1
EXHIBIT 2.01
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
INLAND ENTERTAINMENT CORPORATION,
INLAND ACQUISITION CORPORATION,
CYBERWORKS, INC.
AND
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
DATED AS OF AUGUST 25, 1998
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TABLE OF CONTENTS
Page
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ARTICLE 1
PLAN OF REORGANIZATION................................................................1
1.1 The Merger.............................................................1
1.2 Conversion of Cyberworks Shares........................................2
1.3 Conversion Definitions.................................................2
1.4 Adjustments for Certain Conditions.....................................2
1.5 Adjustments for Capital Changes........................................3
1.6 Conversion of Acquisition Corp. Shares.................................3
1.7 Effects of the Merger..................................................3
1.8 Bylaws of Cyberworks...................................................3
1.9 Directors and Officers.................................................3
1.10 Further Assurances.....................................................4
1.11 Securities Law Issues..................................................4
1.12 Tax-Free Reorganization................................................4
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER....................................................................4
2.1 Due Execution..........................................................4
2.2 The Cyberworks Common..................................................4
2.3 No Conflict............................................................5
2.4 Consents...............................................................5
2.5 Actions and Proceedings, etc...........................................5
2.6 Investment Representations and Warranties..............................5
2.7 Gaming Restrictions....................................................8
2.8 Stop Transfer Instructions; No Requirements to Transfer................9
2.9 Accuracy of Documents and Information..................................9
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDER AND CYBERWORKS........................................................9
3.1 Organization, Good Standing and Qualification..........................9
3.2 Authority..............................................................9
3.3 Consents..............................................................10
3.4 Capitalization........................................................10
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3.5 Subsidiaries..........................................................11
3.6 No Conflict...........................................................11
3.7 Financial Statements..................................................11
3.8 Absence of Undisclosed Liabilities....................................12
3.9 Tax Returns and Payments..............................................12
3.10 Absence of Certain Changes or Events..................................13
3.11 Accounts Receivable...................................................14
3.12 Interests in Real Property............................................14
3.13 Personal Property.....................................................15
3.14 Intangible Property Rights............................................16
3.15 Title to Assets.......................................................17
3.16 Litigation............................................................17
3.17 Contracts and Permits.................................................17
3.18 Existing Employment Contracts.........................................18
3.19 Interest in Customers, Suppliers and Competitors......................19
3.20 Personnel Identification and Compensation.............................19
3.21 Powers of Attorney and Suretyships....................................20
3.22 Employees.............................................................20
3.23 Labor Relations.......................................................20
3.24 Insurance.............................................................21
3.25 Compliance with Laws..................................................21
3.26 Corporate Documents...................................................21
3.27 Credit Cards..........................................................22
3.28 Bank Accounts.........................................................22
3.29 Environmental Matters.................................................22
3.30 Customers and Suppliers...............................................22
3.31 Unlawful Payment......................................................22
3.32 Restrictive Covenants.................................................23
3.33 Insolvency............................................................23
3.34 Books and Records.....................................................23
3.35 Accuracy of Documents and Information.................................23
3.36 Disclosure............................................................24
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF INLAND.............................................24
4.1 Corporate Existence and Authority.....................................25
4.2 No Conflict...........................................................25
4.3 Consents..............................................................25
4.4 Binding Obligations...................................................25
4.5 Representations.......................................................26
4.6 Capital Stock.........................................................26
4.7 Corporate Documents...................................................26
4.8 Financial Statements..................................................27
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4.9 Absence of Undisclosed Liabilities....................................27
4.10 Status of Inland's Shares of Common Stock............................27
4.11 Governmental Proceedings..............................................27
4.12 Intellectual Property.................................................28
4.13 Absence of Certain Changes or Events..................................28
4.14 Compliance with Laws..................................................29
4.15 Accuracy of Documents and Information.................................29
ARTICLE 5
CYBERWORKS PRECLOSING COVENANTS .....................................................29
5.1 Advice of Changes.....................................................29
5.2 Maintenance of Business...............................................29
5.3 Conduct of Business...................................................29
5.4 Certain Agreements....................................................31
5.5 Regulatory Approvals..................................................32
5.6 Necessary Consents....................................................32
5.7 Litigation............................................................32
5.8 No Other Negotiations.................................................32
5.9 Access to Information.................................................32
5.10 Satisfaction of Conditions Precedent..................................33
5.11 Blue Sky Laws.........................................................33
5.12 Notification of Employee Problems.....................................33
ARTICLE 6
INLAND PRECLOSING COVENANTS..........................................................33
6.1 Regulatory Approvals..................................................33
6.2 Satisfaction of Conditions Precedent..................................33
6.3 Blue Sky Laws.........................................................34
6.4 Advice of Changes.....................................................34
6.5 Litigation............................................................34
ARTICLE 7
CLOSING MATTERS .....................................................................34
7.1 The Closing...........................................................34
7.2 Exchange of Certificates..............................................34
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF CYBERWORKS..............................................35
8.1 Accuracy of Representations and Warranties............................35
8.2 Covenants.............................................................35
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8.3 Compliance with Law...................................................36
8.4 Government Consents...................................................36
8.5 Documents.............................................................36
8.6 No Litigation.........................................................36
8.7 Opinion of Inland's Counsel...........................................36
8.8 Satisfactory Form of Legal and Accounting Matters.....................36
8.9 Employment Agreement..................................................36
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF INLAND..................................................36
9.1 Accuracy of Representations and Warranties............................37
9.2 Covenants.............................................................37
9.3 Absence of Material Adverse Change....................................37
9.4 Compliance with Law...................................................37
9.5 Government Consents...................................................37
9.6 Documents.............................................................37
9.7 No Litigation.........................................................37
9.8 Opinion of Cyberworks' Counsel........................................38
9.9 Requisite Approvals...................................................38
9.10 Employment and Noncompetition Agreements..............................38
9.11 Spousal Consent.......................................................38
9.12 Termination of Rights.................................................38
9.13 Resignation of Directors..............................................38
9.14 Satisfactory Form of Legal and Accounting Matters.....................38
9.15 Cyberworks Options....................................................38
ARTICLE 10
TERMINATION OF AGREEMENT.............................................................39
10.1 Termination...........................................................39
10.2 Certain Continuing Obligations........................................39
ARTICLE 11
INDEMNIFICATION......................................................................40
11.1 Indemnification by Cyberworks and the Shareholder.....................40
11.2 Indemnification by Inland.............................................40
11.3 Notice of Claim.......................................................40
11.4 Defense...............................................................40
11.5 Duration of the Parties Obligations...................................41
11.6 Limitations on Amount -- Cyberworks and the Shareholder...............42
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ARTICLE 12
DEFINITIONS AND ACCOUNTING .........................................................42
12.1 Certain Defined Terms.................................................42
12.2 Accounting Terms......................................................43
ARTICLE 13
MISCELLANEOUS........................................................................44
13.1 Governing Law; Venue..................................................44
13.2 Assignment; Binding Upon Successors and Assigns.......................44
13.3 Severability..........................................................44
13.4 Counterparts..........................................................44
13.5 Other Remedies........................................................44
13.7 No Waiver.............................................................44
13.8 Expenses..............................................................45
13.9 Finder's or Broker's Fees.............................................45
13.10 Notices...............................................................45
13.11 Construction of Agreement.............................................46
13.12 No Joint Venture......................................................46
13.13 Further Assurances....................................................46
13.14 Absence of Third Party Beneficiary Rights.............................46
13.15 Public Announcement...................................................47
13.16 Confidentiality.......................................................47
13.17 Entire Agreement......................................................48
SIGNATURE PAGE.......................................................................49
INDEX TO SCHEDULES AND EXHIBITS
-------------------------------
SCHEDULES DESCRIPTION
--------- -----------
2.3 Conflicts (Shareholder)
2.4 Consents (Shareholder)
2.6 Written Information provided by Inland to Shareholder
2.7 Article X of Inland's Amended and Restated Articles of
Incorporation
3.3 Consents (Cyberworks)
3.6 Conflicts Cyberworks)
3.7 Outstanding Debt Owed by Cyberworks
3.8 Material Liability, Indebtedness and Obligation
3.10 Absence of Certain Changes and Events (Cyberworks)
3.12 Real Property Leases
3.13 Personal Property
3.14 Intellectual Property
3.15 Title to Assets
3.16 Litigation
3.17 Certain Contracts and Permits of Cyberworks
3.18 Employment Contracts
3.19 Interests in Customers, Suppliers and Competitors
3.21 Powers of Attorney and Suretyships
3.22 Employees
3.23 Labor Relations
3.24 Insurance Policies
3.25 Compliance with Laws (Cyberworks)
3.27 Credit Cards
3.28 Bank Accounts of Cyberworks
3.29 Environmental Matters
3.30(a) Customers Accounting for over 5% of the Revenue of Cyberworks
for the Twelve Months ended December 31, 1997 and for the Six
Months ended June 30, 1998
3.30(b) Customers and Suppliers who may be Prejudicially Affected by
the Execution or Completion of the Agreement
3.32 Restrictive Covenants (Cyberworks)
4.3 Consents (Inland)
4.6 Capital Stock (Inland)
4.9 Absence of Undisclosed Liabilities (Inland)
4.13 Absence of Certain Changes or Events (Inland)
4.14 Compliance with Laws (Inland)
5.3(i) Conduct of Business (Cyberworks)
EXHIBITS DESCRIPTION
-------- -----------
C-1 Employment Agreement (▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇)
C-2 Noncompetition Agreement (▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇)
1.7 Restated Articles of Incorporation (Cyberworks)
1.8 Amended and Restated Bylaws of Cyberworks
5.4 Employee Confidentiality, Assignment, and Proprietary Rights
Agreement
8.7 Opinion of Inland's Counsel
9.8 Opinion of Cyberworks' Counsel
9.11 Spousal Consent
The Schedules and Exhibits referenced above have not been filed herewith.
The Registrant will furnish supplementally a copy of any omitted schedule to the
U.S. Securities and Exchange Commission upon request.
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is entered
into as of August 25, 1998, by and among Inland Entertainment Corporation, a
Utah corporation ("Inland"), Inland Acquisition Corporation, a Utah corporation
and the wholly-owned subsidiary of Inland ("Acquisition Corp."), Cyberworks,
Inc., a California corporation ("Cyberworks"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, the sole
shareholder of Cyberworks (the "Shareholder").
RECITALS
A. The parties intend that, subject to the terms and conditions
hereinafter set forth, Acquisition Corp. will merge with and into Cyberworks in
a reverse triangular merger (the "Merger"), with Cyberworks to be the surviving
corporation of the Merger, all pursuant to the terms and conditions of this
Agreement, the Articles of Merger substantially in the form of Exhibit A-1 (the
"Articles of Merger"), the Agreement of Merger substantially in the form of
Exhibit A-2 (the "Agreement of Merger") and the applicable provisions of the
laws of the states of Utah and California. Upon the effectiveness of the Merger,
all the outstanding common stock of Cyberworks will be converted into common
stock of Inland and the right to receive cash in the manner and on the basis
determined herein and as provided in the Articles of Merger and the Agreement of
Merger.
B. It is intended by the parties hereto that the Merger shall constitute
a reorganization within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code"), by virtue of the provisions of
Section 368(a)(2)(E) of the Code.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
PLAN OF REORGANIZATION
1.1 The Merger. The Agreement of Merger and the Articles of Merger will
be filed with the Secretary of State of the State of California and the State of
Utah's Division of Corporations and Commercial Code, respectively, as soon as
practicable after the Closing (as defined in Section 7.1 below). The effective
date of the Merger as specified in the Articles of Merger and the Agreement of
Merger (the "Effective Date") will occur on or before September 30, 1998, or on
such other date as the parties hereto may mutually agree upon. Subject to the
terms and conditions of this Agreement, the Articles of Merger and the
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Agreement of Merger, Acquisition Corp. will be merged with and into Cyberworks
in a statutory merger pursuant to the Articles of Merger and the Agreement of
Merger and in accordance with applicable provisions of Utah and California laws
as follows:
1.2 Conversion of Cyberworks Shares. Each share of Cyberworks common
stock, $1.00 par value (the "Cyberworks Common"), that is issued and outstanding
immediately prior to the Effective Date will, by virtue of the Merger and at the
Effective Date, and without further action on the part of any holder thereof, be
converted into a right to receive the Applicable Inland Common Number
(determined in accordance with Section 1.3 hereof) of fully paid and
nonassessable shares of Inland common stock, $.001 par value (the "Inland
Common") and the right to receive cash equal to the Applicable Cash Amount
(determined in accordance with Section 1.3 hereof).
1.3 Conversion Definitions. Unless there is an adjustment to the shares
to be issued in the Merger pursuant to Sections 1.4 or 1.5 below: (a) the
"Applicable Inland Common Number" for the conversion of the Cyberworks Common
will be determined by dividing (i) 750,000 by (ii) the total number of issued
and outstanding shares of Cyberworks Common at the Effective Date (the
"Outstanding Cyberworks Common"); and (b) the "Applicable Cash Amount" for the
conversion of the Cyberworks Common will be determined by dividing (i) $500,000
by (ii) the Outstanding Cyberworks Common. The value of the Inland Common to be
received by the Shareholder (the "Stock Component") shall be equal to Fair
Market Value (as defined below) multiplied by the result obtained when
multiplying the Applicable Inland Common Number by the Outstanding Cyberworks
Common. The "Cash Component" shall be equal to the result obtained when
multiplying the Applicable Cash Amount by the Outstanding Cyberworks Common. The
sum of the Stock Component and the Cash Component shall equal the "Total
Consideration". "Fair Market Value" shall mean the average of the per day
average high and low sales prices for one (1) share of common stock of Inland on
The NASDAQ Stock Market for the five (5) consecutive trading days immediately
preceding the Determination Date, as reported (absent manifest error in the
printing thereof) by the Wall Street Journal (Western Edition). The
"Determination Date" shall be the date that is two (2) business days prior to
the Closing Date.
1.4 Adjustments for Certain Conditions. Should the percentage of the
Stock Component be less than 80% of the Total Consideration (after taking into
consideration a 15% discount with respect to the Inland Common), then the Cash
Component shall be reduced to such extent that the percentage of the Stock
Component will be equal to or greater than 80%. Notwithstanding anything to the
contrary, in no event will the Inland Common to be delivered in connection with
the Merger result in an increase in Inland's outstanding common stock by more
than 19.5%. Should it appear that this 19.5% limitation will be exceeded, the
number of shares of Inland Common to be delivered to Shareholder shall be capped
at an amount equal to the number of shares that will result in an increase in
Inland's outstanding common stock by 19.5%.
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1.5 Adjustments for Capital Changes. If prior to the Merger, Inland
recapitalizes either through a split-up of its outstanding shares into a greater
number, or through a combination of its outstanding shares into a lesser number,
or reorganizes, reclassifies or otherwise changes its outstanding shares into
the same or a different number of shares of other classes (other than through a
split-up or combination of shares provided for in the previous clause), or
declares a dividend on its outstanding shares payable in shares or securities
convertible into shares, the calculation of the Applicable Inland Common Number
and the Applicable Cash Amount governing the conversion of Cyberworks Common
will be adjusted appropriately.
