Exhibit 1
ACQUISITION AGREEMENT
between
EXPLORE TECHNOLOGIES, INC.
("Explore")
and
▇▇▇▇▇▇▇▇▇.▇▇▇. INC
("▇▇▇▇▇▇▇▇▇.▇▇▇")
AGREEMENT AND PLAN OF ACQUISITION
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THIS AGREEMENT (the "Agreement") is entered into on the October 5, 2000, by
and among EXPLORE TECHNOLOGIES, INC., a Nevada corporation (hereinafter referred
to as "Explore") and ▇▇▇▇▇▇▇▇▇.▇▇▇. INC., a British Columbia corporation
(hereinafter referred to as "▇▇▇▇▇▇▇▇▇.▇▇▇").
R E C I T A L S:
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WHEREAS, the parties believe that a Purchase of ▇▇▇▇▇▇▇▇▇.▇▇▇ by Explore is in
the best interests of the parties to this Agreement and their respective
Shareholders; and
WHEREAS, the respective Boards of Directors and shareholders of the parties have
approved, or will meet to consider and approve, the acquisition of
▇▇▇▇▇▇▇▇▇.▇▇▇ by Explore, upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
in this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:
ARTICLE I. THE ACQUISITION
1.01 The Acquisition. At the Effective Time (as defined in Section 1.03
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hereof) and subject to and upon the terms and conditions of this Agreement,
Explore shall acquire 100% of the issued and outstanding common and preferred
shares of ▇▇▇▇▇▇▇▇▇.▇▇▇ . Following the Acquisition, Explore will continue to
operate as a holding Company and ▇▇▇▇▇▇▇▇▇.▇▇▇ will continue to operate as a
wholly owned subsidiary. (Explore and ▇▇▇▇▇▇▇▇▇.▇▇▇ are sometimes referred to
collectively herein as the "Constituent Companies").
1.02 Effects of the Acquisition. At the Effective Time, Explore will, without
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any other action, possess all the rights, privileges, powers and franchises, of
a public as well as of a private nature, and be subject to all the restrictions,
disabilities and duties of each of the Constituent Companies; and all rights,
privileges, powers and franchises of each of the Constituent Companies, and the
title to any real estate vested by deed or otherwise in the Constituent
Companies will not revert or be in any way impaired by reason of the
Acquisition; but all rights of creditors and all liens upon any property of
either of the Constituent Companies will be preserved unimpaired.
1.03 Closing; Effective Time and Transaction Effective Date. The closing of
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the Acquisition (the "Closing") will take place on a date to be specified by
the parties, but in no event more than ten (10) business days following approval
of the Acquisition by the Shareholders of Explore and ▇▇▇▇▇▇▇▇▇.▇▇▇ (the
"Closing Date"), subject to satisfaction or waiver of the conditions set forth
in this Agreement, at the offices of Explore in Vancouver, British Columbia.
The Acquisition will become effective at the time of the filing of the
Certificate of Acquisition with the offices of the Secretary of State of the
State of Nevada in accordance with the provisions of applicable law, which
Certificates of Acquisition will be so filed as soon as practicable after the
Closing. The date and time when the Acquisition will become effective shall be
at such time as the Certificates of Acquisition are duly filed with the Nevada
Secretary of State or such later date as mutually agreeable to the Constituent
Companies and specified in the Certificates of Acquisition (the "Effective
Time").
1.04 Certificate of Incorporation. The Articles of Organization and Bylaws of
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Explore in effect immediately prior to the Effective Time will remain the
Articles of Organization and Bylaws of Explore until amended in accordance with
the provisions of the applicable corporate law.
ARTICLE II. STATUS AND CONVERSION OF SECURITIES;
ACQUISITION CONSIDERATION
2.01 Conversion of Securities. At the Effective Time, each share of the common
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stock of ▇▇▇▇▇▇▇▇▇.▇▇▇ (the "▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock") issued and outstanding
immediately prior to the Effective Time will, by virtue of the Acquisition and
without any action on the part of the holders thereof, be tended and transferred
to Explore and each outstanding share of ▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock held by the
Shareholders of ▇▇▇▇▇▇▇▇▇.▇▇▇ will be converted into the right to receive the
Acquisition Consideration (as defined in Section 2.02 hereof) as described
below.
2.02 Acquisition Consideration. As of the Effective Time, each issued and
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outstanding share of ▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock held by the Shareholders of
▇▇▇▇▇▇▇▇▇.▇▇▇ (collectively, the "▇▇▇▇▇▇▇▇▇.▇▇▇ Shareholders"), comprising all
of the issued and outstanding shares of ▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock as of the
Effective Time, will be tended and converted into a right to receive 5,000,000
(five Million) shares of the common stock of Explore such that Explore will
issue an aggregate of 5,000,000 (five Million) shares of its common stock on
Closing (the "Explore Common Stock" and in aggregate, the "Acquisition
Consideration"). Since as of the Effective Time all shares of the ▇▇▇▇▇▇▇▇▇.▇▇▇
Common Stock will be owned by Explore each holder of shares of ▇▇▇▇▇▇▇▇▇.▇▇▇
Common Stock will cease to have any rights with respect thereto, except the
right to receive the Acquisition Consideration and any cash in lieu of
fractional shares of Explore Common Stock to be issued or paid in consideration
therefore upon surrender of such certificate in accordance with Section 2.03.
2.03 Delivery of Acquisition Consideration. Explore shall deliver the
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Acquisition Consideration to each holder of ▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock within
five (5) business days of Closing
or within five (5) business days after surrender of certificates (the
"Certificates") representing all shares of ▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock owned by
such individual, whichever is later.
(1) Certificates. The Certificates shall forthwith be transferred upon
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surrender. Until surrendered as contemplated by this Section 2.03,
each such Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender that
pro rata portion of the Acquisition Consideration applicable thereto.
No interest will be paid or will accrue on any portion of the
Acquisition Consideration. In the event any such Certificate is not
duly surrendered within six (6) months of Closing, the holder thereof
will automatically forfeit all rights therein, including the right to
receive any Acquisition Consideration, and any obligation of Explore
or either Constituent Company with respect to such Certificate will be
rendered null and void.
(2) No Further Ownership Rights in ▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock. All shares
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of Explore Common Stock issued upon the surrender for exchange of the
Certificates in accordance with the terms of this Article II shall be
deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to ▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock theretofore
represented by such Certificates, and there shall be no further
registration or transfer of the shares of ▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock
after the Effective Time.
(3) No Fractional Shares. No certificates or scrip representing
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fractional shares of Explore Common Stock shall be issued upon the
surrender of certificates of ▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock for exchange,
and such fractional share interests will not entitle the owner thereof
to vote or to any rights as a stockholder of Explore. Notwithstanding
any other provision of this Agreement, each holder of ▇▇▇▇▇▇▇▇▇.▇▇▇
Common Stock exchanged pursuant to the Acquisition who would otherwise
have been entitled to receive a fraction of a share of Explore Common
Stock (after taking into account all Certificates delivered by such
holder) will promptly receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of
Explore Common Stock multiplied by the per share closing price of such
Explore Common Stock as reported on the Nasdaq Over-The-Counter
Bulletin Board on the date of the Effective Time.
(4) Lost Certificates. In the event any Certificates have been lost,
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stolen or destroyed, upon the making of an affidavit of that fact, in
form and substance reasonably satisfactory to Explore, by the person
claiming such certificate to be lost, stolen or destroyed, Explore
will issue in exchange for such lost, stolen or destroyed Certificate
the shares of Explore Common Stock and cash in lieu of fractional
shares, deliverable in respect thereof pursuant to this Agreement.
