock for the
Exchange Shares and the exchange of certificates therefor, shall be as follows:
2.1 Each one (1.0) share of ▇▇▇▇▇▇ Common Stock which shall be issued and
outstanding immediately prior to the Effective Date of the Exchange shall, by
2
virtue of the Exchange and without any action on the part of the holder thereof
other than that set forth in the Reorganization Agreement, be exchanged at the
Effective Date of the Exchange into One Thousand Seven Hundred (1,700) shares of
the Exchange Shares. If between the date hereof and the Effective Date of the
Exchange, RC or ▇▇▇▇▇▇ shall either effect any reclassification,
recapitalization, subdivision, combination or exchange of shares, in respect of
their respective outstanding common stock, or a stock dividend thereon shall be
declared with a record date within said period, the per share amounts of the
Exchange Shares to be issued and delivered as provided in this Agreement shall
be appropriately adjusted.
2.2 After the Effective Date of the Exchange certificates evidencing
outstanding shares of ▇▇▇▇▇▇ Common Stock shall evidence the right of the holder
thereof to receive certificates for shares of the Exchange Shares at the
applicable rate as aforesaid. Each holder of ▇▇▇▇▇▇ Common Stock, upon surrender
of the certificate or certificates, which prior thereto represented shares of
▇▇▇▇▇▇ Common Stock, to RC's stock transfer agent, which shall act as the
exchange agent (the "Exchange Agent") for such shareholder to effect the
exchange of certificates on their behalf, shall be entitled upon such surrender
to receive in exchange therefor a certificate or certificates representing the
number of whole shares of the Exchange Shares into which the shares of ▇▇▇▇▇▇
Common Stock theretofore represented by the certificate or certificates so
surrendered shall have been exchanged as aforesaid. Until so surrendered, each
such outstanding certificate for shares of ▇▇▇▇▇▇ Common Stock shall be deemed
for all corporate purposes, including voting rights, subject to the future
provisions of this Article II, to evidence the ownership of the shares of the
Exchange Shares into which such shares have been so exchanged. No dividends or
distributions will be paid to persons entitled to receive certificates for
shares of the Exchange Shares pursuant hereto until such persons shall have
surrendered their certificates which prior to the Effective Date of the Exchange
represented shares of ▇▇▇▇▇▇ Common Stock; but there shall be paid to the record
holder of each such certificate, with respect to the number of whole shares of
the Exchange Shares issued in exchange therefor (i) upon such surrender,the
amount of any dividends or distributions with a record date subsequent to the
Effective Date of the Exchange and prior to surrender which shall have become
payable thereon since the Effective Date of the Exchange, without interest, and
(ii) after such surrender, the amount of any dividends thereon with a record
date subsequent to the Effective Date of the Exchange and prior to surrender and
the payment date of which shall be subsequent to surrender; such amount to be
paid on such payment date.
2.3 No certificate representing a fraction of a share of the Exchange
Shares will be issued and no right to vote or receive any distribution or any
other right of a shareholder shall attach to any fractional interest in a share
3
of the Exchange Shares to which any holder of shares of ▇▇▇▇▇▇ Common Stock
would otherwise be entitled hereunder. In lieu thereof, each holder of shares of
▇▇▇▇▇▇ Common Stock entitled to a fraction of a share of the Exchange Shares
shall receive one whole share of RC Common Stock if the fraction of a share is
equal to or greater than one-half share (.50); otherwise, the holder of the
fraction of a share shall receive no additional share.
2.4 If any certificate for shares of the Exchange Shares is to be issued in
a name other than that in which the certificate surrendered in exchange therefor
is registered, it shall be a condition of the issuance thereof that the
certificate so surrendered shall be properly endorsed and otherwise be in proper
form for transfer and that the person requesting such exchange pay to the
Exchange Agent any transfer or other taxes required by reason of the issuance of
a certificate for shares of the Exchange Shares in any name other than that of
the registered holder of the certificate surrendered, or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
2.5 At the Effective Date of the Exchange, all shares of ▇▇▇▇▇▇ Common
Stock which shall then be held in its treasury, if any, shall cease to exist,
and all certificates representing such shares shall be canceled.
III
EFFECTIVE DATE OF EXCHANGE; ABANDONMENT OF EXCHANGE
3.1 Subject to the provisions of this Article III, this Agreement shall be
submitted to the shareholders of ▇▇▇▇▇▇ as provided in the Reorganization
Agreement. If adopted and approved by the vote of the shareholders of each of
the Constituent Corporations, if required by statute, and if all of the
conditions precedent to the consummation of the Exchange specified in the
Reorganization Agreement shall have been satisfied or duly waived by the party
entitled to satisfaction thereof, then unless terminated as provided in this
Article III, the Exchange Certificate shall be filed with the Secretary of the
States of Nevada and Arizona. The Effective Date of the Exchange is the date
upon which a duly executed copy of the Exchange Certificate is filed with the
Secretary of the States of Nevada and Arizona. The date when the Exchange shall
become effective as aforesaid is herein called the "Effective Date of the
Exchange".
3.2 This Agreement of Exchange may be terminated and the proposed Exchange
abandoned at any time prior to the Effective Date of the Exchange, and whether
before or after approval of this Agreement of Exchange by the Board of Directors
or shareholders of either of the Constituent Corporations, in the manner
provided in the Reorganization Agreement.
4
IV
MISCELLANEOUS
4.1 For the convenience of the parties hereto and to facilitate the filing
of this Agreement of Exchange, any number of counterparts hereof may be
executed; and each such counterpart shall be deemed to be an original
instrument.
4.2 At any time prior to the Effective Date of the Exchange the parties
hereto may, by written agreement, (a) extend the time for the performance of any
of the obligations or other acts of the parties hereto, (b) waive (in the manner
specified in Paragraph 16 of the Reorganization Agreement) any breach or
inaccuracy in the representations and warranties contained in this Agreement of
Exchange or in the Reorganization Agreement or in any document delivered
pursuant thereto, or (c) waive (in the manner specified in Paragraph 15 of the
Reorganization Agreement) compliance with any of the covenants, conditions or
agreements contained in this Agreement of Exchange or in the Reorganization
Agreement.
4.3 The corporation parties to this Agreement are also parties to the
Reorganization Agreement. The two agreements are intended to be construed
together in order to effectuate their purposes, and said agreements are intended
as a plan or reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1954, as amended.
5
IN WITNESS WHEREOF, each of the undersigned corporations has caused this
Agreement of Exchange to be signed in its corporate name by its duly authorized
officers and its corporate seal to be affixed hereto, all as of the date first
above written.
▇▇▇.▇▇▇ INC.
By:
-------------------------------------
President
▇▇▇▇▇▇ COMPUTER, INC.
By:
-------------------------------------
Chairman
6