1.6 Conversion of Acquisition Corp. Shares. Each share of Acquisition
Corp. common stock, $.001 par value ("Acquisition Corp. Common"), that is issued
and outstanding immediately prior to the Effective Date will, by virtue of the
Merger and without further action on the part of the sole shareholder of
Acquisition Corp., be converted into and become one (1) share of Cyberworks
common stock that is issued and outstanding immediately after the Effective
Date, and the shares of Cyberworks Common into which the shares of Acquisition
Corp. Common are so converted shall be the only shares of Cyberworks common
stock that are issued and outstanding immediately after the Effective Date.
1.7 Effects of the Merger. At the Effective Date: (a) the separate
existence of Acquisition Corp. will cease and Acquisition Corp. will be merged
with and into Cyberworks and Cyberworks will be the surviving corporation
pursuant to the terms of the Articles of Merger and the Agreement of Merger; (b)
the Articles of Incorporation of Cyberworks will be amended to read as set forth
in Exhibit 1.7 as the Articles of Incorporation of the surviving corporation;
(c) each share of Cyberworks Common outstanding immediately prior to the
Effective Date will be converted as provided in this Article 1; (d) each share
of Acquisition Corp. Common outstanding immediately prior to the Effective Date
will be converted as provided in this Article 1; and (e) the Merger will, at and
after the Effective Date, have all of the effects provided by applicable law.
1.8 Bylaws of Cyberworks. At the Effective Date, the Bylaws of
Cyberworks will be amended and restated in their entirety to read as set forth
on Exhibit 1.8 as the Bylaws of the surviving corporation.
1.9 Directors and Officers. At the Effective Date: (a) the directors of
Cyberworks as the surviving corporation shall be L. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇; and (b) the officers
of Cyberworks as the surviving corporation shall be: L. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇,
Chairman of the Board and Chief Executive Officer; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
President and Chief Operating Officer; ▇▇▇▇▇▇ ▇▇▇▇▇▇, Executive Vice President,
Chief Financial Officer and Secretary; ▇▇▇▇▇ ▇▇▇▇▇, Executive Vice President -
Administration; ▇▇▇▇ ▇▇▇▇▇▇, Executive Vice President Marketing; and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, Vice President - Special Projects.
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1.10 Further Assurances. Cyberworks agrees that if, at any time after
the Effective Date, Inland considers or is advised that any further deeds,
assignments or assurances are reasonably necessary or desirable to vest, perfect
or confirm in Inland title to any property or rights of Cyberworks as provided
herein, Inland and any of its officers are hereby authorized by Cyberworks to
execute and deliver all such proper deeds, assignments and assurances and do all
other things necessary or desirable to vest, perfect or confirm title to such
property or rights in Inland and otherwise to carry out the purposes of this
Agreement, in the name of Cyberworks or otherwise.
1.11 Securities Law Issues. Based in part on the representations of the
Shareholder made in Section 2.6 below, the Inland Common to be issued in the
Merger will be issued pursuant to an exemption from registration under Section
4(2) of the Securities Act of 1933, as amended (the "Securities Act") and/or
Regulation D promulgated under the Securities Act and applicable state
securities laws.
1.12 Tax-Free Reorganization. It is intended by the parties hereto that
the Merger shall constitute a reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"), by
virtue of the provisions of Section 368(a)(2)(E) of the Code.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER
In order to induce Inland and Acquisition Corp. to enter into
this Agreement, the Shareholder hereby makes the representations and warranties
set forth below, which representations and warranties shall be deemed to
continue in full force and effect until the time of the Closing and thereafter
as set forth herein.
2.1 Due Execution. This Agreement has been duly executed and delivered
by the Shareholder and this Agreement constitutes a legal, valid and binding
obligation of the Shareholder, enforceable against the Shareholder in accordance
with its terms, except as such enforceability may be subject to or limited by
(a) bankruptcy, insolvency, moratorium, fraudulent conveyance or other similar
laws relating to the rights of creditors generally, (b) limitations imposed by
law or equitable principles upon the availability of specific performance,
injunctive relief or other equitable remedies, and (c) concepts of materiality.
2.2 The Cyberworks Common. The Shareholder has good and valid title to
the Cyberworks Common being sold hereunder, free and clear of any liens, claims,
encumbrances, security interests, options, charges and restrictions of any kind.
Upon delivery to Inland at the Closing of certificates representing the
Cyberworks Common being sold hereunder by the Shareholder duly endorsed by the
Shareholder for transfer to Inland, and upon the Shareholder's receipt of the
consideration hereunder, good and valid title to
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such Cyberworks Common will pass to Inland, free and clear of any liens, claims,
encumbrances, security interests, options, pledges, equities, right of first
refusal, charges, claims and restrictions of any kind. Other than this
Agreement, the Cyberworks Common being sold by the Shareholder hereunder are not
subject to any other contract, agreement, arrangement, commitment or
understanding, including any such agreement, arrangement, commitment or
understanding restricting or otherwise relating to the voting, dividend rights
or disposition of the Cyberworks Common.
2.3 No Conflict. Except as stated in Schedule 2.3, the execution and
delivery of this Agreement does not, and the performance of this Agreement and
the consummation of the transactions contemplated hereby in accordance with the
terms, conditions and provisions hereof will not result in a breach or violation
of, or be in conflict with, or constitute (with or without the giving of notice
or the passage of time or both) a default under (a), to the Knowledge of the
Shareholder, any statute, law, ordinance, rule or regulation (including, without
limitation, all laws regulating franchises) applicable to the Shareholder; (b)
the terms, conditions or provisions of any lease, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of trust,
partnership agreement, contract, instrument, or arrangement (whether or not in
writing) to which the Shareholder is a party or by which the Shareholder is
bound; or (c) any permit, license, order, judgment or decree of any court,
arbitrator or governmental authority by which the Shareholder is bound.
2.4 Consents. No consent, permit, approval, order, authorization of, or
filing with or notice to, any federal, state, local, or foreign governmental
department, commission, board, bureau, agency, instrumentality or authority or
any person (whether or not governmental in character) has been or is required to
be obtained, made or given by the Shareholder in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby or the fulfillment of or the compliance with the terms,
conditions and provisions hereof, except as set forth in Schedule 2.4 to this
Agreement.
2.5 Actions and Proceedings, etc. There are no (a) outstanding
judgments, orders, writs, preliminary or permanent injunctions or other decrees
of any court, administrative agency, governmental authority or instrumentality
or arbitration tribunal against the Shareholder which have or could reasonably
have a Material Adverse Effect on the ability of the Shareholder to consummate
the transactions contemplated hereby or (b) actions, suits, claims or legal,
administrative or arbitration proceedings or investigations pending or, to the
Knowledge of the Shareholder, threatened against the Shareholder, which have or
could reasonably have a Material Adverse Effect on the ability of the
Shareholder to consummate the transactions contemplated hereby.
2.6 Investment Representations and Warranties. The Shareholder
understands and represents and warrants to, and agrees with, Inland that:
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2.6.1 The Shareholder understands that the terms of the Merger
have not been reviewed by the U.S. Securities and Exchange Commission (the
"SEC") or state securities authorities nor has such federal or state securities
agencies passed on, or made any recommendation or endorsement of the Inland
Common.
2.6.2 The Shareholder acknowledges that, in making the decision
to accept the Inland Common as part of the consideration for the conversion of
the Cyberworks Common, he has relied solely upon independent investigations made
by him and not upon any representations made by Inland with respect to Inland or
the Inland Common, except for the representations and warranties in this
Agreement, except that the Shareholder has received, reviewed and relied upon
(a) Inland's Annual Report to Stockholders for the year ended June 30, 1997, (b)
copies of Inland's report on Form 10-KSB for the year ended June 30, 1997,
Inland's reports on Form 10-QSB for the quarters ended September 30, 1997,
December 31, 1997, and March 31, 1998, and Inland's definitive Proxy Statement
dated October 28, 1997, each filed by Inland pursuant to the Exchange Act, and
all other filings, including filings on Form 8-K, by Inland under the Exchange
Act since March 31, 1998, which, together with any filings by Inland under the
Exchange Act after the date hereof and prior to the Closing, are defined as
"Exchange Act Reports", (c) any unaudited financial statements of Inland
provided to the Shareholder, and (d) certain other written information provided
by Inland to the Shareholder set forth on Schedule 2.6.
2.6.3 The Shareholder acknowledges and understands that the
Inland Common received by the Shareholder pursuant to the Merger has not been
registered under the Securities Act and constitutes "restricted securities"
under Rule 144(d) of the Securities Act, and will be issued in reliance on the
exemptions for non-public offerings provided by Section 4(2) of the Securities
Act, which exemption depends upon, among other things, the representations made
and information furnished by the Shareholder, including the bona fide nature of
the Shareholder's investment intent as expressed herein. The Shareholder also
understands that Inland is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
the Shareholder set forth herein in order to determine the applicability of such
exemptions and the suitability of the Shareholder to acquire the Inland Common.
2.6.4 The Shareholder acknowledges that the shares of Inland
Common issued in connection with the Merger may not be resold publicly for a
period of one year under Rule 144 unless the shares are registered with the SEC.
The Shareholder accepts the risks of holding such shares indefinitely and the
other risks set forth in the Exchange Act Reports. The Shareholder, together
with his advisors, is capable of assessing the risks of an investment in Inland
Common and is fully aware of the economic risks thereof. The Shareholder
acknowledges that Inland's operating results have in the past and may in the
current period and in future periods not meet the expectations of securities
analysts and that failure to meet such expectations would be likely to have a
Material Adverse Effect on the trading price of Inland Common.
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2.6.5 The Shareholder is receiving the shares of Inland Common in
the Merger for investment for such Shareholder's own account only, not as a
nominee or agent, and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act, and the
Shareholder has no present intention of selling, granting any participation in,
or otherwise distributing the same within the meaning of the Securities Act. By
executing this Agreement, the Shareholder further represents that it does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third person with
respect to any of the shares of the Inland Common. The Shareholder has no
current plan or intention to engage in a sale, exchange, transfer, distribution,
redemption or reduction in any way of the Shareholder's risk of ownership by
short sale or otherwise, or other disposition, directly or indirectly, of any of
the Inland Common to be received by Shareholder in the Merger.
2.6.6 The Shareholder recognizes that Inland has made available
to him the opportunity to examine such additional documents from Inland and to
ask questions of, and receive full answers from, Inland concerning, among other
things, Inland, its financial condition, its management, its prior activities
and any other information which the Shareholder considers relevant or
appropriate in connection with entering into this Agreement. The Shareholder
further represents that the oral information provided by Inland's management, if
any, has been consistent with the information set forth in the Exchange Act
Reports. The Shareholder represents that it has had an opportunity to ask
questions and receive answers from Inland regarding the terms of the Merger in
which the Inland Common will be issued and that he has received the information
he requested regarding the business and affairs of Inland.
2.6.7 The Shareholder acknowledges that he (a) is able to bear
the economic risk of the Shareholder's investment, (b) is able to hold the
Inland Common for an indefinite period of time, (c) can afford a complete loss
of the his investment in the Inland Common; (d) has adequate means of providing
for his current needs and possible personal contingencies and has no need for
liquidity in this investment, and (e) has such knowledge and experience in
financial or business matters that he is capable of evaluating the merits and
risks of the investment in the Inland Common.
2.6.8 Without in any way limiting the representations set forth
above, the Shareholder further agrees not to make any disposition of all or any
portion of the Inland Common or unless and until:
(a) There is then in effect a registration statement under
the Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement; or
(b) (i) The Shareholder shall have notified Inland of the
proposed disposition and shall have furnished Inland with a detailed
statement of the circumstances surrounding the proposed disposition, and
(ii) if requested by Inland,
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14
the Shareholder shall have furnished Inland with an opinion of counsel,
reasonably satisfactory to Inland, that such disposition will not
require registration of such shares under the Securities Act.
2.6.9 The Shareholder represents that at no time was he presented
with or solicited by any general mailing, leaflet, public promotional meeting,
newspaper or magazine article, radio or television advertisement, or any other
form of general advertising or general solicitation in connection with the
Merger.
2.6.10 The Shareholder acknowledges that the certificates
representing the Inland Common shall contain the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
REGISTERED OR QUALIFIED UNDER ANY OTHER SECURITIES LAW; THEY HAVE
BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE
PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED UNDER SUCH ACT AND ANY APPLICABLE SECURITIES
LAWS, OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE
AND INLAND ENTERTAINMENT CORPORATION ("INLAND") SHALL HAVE
RECEIVED, AT THE EXPENSE OF THE HOLDER HEREOF, EVIDENCE OF THE
EXEMPTION REASONABLY SATISFACTORY TO INLAND (WHICH MAY INCLUDE,
AMONG OTHER THINGS, AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO INLAND)."
2.6.11 All information that Shareholder provides to Inland
hereunder concerning such Shareholder's financial position and knowledge of
financial and business matters is correct and complete as of the date set forth
above.
2.7 Gaming Restrictions. The Shareholder acknowledges that he has read
and understands Article X of Inland's Amended and Restated Articles of
Incorporation, as amended ("Article X"), relating to the additional requirements
imposed upon certain persons, including the Shareholder, who are or will be
significant shareholders of Inland. A copy of Article X is attached hereto as
Schedule 2.7. The Shareholder hereby agrees that his signature on this Agreement
also shall constitute his written agreement to be bound by the provisions of
Article X.
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15
2.8 Stop Transfer Instructions; No Requirements to Transfer. The
Shareholder agrees that, in order to ensure compliance with the restrictions
referred to herein, Inland may issue appropriate "stop transfer" instructions to
its transfer agent. Inland shall not be required (a) to transfer or have
transferred on its books any Inland Common that has been sold or otherwise
transferred in violation of any of the provisions of this Agreement or (b) to
treat as owner of such Inland Common or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Inland Common shall
have been so transferred in violation of any provision of this Agreement. Inland
agrees that such stop transfer instructions and legends will be promptly removed
if the provisions of the Securities Act and Inland's Charter Documents are
complied with.
2.9 Accuracy of Documents and Information. The copies of all
instruments, agreements, other documents and written information delivered to
Inland by or on behalf of the Shareholder, pursuant to this Article 2 are and
will be complete and correct in all material respects as of the date hereof and
as of the Closing Date. The representations and warranties made by the
Shareholder in this Article 2, or in other written materials furnished to Inland
pursuant to the representations and warranties in this Article 2 or in
connection with the transactions contemplated by this Article 2, taken as a
whole, do not contain any untrue statement of material fact and do not omit any
material fact necessary to make the statements or facts contained herein or
therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDER AND CYBERWORKS
In order to induce Inland and Acquisition Corp. to enter into
this Agreement, the Shareholder and Cyberworks hereby, jointly and severally,
each make the representations and warranties set forth below, which
representations and warranties shall be deemed to continue in full force and
effect until the time of the Closing and thereafter as set forth herein.