2.04 Cancellation of Treasury Shares. Any authorized but unissued shares of
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▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock as of the Effective Time shall automatically be
canceled and retired and shall cease to exist, and no Explore Common Stock, cash
or other consideration will be delivered in exchange therefore.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇▇▇.▇▇▇
As an inducement to Explore to enter into this Agreement and to consummate the
Acquisition, ▇▇▇▇▇▇▇▇▇.▇▇▇ represents and warrants to Explore, which
representations and warranties will be true and correct at Closing and will
survive Closing, as follows:
3.01 Organization, Qualification and Authority. ▇▇▇▇▇▇▇▇▇.▇▇▇ is a corporation
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duly organized, validly existing and in good standing in the Province of British
Columbia and is qualified as a foreign corporation in each jurisdiction in which
its business requires it to be qualified. Since the date of its organization
and incorporation, ▇▇▇▇▇▇▇▇▇.▇▇▇ has consistently observed and operated within
the corporate formalities of the jurisdictions in which it is incorporated
and/or conducts its business, and has consistently observed and complied with
the general corporation law of such jurisdictions. True and complete copies of
the Memoranda and Articles of Association, as currently in effect, of
▇▇▇▇▇▇▇▇▇.▇▇▇ have been delivered to Explore. No amendments to any such
Memoranda and Articles of Association have been authorized. ▇▇▇▇▇▇▇▇▇.▇▇▇ has
the full corporate power and authority to own, lease and operate its properties
and assets as presently owned, leased and operated and to carry on its business
as it is now being conducted. ▇▇▇▇▇▇▇▇▇.▇▇▇ has the full right, power and
authority to execute, deliver and carry out the terms of this Agreement and all
documents and agreements necessary to give effect to the provisions of this
Agreement. Subject to obtaining requisite approval of the Board of Directors of
▇▇▇▇▇▇▇▇▇.▇▇▇, execution, delivery and consummation of this Agreement and all
other agreements and documents executed in connection herewith by ▇▇▇▇▇▇▇▇▇.▇▇▇
have been duly authorized by all necessary corporate action on the part of
▇▇▇▇▇▇▇▇▇.▇▇▇ and no other action on the part of ▇▇▇▇▇▇▇▇▇.▇▇▇ or any other
person or entity is necessary to authorize the execution, delivery and
consummation of this Agreement and all other agreements and documents executed
in connection herewith. This Agreement and all other agreements and documents
executed in connection herewith by ▇▇▇▇▇▇▇▇▇.▇▇▇, upon due execution and
delivery thereof, will constitute the valid and binding obligations of
▇▇▇▇▇▇▇▇▇.▇▇▇, enforceable in accordance with their respective terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally and by general principles of equity.
3.02 Capitalization and Stock Ownership.
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(a) Common Stock. The authorized capital stock of ▇▇▇▇▇▇▇▇▇.▇▇▇ consists
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of 102,300 shares of common stock (the "▇▇▇▇▇▇▇▇▇.▇▇▇ Stock"). The
issued and outstanding securities of ▇▇▇▇▇▇▇▇▇.▇▇▇ consist of 200
shares of ▇▇▇▇▇▇▇▇▇.▇▇▇ Stock, each of which shares is duly
authorized, validly issued, fully paid and non-assessable. The
▇▇▇▇▇▇▇▇▇.▇▇▇ Stock is not subject to preemptive or comparable rights.
The ▇▇▇▇▇▇▇▇▇.▇▇▇ Stock has been issued in accordance with all
applicable federal and state securities laws.
(b) Other Securities. There are not any existing options, warrants,
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calls, subscriptions or other rights or agreements or commitments
obligating ▇▇▇▇▇▇▇▇▇.▇▇▇ to issue, transfer or sell any of its capital
stock or any other security convertible into or evidencing the right
to subscribe for any such stock.
(c) Related Agreements. There are no voting trusts, voting agreements,
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shareholders' agreements or other comparable commitments or
understandings to which ▇▇▇▇▇▇▇▇▇.▇▇▇ is a party or by which
▇▇▇▇▇▇▇▇▇.▇▇▇ is bound with respect to the voting of any ▇▇▇▇▇▇▇▇▇.▇▇▇
Stock.
3.03 Absence of Default. The execution, delivery and consummation of this
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Agreement, and all other agreements and documents executed in connection
herewith by ▇▇▇▇▇▇▇▇▇.▇▇▇ will not constitute a violation of, be in conflict
with, or, with or without the giving of notice or the passage of time, or both,
result in a breach of, constitute a default under, or create (or cause the
acceleration of the maturity of) any debt, indenture, obligation or liability or
result in the creation or imposition of any security interest, lien, charge or
other encumbrance upon any of the assets of ▇▇▇▇▇▇▇▇▇.▇▇▇ under: (a) any term
or provision of the Memoranda and Articles of Association of ▇▇▇▇▇▇▇▇▇.▇▇▇; (b)
any material contract, lease, purchase order, agreement, document or other
commitment, oral or written, to which ▇▇▇▇▇▇▇▇▇.▇▇▇ is a party or by which
▇▇▇▇▇▇▇▇▇.▇▇▇ is bound (collectively, the "▇▇▇▇▇▇▇▇▇.▇▇▇ Contracts") (for
purposes of categorizing contracts, "material" is defined to exclude any
contract, lease, purchase order, agreement, document or commitment which both
(y) in terms of payments, costs, services or other measure does not exceed
$5,000.00 in the aggregate, and (z) is terminable without penalty upon ninety
(90) days' written notice or less); (c) any judgment, decree, order, writ,
injunction or rule of any court or regulatory authority; or (d) to the
knowledge of ▇▇▇▇▇▇▇▇▇.▇▇▇, any law, statute, rule or regulation to which
▇▇▇▇▇▇▇▇▇.▇▇▇ is subject.
3.04 Financial Statements. Attached hereto as Exhibit 3.04 are true and
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correct copies of unaudited financial statements of the business of
▇▇▇▇▇▇▇▇▇.▇▇▇, for the period ending August 31, 2000 (the "▇▇▇▇▇▇▇▇▇.▇▇▇
Financial Statements"). The ▇▇▇▇▇▇▇▇▇.▇▇▇ Financial Statements are based on the
books and records of ▇▇▇▇▇▇▇▇▇.▇▇▇ and present fairly and accurately the assets,
liabilities and financial position of ▇▇▇▇▇▇▇▇▇.▇▇▇ as of, and the results of
its operations for, the respective periods specified. The ▇▇▇▇▇▇▇▇▇.▇▇▇
Financial Statements have been prepared in accordance with generally accepted
accounting principles. ▇▇▇▇▇▇▇▇▇.▇▇▇ will prepare and deliver to Explore
audited financial statements for the period ending August 31, 2000 by no later
than December 31, 2000. Upon receipt by Explore, the audited financial
statements will deem to be included as part of the ▇▇▇▇▇▇▇▇▇.▇▇▇ Financial
Statements for the purposes of interpreting ▇▇▇▇▇▇▇▇▇.▇▇▇'s representations and
warranties under this Agreement.
3.05 Operations Since March, 2000. Since March 2000 and except as contemplated
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by this Agreement and as a result of the execution of the agreements referred to
in Section 3.07 of this Agreement, there has been no:
(1) change in the assets, liabilities or financial condition of
▇▇▇▇▇▇▇▇▇.▇▇▇ which has a material adverse effect on ▇▇▇▇▇▇▇▇▇.▇▇▇'s
assets or business;
(2) material loss, damage or destruction of or to any of the assets of
▇▇▇▇▇▇▇▇▇.▇▇▇, whether or not covered by insurance;
(3) sale, lease, transfer or other disposition by ▇▇▇▇▇▇▇▇▇.▇▇▇ of, or
mortgages or pledges of or the imposition of any lien, charge or
encumbrance on, any material portion of the assets of ▇▇▇▇▇▇▇▇▇.▇▇▇,
other than those made in the ordinary course of business;
(4) substantial increase in the compensation payable by ▇▇▇▇▇▇▇▇▇.▇▇▇ to
any of its employees, directors, independent contractors or agents, or
increase in, or institution of, any bonus, insurance, pension, profit-
sharing or other employee benefit plan or arrangements made to, for or
with the employees, directors, independent contractors or agents of
▇▇▇▇▇▇▇▇▇.▇▇▇;
(5) payment by ▇▇▇▇▇▇▇▇▇.▇▇▇ of any dividend or other distribution to its
Shareholders;
(6) material change in the accounting methods or practices employed by
▇▇▇▇▇▇▇▇▇.▇▇▇ or change in adopted depreciation or amortization
policies; or
(7) strike, work stoppage or other labor dispute by or with ▇▇▇▇▇▇▇▇▇.▇▇▇
employees which materially adversely affects ▇▇▇▇▇▇▇▇▇.▇▇▇'s
operations.
3.06 Licenses. ▇▇▇▇▇▇▇▇▇.▇▇▇ has all local, state and federal licenses,
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permits, registrations, certificates, contracts, consents, accreditations and
approvals (collectively, the "Licenses") necessary for it to occupy, operate and
conduct its business, and there do not exist any waivers or exemptions relating
thereto. To the knowledge of ▇▇▇▇▇▇▇▇▇.▇▇▇, there is no material default on the
part of ▇▇▇▇▇▇▇▇▇.▇▇▇ under any of the Licenses and there exist no grounds for
revocation, suspension or limitation of any of the Licenses. Neither the
execution nor delivery of this Agreement nor the consummation of any of the
transactions contemplated hereunder will result in any revocation or termination
of any License.
3.07 Contracts.
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▇▇▇▇▇▇▇▇▇.▇▇▇ has provided or will provide to Explore, prior to closing, copies
of all material contracts to which ▇▇▇▇▇▇▇▇▇.▇▇▇ is a party (the "▇▇▇▇▇▇▇▇▇.▇▇▇"
Contracts.
