AGREEMENT AND PLAN OF SHARE EXCHANGE
Agreement entered into on December 10, 1999 by and between
INNOVATIVE TECHNOLOGIES SYSTEMS, INC., a Florida corporation (the
"Buyer"), and Xxxxxxxxx Educational Alternatives, INC., a Florida
corporation (the "Target"). The Buyer and the Target are referred
to collectively herein as the "Parties."
This Agreement contemplates a tax-free share exchange of the
Target with and into the Buyer in a reorganization pursuant to
Code Section 368(a)(1)(A). The Target Stockholders will receive
capital stock in the Buyer in exchange for their capital stock in
the Target.
Now, therefore, in consideration of the premises and the
mutual promises herein made, and in consideration of the
representations, warranties, and covenants herein contained, the
Parties agree as follows.
1. Definitions.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Buyer" has the meaning set forth in the preface above.
"Buyer-owned Share" means any Target Share that the Buyer
owns beneficially.
"Buyer Share" means any share of the Common Stock, $0.001 par
value per share, of the Buyer.
"Certificate of Share Exchange" has the meaning set forth in
Section 2(c) below.
"Closing" has the meaning set forth in Section 2(b) below.
"Closing Date" has the meaning set forth in Section 2(b) below.
"Confidential Information" means any information concerning
the businesses and affairs of the Target and its Subsidiaries that
is not already generally available to the public.
"Conversion Ratio" has the meaning set forth in Section 2(d)(v)
below.
"Definitive Target Proxy Materials" means the definitive
proxy materials relating to the Special Target Meeting.
"Florida General Corporation Law" means the General
Corporation Law of the State of Florida, as amended.
"Disclosure Schedule" has the meaning set forth in Section 3
below.
"Dissenting Share" means any Target Share which any
stockholder who or which has exercised his or its appraisal rights
under the Florida General Corporation Law holds of record.
"Effective Time" has the meaning set forth in Section 2(d)(i)
below.
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 2
"Exchange Agent" has the meaning set forth in Section 2(e) below.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"IRS" means the Internal Revenue Service.
"Knowledge" means actual knowledge after reasonable
investigation.
"Share exchange" has the meaning set forth in Section 2(a) below.
"Most Recent Fiscal Quarter End" has the meaning set forth in
Section 3(f) below.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with
respect to quantity and frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation,
an association, a joint stock company, a trust, a joint venture,
an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Requisite Buyer Board of Directors Approval" means the
affirmative vote of a majority of the Buyer Directors in favor of
this Agreement and the Share exchange.
"Requisite Target Shareholder Approval" means the affirmative
vote of a majority of the Buyer Shares in favor of this Agreement
and the Share exchange.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for taxes
not yet due and payable or for taxes that the taxpayer is
contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under
capital lease arrangements, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with
the borrowing of money.
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 3
"Special Buyer Meeting" has the meaning set below.
"Special Target Meeting" has the meaning set forth below.
"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the
common stock or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"Surviving Corporation" has the meaning set forth in Section
2(a) below.
"Target" has the meaning set forth in the preface above.
"Target Share" means any share of the Common Stock, $0.001
par value per share, of the Target.
"Target Stockholder" means any Person who or which holds any
Target Shares.
2. Basic Transaction.
(a) The Share exchange. On and subject to the terms and
conditions of this Agreement, the Target will become a wholly
owned subsidiary of the Buyer (the "Share exchange") at the
Effective Time. The Buyer shall be the corporation surviving the
Share exchange (the "Surviving Corporation").
(b) The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices
of the law office of X. Xxx Xxxxxxxx, P.A. at 0000 Xxxxxx Xxxx
Xxxx. Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxx 00000, commencing at 9:00
a.m. local time on the second business day following the
satisfaction or waiver of all conditions to the obligations of the
Parties to consummate the transactions contemplated hereby (other
than conditions with respect to actions the respective Parties
will take at the Closing itself) or such other date as the Parties
may mutually determine (the "Closing Date"); provided, however,
that the Closing Date shall be no earlier than December 10,1999.