3.1 Organization, Good Standing and Qualification. Cyberworks is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all necessary power and authority to own and
lease its properties and assets and to conduct its businesses as now owned and
presently operated by it. Neither the nature of its business, nor the character
or location of properties or assets owned or leased by Cyberworks, has made or
makes necessary licensing or qualification by Cyberworks in any jurisdiction
other than its respective jurisdiction of organization.
3.2 Authority. Cyberworks has full corporate power, authority and legal
right to enter into and perform its obligations under this Agreement and all
agreements to which Cyberworks is or will be a party that are required to be
executed pursuant to this Agreement
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16
(the "Cyberworks Ancillary Agreements"), and to consummate the transactions
contemplated hereby and thereby. This Agreement and the Cyberworks Ancillary
Agreements have been duly and validly approved by the Cyberworks Board of
Directors and Shareholders, as required by applicable law. This Agreement and
the Cyberworks Ancillary Agreements constitute legal, valid and binding
obligations of Cyberworks enforceable against Cyberworks; provided, however,
that the Cyberworks Ancillary Agreements will not be effective until the earlier
of the Effective Date or the date provided for therein in accordance with their
respective terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws, or by equitable principles, relating to or limiting the
rights of creditors generally, (b) limitations imposed by law or equitable
principles upon the availability of specific performance, injunctive relief or
other equitable remedies, and the Shareholder (as applicable) and (c) concepts
of materiality.
3.3 Consents. No filing, authorization or approval, governmental or
otherwise, is necessary to enable Cyberworks to enter into, and to perform its
obligations under, this Agreement and the Cyberworks Ancillary Agreements,
except for (a) the filing of the Articles of Merger and the Agreement of Merger
with the Secretaries of State of the States of Utah and California,
respectively, the filing of such officers' certificates and other documents as
are required to effectuate the Merger under Utah and California law and the
filing of appropriate documents with the relevant authorities of the states
other than California in which Cyberworks is qualified to do business, if any,
(b) such filings as may be required to comply with federal and state securities
laws, (c) consents required under contracts disclosed in Schedule 3.3 and (d)
the approval of the Shareholder.
3.4 Capitalization.
(a) Authorized/Outstanding Capital Stock. The authorized capital
stock of Cyberworks consists of 10,000 shares of Cyberworks Common. 1,000 shares
of Cyberworks Common are issued and outstanding as of this date and as of the
Closing Date, of which ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ holds of record and beneficially all
1,000 shares of Cyberworks Common, respectively. The Shareholder holds good and
marketable title to such Cyberworks shares, free and clear of all liens,
agreements, voting trusts, proxies and other arrangements or restrictions of any
kind whatsoever. No shares of Preferred Stock are authorized, issued or
outstanding. All issued and outstanding shares of Cyberworks Common have been
duly authorized and validly issued, are fully paid and nonassessable, are not
subject to any right of rescission and have been offered, issued, sold and
delivered by Cyberworks in compliance with all registration or qualification
requirements (or applicable exemptions therefrom) of applicable federal and
state securities laws.
(b) Options/Rights. There are no stock appreciation rights,
options, warrants, calls, rights, commitments, conversion privileges or
preemptive or other rights or agreements outstanding to purchase or otherwise
acquire any of Cyberworks' authorized but unissued capital stock or any
securities or debt convertible into or exchangeable for shares
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17
of Cyberworks Common or obligating Cyberworks to grant, extend or enter into
such option, warrant, call, commitment, conversion privileges or preemptive or
other right or agreement. There is no liability for dividends accrued but
unpaid. There are no voting agreements, registration rights, rights of first
refusal or other restrictions (other than normal restrictions on transfer under
applicable federal and state securities laws) applicable to any of Cyberworks'
outstanding securities.
3.5 Subsidiaries. Cyberworks does not have any subsidiaries or any
equity interest, direct or indirect, in any corporation, partnership, joint
venture or other business entity.
3.6 No Conflict. Except as stated in Schedule 3.6, the execution and
delivery of this Agreement or any of the Cyberworks Ancillary Agreements do not,
and the performance of this Agreement or any of the Cyberworks Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby in accordance with their respective terms, conditions and provisions
will not (a) accelerate the maturity of, or give any person any rights under, or
the right to rescind, or otherwise modify, any obligation, indebtedness,
license, agreement or instrument to which Cyberworks is a party or by which
Cyberworks or any of its properties or assets is bound, (b) result in the
creation of any lien, encumbrance or charge upon any of the properties or assets
of Cyberworks or (c) result in a breach or violation of, or be in conflict with,
or constitute (with or without the giving of notice or the passage of time or
both) a default under (i), to the Knowledge of Cyberworks or the Shareholder,
any statute, law, ordinance, rule or regulation (including, without limitation,
all laws regulating franchises) applicable to Cyberworks or any of its
properties or assets; (ii) the terms, conditions or provisions of the articles
of incorporation or any other charter documents of Cyberworks, or any lease,
license, promissory note, conditional sales contract, commitment, indenture,
mortgage, deed of trust, partnership agreement or other agreement, contract,
instrument or arrangement or other undertaking (whether or not in writing) to
which Cyberworks is a party or by which Cyberworks, or any of its properties or
assets, is bound; or (iii) any permit, license, order, judgment or decree of any
court, arbitrator or governmental authority by which Cyberworks, or any of its
properties or assets, is bound.
3.7 Financial Statements.
3.7.1 The Shareholder and Cyberworks have caused to be delivered
to Inland true and complete copies of the financial statements of Cyberworks for
the year ended December 31, 1997, prepared in accordance with GAAP, and
unaudited financial statements of Cyberworks for the quarterly periods ended
March 31, 1998 and June 30, 1998 (together the "Cyberworks Financial
Statements"). The Cyberworks Financial Statements: (i) are in agreement with the
books and records of Cyberworks; and (ii) present fairly and accurately the
assets, liabilities and financial position of Cyberworks at the respective dates
of the balance sheets included in the financial statements, and the results of
operations and changes in financial position and shareholders' equity thereof
for the respective periods covered thereby. The Shareholder and Cyberworks have
made available to Inland and its agents and
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representatives for inspection true and correct copies of the accountants'
working papers and other materials utilized in preparing the financial
statements.
3.7.2 The accounting and other books and records of Cyberworks
have been properly prepared and accurately present and reflect in accordance
with GAAP all the transactions entered into by Cyberworks or to which it has
been a party and there are at the date hereof no material inaccuracies or
discrepancies of any kind contained or reflected in any of the said books and
records, and as of the dates thereof they respectively give and reflect a true
and fair view of the financial position of Cyberworks and of its respective
fixed, current and contingent assets and liabilities, and debtors and creditors.
3.7.3 Except as set forth on Schedule 3.7, to the Knowledge of
the Shareholder or Cyberworks, in relation to all debentures, acceptance
credits, overdrafts, loans or other financial facilities outstanding or
available to Cyberworks (referred to in this clause as "facilities"): material
details of all facilities have been disclosed and there have been delivered to
Inland accurate copies of all material documents, if any, relating to the
facilities; there has been no contravention of, or non-compliance with, any
material provision of any of such documents; no steps for the early repayment of
any indebtedness relating to the facilities have been taken or threatened; there
are no circumstances whereby the continuation of any of the facilities are
likely to be prejudiced, or which may give rise to any alteration in the terms
and conditions of any of the facilities; none of the facilities is dependent on
the guarantee or indemnity of, or any security provided by, a third party other
than the Shareholder; and the Shareholder has no reason to anticipate that as a
result of anything contemplated in this Agreement or any of the Cyberworks
Ancillary Agreements, any of the facilities might be terminated or mature prior
to its stated maturity.
3.8 Absence of Undisclosed Liabilities. As of December 31, 1997
(the "Balance Sheet Date"), Cyberworks did not have and was not subject to any
material liability, indebtedness, claim, obligation or responsibility, fixed or
contingent, liquidated or unliquidated, secured or unsecured, or otherwise,
which was not either:
(a) specifically included in the full amount as a liability or
adequately and specifically reserved for or against in the full amount
in the Consolidated Balance Sheet; or
(b) fully and specifically set forth in Schedule 3.8.
Since the Balance Sheet Date, Cyberworks has not incurred or become
subject to any material liability, indebtedness, claim, obligation or
responsibility, fixed or contingent, liquidated or unliquidated, secured or
unsecured, or otherwise, other than those incurred since the Balance Sheet Date
in the ordinary course of business consistent with past practice.
3.9 Tax Returns and Payments. Cyberworks has filed all federal, state,
local and foreign tax and material information returns required to be filed
prior to the date hereof, has
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paid all taxes required to be paid in respect of all periods prior to the date
hereof for which returns have been filed, has made all necessary estimated tax
payments, and has no liability for taxes in excess of the amount so paid, except
to the extent adequate reserves have been established in the Cyberworks
Financial Statements. True, correct and complete copies of all such tax and
information returns have been provided or made available by Cyberworks to
Inland. To Cyberworks's Knowledge, Cyberworks is not delinquent in the payment
of any tax or in the filing of any tax returns, and no deficiencies for any tax
have been threatened, claimed, proposed or assessed which have not been settled
or paid. No tax return of Cyberworks has ever been audited by the Internal
Revenue Service or any state taxing agency or authority. For the purposes of
this Section 3.9, the terms "tax" and "taxes" include all federal, state, local
and foreign income, gains, franchise, excise, property, sales, use, employment,
license, payroll, occupation, recording, value added or transfer taxes,
governmental charges, fees, levies or assessments (whether payable directly or
by withholding), and, with respect to such taxes, any estimated tax, interest
and penalties or additions to tax and interest on such penalties and additions
to tax. Since its inception, Cyberworks has made an election under the Internal
Revenue Code of 1968, as amended (the "Code") and state income tax laws to be
treated as an S Corporation. Such election will remain valid through the Closing
Date. All taxes arising by reason of such election (including, but not limited
to, the corporate level built in gain and capital gain taxes described in
Section 1374 of the Code or a predecessor section of the Code) have been or will
be paid by the Shareholder no matter when assessed. Cyberworks has no current or
deferred federal income tax liabilities and will not as a result of the merger
become liable for any income tax not adequately reserved against on the
Cyberworks' Financial Statements. Cyberworks has not filed a consent pursuant to
Section 341(f) of the Code. If Cyberworks were to become subject to an audit by
the Internal Revenue Service or any state taxing agency or authority for tax
years or periods prior to the Effective Date (including, but not limited to, any
short tax year resulting from the Merger), the Shareholder will use all
reasonable efforts to resolve all such audits in a manner consistent with the
intentions of Cyberworks and Inland as expressed in this Agreement.
3.10 Absence of Certain Changes or Events. Since the Balance Sheet Date
and except as specifically authorized hereunder or as set forth in Schedule
3.10:
(a) Cyberworks has not entered into any transaction other than in
the ordinary course of business, consistent with past practice;
(b) there have been no changes in the financial condition,
results of operations, assets, liabilities, prospects or Cyberworks
other than changes in the ordinary course of business, consistent with
past practice which in the aggregate have not had a Material Adverse
Effect, nor any event or circumstance which could reasonably be expected
to result in any such changes and, without limiting the foregoing, there
has not been any damage, destruction or loss, whether or not covered by
insurance, affecting any of the assets or properties of Cyberworks
amounting to more than $10,000 in the aggregate;
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(c) Cyberworks has not (i) increased or decreased any of the
rates of compensation payable or to become payable to any employee,
agent or consultant, or granted, made or accrued any bonus, percentage
compensation, service award or other like benefit to or to the credit of
any such employee, agent or consultant; (ii) entered into or amended any
bonus, incentive compensation, deferred compensation, profit sharing,
retirement, pension, group insurance or other benefit plan or any
employment or consulting agreement; (iii) created or otherwise become
liable with respect to any indebtedness for money borrowed or purchase
money indebtedness, except in the ordinary course of businesses
consistent with past practice; (iv) amended its Articles of
Incorporation or any other charter documents; (v) issued, purchased or
disposed of or contracted to issue, purchase, or dispose of any of its
capital stock or any options, warrants or rights with respect thereto or
interests therein; (vi) entered into, assumed, modified or terminated
any contract, liability or obligation, except in the ordinary course of
business, consistent with past practice or settled, discharged or waived
any right or claim without adequate consideration; (vii) sold, leased or
otherwise disposed of or encumbered in any way any assets, except for
sales in the ordinary course of business, consistent with past practice;
(viii) acquired any property or asset, except in the ordinary course of
business, consistent with past practice; (ix) directly or indirectly
declared or paid any non-cash dividend or distribution with respect to
its capital stock, (x) entered into any transaction with the Shareholder
or any Affiliate of the Shareholder, except in the ordinary course of
business consistent with past practice; or (xi) agreed to take any
action specified in (i)-(x) hereof.
3.11 Accounts Receivable. The accounts receivable and other receivables
of Cyberworks shown on the Cyberworks Financial Statements, and the accounts
receivable and other receivables arising since the Balance Sheet Date, are valid
and binding obligations of the debtors requiring no further performance by
Cyberworks, and, subject to such reserves as have been disclosed in writing to
Inland, the Shareholder believes that as of the date of this Agreement they are
fully collectible in the ordinary course of business in amounts not less than
the aggregate amount thereof carried on the books of Cyberworks.
3.12 Interests in Real Property. Cyberworks does not own any real
property. Schedule 3.12 sets forth a true and complete list of each parcel of
real property leased by Cyberworks. A true and complete copy of each lease
listed on Schedule 3.12 has been provided to Inland. All of such leases are
valid and enforceable, and there does not exist any default under any of such
leases, or any event which, with the giving of notice or passage of time, or
both, would constitute a default under any of such leases. There are no
circumstances known to the Shareholder or Cyberworks which are likely to give
rise to any dispute in relation to any of such real properties with any
governmental or local authority, superior lessor, tenant or licensee or with the
owner or occupier of any adjoining or neighboring property or any other party.
Cyberworks has complied in all material respects with all legislation, statutory
requirements, governmental or other orders, rules, directives
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or instruments affecting or pertaining to the use, occupation or enjoyment of
such properties. Neither the Shareholder nor Cyberworks have received any notice
or are aware of any breach of any covenants, restrictions, stipulations,
conditions and other terms affecting such real properties or are aware of any
circumstances which would entitle or require any person to exercise any powers
of entry and taking possession or which would otherwise terminate or restrict
the continued possession or occupation of such real properties. To the Knowledge
of the Shareholder or Cyberworks, such real properties:
(a) are not subject to any covenants, obligations, restrictions
or conditions which are of any unusual or onerous nature or which would
affect the use or continued use of the properties by the relevant owners
for the purpose or to the extent or in the manner now used;
(b) do not enjoy any right, easement or privilege, the withdrawal
or cessation of which would adversely affect the use or continued use of
any of such real properties by the relevant owners for the purpose for
or to the extent to or in the manner in which it is now used;
(c) are not affected by any of the following matters: (i) any
closing order, demolition order or clearance order; (ii) any order or
proposal publicly advertised or of which written notice has been
received for the compulsory acquisition or requisition of the whole or
any part thereof or the discontinuance of any use or the removal of any
building; or (iii) any agreement with any public body or authority
regulating the use or development thereof except as stated in the lease
agreement;
and neither the Shareholder nor Cyberworks are aware of any intention on the
part of the relevant authorities to issue any such order or notice, or any
matter which gives rise to the issue of any such order or notice. As at the date
hereof, to the Knowledge of the Shareholder or Cyberworks, there is no agreement
to sell or part with the possession of or let or license or grant any option
over or otherwise dispose of any interest in such properties or any part
thereof. All of such real property interests and improvements, the furniture,
fixtures and equipment relating thereto, and the operation of the businesses of
Cyberworks thereon, conform to any and all applicable health, fire, safety,
zoning and building laws, ordinances and regulations. Except as set forth on
Schedule 3.12, all buildings, structures and fixtures used by Cyberworks in the
conduct of its business are located on the parcels of real property listed in
Schedule 3.12 and are in good operating condition and repair, ordinary wear and
tear excepted.