No ▇▇▇▇▇▇▇▇▇.▇▇▇ Contract has been modified or amended from the form that has
been provided to Explore for review. No event or condition has happened or
presently exists which constitutes a default or breach or, after notice or lapse
of time or both, would constitute a default or breach by ▇▇▇▇▇▇▇▇▇.▇▇▇ under any
▇▇▇▇▇▇▇▇▇.▇▇▇ Contract. No ▇▇▇▇▇▇▇▇▇.▇▇▇ Contract has been entered into with
any affiliate of ▇▇▇▇▇▇▇▇▇.▇▇▇. The consummation of the transactions
contemplated hereunder will not default, alternate or terminate any
▇▇▇▇▇▇▇▇▇.▇▇▇ Contract.
3.08 Environmental Matters.
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(1) Hazardous Substances. As used in this Section, the term
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"Hazardous Substances" means any hazardous or toxic substances,
materials or wastes, including but not limited to those
substances, materials, and wastes defined in Paragraph 101 of the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), listed in the United States
Department of Transportation Table (49 CFR 172.101) or by the
Environmental Protection Agency as hazardous substances pursuant
to 40 CFR Part 302, or which are regulated under any other
Environmental Law (as such term is defined herein), and any of
the following: hydrocarbons, petroleum and petroleum products,
asbestos, polychlorinated biphenyls, formaldehyde, radioactive
substances (other than naturally occurring materials in place),
flammables and explosives.
(2) Compliance with Laws and Regulations. All operations or
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activities of ▇▇▇▇▇▇▇▇▇.▇▇▇ on, and any use or occupancy by
▇▇▇▇▇▇▇▇▇.▇▇▇ of, the real estate necessary to operate the
business of ▇▇▇▇▇▇▇▇▇.▇▇▇ are in material compliance with any and
all laws, regulations, orders, codes, judicial decisions,
decrees, licenses, permits and other applicable requirements of
governmental authorities with respect to Hazardous Substances,
pollution or protection of human health and safety (collectively,
"Environmental Law"), including but not limited to the release,
emission, discharge, storage and removal of Hazardous Substances.
To the knowledge of ▇▇▇▇▇▇▇▇▇.▇▇▇, without inquiry, all prior
owners, operators and occupants of such real estate complied with
Environmental Law. ▇▇▇▇▇▇▇▇▇.▇▇▇ is not aware of any pending or
threatened claim, lawsuit, investigation or inquiry regarding
non-compliance with Environmental Law pertaining to the
operations of, or real estate leased by, ▇▇▇▇▇▇▇▇▇.▇▇▇.
3.09 Litigation. There are no lawsuits, proceedings, actions, arbitrations,
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governmental investigations, claims, inquiries or proceedings pending or, to the
knowledge of ▇▇▇▇▇▇▇▇▇.▇▇▇, threatened involving ▇▇▇▇▇▇▇▇▇.▇▇▇. ▇▇▇▇▇▇▇▇▇.▇▇▇
knows of no basis for any lawsuits, proceedings, actions, arbitrations,
governmental investigations, claims, inquiries or proceedings involving
▇▇▇▇▇▇▇▇▇.▇▇▇.
3.10 Employees.
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(a) Exhibit 3.10 attached hereto sets forth a complete list of all
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▇▇▇▇▇▇▇▇▇.▇▇▇ officers and employees with their rates of pay, job
titles and employment start dates.
(b) ▇▇▇▇▇▇▇▇▇.▇▇▇ is not a party to any labor contract, collective
bargaining agreement, contract, letter of understanding, or any
other arrangement, formal or informal, with any labor union or
organization which obligates it to compensate its employees at
prevailing rates or union scale, nor are any of such employees
represented by any labor union or organization. There is no
pending or, to the knowledge of ▇▇▇▇▇▇▇▇▇.▇▇▇, threatened labor
dispute, work stoppage, unfair labor practice complaint, strike,
administrative or court proceeding or order between ▇▇▇▇▇▇▇▇▇.▇▇▇
and any of its employees. There is no pending or, to the
knowledge of ▇▇▇▇▇▇▇▇▇.▇▇▇, threatened suit, action,
investigation or claim between ▇▇▇▇▇▇▇▇▇.▇▇▇ and any of its
present or former employees. ▇▇▇▇▇▇▇▇▇.▇▇▇ knows of no labor
union organizing activity at any location of ▇▇▇▇▇▇▇▇▇.▇▇▇ within
the last three (3) years.
3.11 Insurance. ▇▇▇▇▇▇▇▇▇.▇▇▇ has in effect and has continuously maintained
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insurance coverage for all of its operations, personnel and assets.
3.12 Broker's or Finder's Fee. ▇▇▇▇▇▇▇▇▇.▇▇▇ has not employed, and is not
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liable for the payment of any fee to, any finder, broker or similar person in
connection with the transactions contemplated under this Agreement.
3.13 Employee Benefit Plans. Other than health and comparable insurance,
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▇▇▇▇▇▇▇▇▇.▇▇▇ does not maintain or contribute to, or is required to maintain or
contribute to, any "employee welfare benefit plan" or any "employee pension
benefit plan" as each is defined in the Employee Retirement Income Security Act
of 1974 as amended. Further, no such benefit plans covered employees of
▇▇▇▇▇▇▇▇▇.▇▇▇ during the period of their employment with any predecessor of
▇▇▇▇▇▇▇▇▇.▇▇▇, including any multi-employer pension plan as defined under the
Code. Accordingly, there are no unfunded liabilities of ▇▇▇▇▇▇▇▇▇.▇▇▇ under any
benefit plans.
3.14 Compliance with Laws. The business of ▇▇▇▇▇▇▇▇▇.▇▇▇ has been and is
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currently operated in material compliance with all applicable laws, rules and
regulations of each jurisdiction in which the business of ▇▇▇▇▇▇▇▇▇.▇▇▇ is
conducted. ▇▇▇▇▇▇▇▇▇.▇▇▇ has not made any kickback, bribe or payment to any
person or entity, directly or indirectly, for referring, recommending or
arranging business with, to or for ▇▇▇▇▇▇▇▇▇.▇▇▇ which action could have a
material adverse effect on the business of ▇▇▇▇▇▇▇▇▇.▇▇▇. No bulk sales or
similar statute under the laws of any state applies to the transactions
contemplated under this Agreement.
3.15 WARN Act. Since ninety (90) days prior to Closing, ▇▇▇▇▇▇▇▇▇.▇▇▇ has not
--------
temporarily or permanently closed or shut down any single site of employment or
any facility or any operating unit, department or service within a single site
of employment, as such terms are used in the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. (S)(S)2102, et seq. ("WARN").
-- ---
3.16 Tax Returns; Taxes.
------------------
(a) ▇▇▇▇▇▇▇▇▇.▇▇▇ has filed all federal, state and local tax returns
and tax reports required by such authorities to be filed as of
the date hereof. ▇▇▇▇▇▇▇▇▇.▇▇▇ has paid all taxes, assessments,
governmental charges, penalties, interest and fines due or
claimed to be due as of the time of Closing (including, without
limitation, taxes on properties, income, franchises, licenses,
sales and payrolls) by any federal, state or local authority.
Additionally, the reserves for taxes (if any) reflected in the
▇▇▇▇▇▇▇▇▇.▇▇▇ Financial Statements are adequate to cover all tax
liabilities accrued as of the respective dates thereof. There is
no pending tax examination or audit of, nor any action, suit,
investigation or claim asserted or, to the knowledge of
▇▇▇▇▇▇▇▇▇.▇▇▇, threatened against ▇▇▇▇▇▇▇▇▇.▇▇▇ by any federal,
state or local authority; and ▇▇▇▇▇▇▇▇▇.▇▇▇ has not requested or
been granted any extension of the limitation period applicable to
any tax claims.
(b) ▇▇▇▇▇▇▇▇▇.▇▇▇ has complied with all applicable laws, rules and
regulations relating to the payment and withholding of taxes and
has timely withheld from employee wages and paid over to the
proper governmental authorities all amounts required to be so
withheld and paid over. No agreements have been made by
▇▇▇▇▇▇▇▇▇.▇▇▇ to waive the statute of limitations for the
assessment or payment of any taxes. To the knowledge of
▇▇▇▇▇▇▇▇▇.▇▇▇, ▇▇▇▇▇▇▇▇▇.▇▇▇ has not committed any violation of
any federal, state or local tax laws.
3.17 Tax Reorganization. ▇▇▇▇▇▇▇▇▇.▇▇▇ has neither taken nor failed to take
------------------
any action which would prevent the Acquisition from being treated as a tax-free
Acquisition under Section 721 of the Code, or the Acquisition from constituting
a reorganization within the meaning of Section 368(a)(1)(A) of the Code.