(c) Actions at the Closing. At the Closing, (i) the Target
will deliver to the Buyer the various certificates, instruments,
and documents referred to in Section 6(a) below, (ii) the Buyer will
deliver to the Target the various certificates, instruments, and
documents referred to in Section 6(b) below, (iii) the Buyer and the
Target will file with the Secretary of State of the State of
Florida a Certificate of Share exchange in the form attached
hereto as Exhibit B (the "Certificate of Share exchange"), and
(iv) the Buyer will deliver to the Exchange Agent in the manner
provided below in this Section 2 the certificate evidencing the Buyer
Shares issued in the Share exchange.
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 4
(d) Effect of Share exchange.
(i) General. The Share exchange shall become effective
at the time (the "Effective Time") the Buyer and the Target
file the Certificate of Share exchange with the Secretary of
State of the State of Florida. The Share exchange shall have
the effect set forth in the Florida General Corporation Law.
The Surviving Corporation may, at any time after the
Effective Time, take any action (including executing and
delivering any document) in the name and on behalf of either
the Buyer or the Target in order to carry out and effectuate
the transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. The Certificate of
Incorporation of the Buyer and the Target will be modified as
provided for in the Florida Statutes.
(iii) Bylaws. The Bylaws of the Target in effect at and
as of the Effective Time will remain the Bylaws of the
Target.
(iv) Directors and Officers. As soon as practicable
after the Closing of this Agreement, the Directors of the
Surviving Corporation shall hold a special meeting for the
purpose, of, among other things, the appointment of officers
for said Target.
(v) Conversion of Target Shares. At and as of the
Effective Time, (A) each Target Share (other than any
Dissenting Share or Buyer-owned Share) shall be converted
into the right to receive 1/2 (.5) Buyer Share (the ratio of
Two (2) Target Shares to One (1) Buyer Share is referred to
herein as the "Conversion Ratio"), (B) each Dissenting Share
shall be converted into the right to receive payment from the
Surviving Corporation with respect thereto in accordance with
the provisions of the Florida General Corporation Law, and
(C) each Buyer-owned Share shall be canceled; provided,
however, that the Conversion Ratio shall be subject to
equitable adjustment in the event of any stock split, stock
dividend, reverse stock split, or other change in the number
of Target Shares outstanding. No Target Share shall be deemed
to be outstanding or to have any rights other than those set
forth above in this Section 2(d)(v) after the Effective Time.
(vi) Buyer Shares. Each Buyer Share issued and
outstanding at and as of the Effective Time will remain
issued and outstanding.
(e) Procedure for Payment.
(i) Immediately after the Effective Time, (A) the Buyer
will furnish to The Delaware Escrow Company (the "Exchange
Agent") a stock certificate (issued in the name of the
Exchange Agent or its nominee) representing that number of
Buyer Shares equal to the product of (I) the Conversion Ratio
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 5
times (II) the number of outstanding Target Shares (other
than any Dissenting Shares and Buyer-owned Shares) and (B)
the Buyer will cause the Exchange Agent to mail a letter of
transmittal (with instructions for its use) to each record
holder of outstanding Target Shares for the holder to use in
surrendering the certificates which represented his or its
Target Shares in exchange for a certificate representing the
number of Buyer Shares to which he or it is entitled.
(ii) The Buyer will not pay any dividend or make any
distribution on Buyer Shares (with a record date at or after
the Effective Time) to any record holder of outstanding
Target Shares until the holder surrenders for exchange his or
its certificates which represented Target Shares.
(iii) The Buyer may cause the Exchange Agent to return
any Buyer Shares remaining unclaimed 180 days after the
Effective Time, and thereafter each remaining record holder
of outstanding Target Shares shall be entitled to look to the
Buyer (subject to abandoned property, escheat, and other
similar laws) as a general creditor thereof with respect to
the Buyer to which he or it is entitled upon surrender of his
or its certificates.
(iv) The Buyer shall pay all charges and expenses of the
Exchange Agent.
(f) Closing of Transfer Records. After the close of business
on the Closing Date, transfers of Target Shares outstanding prior
to the Effective Time shall not be made on the stock transfer
books of the Surviving Corporation.
3. Representations and Warranties of the Target. The Target
represents and warrants to the Buyer that the statements contained
in this Section 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section
3), except as set forth in the disclosure schedule accompanying
this Agreement and initialed by the Parties (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in
this Section 3.
(a) Organization, Qualification, and Corporate Power. Each of
the Target and its Subsidiaries is a corporation duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Each of the Target and its
Subsidiaries is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such
qualification is required. Each of the Target and its Subsidiaries
has full corporate power and authority to carry on the businesses
in which it is engaged and to own and use the properties owned and
used by it.