3.13 Personal Property. All assets used in the conduct of the business
of Cyberworks are either owned by Cyberworks, or leased or rented by Cyberworks,
(a) in transactions with non-Affiliates of the Shareholder, or (b) on terms no
more or less favorable than would have been obtained in arms length
transactions. Schedule 3.13 sets forth, current as of the date hereof, a true,
complete and correct list of each of the assets (other than real
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property) having a book value of $15,000 or more included in the Cyberworks
Financial Statements or otherwise used in the conduct of the business of
Cyberworks. The book value of any assets that are not included on such list does
not, in the aggregate, exceed $20,000, as of the date hereof. Except as set
forth on Schedule 3.13, Cyberworks has good title, free and clear of all title
defects and objections, security interests, liens and encumbrances, including,
without limitation, leases, chattel mortgages, conditional sales contracts,
collateral security arrangements and other title or interest retaining
arrangements, to any inventory, furniture, machinery, equipment, and other
personal property reflected on the Cyberworks Financial Statements, except for
acquisitions, sales and dispositions in the normal course of business since the
Balance Sheet Date as contemplated by this Agreement. All material personal
property of Cyberworks is in good operating condition and repair, ordinary wear
and tear excepted.
3.14 Intangible Property Rights. Schedule 3.14 is a true and complete
list of all licenses, patents, copyrights, trademarks, service marks, service
names, trade names, trade secrets or other proprietary information
(collectively, the "Intellectual Property") owned by Cyberworks or in which they
have rights. Cyberworks owns or possesses irrevocable rights in all Intellectual
Property which is necessary or adequate for the conduct of its businesses. To
the Knowledge of the Shareholder or Cyberworks, Cyberworks is not infringing and
has not infringed upon any patent, trademark, trademark right, service ▇▇▇▇,
service name, trade name, trade secret or proprietary information owned or held
by any other person or entity. Except as set forth in Schedule 3.14, there is no
claim or action by any other person or entity pending or threatened alleging
that Cyberworks is infringing upon any patent, trademark, trademark right,
service ▇▇▇▇, service name, trade name, trade secret or proprietary information
owned or held by any other person or entity, nor to the Knowledge of the
Shareholder or Cyberworks is there any reasonable basis for any such claim or
action by any person. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not constitute
a material breach of any instrument or agreement governing any Intellectual
Property (the "Cyberworks IP Rights Agreements"), will not cause the forfeiture
or termination or give rise to a right of forfeiture or termination of any
Intellectual Property or materially impair the right of Cyberworks to use, sell
or license any Intellectual Property or portion thereof. There are no royalties,
honoraria, fees or other payments payable by Cyberworks to any person by reason
of the ownership, use, license, sale or disposition of the Intellectual Property
(other than as set forth in the Cyberworks IP Rights Agreements listed in
Schedule 3.14). Neither the manufacture, marketing, license, sale or intended
use of any product currently licensed or sold by Cyberworks or currently under
development by Cyberworks violates any license or agreement between Cyberworks
and any third party. Cyberworks has taken reasonable and practicable steps
designed to safeguard and maintain the secrecy and confidentiality of, and its
proprietary rights in, all material Intellectual Property. All officers,
employees and consultants of Cyberworks have executed and delivered to
Cyberworks an agreement regarding the protection of proprietary information and
the assignment to Cyberworks of all intellectual property rights arising from
the services performed for Cyberworks by such persons.
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3.15 Title to Assets. Except as set forth in Schedule 3.12 or 3.13,
Cyberworks is the owner and has good and marketable title to all its assets and
interests in assets, whether real, personal, mixed, tangible or intangible,
which constitute all the assets and interests in assets that are used in its
business and that are necessary for the conduct and operation of its business as
presently conducted. Except as set forth in Schedule 3.12 or 3.13, all these
assets are free and clear of mortgages, liens, pledges, charges, encumbrances,
equities, claims, easements, rights of way, covenants, conditions or
restrictions, except for: (i) those reflected on the Cyberworks Financial
Statements; and (ii) liens for current taxes not yet due and payable. Cyberworks
is in possession of all premises leased to it from others. Except as set forth
on Schedule 3.15, neither any officer, director, employee or Affiliate of
Cyberworks, nor any spouse or child of any of these persons, owns, or has any
interest, directly or indirectly, in any of the real or personal property owned
by or leased to Cyberworks.
3.16 Litigation. To the Knowledge of Shareholder or Cyberworks, Schedule
3.16 identifies all claims, suits, litigation, actions, arbitrations,
governmental investigations and legal, administrative or other proceedings or
controversies, at law or in equity or otherwise, to which Cyberworks, or any of
its officers, directors, employees, stockholders or agents or assets, is a party
or which is, to the Knowledge of the Shareholder or Cyberworks, threatened
against any such persons or assets which affects or may reasonably be expected
to affect the financial condition, liabilities, Permits or Contracts (as defined
in Section 3.17), assets, shareholders' equity, properties (including the value
or usefulness thereof), sales, net income, operations, prospects or businesses
of Cyberworks. The matters set forth in Schedule 3.16, if decided adversely,
will not, individually or in the aggregate, reasonably be expected to result in
any adverse change in the financial condition, liabilities, Permits or
Contracts, assets, shareholders' equity, properties, sales, net income,
operations, prospects or businesses of Cyberworks. Cyberworks is not subject to
any order, judgment, decree or governmental restriction which adversely affects
its financial condition, liabilities, Permits or Contracts, assets,
shareholders' equity, properties, sales, net income, operations, prospects or
businesses or which would prevent the transactions contemplated by this
Agreement. Except as disclosed in Schedule 3.16, to the Knowledge of Cyberworks
and the Shareholder, Cyberworks has not been and is not in violation of, and has
not received any formal or informal notice of violation of, any law or order,
writ, injunction or decree of any U.S. federal, state, municipal, or local court
or other governmental department, commission, board, bureau, agency or
instrumentality. There is no basis for any Person, firm, corporation or entity
to assert a claim against Cyberworks or Inland as successor in intent to
Cyberworks based upon: (a) ownership or rights to ownership of any shares of
Cyberworks Common, (b) any rights as a Cyberworks securities holder, including,
without limitation, any option or other right to acquire any Cyberworks
securities, any preemptive rights or any rights to notice or to vote, or (c) any
rights under any agreement between Cyberworks and the Shareholder or former
Cyberworks securities holder, if any, in such holder's capacity as such.
3.17 Contracts and Permits. Schedule 3.17 describes all (a) currently
effective or applied for (as designated in Schedule 3.17) licenses, franchises,
permits, easements, certificates, consents, rights, privileges, and
authorizations necessary or advisable to the
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conduct of the business of Cyberworks (collectively, the "Permits"), and (b)
currently effective contracts, instruments, arrangements or agreements, oral or
written (other than leases disclosed on other schedules delivered pursuant to
this Agreement), to which Cyberworks is a party or by which its properties are
bound which: (i) involve the payment by Cyberworks of more than $20,000 per
annum; (ii) have a duration of more than one year; (iii) are not terminable at
the option of Cyberworks by less than 30 days' notice, without the payment of
any penalty; (iv) is with any officer, director, shareholder, Affiliate or other
employee of Cyberworks; (v) are with a bank or other lender; (vi) grant
exclusive sales, purchase or distribution rights to any person; or (vii) have
been entered into other than in the ordinary course of business (collectively,
the "Contracts"). The Shareholder and Cyberworks have provided to Inland true
copies of each Permit and Contract. Unless so stated on Schedule 3.17, to the
Knowledge of Cyberworks or the Shareholder, Cyberworks has not been and is not
in material breach or default of any Permit or Contract and no event exists
which, with the giving of notice or passage of time, or both, would constitute a
material breach or default of any of the Permits or Contracts. All of the
Permits and Contracts are in full force and effect and are not subject to
cancellation, termination, or modification for any reason related to the
consummation of the transactions contemplated in this Agreement or otherwise. To
the Knowledge of the Shareholder or Cyberworks, no other party to any Permit or
Contract intends to revoke, alter, or not to perform its obligations under such
Permit or Contract. Except as set forth on Schedule 3.17, Cyberworks is not a
party to any agreement in which any of the directors or Affiliates of Cyberworks
is interested (directly or indirectly). Except as set forth on Schedule 3.17,
there is no contract which is likely or estimated to give rise to a loss to
Cyberworks exceeding in the aggregate $20,000. To the Knowledge of the
Shareholder or Cyberworks, except as set forth on Schedule 3.17, there is no
contract involving or which may involve obligations on Cyberworks or the need
for expenditure by Cyberworks of a nature or magnitude which cannot be
fulfilled, or performed without undue or unusual expenditure of money or effort.
3.18 Existing Employment Contracts. Schedule 3.18 sets forth a list and
full description of all employment contracts and collective bargaining
agreements, and all pension, bonus, retirement, profit-sharing, stock option, or
other agreements or arrangements, oral or written, providing for employee
remuneration or benefits (including, without limitation, all vacation,
termination, severance and leave policies and obligations) to which Cyberworks
is a party or by which Cyberworks is bound (collectively, "Employee Plans").
Except as disclosed in Schedule 3.18, for each Employee Plan which is not fully
funded, Cyberworks has established reserves on its books to provide for the
benefits earned and other liabilities accrued under each such Employee Plan
through the Closing Date in amounts sufficient to fully provide for such
benefits and liabilities; these reserves have been determined in the same manner
as such reserves have been determined for the prior year. True and correct
copies of all Employee Plans and records disclosing the costs of providing
benefits under, and paying liabilities of, each Employee Plan for the past three
years have been provided to Inland. To the Knowledge of Cyberworks, no employee
of Cyberworks is in material violation of any term of any employment contract,
patent disclosure agreement or noncompetition agreement or any other contract or
agreement, or any restrictive covenant,
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relating to the right of any such employee to be employed by Cyberworks or to
use trade secrets or proprietary information of others, and the employment of
any employee of Cyberworks does not subject Cyberworks to any liability to any
third party.
Except as set forth in Schedule 3.18, Cyberworks is not a party
to any (a) agreement with any executive officer or other key employee of
Cyberworks (i) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Cyberworks in
the nature of any of the transactions contemplated by this Agreement, the
Articles of Merger and the Agreement of Merger, (ii) providing any term of
employment or compensation guarantee or (iii) providing severance benefits or
other benefits after the termination of employment of such employee regardless
of the reason for such termination of employment, or (b) agreement or plan,
including, without limitation, any stock option plan, stock appreciation rights
plan or stock purchase plan, any of the benefits of which will be materially
increased, or the vesting of benefits of which will be materially accelerated,
by the occurrence of any of the transactions contemplated by this Agreement, the
Articles of Merger and the Agreement of Merger or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement, the Articles of Merger and the Agreement of
Merger. Cyberworks is not obligated to make any excess parachute payment, as
defined in Section 280G(b)(1) of the Code, nor will any excess parachute payment
be deemed to have occurred as a result of or arising out of the Merger to the
extent Section 280G of the Code is applicable to Cyberworks.
3.19 Interest in Customers, Suppliers and Competitors. To the Knowledge
of the Shareholder or Cyberworks, except as disclosed and described in Schedule
3.19 (and including direct employee compensation disclosed to Inland and not in
arrears), neither the Shareholder nor Cyberworks, nor any officer, director or
Affiliate of Cyberworks, nor any spouse or child of any of them, has any direct
or indirect interest in any competitor, contractor, supplier or customer of
Cyberworks, or in any person with whom Cyberworks is doing business or is
leasing or buying property or services. No person who is an officer, director or
shareholder of Cyberworks, or any member of any officer's, director's or
shareholder's immediate family, is directly or indirectly interested in any
material contract or informal arrangement with Cyberworks, including, but not
limited to, any loan arrangements, except for compensation for services as an
officer, director or employee of Cyberworks as listed in Schedule 3.18. None of
such officers, directors, shareholders or family members has any interest in any
property, real or personal, tangible or intangible, including, without
limitation, inventions, patents, copyrights, trademarks, trade names or trade
secrets, used in the business of Cyberworks, except for the normal rights of a
shareholder.
3.20 Personnel Identification and Compensation. Inland has been provided
with a written list of the names of all officers, directors, employees, and
agents of Cyberworks who receive an annual salary in excess of $10,000 per
annum, stating the rates of
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compensation payable to each of them. Except as listed on such list, no other
person, except accountants, auditors and attorneys, regularly performs
compensable services Cyberworks.
3.21 Powers of Attorney and Suretyships. To the Knowledge of the
Shareholder or Cyberworks, except as described in Schedule 3.21, Cyberworks
presently has no outstanding powers of attorney or guarantees, and no material
obligations or liabilities, whether actual, accrued, accruing or contingent, as
guarantor, surety, co-▇▇▇▇▇▇, endorser (other than checks endorsed for
presentation in the ordinary course of business), co-maker, indemnitor or
otherwise in respect of the obligation of any person, corporation, partnership,
joint venture, association, organization or other entity.
3.22 Employees.
(a) Other than as set forth in Schedule 3.22, Cyberworks is not a
party to:
(i) any payment in connection with retirement, death or
disability to any person who is or has been a director, officer or employee of
Cyberworks or a relative or dependent or such a person other than pursuant to
any such agreement, arrangement, scheme or fund to which Cyberworks is required
by law to be a party;
(ii) any profit sharing plan or other employee benefit
plan for the payment to employees or directors of bonuses or incentive payments
or the like or of any non-cash compensation, including but not limited to grants
of options, rights, warrants, convertible securities and the like; or
(iii) any obligation or ex-gratia arrangement to pay
pensions, gratuities, retirement benefits, periodical sums or any compensation
to any person other than pursuant to any such agreement, arrangement, scheme or
fund to which Cyberworks is required by law to be a party.
(b) To the Knowledge of Shareholder or Cyberworks, Cyberworks is
under no obligation (whether actual or contingent) to any former employee
whether for breach of any contract of service, for compensation for wrongful
dismissal or for unfair dismissal or for payment of any salaries, wages,
pension, gratuities, bonuses or otherwise howsoever or whatsoever and no tax,
levy, contribution or payment in respect to any former employee whether to any
governmental authority, pension fund, scheme or trust or otherwise howsoever or
whatsoever will be outstanding or disputed.
