SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
January 21, 2000
Date of Report
(Date of Earliest Event Reported)
NEXTPATH TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in its Charter)
1615 N. 24th West Avenue
Tulsa, Oklahoma 74127
(Address of principal executive offices)
918/295-8289
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name and former address, if changed since last report)
Nevada 000-26425 84-1402416
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
NextPath Technologies, Inc. (the "Company') hereby amends Item 7
of its Current Report on Form 8-K dated January 21, 2000 related to its
acquisition of Essentia Water, Inc. to read in its entirety as follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired. See Exhibits 99.1 and
99.2.
(b) Proforma financial information. See NextPath Form 10K/A dated May
17, 2000.
(c) Exhibits
2.1** Agreement and Plan of Merger dated January 21, 2000.
99.1** Essentia Water, Inc. Financial Statements Year Ended
December 31, 1998 and 199
99.2** Essentia Water, Inc. Financial Statement as of January
31, 2000
* Previously filed
** Filed herein
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment to Current Report on Form 8-K/A to be
signed on its behalf by the undersigned hereunto duly authorized.
NEXTPATH TECHNOLOGIES, INC.
By /s/ David Nuttle
----------------------------------
President, Chief Executive Officer
Date: June 26, 2000.
<PAGE>
AGREEMENT AND PLAN OF MERGER
by and among
NEXTPATH TECHNOLOGIES, INC.
(Parent)
ESSENTIA WATER, INC., a Delaware corporation
(Sub)
ESSENTIA WATER, INC., a Washington corporation
(Target)
and
MONETA HOLDINGS, LLC and KENNETH L. UPTAIN
(Shareholders)
Dated as of January 21, 2000
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TABLE OF CONTENTS
Section Description Page
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1. Definitions ......................................................... 1
2. The Merger........................................................... 7
(a) The Merger ................................................... 7
(b) Effective Time of the Merger ................................. 7
(c) The Surviving Corporation .................................... 7
3. Conversion of Shares and Consideration Therefor...................... 8
(a) Conversion of Target Shares .................................. 8
(b) Delivery of Parent Shares .................................... 8
(c) Delivery of Target Shares .................................... 8
(d) Taking Necessary Action; Further Action ...................... 8
(e) Registration Rights .......................................... 9
(f) Re-Issuance of Shareholder Notes ............................. 9
(g) Assumption of Target Stock Option Plan ....................... 9
4. The Closing ......................................................... 9
(a) The Closing .................................................. 9
(b) Deliveries at the Closing .................................... 9
5. Representations and Warranties Concerning the Transaction ...........10
(a) Representations and Warranties of the Shareholders ...........10
(i) Authorization of Transaction ..........................10
(ii) Noncontravention ......................................10
(iii) Broker's Fees .........................................10
(iv) The Shares ............................................11
(v) Suitability ...........................................11
(vi) Absence of Registration ...............................11
(vii) Restrictions on Transferability .......................11
(viii) Access to Information .................................11
(ix) Investment ............................................12
(x) Liability .............................................12
(b) Representations and Warranties of the Parent and Sub .........12
(i) Organization and Qualification ........................12
(ii) Capitalization ........................................13
(iii) Authorization of Transaction ..........................13
(iv) Noncontravention ......................................13
(v) Default ...............................................14
(vi) Litigation ............................................14
(vii) Suitability............................................14
(viii) Absence of Registration ...............................14
(ix) Restrictions on Transferability .......................14
(x) Access to Information .................................14
(xi) Brokers' Fees .........................................15
(xii) Investment ............................................15
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TABLE OF CONTENTS
Section Description Page
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(xiii) Employee Benefit Program ..............................15
(xiv) Directors and Officers Liability Insurance ............15
(xv) Financing Needed to Develop Target's Business .........15
(xvi) Subsidiaries ..........................................15
(xvii) Parent Financial Statements ...........................16
(xviii)Events Subsequent to the Most Recent
Financial Statement of Parent..........................16
(xix) Business of Parent and Subsidiaries ...................16
(xx) Disclosure ............................................16
(xxi) Access ................................................16
6. Representations and Warranties Concerning the Target ................16
(a) Organization and Qualification ...............................16
(b) Capitalization ...............................................16
(c) Notice of Transaction ........................................16
(d) Noncontravention .............................................16
(e) Subsidiaries .................................................16
(f) Target Financial Statements ..................................16
(g) Events Subsequent to the Most Recent Financial Statement