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 6
(b) Capitalization. The entire authorized capital stock of
the Target consists of 120,000,000 Target Shares, of which
1,510,000 Common Target Shares are issued and outstanding and no
Target Shares are held in treasury. All of the issued and
outstanding Target Shares have been duly authorized and are
validly issued, fully paid, and nonassessable. There are no
outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require the Target to issue,
sell, or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with
respect to the Target.
(c) Authorization of Transaction. The Target has full power
and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder; provided, however, that the Target cannot consummate
the Share exchange unless and until it receives the Requisite
Target Stockholder Approval. This Agreement constitutes the valid
and legally binding obligation of the Target, enforceable in
accordance with its terms and conditions.
(d) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental
agency, or court to which any of the Target and its Subsidiaries
is subject or any provision of the charter or bylaws of any of the
Target and its Subsidiaries or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument or other arrangement to which
any of the Target and its Subsidiaries is a party or by which it
is bound or to which any of its assets is subject (or result in
the imposition of any Security Interest upon any of its assets).
Other than in connection with the provisions of the Florida
General Corporation Law, the Securities Exchange Act, the
Securities Act, and the state securities laws, none of the Target
and its Subsidiaries needs to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(e) Filings with the SEC. The Target will made all filings
with the SEC that it may been required to make.
(f) Financial Statements. The financial statements included
in or incorporated by reference have been prepared in accordance
with GAAP applied on a consistent basis throughout the periods
covered thereby and present fairly the financial condition of the
Target and its Subsidiaries as of the indicated dates and the
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 7
results of operations of the Target and its Subsidiaries for the
indicated periods; provided, however, that the interim statements
are subject to normal year-end adjustments.
(g) Events Subsequent to Most Recent Fiscal Quarter End.
Since the Most Recent Fiscal Quarter End, there has not been any
material adverse change in the business, financial condition,
operations, results of operations, or future prospects of the
Target and its Subsidiaries taken as a whole.
(h) Undisclosed Liabilities. None of the Target and its
Subsidiaries has any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due), including any liability for taxes,
except for (i) liabilities set forth on the face of the balance
sheet dated as of the Most Recent Fiscal Quarter End (rather than
in any notes thereto) and (ii) liabilities which have arisen after
the Most Recent Fiscal Quarter End in the Ordinary Course of
Business (none of which results from, arises out of, relates to,
is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement, or violation of law).
(i) Brokers' Fees. None of the Target and its Subsidiaries
has any liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
(j) Continuity of Business Enterprise. The Target operates at
least one significant historic business line, or owns at least a
significant portion of its historic business assets, in each case
within the meaning of Reg. Section 1.368-1(d).
(k) Disclosure. The Target's statements to its shareholders
will not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they
will be made, not misleading; provided, however, that the Target
makes no representation or warranty with respect to any
information that the Buyer will supply specifically for use in any
Proxy Materials. None of the information that the Target will
supply will contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under
which they will be made, not misleading.
4. Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Target that the statements
contained in this Section 4 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section
4), except as set forth in the Disclosure Schedule. The Disclosure
Schedule will be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Section 4.
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 8
(a) Organization. The Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Capitalization. The entire authorized capital stock of
the Buyer consists of 50,000,000 Buyer Shares, of which 6,100,000
Buyer Shares are issued and outstanding and no Buyer Shares are
held in treasury. All of the Buyer Shares to be issued in the
Share exchange have been duly authorized and, upon consummation of
the Share exchange, will be validly issued, fully paid, and
nonassessable.
(c) Authorization of Transaction. The Buyer has full power
and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder; provided, however, that the Buyer cannot consummate the
Share exchange unless and until it receives the Requisite Buyer
Stockholder Approval. This Agreement constitutes the valid and
legally binding obligation of the Buyer, enforceable in accordance
with its terms and conditions.
(d) Noncontravention. To the Knowledge of any director or
officer of the Buyer, neither the execution and the delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental
agency, or court to which the Buyer is subject or any provision of
the charter or bylaws of the Buyer or (ii) conflict with, result
in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other
arrangement to which the Buyer is a party or by which it is bound
or to which any of its assets is subject, except where the
violation, conflict, breach, default, acceleration, termination,
modification, cancellation, or failure to give notice would not
have a material adverse effect on the ability of the Parties to
consummate the transactions contemplated by this Agreement.