3.23 Labor Relations. Except as described in Schedule 3.23, there are no
agreements with, or pending petitions for recognition of, any labor union or
association as the bargaining agent or representative for all of Cyberworks'
employees; no such petitions have been pending at any time within three years of
the date of this Agreement and there has been no organizing effort by any union
or other group seeking to represent any employees of Cyberworks as their
bargaining agent or representative at any time within three years of
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the date of this Agreement; no claim has been, nor could be, made that any
collective bargaining agreement set forth on Schedule 3.23 should be applicable
to any employees of Cyberworks not expressly covered by the terms of such
agreements; and there are no labor strikes, work stoppages or other labor
troubles, now pending, or threatened, against Cyberworks, nor have there been
any such labor strikes, work stoppages or other labor troubles, at any time
within the two (2) years preceding the date of this Agreement. Except as
described on Schedule 3.23, there have been no grievances filed, nor claims of
unfair labor practices, made, against Cyberworks at any time within the past
three years.
3.24 Insurance. Schedule 3.24 includes a list of all insurance policies
in force with respect to Cyberworks showing for each such policy: (a) the owner;
(b) the coverage of such policy; (c) the amount of premium properly allocable to
such policy; (d) the name of the insurer; and (e) the termination date of the
policy. All policies listed on Schedule 3.24 are in full force and effect and
are "claims made" policies. All the conditions of such insurance have been
performed and observed and nothing has been done or omitted to be done which
could make any such insurance void or voidable. All premiums in respect of such
insurance which may have become due have been duly paid. There are no claims
outstanding, or to the Knowledge of Shareholder or Cyberworks pending or
threatened against Cyberworks which are not covered by insurance. The
Shareholder and Cyberworks have provided Inland with complete copies of all
policies listed on Schedule 3.24. To the Knowledge of the Shareholder or
Cyberworks, such insurance policies provide coverage reasonable for the business
conducted by Cyberworks and are sufficient for compliance with all applicable
laws or leases or other agreements to which Cyberworks is a party.
3.25 Compliance with Laws. To the Knowledge of the Shareholder or
Cyberworks, except as described in Schedule 3.25 Cyberworks has not been and
currently is not in violation of any applicable U.S. federal, state, or local
statutes, laws and regulations (including, without limitation, any applicable
building, zoning, or other law, ordinance, or regulation) affecting any of its
properties or the conduct or operation of its business.
3.26 Corporate Documents.
3.26.1 The Shareholder and Cyberworks have furnished to Inland
for its examination: (i) true and correct copies of articles of incorporation,
bylaws and any other charter documents, including any amendments thereto, of
Cyberworks and (ii) except as described in Schedule 3.26, the statutory books,
minute books and stock transfer registers of Cyberworks which contain all
records concerning all proceedings, consents, actions and meetings of the
shareholders and boards of directors of Cyberworks and issuances of shares,
debentures and other securities thereof.
3.26.2 Cyberworks has complied with its articles of incorporation
and any other charter documents in all respects, and none of the business,
activities, agreements, commitments or rights of Cyberworks is ultra ▇▇▇▇▇ or
unauthorized.
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3.27 Credit Cards. Schedule 3.27 contains a true and complete list of
all credit cards issued or caused to be issued by or on behalf of Cyberworks to
any person, firm or entity which Cyberworks is or may be liable for charges or
payments. The Shareholder and Cyberworks shall cause to be delivered to Inland
on or before the Closing Date all of such credit cards as Inland may designate.
3.28 Bank Accounts. Schedule 3.28 contains a true and complete list of
the name of each bank, savings and loan association or other financial
institution in which Cyberworks has any type of account or safe deposit box, the
account name and number of each such account or safe deposit box and the names
of all persons authorized to draw thereon or have access thereto.
3.29 Environmental Matters.
(a) Except as provided in Schedule 3.29, Cyberworks and
every person for whose default Cyberworks may be vicariously liable have
complied with all applicable legislation, licences, consents and permissions
relating to environmental matters.
(b) Except as provided in Schedule 3.29, neither
Cyberworks nor any person for whose default Cyberworks may be vicariously liable
is the subject of any actions, claims or proceedings relating to environmental
matters and no such action, claim or proceeding is threatened against or
expected by Cyberworks or any such person.
3.30 Customers and Suppliers. Schedule 3.30(a) lists each customer of
Cyberworks which accounted for more than 5% of Cyberworks' revenues for the
twelve months ended December 31, 1997 and for the six-months ended June 30,
1998. There has not been any material adverse change in the business
relationship between Cyberworks and any of its respective customers or
suppliers, nor have there been any material disputes or controversies between
Cyberworks and any of their respective customers or suppliers, nor, to the
Knowledge of the Shareholder or Cyberworks, is there any event or circumstance
which could reasonably form the basis for any such material dispute or
controversy. Except as noted on Schedule 3.30(b), so far as the Shareholder is
aware, the business relationships with customers, suppliers, employees and other
persons with regard to Cyberworks will not be prejudicially affected by the
execution or completion of this Agreement.
3.31 Unlawful Payment. To the Knowledge of the Shareholder or
Cyberworks, neither Cyberworks nor any officer, director, shareholder, employee,
agent or representative of Cyberworks has made, directly or indirectly, with
respect to the business of any Company, any illegal political or illegal
charitable contributions, payments from corporate funds not recorded on the
books and records of the Companies, payments from corporate funds that were
falsely recorded on the books and records of the Companies, payments from
corporate funds to governmental officials in their individual capacities for the
purpose of affecting their action or the action of the government they represent
to obtain favorable
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treatment in securing businesses or licenses or to obtain special concessions,
or payments to any officers, employees or agents of a customer or supplier for
the purpose of influencing their action or inaction or the action or inaction of
any other officer, employee or agent of such customer or supplier.
3.32 Restrictive Covenants. Except as described on Schedule 3.32,
Cyberworks is not bound by any agreement, contract or covenant limiting its
freedom to compete in any line of business or with any person or other entity in
any geographic area.
3.33 Insolvency.
3.33.1 No receiver has been appointed of the whole or any part of
Cyberworks' assets or undertaking and no order has been made or petition
presented or resolution passed for the winding up of Cyberworks.
3.33.2 Cyberworks has not stopped payment nor is it insolvent or
unable to pay its debts within the meaning of the United States Bankruptcy Code.
3.33.3 No unsatisfied judgment is outstanding against Cyberworks.
3.34 Books and Records. The books, records and accounts of Cyberworks
(a) are in all material respects true and complete, (b) have been maintained in
accordance with reasonable business practices on a basis consistent with prior
years, (c) are stated in reasonable detail and accurately and fairly reflect the
transactions and dispositions of the assets of Cyberworks and (d) accurately and
fairly reflect the basis for the Cyberworks Financial Statements. Cyberworks has
devised and maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (a) transactions are executed in accordance
with management's general or specific authorization; (b) transactions are
recorded as necessary (i) to permit preparation of financial statements in
conformity with generally accepted accounting principles or any other criteria
applicable to such statements, and (ii) to maintain accountability for assets,
and (c) the amount recorded for assets on the books and records of Cyberworks is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
3.35 Accuracy of Documents and Information. The copies of all
instruments, agreements, other documents and written information delivered to
Inland by or on behalf of Cyberworks or the Shareholder or any of their
respective representatives pursuant to this Agreement, are and will be complete
and correct in all material respects as of the date hereof and as of the Closing
Date. The representations and warranties made by Cyberworks and the Shareholder
in this Agreement, or in other written materials furnished to Inland hereunder
or in connection with the transactions contemplated hereby, taken as a whole, do
not contain any untrue statement of material fact and do not omit any material
fact necessary to make the statements or facts contained herein or therein not
misleading.
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3.36 Disclosure.
(a) To the Knowledge of the Shareholder or Cyberworks, none of
the documents or information provided to Inland by the Shareholders and
Cyberworks or any agent or employee of Cyberworks in the course of Inland's due
diligence investigation and the negotiation of this Agreement and Articles 2 and
3 of this Agreement and the Disclosure Schedules, contain any untrue statement
of any material fact or omit to state a material fact necessary in order to make
the statements contained in this Agreement or in such documents, information or
Disclosure Schedules not misleading. There is no fact which materially adversely
affects the business, prospects, condition, affairs or operations of Cyberworks,
any of properties or assets of Cyberworks which has not been set forth in this
Agreement or in such documents, information or Disclosure Schedules.
(b) Nothing in the Disclosure Schedules referred to in this
Article 3 will be deemed adequate to disclose an exception to a representation
or warranty made in this Agreement unless the applicable Disclosure Schedule
identifies the exception with particularity and describes the relevant facts in
reasonable detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item will not be deemed
adequate to disclose an exception to a representation or warranty made in this
Agreement (unless the representation or warranty has to do with the existence of
the document or other item itself). The Shareholder acknowledges and agrees
that, except with respect to representations set forth in Articles 2 and 3 that
are qualified by the Knowledge of matters which result in adverse consequences
to Inland will not relieve Cyberworks of such Cyberworks' obligation pursuant to
Article 11 to indemnify and hold Inland harmless from all adverse consequences.
(c) Notwithstanding anything to the contrary in this Agreement,
(i) no investigation by Inland shall affect the representations and warranties
of the Shareholder or Cyberworks under this Agreement or contained in any
document, certificate or other writing furnished or to be furnished to Inland in
connection with the transactions contemplated hereby and (ii) such
representations and warranties shall not be affected or deemed waived by reason
of the fact that Inland knew or should have known that any of the same is or
might be inaccurate in any respect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF INLAND
In order to induce the Shareholder and Cyberworks to enter into
this Agreement, Inland hereby makes the representations and warranties set forth
below, which representations and warranties shall be deemed to continue in full
force and effect until the time of the Closing and thereafter as set forth
herein:
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4.1 Corporate Existence and Authority. Inland is a corporation duly
incorporated, validly existing, and in good standing under the laws of the State
of Utah. Inland has full power, authority and legal right to enter into and
perform its obligations under this Agreement, and all agreements to which Inland
is or will be a party that are required to be executed pursuant to this
Agreement (the "Inland Ancillary Agreements") and to consummate the transactions
contemplated hereby.
4.2 No Conflict. The execution and delivery of this Agreement do not,
and the performance of this Agreement and the consummation of the transactions
contemplated hereby in accordance with the terms, conditions and provisions
hereof will not result in a breach or violation of, or in conflict with, or
constitute (with or without the giving of notice or the passage of time or both)
a default under:
4.2.1 to the Knowledge of Inland, any statute, law, ordinance,
rule or regulation applicable to Inland, or
4.2.2 the terms, conditions or provisions of the articles of
incorporation or bylaws or other organizational documents of Inland, or any
lease, license, promissory note, conditional sales contract, commitment,
indenture, mortgage, deed of trust, partnership agreement or other agreement,
contract, instrument, or arrangement (whether or not in writing) to which Inland
is a party or by which Inland or its properties, is or may be bound, or
4.2.3 any permit, license, order, judgment or decree of any
court, arbitrator or governmental authority by which Inland or its properties is
or may be bound.
4.3 Consents. No consent, permit, approval, order, authorization of, or
filing with or notice to, any federal, state, local or foreign governmental
department, commission, board, bureau, agency, instrumentality or authority or
any person (whether or not governmental in character) has been or is required to
be obtained, made or given by Inland in connection with the execution and
delivery of this Agreement and the Inland Ancillary Agreements or the
consummation of the transactions contemplated hereby or thereby or the
fulfillment of or the compliance with the terms, conditions and provisions
hereof or thereof, except as set forth in Schedule 4.3 to this Agreement.
4.4 Binding Obligations. This Agreement and the Inland Ancillary
Agreements are, or when executed by Inland will be, valid and binding
obligations of Inland, enforceable against Inland in accordance with their
respective terms, except as to the effect, if any, of (a) applicable bankruptcy
and other similar laws affecting the rights of creditors generally, and (b)
rules of law governing specific performance, injunctive relief and other
equitable remedies; provided, however, that the Articles of Merger, the
Agreement of Merger and the Inland Ancillary Agreements will not be effective
until the Effective Date.
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32
4.5 Representations. The representations and warranties made by Inland
in this Agreement, the Inland Ancillary Agreements or in other written materials
furnished to the Shareholder and Cyberworks hereunder or in connection with the
transactions contemplated hereby, when taken together, do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements contained herein or therein not misleading.
4.6 Capital Stock. The authorized capital stock of Inland consists of
100,000,000 shares of Inland Common, $.001 par value per share. Except as set
forth on Schedule 4.6 hereto, on the date hereof there are no outstanding
warrants, options, "phantom" stock rights, agreements, convertible or
exchangeable securities or other commitments (other than this Agreement and
other agreements related thereto) pursuant to which Inland is or may become
obligated to issue, sell, purchase or redeem any shares of capital stock or
other securities of Inland.
4.7 Corporate Documents.
4.7.1 Inland has furnished to the Shareholder for his
examination: (a) true and correct copies of the Articles of Incorporation and
Bylaws, including any amendments thereto, of Inland, (b) the minute books of
Inland which contain all records concerning all proceedings, consents, actions
and meetings of the shareholders and board of directors of Inland and (c) all
information required to be filed with the SEC by Inland or provided to the SEC
in accordance with the rules and regulations of the Commission since December
31, 1997 (together with any such filings or information supplied to the SEC
after the date of this Agreement and prior to the Closing, the "SEC Filings").
4.7.2 Inland has complied with its Articles of Incorporation and
Bylaws in all material respects, and none of the business, activities,
agreements, commitments or rights of Inland is ultra ▇▇▇▇▇ or unauthorized.
4.7.3 Compliance has been made with all other legal requirements
concerning Inland and all issues of shares, debentures or other securities
thereof and the stock transfer records and minute books of Inland are up to date
and contain true, full and accurate records of all matters required to be dealt
with therein, and all annual or other reports required to be filed under the
Utah Business Corporations Act have been filed and all legal requirements
relating to the formation and organization of Inland and the issue of shares and
other securities have been complied with, except where noncompliance would not
result in a Material Adverse Effect.
4.7.4 All documents required by the SEC or by any legislation in
other relevant jurisdictions to be filed or registered in respect of Inland have
been duly filed or registered, and all fees payable in connection with such
documents has been paid.
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4.8 Financial Statements. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, which has examined and
expressed its opinion on certain financial statements of Inland filed as part of
the SEC Filings (the "Inland's Financial Statements"), are independent public
accountants within the meaning of the Securities Act; Inland's Financial
Statements, together with the notes, forming part of the SEC Filings, comply in
all material respects with the requirements of the Securities Act and have been
prepared and fairly present the financial condition, the results of operations
and changes in financial position of Inland at the respective dates and for the
respective periods indicated, in accordance with GAAP throughout such periods;
and the financial and statistical information and data set forth in the SEC
Filings is fairly presented and prepared on a basis consistent with such
Inland's Financial Statements and the books and records of Inland, as the case
may be.