3.18 Title to and Conditions of Assets. ▇▇▇▇▇▇▇▇▇.▇▇▇ is the sole legal and
---------------------------------
beneficial owner of the personal property used in operating its business,
including all personal property reflected in the ▇▇▇▇▇▇▇▇▇.▇▇▇ Financial
Statements. All such personal property is owned by ▇▇▇▇▇▇▇▇▇.▇▇▇ free and clear
of all liens, security interests, charges and encumbrances, except as disclosed
in the ▇▇▇▇▇▇▇▇▇.▇▇▇ Financial Statements. ▇▇▇▇▇▇▇▇▇.▇▇▇ owns no real property,
but is in lawful possession of the real estate it leases. ▇▇▇▇▇▇▇▇▇.▇▇▇ is in
material compliance with respect to all leases of real estate entered into for
the conduct of its business. All equipment owned or leased by ▇▇▇▇▇▇▇▇▇.▇▇▇
performs the respective functions they are supposed to perform and are in good
working order, ordinary wear and tear accepted. The inventory of ▇▇▇▇▇▇▇▇▇.▇▇▇
is,
in the aggregate, of a quality and quantity customarily used in the ordinary
course of business. All URL addresses, trademarks, service marks, trade names,
inventions, patents, processes, copyrights and applications therefore,
registered or at common law (collectively, the "Intellectual Property") used by
▇▇▇▇▇▇▇▇▇.▇▇▇ in its business are owned by ▇▇▇▇▇▇▇▇▇.▇▇▇ as the sole legal and
beneficial owner of such Intellectual Property. No proceedings have been
instituted or pending or, to the knowledge of ▇▇▇▇▇▇▇▇▇.▇▇▇, threatened which
challenge the validity of the ownership or use by ▇▇▇▇▇▇▇▇▇.▇▇▇ of any such
Intellectual Property. ▇▇▇▇▇▇▇▇▇.▇▇▇ has not licensed any third party to use any
such Intellectual Property, and ▇▇▇▇▇▇▇▇▇.▇▇▇ has no knowledge of the unlawful
use or infringement of any such Intellectual Property by any other person.
3.19 No Omissions or Misstatements. There is no fact material to the assets,
-----------------------------
businesses, liabilities or prospects of ▇▇▇▇▇▇▇▇▇.▇▇▇ as a whole which has not
been set forth or described in this Agreement or in the Exhibits hereto and
which is material to the conduct, prospects, operations or financial condition
of ▇▇▇▇▇▇▇▇▇.▇▇▇. None of the information included in this Agreement and
Exhibits hereto, or other documents furnished or to be furnished by
▇▇▇▇▇▇▇▇▇.▇▇▇ contains any untrue statement of a material fact or is misleading
in any material respect or omits to state any material fact necessary in order
to make any of the statements herein or therein not misleading in light of the
circumstances in which they were made. Copies of all documents referred to in
any Exhibit hereto have been delivered or made available to Explore and
constitute true, correct and complete copies thereof and include all amendments,
exhibits, schedules, appendices, supplements or modifications thereto or waivers
thereunder.
3.20 Conflict of Interest: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇ are Directors of both
--------------------
▇▇▇▇▇▇▇▇▇.▇▇▇ and Explore Technologies Inc. and are acting in the best interests
of both companies.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF EXPLORE
As an inducement to the other parties hereto to enter into this Agreement and to
consummate the Acquisition, Explore represents and warrants to ▇▇▇▇▇▇▇▇▇.▇▇▇,
which representations and warranties will be true and correct at Closing, as
follows.
4.01 Organization, Qualification and Authority. Explore is a corporation duly
-----------------------------------------
organized, validly existing and in good standing in the State of Nevada, and is
not required to be qualified to do business as a foreign corporation in any
other jurisdiction. Explore does not own stock or equity interest in and does
not control, directly or indirectly, any corporation, partnership, joint
venture, association or business organization. Since the date of its
organization and incorporation or formation, Explore has consistently observed
and operated within the corporate formalities of the jurisdictions in which it
is organized and/or conducts its business, has consistently observed and
complied with the general corporation law of such jurisdictions and has been
duly qualified to do business as a foreign corporation in all relevant
jurisdictions. Explore has the full right, power and authority to own, lease
and operate its properties and assets as presently owned, leased and operated
and to carry on its business as it is now being conducted. Subject to obtaining
requisite approval of the shareholders of Explore, Explore has the full right,
power and authority to
execute, deliver and carry out the terms of this Agreement and all documents and
agreements necessary to give effect to the provisions of this Agreement, to
consummate the transactions contemplated on the part of Explore hereby, and to
take all actions necessary to permit or approve the actions of Explore taken in
connection with this Agreement. Subject to obtaining requisite approval of the
shareholders of Explore, the execution, delivery and consummation of this
Agreement and all other agreements and documents executed in connection herewith
by Explore have been duly authorized by all necessary corporate action on the
part of Explore, respectively. No other action on the part of Explore, or any
other person or entity is necessary to authorize the execution, delivery and
consummation of this Agreement and all other agreements and documents executed
in connection herewith, other than such shareholder approval. This Agreement and
all other agreements and documents executed in connection herewith by Explore
and, upon due execution and delivery thereof, will constitute the valid and
binding obligations of Explore, enforceable in accordance with their respective
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and by
general principles of equity.
4.02 Capitalization and Stock Ownership.
----------------------------------
(1) Common Stock. The authorized capital stock of Explore (the
------------
"Explore Common Stock") consists of 25,000,000 shares, $0.001 par
value, of common stock, of which 15,225,000 shares are issued and
outstanding as of the date hereof. The Explore Common Stock
constitutes all current issued and outstanding securities of
Explore, and are duly authorized, validly issued, fully paid and
non-assessable. The Explore Common Stock is not subject to
preemptive or comparable rights. The Explore Common Stock and all
other currently or previously outstanding securities of Explore
have been issued in accordance with all applicable federal, state
and foreign securities laws.
(2) Other Securities.
----------------
a) Explore has issued 600,000 options to Directors, Employees
and consultants to purchase 600,000 common shares in the
Capital Stock of Explore at $0.20 each. These options have
been issued but not exercised.
b) Explore has agreed to issue 100,000 shares to ▇▇▇▇▇▇ ▇▇▇▇▇▇
as a finders fee.
c) Explore has agreed to issue to Senate Capital Group Inc.
120,000 shares as compensation for agreeing to cancel their
Management Agreement.
d) Explore does not have any other existing warrants, calls,
subscriptions, stock appreciation rights or other rights or
agreements or commitments obligating Explore to issue,
transfer or sell any capital stock or any other security
convertible into or evidencing the right to subscribe for
any such security.
Explore Common Stock. On the Closing Date, Explore will have a
--------------------
sufficient number of authorized but unissued and/or treasury
shares of Explore Common Stock available for issuance to the
▇▇▇▇▇▇▇▇▇.▇▇▇ Shareholders in accordance with the provisions of
this Agreement. The Explore Common Stock to be issued as
Acquisition Consideration ("New Shares") pursuant to the
Agreement will, when so delivered, be duly and validly issued in
accordance with all applicable federal and state securities laws, will
be exempt from registration requirements of the 1933 Act and state
"blue sky" laws, will be fully paid and non-assessable, and will be
free and clear of preemptive or comparable rights. The New Shares will
initially be restricted under the 1933 and 1934 Acts and SEC Rules and
Regulations but Explore has agreed to file a Regulation s-4
application to release up to 50% of these issued shares from
restriction in the event the New Shares do not form part of a control
block.
4.03 Absence of Default. The execution, delivery and consummation of this
------------------
Agreement, and all other agreements and documents executed in connection
herewith by Explore will not constitute a violation of, be in conflict with, or,
with or without the giving of notice or the passage of time, or both, result in
a breach of, constitute a default under, or create (or cause the acceleration of
the maturity of) any debt, indenture, obligation or liability or result in the
creation or imposition of any security interest, lien, charge or other
encumbrance upon any of the assets of Explore under: (a) any term or provision
of the Charter or Bylaws of Explore; (b) any material contract, lease, purchase
order, agreement, document or other commitment, oral or written, to which
Explore is a party or by which Explore is bound (collectively the "Explore
Contracts") (for purposes of categorizing contracts, "material" being defined to
exclude any contract, lease, purchase order, agreement, document or commitment
which both (y) in terms of payments, costs, services or other measure does not
exceed $5,000.00 in the aggregate and (z) is terminable without penalty upon
ninety (90) days' written notice or less); (c) any judgment, decree, order,
writ, injunction or rule of any court or regulatory authority; or (d), to the
knowledge of Explore, any law, statute, rule or regulation to which Explore is
subject.
4.04 Litigation. There are no lawsuits, proceedings, actions, arbitrations,
----------
governmental investigations, claims, inquiries or proceedings pending or, to the
knowledge of Explore, threatened involving Explore and Explore knows of no basis
for any lawsuits, proceedings, actions, arbitrations, governmental
investigations, claims, inquiries or proceedings involving Explore.