of Target ....................................................17
(h) Undisclosed Liabilities ......................................19
(i) Tax Matters ..................................................19
(j) Tangible Assets ..............................................20
(k) Real Property ................................................20
(l) Personal Property ............................................20
(m) Intellectual Property ........................................21
(n) Product Liability/Warranties .................................22
(o) Contracts ....................................................22
(p) Insurance ....................................................23
(q) Litigation ...................................................23
(r) Employees ....................................................23
(s) Employee Benefits ............................................23
(t) Health and Safety Matters ....................................24
(u) Environmental Matters ........................................24
(v) Legal Compliance .............................................26
(w) Certain Business Relationships with the Target ...............26
(x) Brokers' Fees ................................................27
(y) Year 2000 Compliance .........................................27
(z) Customer List ................................................27
(aa) Acquired Accounts Receivable .................................27
(bb) Accounts Payable .............................................27
(cc) Target Liability .............................................27
(dd) Minutes ......................................................27
(ee) Disclosure ...................................................28
7. Pre-Closing Covenants................................................28
(a) General ......................................................28
(b) Notices and Consents .........................................28
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TABLE OF CONTENTS
Section Description Page
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(c) Operation of Business ........................................28
(d) Preservation of Business .....................................28
(e) Access 28
(f) Notice of Developments .......................................29
(g) Exclusivity ..................................................29
(h) Plant Closing Notification ...................................29
(i) Intercompany Items ...........................................29
8. Additional Covenants ...............................................29
(a) General ......................................................29
(b) Litigation Support ...........................................30
(c) Transition ...................................................30
(d) Confidentiality ..............................................30
(e) Additional Tax Matters .......................................31
(f) Covenant Not to Compete ......................................31
(g) Employment Matters ...........................................31
(h) Covenants with Respect to Tax-Free Reorganization ............32
9. Conditions to Obligations to Close ..................................32
(a) Conditions to Obligation of the Parent and Sub ...............32
(b) Conditions to Obligations of the Shareholders ................34
10. Closing Deliveries ..................................................35
(a) Deliveries by the Shareholders at Closing ....................35
(b) Deliveries by the Parent and Sub at Closing ..................36
11. Audit ...............................................................36
12. Indemnification .....................................................36
(a) Survival .....................................................36
(b) Indemnification by the Shareholders ..........................36
(c) Indemnification by the Parent ................................37
(d) Notice and Opportunity to Defend .............................37
13. Termination .......................................................38
(a) Termination of Agreement .....................................38
(b) Effect of Termination ........................................38
14. Miscellaneous........................................................38
(a) Disclosure Schedules .........................................38
(b) Press Releases and Announcements .............................39
(c) No Third-Party Beneficiaries .................................39
(d) Entire Agreement .............................................39
(e) Succession and Assignment ....................................39
(f) Counterparts/Facsimile .......................................39
(g) Headings .....................................................40
(h) Notices ......................................................40
(i) Amendments and Waivers .......................................40
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TABLE OF CONTENTS
Section Description Page
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(j) Severability .................................................40
(k) Expenses .....................................................41
(l) Construction .................................................41
(m) Incorporation of Exhibits and Schedules ......................41
(n) Specific Performance .........................................41
EXHIBITS
A Agreement of Merger
B Certificate of Merger - Delaware
B-1 Articles of Merger - Washington
C-1 Shareholder Notes
C-2 Promissory Note
D Target Financial Statements
E Consulting Agreement - Kenneth L. Uptain
F Closing Certificate - Shareholders
G Opinion of Counsel - Shareholders
H Release - Shareholders
I Closing Certificate - Parent and Sub
J Opinion of Counsel - Parent
K Parent Financial Statements
L Registration Rights Agreement
M Release - Groupnow, Inc. (Venturenow, Inc.)