4.9 Absence of Undisclosed Liabilities. As of June 30, 1998 (the
"Inland's Balance Sheet Date"), Inland did not have and was not subject to any
material liability, indebtedness, claim, obligation or responsibility, fixed or
contingent, liquidated or unliquidated, secured or unsecured, or otherwise,
which was not either:
4.9.1 specifically included in the full amount as a liability or
adequately and specifically reserved for or against in the full amount in
Inland's Financial Statements included in its SEC Filings; or
4.9.2 fully and specifically set forth in Schedule 4.9.
Except as set forth on Schedule 4.9, since Inland's Balance Sheet
Date, Inland has not incurred or become subject to any material liability,
indebtedness, claim, obligation or responsibility, fixed or contingent,
liquidated or unliquidated, secured or unsecured, or otherwise, other than those
incurred since Inland's Balance Sheet Date in the ordinary course of business of
Inland consistent with past practice.
4.10 Status of Inland's Shares of Common Stock. All of the outstanding
shares of Inland Common have been issued in compliance with all applicable state
and federal securities laws and are duly authorized and validly issued, fully
paid and nonassessable and free of preemptive rights, contractual rights to
purchase and similar rights except as set forth in the SEC Filings; the Inland
Common to be issued and sold by Inland have been duly authorized and, upon
delivery to the Shareholder in accordance with the terms hereof, will have been
validly issued and fully paid and will be nonassessable and free of preemptive
rights, contractual rights to purchase and similar rights; and the capital stock
of Inland, including the Inland Common and, on August 25, 1998, the number of
shares of Inland Common outstanding was 3,949,186.
4.11 Governmental Proceedings. There is no legal or governmental
proceeding pending or to Inland's Knowledge threatened or contemplated to which
Inland is a party or of which the business or property of Inland is the subject
which is not disclosed in the SEC
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34
Filings and which might result in a judgment or decree having a Material Adverse
Effect, and there is no contract or document of a character required to be
described in the SEC Filings or to be filed as an exhibit to the SEC Filings
which is not described or filed as required.
4.12 Intellectual Property. Except as described in the SEC Filings,
Inland owns or possesses adequate rights, or can obtain such rights on terms
which would not be materially adverse to Inland, which protect Inland's acts
necessary for the conduct of its business as described in the SEC Filings. To
the Knowledge of Inland, except as described in the SEC Filings, Inland is not
infringing and has not infringed upon any patent, trademark, trademark right,
service ▇▇▇▇, service name, trade name, trade secret or proprietary information
owned or held by any other person or entity. Except as described in the SEC
Filings, there is no claim or action by any other person or entity pending or
threatened alleging that Inland is infringing upon any patent, trademark,
trademark right, service ▇▇▇▇, service name, trade name, trade secret or
proprietary information owned or held by any other person or entity which, if
successful, would have a Material Adverse Effect, nor to the Knowledge of Inland
is there any reasonable basis for any such claim or action by any person.
4.13 Absence of Certain Changes or Events. Since Inland's Balance Sheet
Date and except as specifically authorized hereunder or as set forth in Schedule
4.13:
4.13.1 Inland has not entered into any transaction other than in
the ordinary course of business, consistent with past practice;
4.13.2 there have been no changes in the financial condition,
results of operations, assets, liabilities, prospects or business of Inland
other than changes in the ordinary course of business, consistent with past
practice which in the aggregate have not been materially adverse to Inland, nor
any event or circumstance which could reasonably be expected to result in any
such changes and, without limiting the foregoing, there has not been any
material damage, destruction or loss, whether or not covered by insurance,
affecting any of the assets or properties of Inland;
4.13.3 Inland has not (a) created or otherwise become liable with
respect to any indebtedness for money borrowed or purchase money indebtedness,
except in the ordinary course of business consistent with past practice; (b)
amended Inland's Certificate of Incorporation or Bylaws; (c) issued, purchased
or disposed of or contracted to issue, purchase, or dispose of any of its
capital stock or any options, warrants or rights with respect thereto or
interests therein; (d) entered into, assumed, modified or terminated any
contract, liability or obligation, except in the ordinary course of business,
consistent with past practice or settled, discharged or waived any right or
claim without adequate consideration; (e) sold, leased or otherwise disposed of
or encumbered in any way any assets, except for sales in the ordinary course of
business, consistent with past practice; (f) directly or indirectly declared or
paid any non-cash dividend or distribution with respect to the capital stock of
Inland; or (g) agreed to take any action specified in (a)-(g) hereof.
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35
4.14 Compliance with Laws. Except as described in Schedule 4.14, Inland
has not been and currently is not in violation of any applicable foreign,
federal, state, or local statutes, laws and regulations (including, without
limitation, any applicable building, zoning, or other law, ordinance, or
regulation) affecting any of its properties or the conduct or operation of its
business.
4.15 Accuracy of Documents and Information. The copies of all
instruments, agreements, other documents and written information delivered to
the Shareholder by or on behalf of Inland or any of its representatives pursuant
to this Agreement are and will be complete and correct in all material respects
as of the date hereof and as of the Closing Date. The representations and
warranties made by Inland in this Agreement, or in other written materials
furnished to the Shareholder hereunder or in connection with the transactions
contemplated hereby, taken as a whole, do not contain any untrue statement of
material fact and do not omit any material fact necessary to make the statements
or facts contained herein or therein not misleading.
ARTICLE 5
CYBERWORKS PRECLOSING COVENANTS
During the period from the date of this Agreement until the
Effective Date, the Shareholder and Cyberworks, jointly and severally, covenant
and agree with Inland as follows:
5.1 Advice of Changes. Cyberworks and the Shareholder will promptly
advise Inland in writing, to the extent of the Knowledge of Cyberworks'
President, Chief Executive Officer or Chief Financial Officer, (a) of any event
occurring subsequent to the date of this Agreement that would render any
representation or warranty of Cyberworks or the Shareholder contained in this
Agreement, if made on or as of the date of such event or the Closing Date (as
defined in Section 7.1 hereof), untrue or inaccurate in any material respect and
(b) of any material adverse change in Cyberworks' financial condition,
properties, assets, liabilities, business, results of operations or prospects.
5.2 Maintenance of Business. The parties hereto understand and
acknowledge that it is their intent to work closely together during the period
from the date hereof until the Closing Date (as defined in Section 7.1 hereof).
If Cyberworks or the Shareholder become aware of a material deterioration in the
relationship with any material customer, supplier or key employee, such person
will promptly bring such information to the attention of Inland in writing and,
if requested by Inland, will exert all reasonable efforts to restore the
relationship.
5.3 Conduct of Business. Cyberworks will not, and the Shareholder shall
take all necessary action to ensure that Cyberworks does not, without the prior
written consent of the
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Chairman of the Board and Chief Executive Officer or the Executive Vice
President, Chief Financial Officer of Inland, not to be unreasonably withheld:
(a) borrow any money;
(b) enter into any transaction not in the ordinary course of
business or enter into any transaction or make any commitment involving an
expense of Cyberworks or capital expenditure by Cyberworks in excess of $10,000;
(c) encumber or permit to be encumbered any of its assets except
in the ordinary course of its business consistent with past practice and to an
extent which is not material;
(d) dispose of any of its material assets except in the ordinary
course of business consistent with past practice;
(e) enter into any material lease or contract for the purchase or
sale of any property, real or personal, tangible or intangible, except in the
ordinary course of business consistent with past practice or enter into any
agreement of the types described in Section 3.17;
(f) fail to maintain its equipment and other assets in good
working condition and repair according to the standards it has maintained to the
date of this Agreement, subject only to ordinary wear and tear;
(g) pay any bonus, royalty, increased salary or special
remuneration to any officer, employee or consultant (except pursuant to existing
arrangements heretofore disclosed in writing to Inland ) or enter into any new
employment or consulting agreement with any such person, or enter into any new
agreement or plan of the type described in Section 3.18;
(h) change accounting methods;
(i) declare, set aside or pay any cash or stock dividend or other
distribution in respect of capital stock, or redeem or otherwise acquire any of
its capital stock, except as set forth on Schedule 5.3(i);
(j) amend or terminate any contract, agreement or license to
which it is a party except those amended or terminated in the ordinary course of
business, consistent with past practice, and which are not material in amount or
effect;
(k) lend any amount to any person or entity, other than advances
for travel and expenses which are incurred in the ordinary course of business
consistent with past
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practice, not material in amount, which travel and expenses shall be documented
by receipts for the claimed amounts;
(l) guarantee or act as a surety for any obligation except for
the endorsement of checks and other negotiable instruments in the ordinary
course of business, consistent with past practice which are not material in
amount;
(m) waive or release any material right or claim except in the
ordinary course of business, consistent with past practice;
(n) issue or sell any shares of its capital stock of any class or
any other of its securities, or issue or create any warrants, obligations,
subscriptions, options, convertible securities, stock appreciation rights or
other commitments to issue shares of capital stock, or accelerate the vesting of
any outstanding option or other security;
(o) split or combine the outstanding shares of its capital stock
of any class or enter into any recapitalization affecting the number of
outstanding shares of its capital stock of any class or affecting any other of
its securities;
(p) except for the Merger, merge, consolidate or reorganize with,
or acquire any entity;
(q) amend its Articles of Incorporation or Bylaws;
(r) agree to any audit assessment by any tax authority or file
any federal or state income or franchise tax return unless copies of such
returns have been delivered to Inland for its review prior to filing;
(s) license any of Cyberworks' technology or any of the
Intellectual Property of Cyberworks, except in the ordinary course of business
consistent with past practice;
(t) change any insurance coverage or issue any certificates of
insurance;
(u) terminate the employment of any employee listed in Schedule
3.17; or
(v) agree to do any of the things described in the preceding
clauses 5.3(a) through 5.3(u).
5.4 Certain Agreements. Cyberworks and the Shareholder will cause all
present employees and consultants of Cyberworks who have not previously executed
Cyberworks' forms of assignments of copyright and other intellectual property
rights to Cyberworks to execute such forms, copies of which are attached hereto
as Exhibit 5.4.
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5.5 Regulatory Approvals. Cyberworks and, if necessary, the Shareholder,
will execute and file, or join in the execution and filing, of any application
or other document that may be necessary in order to obtain the authorization,
approval or consent of any governmental body, federal, state, local or foreign,
which may be reasonably required, or which Inland may reasonably request, in
connection with the consummation of the transactions provided for in this
Agreement. Cyberworks and the Shareholder will use all reasonable efforts to
obtain or assist Inland in obtaining all such authorizations, approvals and
consents.
5.6 Necessary Consents. Cyberworks and the Shareholder will use their
respective best efforts to obtain such written consents and take such other
actions as may be necessary or appropriate for Cyberworks, in addition to those
set forth in Section 5.5, to facilitate and allow the consummation of the
transactions provided for herein and to facilitate and allow Inland to carry on
Cyberworks' business after the Closing Date (as defined in Section 7.1 hereof).
5.7 Litigation. Cyberworks and the Shareholder will notify Inland in
writing promptly after learning of any action, suit, proceeding or investigation
by or before any court, board or governmental agency, initiated by or against
Cyberworks or threatened against it.
5.8 No Other Negotiations. From the date hereof until the termination of
this Agreement (provided such termination is not in breach of this Agreement) or
the consummation of the Merger, Cyberworks and the Shareholder will not, and
will not authorize any officer, director, employee or affiliate of Cyberworks or
the Shareholder, or any other person, on its behalf, directly or indirectly, to
(a) solicit, facilitate, discuss or encourage any offer, inquiry or proposal
received from any party other than Inland, concerning the possible disposition
of all or any substantial portion of Cyberworks' business, assets or capital
stock by merger, sale or any other means or to otherwise solicit, facilitate,
discuss or encourage any such disposition (other than the Merger), or (b)
provide any confidential information to or negotiate with any third party other
than Inland in connection with any offer, inquiry or proposal concerning any
such disposition. Cyberworks and the Shareholder will immediately notify Inland
of any such offer, inquiry or proposal.
5.9 Access to Information. Until the Closing Date (as defined in Section
7.1 hereof) and subject to the terms and conditions hereof relating to the
confidentiality and use of confidential and proprietary information, Cyberworks
and the Shareholder will provide Inland and its agents with reasonable access to
the files, books, records and offices of Cyberworks, including, without
limitation, any and all information relating to Cyberworks taxes, commitments,
contracts, leases, licenses, real, personal and intangible property, and
financial condition, and specifically including, without limitation, access to
Cyberworks source code reasonably necessary for Inland to complete its diligence
review of the Cyberworks products and technology. Cyberworks will cause its
accountants to cooperate with Inland and its agents in making available all
financial information reasonably requested,
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including without limitation the right to examine all working papers pertaining
to all financial statements prepared or audited by such accountants.
5.10 Satisfaction of Conditions Precedent. Cyberworks and the
Shareholder will use all reasonable efforts to satisfy or cause to be satisfied
all the conditions precedent which are set forth in Article 9, and Cyberworks
and the Shareholder will use all reasonable efforts to cause the transactions
provided for in this Agreement to be consummated, and, without limiting the
generality of the foregoing, to obtain all consents and authorizations of third
parties and to make all filings with, and give all notices to, third parties
that may be necessary or reasonably required on its part in order to effect the
transactions provided for herein.
5.11 Blue Sky Laws. Cyberworks and the Shareholder shall use their
respective best efforts to assist Inland to the extent necessary to comply with
the securities and Blue Sky laws of all jurisdictions applicable in connection
with the Merger.
5.12 Notification of Employee Problems. Cyberworks and the Shareholder
will promptly notify Inland if any of Cyberworks' officers becomes aware that
any of the employees listed in Schedule 3.18 intends to leave its employ.
ARTICLE 6
INLAND PRECLOSING COVENANTS
During the period from the date of this Agreement until the Effective
Date, Inland covenants to and agrees with Cyberworks as follows:
6.1 Regulatory Approvals. Inland will execute and file, or join in the
execution and filing, of any application or other document that may be necessary
in order to obtain the authorization, approval or consent of any governmental
body, federal, state, local or foreign, which may be reasonably required, or
which Cyberworks may reasonably request, in connection with the consummation of
the transactions provided for in this Agreement. Inland will use all reasonable
efforts to obtain all such authorizations, approvals and consents.
6.2 Satisfaction of Conditions Precedent. Inland will use all reasonable
efforts to satisfy or cause to be satisfied all the conditions precedent which
are set forth in Article 8, and Inland will use all reasonable efforts to cause
the transactions provided for in this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties that may be necessary or reasonably required on its
part in order to effect the transactions provided for herein.
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6.3 Blue Sky Laws. Inland shall use its best efforts to assist
Cyberworks to the extent necessary to comply with the securities and Blue Sky
laws of all jurisdictions applicable in connection with the Merger.
6.4 Advice of Changes. Inland will promptly advise Cyberworks in
writing, to the extent of the Knowledge of Inland's Chairman of the Board and
Chief Executive Officer or Executive Vice President-Chief Financial Officer, (a)
of any event occurring subsequent to the date of this Agreement that would
render any representation or warranty of Inland contained in this Agreement, if
made on or as of the date of such event or the Closing Date (as defined in
Section 7.1 hereof), untrue or inaccurate in any material respect and (b) of any
material adverse change in Inland's financial condition, properties, assets,
liabilities, business, results of operations or prospects.