4.05 SEC Information. Explore Stock is traded only on the Nasdaq O.T.C.
---------------
Bulletin Board. Explore has provided to ▇▇▇▇▇▇▇▇▇.▇▇▇ true and complete copies,
as filed with the Securities Exchange Commission ("SEC"), of Explore's Form 10-
SB registration statement and Quarterly Reports on Form 10-Q (or other form) for
the fiscal quarters ending July 31, 2000 (the "Explore Public Reports"). Each
of the Explore Public Reports, at the time it was filed with the appropriate
authorities or otherwise issued or distributed, was prepared, filed and
distributed timely and in accordance in all material respects with the
applicable rules and regulations of such authorities and applicable requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and did
not, at the time they were so filed or mailed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As of their respective
dates, the financial statements of Explore contained in the Explore Public
Reports (the "Explore Financial Statements") were prepared in accordance with,
and complied as to form in all material respects with, applicable accounting
requirements and with the published rules and regulations of the applicable
authorities with
respect thereto, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods indicated except to
the extent required by changes in generally accepted accounting principles and
as may be indicated in the notes thereto and fairly presented the consolidated
balance sheet and the consolidated assets, liabilities and financial position of
Explore as at the dates thereof and the consolidated results of operations and
cash flows of Explore for the periods then ended. There is no fact material to
the assets, businesses, liabilities or prospects of Explore as a whole which has
not been set forth or described the Explore Public Reports, in this Agreement or
in the Exhibits hereto and which is material to the conduct, prospects,
operations or financial condition of Explore.
4.06 Environmental Matters
----------------------
Hazardous Substances. As used in this Section, the term "Hazardous Substances"
--------------------
means any hazardous or toxic substances, materials or wastes, including but not
limited to those substances, materials, and wastes defined in Paragraph 101 of
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), listed in the United States Department of
Transportation Table (49 CFR 172.101) or by the Environmental Protection Agency
as hazardous substances pursuant to 40 CFR Part 302, or which are regulated
under any other Environmental Law (as such term is defined herein), and any of
the following: hydrocarbons, petroleum and petroleum products, asbestos,
polychlorinated biphenyls, formaldehyde, radioactive substances (other than
naturally occurring materials in place), flammables and explosives.
Compliance with Laws and Regulations. All operations or activities of Explore
------------------------------------
on, and any use or occupancy by Explore of, the real estate necessary to operate
the business of Explore are in material compliance with any and all laws,
regulations, orders, codes, judicial decisions, decrees, licenses, permits and
other applicable requirements of governmental authorities with respect to
Hazardous Substances, pollution or protection of human health and safety
(collectively, "Environmental Law"), including but not limited to the release,
emission, discharge, storage and removal of Hazardous Substances. To the
knowledge of Explore, without inquiry, all prior owners, operators and occupants
of such real estate complied with Environmental Law. Explore is not aware of any
pending or threatened claim, lawsuit, investigation or inquiry regarding non-
compliance with Environmental Law.
4.07 Conflict of Interest: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇ are Directors of both
--------------------
▇▇▇▇▇▇▇▇▇.▇▇▇ and Explore Technologies Inc. and are acting in the best
interests of both companies.
ARTICLE V. COVENANTS OF PARTIES PENDING CLOSING
5.01 Proxy Statement/Prospectus.
--------------------------
(a) As soon as practicable after the execution of this Agreement,
▇▇▇▇▇▇▇▇▇.▇▇▇ and Explore shall mutually cooperate in jointly
preparing and filing with the United States Securities and Exchange
Commission (the "Commission") of a proxy statement and prospectus on
the appropriate form of registration statement required under the
Securities Act of 1933 (the "Proxy
----------------------
Statement/Prospectus"). The Proxy Statement/Prospectus shall
constitute a disclosure document for the offer and issuance of the
shares of Explore Common Stock to be received by the holders of the
capital stock of ▇▇▇▇▇▇▇▇▇.▇▇▇ in the Acquisition and for the other
transactions contemplated by this Agreement. As promptly as
practicable after comments, if any, are received from the Commission
with respect to such Proxy Statement/Prospectus and after the
furnishing by ▇▇▇▇▇▇▇▇▇.▇▇▇ and Explore of all information required to
be contained therein, ▇▇▇▇▇▇▇▇▇.▇▇▇ and Explore shall prepare and file
with the Commission the Registration Statement, in which the Proxy
Statement/Prospectus shall be included, in connection with the
registration under the Securities Act of the shares of Explore Common
Stock to be issued to the holders of the capital stock of
▇▇▇▇▇▇▇▇▇.▇▇▇ pursuant to the Acquisition. Explore and ▇▇▇▇▇▇▇▇▇.▇▇▇
shall use all reasonable efforts to have or cause the Registration
Statement to become effective as promptly as practicable, and shall
take all or any action required under any applicable federal or state
securities laws in connection with the issuance of Explore Common
Stock pursuant to the Acquisition. As promptly as practicable after
the Registration Statement shall have become effective, Explore and
▇▇▇▇▇▇▇▇▇.▇▇▇ shall each mail or cause to be mailed the Proxy
Statement/Prospectus to their respective Shareholders.
(b) Explore and ▇▇▇▇▇▇▇▇▇.▇▇▇ shall each use its best efforts to cause the
Proxy Statement/Prospectus to comply with applicable federal and state
securities laws requirements. Each of Explore and ▇▇▇▇▇▇▇▇▇.▇▇▇ agrees
to provide promptly to the other such information concerning its
business and financial statements and affairs as, in the reasonable
judgment of the providing party or its counsel, may be required or
appropriate for inclusion in the Proxy Statement/Prospectus, or in any
amendments or supplements thereto, and to cause its counsel and
auditors to cooperate with the other's counsel and auditors in the
preparation of the Proxy Statement/Prospectus. The information
supplied by each of Explore and ▇▇▇▇▇▇▇▇▇.▇▇▇ for inclusion in the
Proxy Statement/Prospectus and Registration Statement shall not, at
(i) the time the Registration Statement is declared effective, (ii)
the time the Proxy Statement/Prospectus is first mailed to the holders
of capital stock of ▇▇▇▇▇▇▇▇▇.▇▇▇, (iii) the time of the ▇▇▇▇▇▇▇▇▇.▇▇▇
Shareholders' Meeting, (iv) the time of the Explore Shareholders'
meeting, and (v) the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. ▇▇▇▇▇▇▇▇▇.▇▇▇ will promptly advise Explore, and Explore
will promptly advise ▇▇▇▇▇▇▇▇▇.▇▇▇, in writing if at any time prior to
the Effective Time either ▇▇▇▇▇▇▇▇▇.▇▇▇ or Explore shall obtain
knowledge of any facts that might make it necessary or appropriate to
amend or supplement the Proxy Statement/Prospectus in order to make
the statements contained or incorporated by reference therein not
misleading or to comply with applicable law.
(c) The Proxy Statement/Prospectus shall contain the unanimous
recommendation of the Board of Directors of ▇▇▇▇▇▇▇▇▇.▇▇▇ that the
▇▇▇▇▇▇▇▇▇.▇▇▇ Shareholders approve the Acquisition and this Agreement
and the conclusion of the Board of Directors that the terms and
conditions of the Acquisition are fair and reasonable to the
Shareholders of ▇▇▇▇▇▇▇▇▇.▇▇▇. The Proxy Statement/Prospectus shall
contain the unanimous recommendation of the Board of Directors of
Explore that the Explore Shareholders approve the issuance of Common
Stock to the ▇▇▇▇▇▇▇▇▇.▇▇▇ Shareholders and this Agreement and the
conclusion of the Board of Directors that the terms and conditions of
the Acquisition are fair and reasonable to the Shareholders of
Explore. Anything to the contrary contained herein notwithstanding,
▇▇▇▇▇▇▇▇▇.▇▇▇ shall not include in the Proxy Statement/Prospectus any
information with respect to Explore or its affiliates or associates,
the form and content of which information shall not have been approved
by Explore prior to such inclusion. Anything to the contrary contained
herein notwithstanding, Explore shall not include in the Proxy
Statement/Prospectus any information with respect to ▇▇▇▇▇▇▇▇▇.▇▇▇ or
its affiliates or associates, the form and content of which
information shall not have been approved by ▇▇▇▇▇▇▇▇▇.▇▇▇ prior to
such inclusion.