DISCLOSURE SCHEDULES
3(b) Calculation of Parent Shares
3(g) Target Stock Options
5(a) Shareholders' Amended Representations and Warranties
5(b) Amended Representations and Warranties Concerning the Parent and
Sub
5(b)(ii) 5% or More Shareholders of Parent
5(b)(iv) Parent Approvals
5(b)(vi) Litigation
5(b)(xvi) Parent Subsidiaries
5(b)(xvii) Events Subsequent to Most Recent Financial Statement of Parent
5(b)(xix) Business of Parent and Subsidiaries
6 Amended Representations and Warranties Concerning the Target
6(b) Target Stock Options
6(d) Target Approvals
6(g) Events Subsequent to the Most Recent Financial Statement of Target
6(h) Target Liabilities
6(i) Tax Matters
6(k) Real Property
6(l) Personal Property
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TABLE OF CONTENTS
Section Description Page
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6(m) Intellectual Property
6(n) Product Liability/Warranties
6(o) Contracts
6(p) Insurance
6(q) Litigation
6(r) Employees
6(s) Employee Benefit (ERISA) Matters
6(t) Health and Safety Matters
6(u) Environmental Matters
6(v) Legal Compliance
6(w) Business Relationships
6(x) Brokers' Fees
6(y) Year 2000 Compliance
6(z) Customer List
6(aa) Acquired Accounts Receivable
6(bb) Accounts Payable
6(cc) Target Liability
6(dd) Minutes
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is entered
into as of January 21, 2000 (the "Effective Date") by and among NextPath
Technologies, Inc., a Nevada corporation (the "Parent"), Essentia Water, Inc., a
Delaware corporation (the "Sub"), Essentia Water, Inc., a Washington corporation
(the "Target"), Moneta Holdings, LLC, a Washington limited liability company
that owns one hundred percent (100%) of the outstanding stock of Target
("Moneta"), and Kenneth L. Uptain ("Uptain"), the sole owner of Moneta and
therefore the beneficial owner of the Target (Moneta and Uptain are collectively
referred to as the "Shareholders"). The Parent, Sub, Target and Shareholders are
referred to in this Agreement individually as a "Party" and collectively as the
"Parties." The Target and the Sub are referred to in this Agreement collectively
as the "Constituent Corporations.".
WHEREAS, the Parent is engaged in the development of new and
innovative technologies;
WHEREAS, the Target, whose principal executive offices are
located at 24100 State Route 9 SE, Bldg. A, Woodinville, WA 98072, is engaged in
the business of developing, manufacturing, packaging and marketing bottled water
products (the "Business");
WHEREAS, Moneta owns all of the issued and outstanding common
stock of the Target (the "Shares");
WHEREAS, the Shareholders and the Boards of Directors of the
Parent, Sub and Target have approved the acquisition of the Target by the
Parent, and the merger of the Target into the Sub (the "Merger"), pursuant to
the Agreement of Merger set forth as Exhibit A attached to this Agreement (the
"Merger Agreement") and the transaction contemplated by this Agreement, in
accordance with the applicable provisions of the statutes of the States of
Delaware and Washington, which permit the Merger;
WHEREAS, for Federal income tax purposes, it is intended that the
transaction contemplated by this Agreement shall be a forward triangular merger
which qualifies as a reorganization pursuant to Section 368(a) of the Code; and
WHEREAS, concurrent with the Merger, the Sub is entering into
a consulting agreement with Kenneth L. Uptain.
NOW, THEREFORE, in consideration of the representations,
warranties, and covenants contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which is acknowledged,
the Parties agree as follows:
1. Definitions.
-----------
"Acquired Accounts Receivable" means all accounts receivable of
the Target which are unpaid as of the Closing Date and which are listed on
Disclosure Schedule 6(aa).
<PAGE>
"Adverse Consequences" means all actual damages from complaints,
actions, suits, proceedings, hearings, investigations, claims, demands,
judgments, orders, decrees, stipulations, injunctions, damages, dues, penalties,
fines, costs, amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses, and fees, including all reasonable attorneys' fees and
court costs.
"Affiliate" means (a) any person directly or indirectly owning,
controlling, or holding with power to vote ten percent (10%) or more of the
outstanding voting securities of such other person; (b) any person ten percent
(10%) or more of whose outstanding voting securities are directly or indirectly
owned, controlled, or held with power to vote, by such other person; (c) any
person directly or indirectly controlling, controlled by, or under common
control with such other person; (d) any officer, director or partner of such
other person; and (e) if such other person is an officer, director or partner,
any company for which such person acts in any such capacity. Notwithstanding the
foregoing, Pure Packaging, Inc., a Washington corporation of which Uptain owns
sixty-seven and six tenths percent (67.6%) of the outstanding stock, will not be
considered an Affiliate as that term is used in this Agreement.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms the basis for any specified
consequence.
"Business" means the business of developing, manufacturing,
packaging and marketing bottled water products, and all other business
activities engaged in by the Target.