6.5 Litigation. Inland will notify Cyberworks in writing promptly after
learning of any action, suit, proceeding or investigation by or before any
court, board or governmental agency, initiated by or against Inland or
threatened against it.
ARTICLE 7
CLOSING MATTERS
7.1 The Closing. Subject to termination of this Agreement as provided in
Article 10 below, the closing of the transactions provided for herein (the
"Closing") will take place at the offices of ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., Pacific
Time on or before August 27, 1998, or, if all conditions to Closing have not
been satisfied or waived by such date, such other place, time and date as
Cyberworks and Inland may mutually select (the "Closing Date"). Prior to or
concurrently with the Closing, the Articles of Merger, the Agreement of Merger
and such officers' certificates or other documents as may be required to
effectuate the Merger will be filed in the offices of the California Secretary
of State and the Utah Division of Corporations and Commercial Code, as
appropriate. Accordingly, the Merger will become effective at the Effective
Date.
7.2 Exchange of Certificates.
7.2.1 As of the Effective Date, all shares of Cyberworks Common
that are outstanding immediately prior thereto will, by virtue of the Merger and
without further action, cease to exist, and all such shares will be converted
into the right to receive from Inland the number of shares of Inland Common and
cash determined as set forth in Section 1.2, subject to Sections 1.4 and 1.5
hereof.
7.2.2 At and after the Effective Date, each certificate
representing outstanding shares of Cyberworks Common will represent the number
of shares of Inland Common into which such shares of Cyberworks Common have been
converted, and such
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shares of Inland Common will be deemed registered with the transfer agent of
Inland in the name of the holder of such certificate. As soon as practicable
after the Effective Date, the Shareholder will surrender (a) the certificates
for such shares (the "Cyberworks Certificates") to Inland for cancellation or
(b) an affidavit of lost certificate in a form reasonably satisfactory to
Inland. Promptly following the Effective Date and receipt of the Cyberworks
Certificates, Inland will cause its transfer agent to issue to such surrendering
holder certificate(s) for the number of shares of Inland Common to which such
holder is entitled pursuant to Section 1.2, subject to Sections 1.4 and 1.5
hereof, and Inland will distribute any cash payable under Section 1.2.
7.2.3 All shares of Inland Common delivered upon the surrender of
Cyberworks Certificates in accordance with the terms hereof will be delivered to
the registered holder. After the Effective Date, there will be no further
registration of transfers of the shares of Cyberworks Common on the stock
transfer books of Cyberworks.
7.2.4 Until Cyberworks Certificates representing Cyberworks
Common outstanding prior to the Merger are surrendered pursuant to Section 7.2.2
above, such certificates will be deemed, for all purposes, to evidence ownership
of (a) the number of shares of Inland Common into which the shares of Cyberworks
Common will have been converted, and (b) the right to receive that certain
amount of cash into which the shares of Cyberworks Common will have been
converted.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF CYBERWORKS
Cyberworks' obligations hereunder are subject to the fulfillment
or satisfaction, on and as of the Closing, of each of the following conditions
(any one or more of which may be waived by Cyberworks, but only in a writing
signed on behalf of Cyberworks by its President or Chief Financial Officer):
8.1 Accuracy of Representations and Warranties. The representations and
warranties of Inland set forth in Article 4 shall be true and accurate in every
material respect on and as of the Closing Date with the same force and effect as
if they had been made at the Closing, and Cyberworks shall have received a
certificate to such effect executed on behalf of Inland by its Executive Vice
President-Chief Financial Officer.
8.2 Covenants. Inland shall have performed and complied in all material
respects with all of its covenants contained in Article 6 on or before the
Closing Date, and Cyberworks shall have received a certificate to such effect
executed on behalf of Inland by its Executive Vice President-Chief Financial
Officer.
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8.3 Compliance with Law. There shall be no order, decree, or ruling by
any court or governmental agency or threat thereof, or any other fact or
circumstance, which would prohibit or render illegal the transactions
contemplated by this Agreement.
8.4 Government Consents. There shall have been obtained at or prior to
the Closing Date such permits or authorizations, and there shall have been taken
such other actions, as may be required to consummate the Merger by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed to be taken, including but not limited to satisfaction of all
requirements under applicable federal and state securities laws.
8.5 Documents. Cyberworks shall have received all written consents,
assignments, waivers, authorizations or other certificates reasonably deemed
necessary by Cyberworks' legal counsel to consummate the transactions provided
for herein.
8.6 No Litigation. No litigation or proceeding shall be pending which
will have the probable effect of enjoining or preventing the consummation of any
of the transactions provided for in this Agreement. No litigation or proceeding
shall be pending which could reasonably be expected to have a material adverse
effect on the financial condition or results of operations of Inland that has
not been previously disclosed to Cyberworks herein.
8.7 Opinion of Inland's Counsel. Cyberworks shall have received from
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to Inland, an opinion substantially
in the form of Exhibit 8.7.
8.8 Satisfactory Form of Legal and Accounting Matters. The form, scope
and substance of all legal and accounting matters contemplated hereby and all
closing documents and other papers delivered hereunder shall be reasonably
acceptable to Cyberworks' counsel.
8.9 Employment Agreement. Inland shall have entered into an Employment
Agreement with the Shareholder in substantially the form attached hereto as
Exhibit C-1 which will become effective upon the Effective Date of the merger.
8.10 Requisite Approvals. The principal terms of this Agreement, the
Articles of Merger and the Agreement of Merger shall have been approved and
adopted by the Board of Directors of Inland and Acquisition Corp. and
unanimously approved and adopted by the written consent or vote of the sole
shareholder of Acquisition Corp.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF INLAND
The obligations of Inland hereunder are subject to the
fulfillment or satisfaction on, and as of the Closing, of each of the following
conditions (any one or more of which may be waived by Inland, but only in a
writing signed on behalf of Inland by its Chairman of the Board and Chief
Executive Officer or Executive Vice President-Chief Financial Officer):
9.1 Accuracy of Representations and Warranties. The representations and
warranties of the Shareholder and Cyberworks set forth in Articles 2 and 3 shall
be true and
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complete in all material respects as of the Closing with the same force and
effect as if they had been made at the Closing, and Inland shall have received a
certificate to such effect executed on behalf of Cyberworks by its President.
9.2 Covenants. Cyberworks and the Shareholder shall have performed and
complied in all material respects with all of their covenants contained in
Article 5 on or before the Closing and Inland shall have received a certificate
to such effect signed on behalf of Cyberworks by its President and the
Shareholder.
9.3 Absence of Material Adverse Change. There shall not have been, in
the reasonable judgment of the Board of Directors of Inland, any change which
could be expected to have a Material Adverse Effect on the financial condition
or results of operations of Cyberworks.
9.4 Compliance with Law. There shall be no order, decree, or ruling by
any court or governmental agency or threat thereof, or any other fact or
circumstance, which would prohibit or render illegal the transactions provided
for in this Agreement.
9.5 Government Consents. There shall have been obtained at or prior to
the Closing Date such permits or authorizations, and there shall have been taken
such other action, as may be required to consummate the Merger by any regulatory
authority having jurisdiction over the parties and the actions herein proposed
to be taken, including but not limited to satisfaction of all requirements under
applicable federal and state securities laws.
9.6 Documents. Inland shall have received all written consents,
assignments, waivers, authorizations or other certificates reasonably deemed
necessary by Inland's legal counsel to provide for the continuation in full
force and effect of any and all material contracts and leases of Cyberworks,
except as disclosed in Cyberworks' Disclosure Schedules, and for Inland to
consummate the transactions contemplated hereby.
9.7 No Litigation. No litigation or proceeding shall be pending which
will have the probable effect of enjoining or preventing the consummation of any
of the transactions provided for in this Agreement. No litigation or proceeding
shall be pending which could reasonably be expected to have a Material Adverse
Effect on the financial condition or results of operations of Cyberworks that
has not been previously disclosed to Inland herein.
9.8 Opinion of Cyberworks' Counsel. Inland shall have received from
Sparber, Ferguson, ▇▇▇▇▇▇ & ▇▇▇▇, counsel to Cyberworks, an opinion
substantially in the form of Exhibit 9.8, including, among other things, an
opinion on the capitalization of Cyberworks.
9.9 Requisite Approvals. The principal terms of this Agreement, the
Articles of Merger and the Agreement of Merger shall have been approved and
adopted by the Board of Directors of Cyberworks and unanimously approved and
adopted by the written consent or vote of the Shareholder.
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9.10 Employment and Noncompetition Agreements. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall
have executed and delivered to Inland an Employment Agreement and a
Noncompetition Agreement substantially in the form attached hereto as Exhibits
C-1 and C-2, which agreements will become effective upon the Effective Date of
the Merger.
9.11 Spousal Consent. The spouse of the Shareholder shall have executed
the Spousal Consent in substantially the form of Exhibit 9.11.
9.12 Termination of Rights. Any registration rights, rights of refusal,
rights to any liquidation preference, or redemption rights of any person
relating to the shares of capital stock on Cyberworks shall have been terminated
or waived as of the Closing.
9.13 Resignation of Directors. The directors of Cyberworks in office
immediately prior to the Effective Date of the Merger shall have resigned as
directors of Cyberworks effective as of the Effective Date of the Merger.
9.14 Satisfactory Form of Legal and Accounting Matters. The form, scope
and substance of all legal and accounting matters contemplated hereby and all
closing documents and other papers delivered hereunder shall be acceptable to
Inland's counsel.
9.15 Cyberworks Options. All outstanding options to purchase the capital
stock of Cyberworks and all other rights, warrants and other convertible
securities to purchase the capital stock of Cyberworks outstanding as of the
Closing Date shall be canceled.
9.16 Cyberworks Equity Grants. Cyberworks shall have obtained
cancellation agreements, in a form acceptable to Inland's counsel, signed by
each of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ cancelling any right
each individual may have had to any equity interest in Cyberworks.
ARTICLE 10
TERMINATION OF AGREEMENT
10.1 Termination. This Agreement may be terminated at any time prior to
the Closing, whether before or after approval of the Merger by the Shareholder
of Cyberworks:
(a) by the mutual written consent of Inland and Cyberworks;
(b) Unless otherwise specifically provided herein or agreed in
writing by Inland and Cyberworks, upon notice by either party, this
Agreement will be terminated if all the conditions to Closing have not
been satisfied or waived on or before August 30, 1998 (the "Final Date")
other than as a result of a breach of this Agreement by the terminating
party;
(c) by Cyberworks, if there has been a breach by Inland of any
representation, warranty, covenant or agreement set forth in this
Agreement on the part of Inland, or if any representation of Inland will
have become untrue, in either case which has or can reasonably be
expected to have a Material Adverse Effect on
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Inland and which Inland fails to cure within a reasonable time, not to
exceed thirty (30) days, after written notice thereof (except that no
cure period will be provided for a breach by Inland which by its nature
cannot be cured);
(d) by Inland, if there has been a breach by Cyberworks of any
representation, warranty, covenant or agreement set forth in this
Agreement on the part of Cyberworks, or if any representation of
Cyberworks will have become untrue, in either case which has or can
reasonably be expected to have a Material Adverse Effect on Cyberworks
and which Cyberworks fails to cure within a reasonable time not to
exceed thirty (30) days after written notice thereof (except that no
cure period will be provided for a breach by Cyberworks which by its
nature cannot be cured); or
(e) by either party, if a permanent injunction or other order by
any Federal or state court which would make illegal or otherwise
restrain or prohibit the consummation of the Merger will have been
issued and will have become final and nonappealable.
Any termination of this Agreement under this Section 10.1 will be effective by
the delivery of written notice of the terminating party to the other party
hereto.
10.2 Certain Continuing Obligations. Following any termination of this
Agreement pursuant to this Article 10, the parties hereto will continue to
perform their respective obligations under Article 13 but will not be required
to continue to perform their other covenants under this Agreement.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification by Cyberworks and the Shareholder. Cyberworks and
the Shareholder shall jointly and severally indemnify, defend and hold harmless
Inland and its officers, directors, attorneys, and agents and its successors and
assigns against and in respect of any and all losses, damages, claims,
obligations, demands, actions, suits, proceedings, assessments, liabilities,
judgments, recoveries and deficiencies, costs and expenses (including, without
limitation, reasonable attorneys' fees and costs and expenses incurred in
investigating, preparing, defending against or prosecuting any litigation,
claim, proceeding or demand), all on an after-tax basis, less any amounts
actually paid as insurance reimbursement, of any kind or character
(collectively, a "Loss"), which arise out of, result from, or relate to any
breach of, or failure by the Shareholder or Cyberworks fully to perform, or any
inaccuracy in, any of the representations, warranties, covenants or agreements
of the Shareholder or Cyberworks in this Agreement (whether known or unknown at
Closing), or in any Schedule, Exhibit, certificate, list, or other document
furnished or to be furnished by the Shareholder or Cyberworks under this
Agreement.
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11.2 Indemnification by Inland. Inland shall indemnify, defend and hold
harmless the Shareholder, in each capacity in which he has served Cyberworks,
and his attorneys and agents and his successors and assigns against and in
respect of any and all Losses, which arise out of, result from, or relate to any
breach of, or failure by Inland fully to perform, or any inaccuracy in, any of
the representations, warranties, covenants or agreements of Inland in this
Agreement (whether known or unknown at Closing), or in any Schedule, Exhibit,
certified list or other document furnished or to be furnished by Inland under
this Agreement.
11.3 Notice of Claim. Whenever Inland or the Shareholder learns of or
discovers any matter which may give rise to a claim for indemnification (the
"Claim") against any other party under this Article ▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ or the Shareholder, as the indemnified party (the "Indemnified
Party"), shall give notice to the Indemnity Obligor of the Claim. With respect
to Claims which are the subject of actions, suits, or proceedings threatened or
asserted in writing by any third party (a "Third Party Claim"), the Indemnified
Party shall, within 15 days following receipt of such Third Party Claim,
promptly notify the Indemnity Obligor in writing of any Claim for recovery,
specifying in reasonable detail the nature of the Loss and the amount of the
liability estimated to arise therefrom. If the Indemnified Party does not so
notify the Indemnity Obligor within 15 days of its discovery of a Third Party
Claim, such Claim shall be barred only to the extent that the Indemnity Obligor
is prejudiced by such failure to notify. The Indemnified Party shall provide to
the Indemnity Obligor as promptly as practicable thereafter all information and
documentation reasonably requested by the Indemnity Obligor to verify the Claim
asserted.