(e) Brokers' Fees. The Buyer does not have any liability or
obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this
Agreement for which any of the Target and its Subsidiaries could
become liable or obligated.
(f) Continuity of Business Enterprise. It is the present
intention of the Buyer to continue at least one significant
historic business line of the Target, or to use at least a
significant portion of the Target's historic business assets in a
business, in each case within the meaning of Reg. Section
1.368-1(d).
(g) Disclosure. The Buyer's statements to its shareholders
will not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 9
made therein, in the light of the circumstances under which they
will be made, not misleading provided, however, that the Buyer
makes no representation or warranty with respect to any
information that the Target will supply specifically for use in
any Proxy Materials. None of the information that the Buyer will
supply will contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under
which they will be made, not misleading.
5. Covenants. The Parties agree as follows with respect to
the period from and after the execution of this Agreement.
(a) General. Each of the Parties will use its best efforts to
take all action and to do all things necessary in order to
consummate and make effective the transactions contemplated by
this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Section 6 below).
(b) Notices and Consents. The Target will give any notices
(and will cause each of its Subsidiaries to give any notices) to
third parties, and will use its [reasonable] best efforts to
obtain (and will cause each of its Subsidiaries to use its
[reasonable] best efforts to obtain) any third party consents,
that the Buyer [reasonably] may request in connection with the
matters referred to in Section 3(d) above.
(c) Regulatory Matters and Approvals. Each of the Parties
will (and the Target will cause each of its Subsidiaries to) give
any notices to, make any filings with, and use its [reasonable]
best efforts to obtain any authorizations, consents, and approvals
of governments and governmental agencies in connection with the
matters referred to in Section 3(d) and Section 4(d) above. Without
limiting the generality of the foregoing:
(i) Florida General Corporation Law. The Target will call a
special meeting of its stockholders (the "Special Target Meeting")
as soon as practicable in order that the stockholders may consider
and vote upon the adoption of this Agreement and the approval of
the Share exchange in accordance with the Florida General
Corporation Law.
(d) Operation of Business. The Target will not (and will not
cause or permit any of its Subsidiaries to) engage in any
practice, take any action, or enter into any transaction outside
the Ordinary Course of Business. Without limiting the generality
of the foregoing:
(i) none of the Target and its Subsidiaries will
authorize or effect any change in its charter or bylaws;
(ii) none of the Target and its Subsidiaries will grant
any options, warrants, or other rights to purchase or obtain
any of its capital stock or issue, sell, or otherwise dispose
of any of its capital stock (except upon the conversion or
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 10
exercise of options, warrants, and other rights currently
outstanding);
(iii) none of the Target and its Subsidiaries will
declare, set aside, or pay any dividend or distribution with
respect to its capital stock (whether in cash or in kind), or
redeem, repurchase, or otherwise acquire any of its capital
stock [, in either case outside the Ordinary Course of
Business];
(iv) none of the Target and its Subsidiaries will issue
any note, bond, or other debt security or create, incur,
assume, or guarantee any indebtedness for borrowed money or
capitalized lease obligation outside the Ordinary Course of
Business;
(v) none of the Target and its Subsidiaries will impose
any Security Interest upon any of its assets outside the
Ordinary Course of Business;
(vi) none of the Target and its Subsidiaries will make
any capital investment in, make any loan to, or acquire the
securities or assets of any other Person outside the Ordinary
Course of Business;
(vii) none of the Target and its Subsidiaries will make
any change in employment terms for any of its directors,
officers, and employees outside the Ordinary Course of
Business; and
(viii) none of the Target and its Subsidiaries will
commit to any of the foregoing.
(e) Full Access. The Target will permit representatives of
the Buyer to have full access to all premises, properties,
personnel, books, records (including tax records), contracts, and
documents of or pertaining to each of the Target and its
Subsidiaries. The Buyer will treat and hold as such any
Confidential Information it receives from any of the Target and
its Subsidiaries in the course of the reviews contemplated by this
Section 5(g), will not use any of the Confidential Information
except in connection with this Agreement, and, if this Agreement
is terminated for any reason whatsoever, agrees to return to the
Target all tangible embodiments (and all copies) thereof which are
in its possession.