5.02 Stockholder Meetings.
--------------------
(a) Promptly after the date hereof, ▇▇▇▇▇▇▇▇▇.▇▇▇ will take all action
necessary in accordance with the British Columbia Corporations Act and
its Certificate of Incorporation and Bylaws to convene the
▇▇▇▇▇▇▇▇▇.▇▇▇ Shareholders' Meeting to be held as promptly as
practicable for the purpose of voting upon this Agreement the issuance
of shares of Explore Common Stock pursuant to the Acquisition,
respectively. ▇▇▇▇▇▇▇▇▇.▇▇▇ will use its commercially reasonable
efforts to solicit from its Shareholders proxies in favor of the
adoption and approval of this Agreement and the approval of the
Acquisition and will take all other action necessary or advisable to
secure the vote or consent of its Shareholders required by Nevada Law
to obtain such approvals. Notwithstanding anything to the contrary
contained in this Agreement, ▇▇▇▇▇▇▇▇▇.▇▇▇ may adjourn or postpone
▇▇▇▇▇▇▇▇▇.▇▇▇ Shareholders' Meeting to the extent necessary to ensure
that any necessary supplement or amendment to the Proxy
Statement/Prospectus is provided to ▇▇▇▇▇▇▇▇▇.▇▇▇'s Shareholders in
advance of a vote on the Acquisition and this Agreement or, if as of
the time for which ▇▇▇▇▇▇▇▇▇.▇▇▇ Shareholders' Meeting is originally
scheduled (as set forth in the Proxy Statement/Prospectus) there are
insufficient shares of ▇▇▇▇▇▇▇▇▇.▇▇▇ capital stock represented (either
in person or by proxy) to constitute a quorum necessary to conduct the
business of the ▇▇▇▇▇▇▇▇▇.▇▇▇'s Shareholders' Meeting. ▇▇▇▇▇▇▇▇▇.▇▇▇
shall ensure that the ▇▇▇▇▇▇▇▇▇.▇▇▇ Shareholders' Meeting is called,
noticed, convened, held and conducted and that all proxies solicited
by the ▇▇▇▇▇▇▇▇▇.▇▇▇ in connection with the ▇▇▇▇▇▇▇▇▇.▇▇▇
Shareholders' Meeting are solicited, in compliance with the
California Law, its Certificate of Incorporation and Bylaws, and all
other applicable legal requirements.
(b) Promptly after the date hereof, Explore will take all action necessary
in accordance with the Nevada Statute and its Certificate of
Incorporation and Bylaws to convene the Explore Shareholders' Annual
General Meeting to be held as promptly as practicable for the purpose
of: (i) voting upon this Agreement and the Acquisition and the
issuance of shares of Explore Common Stock pursuant to the
Acquisition; (ii) Change the name of the Company; (iii) increase the
Authorized capital of the Company to 100,000,000 shares; and (iv)
ratify the 2000 Option Plan.
Explore will use its commercially reasonable efforts to solicit from its
Shareholders proxies in favor of the adoption and approval of the above and will
take all other action necessary or advisable to secure the vote or consent of
its Shareholders required by Nevada Law to obtain such approvals.
Notwithstanding anything to the contrary contained in this Agreement, Explore
may adjourn or postpone Explore Shareholders' Meeting to the extent necessary to
ensure that any necessary supplement or amendment to the Proxy
Statement/Prospectus is provided to Explore's Shareholders in advance of a vote
on the Acquisition of this Agreement or, if as of the time for which Explore
Shareholders' Meeting is originally scheduled (as set forth in the Proxy
Statement/Prospectus) there are insufficient shares of Explore capital stock
represented (either in person or by proxy) to constitute a quorum necessary to
conduct the business of the Explore's Shareholders' Meeting. Explore shall
ensure that the Explore Shareholders' Meeting is called, noticed, convened, held
and conducted that all proxies solicited by the Explore in connection with the
Explore Shareholders' Meeting are solicited, in compliance with Nevada Law, its
Certificate of Incorporation and Bylaws, and all other applicable legal
requirements.
5.03 Preservation of Business and Assets. From the date hereof until the
-----------------------------------
Closing, each of Explore and ▇▇▇▇▇▇▇▇▇.▇▇▇ will use its best efforts and will do
or cause to be done all such acts and things as may be necessary to preserve,
protect and maintain intact the operation of its business and assets as a going
concern consistent with prior practice and not other than in the ordinary course
of business, including preserving, protecting and maintaining the goodwill of
its suppliers, employees, clientele, patients and others having business
relations with each party. Each party will use its best efforts to retain its
employees in their current positions up to Closing. Through Closing, neither
party will acquire or sell or agree to acquire or sell by merging or
consolidating with, or by purchasing or selling a substantial equity interest in
or a substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization or
division thereof. Each party will use its best efforts to facilitate the
consummation of the Acquisition as contemplated hereunder, including obtaining
requisite approval of Shareholders. Through Closing and except as contemplated
by this Agreement, neither party will issue, deliver or sell, or authorize or
propose to issue, deliver or sell, any shares of its capital stock of any class,
any voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities. Through Closing, neither party will split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or repurchase, redeem or otherwise
acquire any shares of its capital stock. From the date hereof until the Closing,
neither party will pay any dividend or distribution to its Shareholders as such,
and neither party will sell, discard or dispose of any of its assets.
5.04 Material Transactions. Except as contemplated by this Agreement, prior to
---------------------
the Effective Time, neither party will, without first obtaining the written
consent of the other party:
(1) dispose of or encumber any asset or enter into any transaction or
make any contract commitment relating to the properties, assets
and business of such entity, other than in the ordinary course of
business or as otherwise disclosed herein;
(2) enter into any employment contract which is not at will or
terminable upon notice of thirty (30) days or less, without
penalty;
(3) enter into any contract or agreement (i) which cannot be
performed within three months or less, or (ii) which involves the
expenditure of over $5,000.00;
(4) except as stipulated herein, issue or sell, or agree to issue or
sell, any shares of capital stock or other securities of such
entity;
(5) make any payment or distribution under any bonus, pension,
profit-sharing or retirement plan or incur any obligation to make
any such payment or contribution which is not in accordance with
such entities usual past practice, or make any payment or
contributions or incur any obligation pursuant to or in respect
of any other plan or contract or arrangement of providing for
bonuses, executive incentive compensation, pensions, deferred
compensation, retirement payments, profit-sharing or the like,
establish or enter into any such plan, contract or arrangement,
or terminate any plan;
(6) extend credit to anyone except in the ordinary course of business
consistent with prior practice;
(7) guarantee the obligation of any person, firm or corporation;
(8) amend its operating agreement, charter or bylaws, or applicable
organizational documents;
(9) set aside or pay any cash dividend or any other distribution on
or in respect of its capital stock or any redemption, retirement
or purchase with respect to its capital stock or issue any
additional shares of its capital stock; or engage in any stock
split, recapitalization, reorganization or comparable
transaction;
(10) discharge or satisfy any lien, charge, encumbrance or
indebtedness outside the ordinary course of business;
(11) institute, settle or agree to settle any litigation, action or
proceeding before any court or governmental body;
(12) authorize any compensation increase of any kind whatsoever for
any employee, consultant or other representative; or
(13) engage in any extraordinary transaction with the exception that
Explore is currently negotiating with another Technology company
with the object of a further acquisition on terms and conditions
similar to this agreement.
5.05 Legal Conditions to Acquisition. Each party hereto will take all
-------------------------------
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on it with respect to the Acquisition and will promptly
cooperate with and furnish information to each other party in connection with
any such requirements imposed upon either or any of them in connection with the
Acquisition.
5.06 Preserve Accuracy of Representations and Warranties. Each party hereto
---------------------------------------------------
will refrain from taking any action which would render any of its
representations and warranties contained in this Agreement untrue, inaccurate or
misleading as of Closing and the Effective Time. Through Closing, each party
will promptly notify the other parties of any lawsuit, claim, audit,
investigation, administrative action or other proceeding asserted or commenced
against such party that may involve or relate in any way to another party to
this Agreement. Each party hereto will promptly notify the other parties of any
facts or circumstances that come to its attention and that cause, or through the
passage of time may cause, any of a party's representations, warranties or
covenants to be untrue or misleading at any time from the date hereof through
Closing.
5.07 Notice of Subsequent Events. Each party hereto shall notify the other
---------------------------
parties of any changes, additions or events of which it has knowledge which
would cause any material change in or material addition to this Agreement
(including but not limited to the Exhibits attached hereto and thereto) promptly
after occurrence of the same. If the effect of such change or addition would,
individually or in the aggregate with the effect of changes or additions
previously disclosed pursuant to this Section, constitute a material adverse
effect on the notifying party, any non-notifying party may, within five (5) days
after receipt of such notice, elect to terminate this Agreement. If the non-
notifying party does not give written notice of such termination within such 5-
day period, the non-notifying parties shall be deemed to have consented to such
change or addition and shall not be entitled to terminate this Agreement by
reason thereof.
5.08 Current Return Filing. Each party will be responsible for the preparation
---------------------
and filing of all of such party's own tax returns which were due on or before
the Closing, and the payment of all taxes due.
5.09 Maintain Books and Accounting Practices. From the date hereof until the
---------------------------------------
Closing, each party will maintain its books of account in the usual, regular and
ordinary manner on a basis consistent with prior years and will make no change
in its accounting methods or practices.