11.4 Defense. If the facts relating to a Loss arise out a Third Party
Claim, or if there is any claim against a third party available by virtue of the
circumstances of the Loss, the Indemnity Obligor may, by giving written notice
to the Indemnified Party within 15 days following its receipt of the notice of
such claim, elect to assume the defense or the prosecution thereof, including
the employment of counsel or accountants, reasonably satisfactory to the
Indemnified Party, at its cost and expense; provided, however, that during the
interim the Indemnified Party shall use its best efforts to take all action (not
including settlement) reasonably necessary to protect against further damage or
loss with respect to the Loss. The Indemnified Party shall have the right to
employ counsel separate from counsel employed by the Indemnity Obligor in any
such action and to participate therein, but the fees and expenses of such
counsel shall be at the Indemnified Party's own expense, unless (a) the
employment thereof has been specifically authorized by the Indemnity Obligor,
(b) such Indemnified Party has been advised by counsel reasonably satisfactory
to the Indemnity Obligor that there may be one or more legal defenses available
to it which are different from or additional to those available to the Indemnity
Obligor and in the reasonable judgment of such counsel it is advisable for such
Indemnified Party to employ separate counsel, or (c) the Indemnity Obligor has
failed to assume the defense of such action and employ counsel reasonably
satisfactory to the Indemnified Party. Whether or not the Indemnity Obligor
chooses to defend or prosecute such claim, all the parties hereto shall
cooperate in the defense or prosecution thereof and shall furnish such records,
information and testimony and shall attend such conferences, discovery
proceedings and trial as may be reasonably
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requested in connection therewith. The Indemnity Obligor shall not be liable for
any settlement of any such claim effected without its prior written consent. In
the event of payment by the Indemnity Obligor to the Indemnified Party in
connection with any Loss arising out of a Third Party Claim, the Indemnity
Obligor shall be subrogated to and shall stand in the place of the Indemnified
Party as to any events or circumstances in respect of which the Indemnified
Party may have any right or claim against such third party relating to such
indemnified matter. The Indemnified Party shall cooperate with the Indemnity
Obligor in prosecuting any subrogated claim. The Indemnity Obligor will take no
action in connection with any claim that would adversely affect the Indemnified
Party without the consent of the Indemnified Party.
11.5 Duration of the Parties Obligations. The Indemnity Obligor's
indemnification obligations under this Agreement shall survive the Closing and
shall terminate as follows: (a) with respect to claims for indemnity arising as
a result of a breach of the representations and warranties contained in Sections
2.1 through and including 2.7, 3.1, 3.3, 3.4, 3.5, 3.9, 4.1, 4.3, 4.4, 4.6 and
5.8, and claims for indemnity involving any action, suit or proceeding
threatened or asserted in writing by any third party against Inland or the
Shareholder which arise out of, result from or are attributable to any breach
of, or failure by Inland, on the one hand, or Cyberworks or the Shareholder, on
the other hand, to materially perform, or any inaccuracy in any of the
representations, warranties, covenants or agreements of Inland, on the one hand,
or Cyberworks or the Shareholder, on the other hand, in this Agreement or in any
schedule, exhibit, certificate, list or other document furnished by Inland, on
the one hand, or Cyberworks or the Shareholder, on the other hand, under this
Agreement, they shall continue and not terminate and (b) with respect to all
other claims for indemnity, after one (1) year from the Closing Date.
11.6 Limitations on Amount -- Cyberworks and the Shareholder.
Cyberworks and the Shareholder will have no liability (for indemnification or
otherwise) under Section 11.1 until the total of all amounts that would be
subject to claims for indemnification with respect to such matters exceeds
$50,000, in which event Cyberworks and the Shareholder shall be jointly and
severally liable only to the extent such amount exceeds $50,000. However, this
Section will not apply in the case of fraud or misrepresentation or an
intentional breach of or default under any provision of this Agreement on the
part of Cyberworks or the Shareholder.
ARTICLE 12
DEFINITIONS AND ACCOUNTING
12.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
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"Affiliate" (and, with a correlative meaning,
"Affiliated") shall mean, with respect to any Person, any other Person that
directly, or through one or more intermediaries, controls or is controlled by or
is under common control with such first Person, and, if such a Person is an
individual, any member of the immediate family of such individual and any trust
whose principal beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such member or trust.
As used in this definition, "control" (including, with correlative meanings,
"controlled by" and "under common control with") shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise), and "immediate family" shall
mean parents, spouse and children.
"Agreement" means this Agreement and Plan of
Reorganization as from time to time amended and in effect between the parties.
"Closing Date" means a date on or before August 27, 1998,
as may be mutually agreed upon in writing by Inland, the Shareholder and
Cyberworks.
"Cyberworks" means Cyberworks, Inc., a California
corporation.
"Cyberworks Common" means the ordinary shares, $1.00 par
value per share, of Cyberworks, Inc. which are held of record and beneficially
by the Shareholder and which are to be converted into shares of Inland Common
and cash pursuant to this Agreement.
"Cyberworks Financial Statements" means the financial
statements of Cyberworks as specified in Section 3.6 herein.
"Disclosure Schedules" means the document prepared by
Cyberworks delivered to Inland and containing those schedules containing certain
disclosures, if any, referred to within the Agreement.
"Exchange Act" means the U.S. Securities Exchange Act of
1934, or any similar federal statute, and the rules and regulations of the
Securities and Exchange Commission (or of any other U.S. federal Agency then
administering the Exchange Act) thereunder, all as the same shall be in effect
at the time.
"GAAP" means U.S. generally accepted accounting principles
after eliminating intercompany items and minority interests.
"Inland" means and shall include Inland Entertainment
Corporation, a Utah corporation, and its successors and assigns.
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"Inland Common" means the shares of common stock, $.001
par value per share of Inland.
"Knowledge" -- An individual will be deemed to have
"Knowledge" of a particular fact or other matter if such individual is actually
aware of such fact or other matter. A Person (other than an individual) will be
deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving, or who has at any time served, as a director,
officer, partner, executor, or trustee of such Person (or in any similar
capacity) has Knowledge of such fact or other matter.
"Material Adverse Effect" means a material adverse effect
on the business, operations, condition or prospects (financial or otherwise) of
Cyberworks or Inland, as the context warrants.
"Person" means an individual, corporation, partnership,
joint venture, association, joint stock company, trust, estate of a deceased
natural person, foundation, fund, institution, society, union or club or
unincorporated organization, or a government or any agency or political
subdivision thereof.
"Securities Act" means the U.S. Securities Act of 1933, as
amended, or any similar U.S. federal statute, and the rules and regulations of
the U.S. Securities and Exchange Commission (or of any other Federal agency then
administering the Securities Act) thereunder, all as the same shall be in effect
at the time.
12.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP and all other financial data
submitted pursuant to this Agreement shall be prepared and calculated in
accordance with such principles.
ARTICLE 13
MISCELLANEOUS
13.1 Governing Law; Venue. The internal laws of the State of California
(irrespective of its choice of law principles) will govern the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement
of the rights and duties of the parties hereto. The parties hereby irrevocably
and unconditionally consent to submit to the exclusive jurisdiction of the
courts of the State of California, County of San Diego and/or the United States
District Court for the Southern District of California for any actions, suits,
controversies or proceedings arising out of or relating to this agreement and
the transactions contemplated hereby (and the parties agree not to commence any
action, suit or proceeding relating thereto except in such courts), and further
agree that service of any process, summons, notice or document by U.S.
registered mail to the respective addresses set forth above shall be effective
service of process for any action, suit or proceeding brought against the
parties in any such court. The parties hereby irrevocably and unconditionally
waive any
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objection to the laying of venue of any action, suit, controversies or
proceeding arising out of this agreement or the transactions contemplated
hereby, in the courts of the State of California, County of San Diego and/or the
United States District Court for the Southern District of California, and hereby
further irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient or improper forum.
13.2 Assignment; Binding Upon Successors and Assigns. Neither party
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other party hereto. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
13.3 Severability. If any provision of this Agreement, or the
application thereof, is for any reason held to any extent to be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.
13.4 Counterparts. This Agreement may be executed in counterparts, each
of which will be an original as regards any party whose name appears thereon and
all of which together will constitute one and the same instrument. This
Agreement will become binding when one or more counterparts hereof, individually
or taken together, bear the signatures of all parties reflected hereon as
signatories.
13.5 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy will not preclude the exercise of any other.
13.6 Amendment and Waivers. Any term or provision of this Agreement may
be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof will
not be deemed to constitute a waiver of any other default or any succeeding
breach or default. This Agreement may be amended by the parties hereto at any
time before or after approval of the Shareholder.
13.7 No Waiver. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions. The waiver by any party of the
right to enforce any of the provisions hereof on any occasion will not be
construed to be a waiver of the right of such party to enforce such provision on
any other occasion.
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13.8 Expenses. Each party will bear its respective expenses and fees of
its own accountants, attorneys, investment bankers and other professionals
incurred with respect to this Agreement and the transactions contemplated
hereby. If the Merger is consummated, the Shareholder will pay at or immediately
before the Closing the accounting and attorneys' fees and expenses and other
fees and expenses incurred by Cyberworks and the Shareholder in connection with
the Merger, and neither Inland nor Cyberworks will be responsible for such fees
and expenses.
13.9 Finder's or Broker's Fees. The Shareholder and Cyberworks each
represent to Inland that it has not made any arrangement or had any dealings
whereby Cyberworks or Inland could become subject, absolutely or contingently,
to a claim for any brokerage commission or finder's fee. Inland represents to
the Shareholder and Cyberworks that Inland has not and will not pay any
brokerage commission or finder's fee in respect of the consideration to be paid
under this Agreement, and Inland has not made any arrangement or had any
dealings whereby the Shareholder, or Cyberworks could become subject, absolutely
or contingently, to a claim for any brokerage commission or finder's fee. The
Shareholder and Cyberworks on the one hand, and Inland, on the other hand, each
agree to indemnify and hold harmless the other against any and all claims,
demands, losses, costs, expenses, obligations, liabilities, damages, recoveries,
and deficiencies, including interest, penalties, and reasonable attorneys fees,
incurred or suffered by reason of any brokerage commission or finder's fee
alleged to be payable because of any act, omission or statement of the
indemnifying party.
13.10 Notices. Any notice or other communication required or permitted
to be given under this Agreement will be in writing, will be delivered
personally or by mail or express delivery, postage prepaid, and will be deemed
given upon actual delivery or, if mailed by registered or certified mail, on the
third business day following deposit in the mails, addressed as follows:
If to either the
Shareholder
or Cyberworks: Cyberworks, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Fax : (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
With a copy to: Sparber, Ferguson, ▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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If to Inland: Inland Entertainment Corporation
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ #▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Executive Vice President
Chief Financial Officer,
and Treasurer
With a copy to: Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
or to such other address as the party in question may have furnished to the
other party by written notice given in accordance with this Section 13.10.
13.11 Construction of Agreement. The language hereof will not be
construed for or against either party. A reference to an article, section or
exhibit will mean an article or section in, or an exhibit to, this Agreement,
unless otherwise explicitly set forth. The titles and headings in this Agreement
are for reference purposes only and will not in any manner limit the
construction of this Agreement. For the purposes of such construction, this
Agreement will be considered as a whole.
13.12 No Joint Venture. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership between the
parties hereto. No party is by virtue of this Agreement authorized as an agent,
employee or legal representative of any other party. No party will have the
power to control the activities and operations of any other, and the parties'
status is, and at all times, will continue to be, that of independent
contractors with respect to each other. No party will have any power or
authority to bind or commit any other. No party will hold itself out as having
any authority or relationship in contravention of this Section.
13.13 Further Assurances. Each party agrees to cooperate fully with the
other party and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
the other party to evidence and reflect the transactions provided for herein and
to carry into effect the intent of this Agreement.
13.14 Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, partner or employee of any
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party hereto or any other person or entity, unless specifically provided
otherwise herein, and, except as so provided, all provisions hereof will be
personal solely between the parties to this Agreement.
13.15 Public Announcement. Inland and Cyberworks will issue a press
release approved by both parties announcing the Merger as soon as practicable
following the execution of this Agreement. Thereafter, Inland may issue such
press releases, and make such other disclosures regarding the Merger, as it
determines to be required or appropriate under applicable securities laws or
NASD for Nasdaq Stock Market rules. Cyberworks will not make any other public
announcement or disclosure of the transactions contemplated by this Agreement.
Cyberworks will take all reasonable precautions to prevent any trading in the
securities of Inland by officers, directors, employees and agents of Cyberworks
having knowledge of any material information regarding Inland provided hereunder
until the information in question has been publicly disclosed.
13.16 Confidentiality. Except as expressly authorized by Inland in
writing, Cyberworks will not directly or indirectly divulge to any person or
entity or use any Inland Confidential Information, except as required for the
performance of its duties under this Agreement. Except as expressly authorized
by Cyberworks in writing, Inland will not directly or indirectly divulge to any
person or entity or use any Cyberworks Confidential Information, except as
required for the performance of its duties under this Agreement. As used herein,
"Inland Confidential Information" consists of (a) any information designated by
Inland as confidential whether developed by Inland or disclosed to Inland by a
third party, (b) the source code to any Inland software and any trade secrets
relating to any of the foregoing, and (c) any information relating to Inland 's
product plans, product designs, product costs, product prices, product names,
finances, marketing plans, business opportunities, personnel, research
development or know-how. As used herein, "Cyberworks Confidential Information"
consists of (x) any information designated by Cyberworks as confidential whether
developed by Cyberworks or disclosed to Cyberworks by a third party, (y) the
source code to any Cyberworks software, and any trade secrets related to any of
the foregoing, and (z) any information relating to Cyberworks product plans,
product designs, product costs, product prices, product names, finances,
marketing plan, business opportunities, personnel, research, development or
know-how. "Inland Confidential Information" and "Cyberworks Confidential
Information" also include the terms and conditions of this Agreement, except as
disclosed in accordance with Section 13.15 above. The foregoing restriction will
apply to information about a party whether or not it was obtained from such
party's employees, acquired or developed by the other party during such other
party's performance under this Agreement, or otherwise learned. The foregoing
restrictions will not apply to information that (i) has become publicly known
through no wrongful act of the receiving party, (ii) has been rightfully
received from a third party authorized by the party which is the owner, creator
or compiler to make such disclosure without restriction, (iii) has been approved
or released by written authorization of the party which is the owner, creator or
compiler, or (iv) is being or has theretofore been disclosed pursuant to a valid
court order after a reasonable attempt has been made to notify the party which
is the owner, creator or compiler.
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13.17 Entire Agreement. This Agreement, the exhibits hereto, the Inland
Ancillary Agreements, the Cyberworks Ancillary Agreements and the accompanying
letter from Inland regarding Cyberworks employees constitute the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties (except for the Confidentiality Agreement dated March 31,
1998, between the parties) with respect to the subject matter hereof. The
express terms hereof control and supersede any course of performance or usage of
trade inconsistent with any of the terms hereof.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
INLAND ENTERTAINMENT CORPORATION, CYBERWORKS, INC., a California
a Utah corporation corporation
By: /s/ L. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------- ------------------------
L. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Chairman of the Board, Chief Executive
Officer and President
INLAND ACQUISITION CORPORATION, SHAREHOLDER OF CYBERWORKS, INC.
a Utah corporation
By: /s/ L. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------- -----------------------
L. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Executive Officer and President
SIGNATURE PAGE TO AGREEMENT AND
PLAN OF REORGANIZATION
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