(f) Notice of Developments. Each Party will give prompt
written notice to the other of any material adverse development
causing a breach of any of its own representations and warranties
in Section 3 and Section 4 above. No disclosure by any Party
pursuant to this Section 5(h), however, shall be deemed to amend
or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 11
(g) Continuity of Business Enterprise. The Buyer will
continue at least one significant historic business line of the
Target, or use at least a significant portion of the Target's
historic business assets in a business, in each case within the
meaning of Reg. Section 1.368-1(d), except that the Buyer may
transfer the Target's historic business assets (i) to a
corporation that is a member of the Buyer's "qualified group,"
within the meaning of Reg. Section 1.368-1(d)(4)(ii), or (ii)
to a partnership if (A) one or more members of the Buyer's
"qualified group" have active and substantial management
functions as a partner with respect to the Target's historic
business or (B) members of the Buyer's "qualified group" in the
aggregate own an interest in the partnership representing a
significant interest in the Target's historic business, in each
case within the meaning of Reg. Section 1.368-1(d)(4)(iii).
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of
the Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) this Agreement and the Share exchange shall have
received the Requisite Target Stockholder Approval;
(ii) the Target and its Subsidiaries shall have procured
all of the third party consents specified in Section 5(b) above;
(iii) the representations and warranties set forth in
Section 3 above shall be true and correct in all material respects
at and as of the Closing Date;
(iv) the Target shall have performed and complied with
all of its covenants hereunder in all material respects
through the Closing;
(v) No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of
the transactions contemplated by this Agreement to be
rescinded following consummation, (C) affect adversely the
right of the Surviving Corporation to own the former assets,
to operate the former businesses, and to control the former
Subsidiaries of the Target, or (D) affect adversely the right
of any of the former Subsidiaries of the Target to own its
assets and to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in
effect);]
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 12
(vi) the Target shall have delivered to the Buyer a
certificate to the effect that each of the conditions
specified above in Section 6(a)(i)-(v) is satisfied in all
respects;
(vii) this Agreement and the Share exchange shall have
received the Requisite Approval from the Buyer's Board of
Directors;
(viii) the Buyer shall have received from counsel to the
Target an opinion in form and substance is deemed appropriate
by the Buyer's counsel, addressed to the Buyer, and Dated as
of the Closing Date;
(ix) The Buyer shall have received the resignations,
effective as of the Closing, of each director and officer of
the Target and its Subsidiaries other than those whom the
Buyer shall have specified in writing at least [five]
business days prior to the Closing;] and
(x) all actions to be taken by the Target in connection
with consummation of the transactions contemplated hereby and
all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to the
Buyer.
The Buyer may waive any condition specified in this Section 6(a)
if it executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Target. The obligation of
the Target to consummate the transactions to be performed by
it in connection with the Closing is subject to satisfaction of
the following conditions:
(i) this Agreement and the Share exchange shall have
received the Requisite Approval from the Buyer's Board of
Directors;
(ii) the representations and warranties set forth in
Section 4 above shall be true and correct in all material
respects at and as of the Closing Date;
(iii) the Buyer shall have performed and complied with
all of its covenants hereunder in all material respects
through the Closing;
(iv) the Buyer shall have delivered to the Target a
certificate to the effect that each of the conditions
specified above in Section 6(b)(i)-(vi) is satisfied in all
respects;
(v) this Agreement and the Share exchange shall have
received the Requisite Target Stockholder Approval;
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 13
(vi) the Target shall have received from counsel to the
Buyer an opinion in form and substance as set forth in
Exhibit F attached hereto, addressed to the Target, and dated
as of the Closing Date;
(vii) all actions to be taken by the Buyer in connection
with consummation of the transactions contemplated hereby and
all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will
be [reasonably] satisfactory in form and substance to the
Target.
The Target may waive any condition specified in this Section 6(b)
if it executes a writing so stating at or prior to the Closing.