5.10 Compliance with Laws and Regulatory Consents. From the date hereof until
--------------------------------------------
the Closing, (a) each party will comply with all applicable statutes, laws,
ordinances and regulations, (b) each party will keep, hold and maintain all
Licenses, (c) each party will use its reasonable efforts and will cooperate
fully with the other parties hereto to obtain all consents, stockholder and
other approvals, exemptions and authorizations of third parties, whether
governmental or private, necessary to consummate the Acquisition, and (d) each
party will make and cause to be made all filings and give and cause to be given
all notices which may be necessary or desirable on their part under all
applicable laws and under their respective contracts, agreements and commitments
in order to consummate the Acquisition.
ARTICLE VI. CLOSING
6.01 Closing Deliveries. At Closing, the parties hereto will deliver or cause
------------------
to be delivered the following, fully executed and in form and substance
reasonably satisfactory to the receiving party(ies):
(1) ▇▇▇▇▇▇▇▇▇.▇▇▇ will deliver to Explore stock certificates of
▇▇▇▇▇▇▇▇▇.▇▇▇, duly endorsed by the ▇▇▇▇▇▇▇▇▇.▇▇▇ Shareholders or
with stock powers attached, representing all of the issued and
outstanding shares of ▇▇▇▇▇▇▇▇▇.▇▇▇ Common Stock.
(2) Explore will deliver to the ▇▇▇▇▇▇▇▇▇.▇▇▇ Shareholders'
certificates representing the shares of Explore Common Stock
comprising the Acquisition Consideration set forth in Article II.
(3) Each will deliver to the other parties a certificate of an
officer, dated as of Closing, certifying that (a) each covenant
and obligation of the delivering party has been complied with,
and (b) each representation, warranty and covenant of the
delivering party is true and correct at the Closing as if made on
and as of the Closing.
(4) Each party will deliver an opinion of its legal counsel, in form
and substance reasonably acceptable to the receiving party(ies).
(5) Each party will deliver the Certificates of Acquisition in form
acceptable for filing with the applicable Secretaries of State.
(6) Each party shall deliver such customary certificates of its
officers and such other customary closing documentation as may be
reasonably requested by the other parties, including without
limitation:
10 Certificates of Existence and/or "Good Standing" regarding the
delivering party and its subsidiaries, certified by the appropriate
Secretary of State and dated within (10) business days of Closing
11 Incumbency Certificates certifying the identity of the officers of
the delivering party and its subsidiaries; and Charters, Operating
Agreement or Certificates of Incorporation, as certified by the
appropriate Secretary of State within ten (10) business days of
Closing, and Bylaws, as certified by an appropriate officer as of
Closing, of the delivering party and its subsidiaries.
ARTICLE VII. CONDITIONS TO CLOSING
7.01 Conditions to Each Party's Obligation to Effect the Acquisition. The
---------------------------------------------------------------
obligation of each party hereto to effect the Acquisition shall be subject to
the fulfillment at or prior to the Closing of the following conditions:
(1) This Agreement and the transactions contemplated hereunder shall have
been approved by shareholders of ▇▇▇▇▇▇▇▇▇.▇▇▇ in the manner required
by the applicable laws of the Province of British Columbia and the
Memoranda and Articles of ▇▇▇▇▇▇▇▇▇.▇▇▇.
(2) This Agreement and the transactions contemplated hereunder shall have
been approved by Directors of Explore (and the Shareholders if so
required under the applicable laws of the State of Nevada and the
Charter and Bylaws of Explore).
(3) Each party hereto shall have received from the other parties copies of
all resolutions and/or consent actions adopted by or on behalf of the
boards of directors and shareholders of such other parties hereto,
certified as of the date of Closing and evidencing approval of this
Agreement and the transactions contemplated hereunder.
(4) No action or proceeding before a court or other governmental body by
any governmental agency or public authority shall have been instituted
or threatened to restrain or prohibit the transactions contemplated
under this Agreement or to obtain an amount of damages or other
material relief in connection with the execution of this Agreement or
any related agreements or the consummation of the Acquisition; and no
governmental agency shall have given notice to any party hereto to the
effect that consummation of the transactions contemplated under this
Agreement would constitute a violation of any law or that it intends
to commence proceedings to restrain consummation of the Acquisition.
(5) All consents, authorizations, orders and approvals of (or filings or
registrations with) any governmental commission, board or other
regulatory body or any other third party (including lenders and
lessors) required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made.
(6) Explore will have received all required state securities or "Blue Sky"
permits and authorizations necessary to issue shares of Explore Common
Stock pursuant to
the Acquisition, including any permit required by the Nevada
Department of Corporations.
7.02 Further Conditions to Obligation of Explore and ▇▇▇▇▇▇▇▇▇.▇▇▇ to Effect
-----------------------------------------------------------------------
the Acquisition. The obligation of Explore to effect the Acquisition shall also
---------------
be subject to the fulfillment at or prior to the Closing of the following
conditions:
(1) ▇▇▇▇▇▇▇▇▇.▇▇▇ shall have performed its obligations contained in this
Agreement required to be performed on or prior to the Closing,
including delivery of the closing items set forth in Section 6.01,
and the representations and warranties of ▇▇▇▇▇▇▇▇▇.▇▇▇ contained in
this Agreement and in any document delivered in connection herewith
shall be true and correct as of the Closing.
(2) The ▇▇▇▇▇▇▇▇▇.▇▇▇ Shareholders will have approved the Acquisition by
no later than November 30/th/, 2000.
(3) Explore and its representatives shall have had reasonable access of
inspection of the business of ▇▇▇▇▇▇▇▇▇.▇▇▇ in connection with
Explore's due diligence review, and the results of Explore's
inspection and due diligence review shall be acceptable to it.
Further, should any such due diligence reveal a matter reasonably
related to any representation, warranty or covenant herein or any
exhibit hereto, Explore may require appropriate amendment(s) to
address such matter.
(4) ▇▇▇▇▇▇▇▇▇.▇▇▇ will have delivered to Explore audited financial
statements for the period August, 31 2000 by no later than December
31, 2000 which will not show any material transactions except the
transactions referred to in this Agreement.
(5) Explore will have cancelled the existing office administration
services agreement between Explore and Senate Capital by paying
Senate $10,000 in cash plus 120,000 shares.
(6) Explore shall have performed its obligations contained in this
Agreement, required to be performed on or prior to the Closing,
including delivery of the closing items set forth in Section 6.01,
and the representations and warranties of Explore contained in this
Agreement and in any document delivered in connection herewith shall
be true and correct as of the Closing.
(7) The Explore shareholders (if so required) shall have properly
approved of the Acquisition ▇▇▇▇▇▇▇▇▇.▇▇▇ and its representatives
shall have had reasonable access of inspection of the business of
Explore in connection with ▇▇▇▇▇▇▇▇▇.▇▇▇'s due diligence review, and
the results of ▇▇▇▇▇▇▇▇▇.▇▇▇'s inspection and due diligence review
shall be acceptable to it. Further, should any such due diligence
reveal a matter reasonably related to
any representation, warranty or covenant herein or any exhibit
hereto, ▇▇▇▇▇▇▇▇▇.▇▇▇ may require appropriate amendment(s) to address
such matter.
(8) ▇▇▇▇▇▇▇▇▇.▇▇▇ acknowledges and agrees that Explore may register the
common stock to be issued or grant registration rights and that
Explore may register this common stock on the registration statement
filed with the SEC to register the common stock of Explore to be
issued the shareholders of ▇▇▇▇▇▇▇▇▇.▇▇▇ on completion of the
Acquisition or on a separate registration statement filed with the
SEC.
ARTICLE VIII. TERMINATION; AMENDMENT; EXTENSION AND WAIVER
8.01 Termination by Mutual Consent. This Agreement may be terminated and the
-----------------------------
Acquisition may be abandoned at any time prior to the Effective Time, before or
after the approval of this Agreement by the shareholders of ▇▇▇▇▇▇▇▇▇.▇▇▇ and/or
Explore, by the mutual consent of the Boards of Directors of ▇▇▇▇▇▇▇▇▇.▇▇▇ and
Explore.
8.02 Termination by Certain Parties. Any party hereto may terminate this
------------------------------
Agreement at any time, if entitled to terminate, in accordance with Section
5.07. This Agreement may be terminated and the Acquisition may be abandoned by
action of the Board of Directors of ▇▇▇▇▇▇▇▇▇.▇▇▇ or Explore if (a) the
Acquisition shall not have been consummated by December 31/st, / 2000; (b) the
approval of the Acquisition by ▇▇▇▇▇▇▇▇▇.▇▇▇'s shareholders shall not have been
obtained by November 30/th/, 2000; (c) the approval of the Acquisition by
Explore's shareholders (if so required) shall not have been obtained by December
31, 2000 at a meeting duly convened therefor or at any adjournment thereof; or
(d) a United States federal or state court of competent jurisdiction or United
States federal or state governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable; provided, that the
party seeking to terminate this Agreement pursuant to this clause (d) shall have
used all reasonable efforts to remove such injunction, order or decree.