7. Termination.
(a) Termination of Agreement. Either of the Parties may
terminate this Agreement with the prior authorization of its board
of directors (whether before or after stockholder approval) as
provided below:
(i) the Parties may terminate this Agreement by mutual
written consent at any time prior to the Effective Time;
(ii) the Buyer may terminate this Agreement by giving
written notice to the Target at any time prior to the
Effective Time (A) in the event the Target has breached any
material representation, warranty, or covenant contained in
this Agreement in any material respect, the Buyer has
notified the Target of the breach, and the breach has
continued without cure for a period of [30 days] after the
notice of breach or (B) if the Closing shall not have
occurred on or before December 10, 1999 by reason of the
failure of any condition precedent under Section 6(a) hereof
(unless the failure results primarily from the Buyer breaching
any representation, warranty, or covenant contained in this
Agreement);
(iii) the Target may terminate this Agreement by giving
written notice to the Buyer at any time prior to the
Effective Time (A) in the event the Buyer has breached any
material representation, warranty, or covenant contained in
this Agreement in any material respect, the Target has
notified the Buyer of the breach, and the breach has
continued without cure for a period of [30 days] after the
notice of breach or (B) if the Closing shall not have
occurred on or before December 10, 1999, by reason of the
failure of any condition precedent under Section 6(b) hereof
(unless the failure results primarily from the Target breaching
any representation, warranty, or covenant contained in this
Agreement);
(iv) any Party may terminate this Agreement by giving
written notice to the other Party at any time prior to the
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 14
Effective Time in the event the Fairness Opinion is
withdrawn; or
(v) any Party may terminate this Agreement by giving
written notice to the other Party at any time after the
Special Buyer Meeting or the Special Target Meeting in the
event this Agreement and the Share exchange fail to receive
the Requisite Buyer Stockholder Approval or the Requisite
Target Stockholder Approval respectively.
(b) Effect of Termination. If any Party terminates this
Agreement pursuant to Section 7(a) above, all rights and obligations
of the Parties hereunder shall terminate without any liability of
any Party to any other Party (except for any liability of any Party
then in breach); provided, however, that the confidentiality
provisions contained in Section 5(g) above shall survive any such
termination.
8. Miscellaneous.
(a) Survival. None of the representations, warranties, and
covenants of the Parties (other than the provisions in Section 2
above concerning issuance of the Buyer Shares, the provisions in
Section 5(j) above concerning insurance and indemnification will
survive the Effective Time.
(b) Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating
to the subject matter of this Agreement without the prior written
approval of the other Party; provided, however, that any Party may
make any public disclosure it believes in good faith is required
by applicable law or any listing or trading agreement concerning
its publicly-traded securities (in which case the disclosing Party
will use its [reasonable] best efforts to advise the other Party
prior to making the disclosure).
(c) No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns;
provided, however, that (i) the provisions in Section 2 above
concerning issuance of the Buyer Shares are intended for the
benefit of the Target Stockholders and (ii) the provisions in
Section 5(j) above concerning insurance and indemnification are
intended for the benefit of the individuals specified therein
and their respective legal representatives.
(d) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the
Parties and supersedes any prior understandings, agreements, or
representations by or between the Parties, written or oral, to the
extent they related in any way to the subject matter hereof.
(e) Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein
and their respective successors and permitted assigns. No Party
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 15
may assign either this Agreement or any of its rights, interests,
or obligations hereunder without the prior written approval of the
other Party.
(f) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same instrument.
(g) Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be
deemed duly given if (and then two business days after) it is sent
by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth
below:
If to the Target: Corporate Offices
Copy to:
If to the Buyer: Corporate Offices
Copy to:
Any Party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at the
address set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the
intended recipient. Any Party may change the address to which
notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of
Florida without giving effect to any choice or conflict of law
provision or rule (whether of the State of Florida or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Florida.
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 16
(j) Amendments and Waivers. The Parties may mutually amend
any provision of this Agreement at any time prior to the Effective
Time with the prior authorization of their respective boards of
directors; provided, however, that any amendment effected
subsequent to stockholder approval will be subject to the
restrictions contained in the Florida General Corporation Law. No
amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by both of the Parties. No
waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated
hereby.
(m) Construction. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to
all rules and regulations promulgated thereunder, unless the
context otherwise requires. The word "including" shall mean
including without limitation.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on [as of] the date first above written.
INNOVATIVE TECHNOLOGIES SYSTEMS, INC.
Buyer
By: /s/Xxxxxxxx Xxxxxxxxx
Title: President
AGREEMENT AND PLAN OF SHARE EXCHANGE
December 10, 1999
Page 17
XXXXXXXXX EDUCATIONAL ALTERNATIVES,
INC.
Seller
By: /s/Xxxxxxxx Xxxxxxxxx
Title: President