8.03 Termination by Explore. This Agreement may be terminated and the
----------------------
Acquisition may be abandoned at any time prior to the Effective Time, before or
after the adoption and approval by the shareholders of Explore, by action by the
Board of Directors of Explore, if (a) there has been a breach by ▇▇▇▇▇▇▇▇▇.▇▇▇
of any representation or warranty contained in this Agreement which would have
or would be reasonably likely to have a material adverse effect on the
operations of ▇▇▇▇▇▇▇▇▇.▇▇▇; or (b) there has been a breach of any of the
covenants or agreements set forth in this Agreement on the part of
▇▇▇▇▇▇▇▇▇.▇▇▇, which breach is not curable or, if curable, is not cured within
ten (10) days after written notice of such breach is given by Explore to
▇▇▇▇▇▇▇▇▇.▇▇▇.
8.04 Termination by ▇▇▇▇▇▇▇▇▇.▇▇▇. This Agreement may be terminated and the
----------------------------
Acquisition may be abandoned at any time prior to the Effective Time by action
of the Board of Directors of ▇▇▇▇▇▇▇▇▇.▇▇▇, if (a) there has been a breach by
Explore of any
representation or warranty contained in this Agreement which would have or would
be reasonably likely to have a material adverse effect on the operations of
Explore, or (b) there has been a breach of any of the covenants or agreements
set forth in this Agreement on the part of Explore, which breach is not curable
or, if curable, is not cured within fifteen (15) days after written notice of
such breach is given by ▇▇▇▇▇▇▇▇▇.▇▇▇ to Explore.
8.05 Effect of Termination and Abandonment. Upon termination of this
-------------------------------------
Agreement pursuant to Section 5.07 or this Article VIII this Agreement and all
agreements and documents (including legal opinions) related hereto, shall be
void and of no force or effect, and there shall be no liability by reason of
this Agreement or the termination thereof on the part of any party hereto, or on
the part of the respective directors, officers, managers, employees, agents,
representatives or shareholders of any of them; provided that this Section 8.05
will not relieve any party from liability for damages incurred as a result of
any willful breach by such party or by an affiliate of such party of any of its
respective representations, warranties, covenants or obligations set forth in
this Agreement.
8.06 Amendment. This Agreement may be amended by the parties at any time before
---------
or after any required approval of matters presented in connection with the
Acquisition by the Explore shareholders or the ▇▇▇▇▇▇▇▇▇.▇▇▇ Shareholders;
provided, that any amendments requiring the approval of the Explore shareholders
or the Original ▇▇▇▇▇▇▇▇▇.▇▇▇ Shareholders will not become effective until the
amendment is approved by said holders. This Agreement may not be amended except
by an instrument in writing signed on behalf of all the parties hereto.
8.07 Extension; Waiver. At any time prior to the Effective Time, any party
-----------------
hereto, by action taken by its Board of Directors evidenced in writing, may, to
the extent legally allowed, (a) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE IX. SURVIVAL OF PROVISIONS AND INDEMNIFICATION
9.01 Survival. The covenants, obligations, representations and warranties of
--------
each party contained in this Agreement, or in any certificate or document
delivered pursuant to this Agreement, will be deemed to be material and to have
been relied upon by the other parties notwithstanding any investigation prior to
the Closing, will not be merged into any documents delivered in connection with
the Closing, and will terminate two (2) years after Closing. The
indemnification obligations will not expire with respect to such claim(s) until
the same are resolved as contemplated hereunder.
9.02 Indemnification by Explore. Subject to the provisions of Section 9.01,
--------------------------
Explore shall indemnify, defend and hold ▇▇▇▇▇▇▇▇▇.▇▇▇ and its officers,
directors, employees, agents and representatives harmless against any and all
losses, costs and expenses (including reasonable
cost of investigation, court costs and legal fees actually incurred) and other
damages resulting from any breach by Explore of any of their covenants,
obligations, representations or warranties or breach or untruth of any
representation, warranty, fact or conclusion contained in this Agreement or any
certificate or document of Explore.
9.03 Indemnification by ▇▇▇▇▇▇▇▇▇.▇▇▇. Subject to the provisions of Section
--------------------------------
9.01, ▇▇▇▇▇▇▇▇▇.▇▇▇ shall indemnify, defend and hold Explore and its respective
officers, directors, employees and representatives harmless against any and all
losses, costs and expenses (including reasonable cost of investigation, court
costs and legal fees actually incurred) and other damages resulting from (a) any
breach by ▇▇▇▇▇▇▇▇▇.▇▇▇ of any of its covenants, obligations, representations or
warranties or breach or untruth of any representation, warranty, fact or
conclusion contained in this Agreement or any certificate or document of
▇▇▇▇▇▇▇▇▇.▇▇▇ delivered pursuant to this Agreement, and (b) any claim that is
brought or asserted by any third party(ies) arising out of the ownership,
licensing, operation or conduct of ▇▇▇▇▇▇▇▇▇.▇▇▇ through Closing.
ARTICLE X. MISCELLANEOUS
10.01 Other Expenses. Except as otherwise provided in this Agreement, each
--------------
party will pay all of its expenses in connection with the negotiation,
execution, and implementation of the transactions contemplated under this
Agreement.
10.02 Notices. All notices, requests, demands, waivers and other
-------
communications required or permitted to be given under this Agreement will be in
writing and will be deemed to have been duly given: (a) if delivered personally
or sent by facsimile, on the date received, (b) if delivered by overnight
courier, on the day after mailing, and (c) if mailed, five days after mailing
with postage prepaid. Any such notice will be sent as follows:
▇▇▇▇▇▇▇▇▇.▇▇▇: #▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
EXPLORE TECHNOLOGIES, INC: ▇▇▇▇▇ #▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
10.03 Prohibition on Trading. ▇▇▇▇▇▇▇▇▇.▇▇▇ agrees not to trade in the
----------------------
securities of Explore based upon any nonpublic information.
10.04 Controlling Law. This Agreement will be construed, interpreted and
---------------
enforced in accordance with the substantive laws of the State of Nevada, without
giving effect to its conflicts of laws provisions. All references to any
monetary amounts are in U.S. dollars, except if expressly indicated to the
contrary.
10.05 Headings. Any table of contents and Section headings in this Agreement
--------
are for convenience of reference only and will not be considered or referred to
in resolving questions of interpretation.
10.06 Benefit. This Agreement will be binding upon and will inure to the
-------
exclusive benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. No party hereto may assign any rights
or delegate any duties hereunder without the prior written consent of the other
parties hereto and any prohibited assignment or delegation will be deemed null
and void.
10.07 Partial Invalidity. The invalidity or unenforceability of any particular
------------------
provision of this Agreement will not affect the other provisions hereof, and
this Agreement will be construed in all respects as if such invalid or
unenforceable provisions were omitted. Further, there will be automatically
substituted for such invalid or unenforceable provision a provision as similar
as possible which is valid and enforceable.
10.08 Counterparts and Facsimiles This Agreement may be executed simultaneously
---------------------------
in two (2) or more counterparts each of which will be deemed an original and all
of which together will constitute but one and the same instrument. The
signature page to this Agreement and all other documents required to be executed
at Closing may be delivered by facsimile and the signatures thereon will be
deemed effective upon receipt by the intended receiving party.
10.09 Interpretation. All pronouns and any variation thereof will be deemed to
--------------
refer to the masculine, feminine, neuter, singular or plural as the identity of
the person or entity, or the context, may require. Further, it is acknowledged
by the parties that this Agreement has undergone several drafts with the
negotiated suggestions of both; and, therefore, no presumptions will arise
favoring either party by virtue of the authorship of any of its provisions or
the changes made through revisions.
10.10 Entire Agreement; Waivers. This Agreement, including the Exhibits and
-------------------------
Attachments hereto and those portions incorporated herein by reference,
constitutes the entire agreement between the parties hereto with regard to the
matters contained herein and it is understood and agreed that all previous
undertakings, negotiations, letter of intent and agreements between the parties
are merged herein. The failure of any party to this Agreement to assert any of
its rights under this Agreement or otherwise will not constitute a waiver of
such rights. Neither the failure nor any delay on the part of any party hereto
in exercising any rights, power or remedy hereunder will operate as a waiver
thereof or of any right, power or remedy; nor will any single or partial
exercise of any right, power or remedy preclude any further or other exercise
thereof, or the exercise of any other right, power or remedy.
10.11 Legal Fees and Costs. In the event any party hereto incurs legal
--------------------
expenses to enforce or interpret any provision of this Agreement, the prevailing
party will be entitled to recover such legal expenses, including, without
limitation, attorney's fees, costs and disbursements, in addition to any other
relief to which such party will be entitled.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and Plan of
Acquisition as of the date first above written.
▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
EXPLORE TECHNOLOGIES, INC.
By: /s/ ▇▇▇ ▇▇▇
Title: Director