"Business Day" means any day except a Saturday, Sunday or other
day in which commercial banks in the State of Washington are authorized by law
to close.
"Cause" means the conviction of (a) a felony, or (b) a
misdemeanor involving embezzlement, fraud, conversion or misuse of a Party's
funds or resources or that affects a Party's business, operations or reputation
or substantially impairs a person's qualifications, character or ability to
perform his or its duties.
"Closing" has the meaning set forth in Section 4(a).
"Closing Date" has the meaning set forth in Section 4(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information, technical data
or know-how related to any aspect of a Party's business (including without
limitation, research findings, products, proposals, formulas, test results,
product developments, discoveries, inventions, processes, designs, drawings,
engineering studies, marketing reports, customer lists and financial
information) which is disclosed by one party (the "Disclosing Party") to the
another party (the "Receiving Party"), either directly or indirectly, in
writing, orally, electronically, graphically, or by drawings, plans or
inspection of products, tests or equipment. The term "Confidential Information"
shall not include any information, technical data or know-how which: (a) is
already (or otherwise becomes) publicly known, not as a result of any action or
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inaction of the Receiving Party; (b) is in the Receiving Party's possession
prior to disclosure by the Disclosing Party as can be shown by the Receiving
Party's files and records as they existed immediately prior to the disclosure;
(c) is approved for release by written authorization of the Disclosing Party;
(d) is independently developed and disclosed by a third party to the Receiving
Party; or (e) disclosure is required by law or regulation.
"Controlled Group of Corporations" has the meaning set forth in
Code Sec. 1563.
"Disclosure Schedule" has the meaning set forth in Section 5.
"Effective Date" means January 21, 2000.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), (d) stock option plan, or (e) Employee
Welfare Benefit Plan or material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Sec. 3(1).
"Environmental Damages" means all claims, judgments, damages,
losses, penalties, fines, liabilities (including strict liability),
encumbrances, liens, costs, and expenses of investigation and defense of any
claim, whether or not such claim is ultimately defeated, and of any good faith
settlement or judgment, of whatever kind or nature, contingent or otherwise,
matured or unmatured, foreseeable or unforeseeable, including without limitation
reasonable attorneys' fees and disbursements and consultants' fees, any of which
are incurred at any time as a result of the existence prior to the Closing Date
of: (i) Hazardous Material upon, about, or beneath the Real Property, or (ii) a
violation of Environmental Requirements pertaining to the Real Property,
regardless of whether the existence of such Hazardous Material or the violation
of Environmental Requirements arose prior to the Target's and its Subsidiaries'
ownership or operation of the Real Property.
"Environmental Requirements" means all applicable statutes,
regulations, rules, ordinances, codes, licenses, permits, orders, approvals,
plans, authorizations, concessions, franchises, and similar items, of all
governmental agencies, departments, commissions, boards, bureaus, states,
political subdivisions, or instrumentalities of the United States, and all
applicable judicial, administrative, and regulatory decrees, judgments, and
orders relating to the protection of human health or the environment.
"Equitable Exceptions" has the meaning set forth in Section
5(a)(i).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
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"GAAP" means generally accepted accounting principles as in
effect from time to time.
"Governmental Body" means any federal, state, county, city, town,
village, municipal or other governmental department, commission, board, bureau,
agency, authority or instrumentality.
"Hazardous Materials" means any substance other than substances
and materials necessary to produce the products currently manufactured by the
Target on the Real Property or used in the ordinary course of the Business: (i)
the presence of which requires investigation or remediation under any applicable
federal, state, or local statute, regulation, ordinance, order, action, policy,
or common law; (ii) that is defined as `a "hazardous waste" or "hazardous
substance" under any applicable federal, state, or local statute, regulation, or
ordinance; (iii) that is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is regulated by
any applicable governmental authority within a United States agency, department,
commission, board, agency, or instrumentality; (iv) the presence of which on the
Real Property causes or threatens to cause a nuisance upon the Real Property or
to adjacent properties, or poses or threatens to pose a hazard to the health or
safety of persons on or about the Real Property; (v) the presence of which on
adjacent properties could constitute a trespass by the Target or the Parent as
of the Closing Date; (vi) that contains gasoline, diesel fuel, or other
petroleum hydrocarbons in any unconfined manner; or (vii) that contains PCBs,
asbestos, or urea formaldehyde foam insulation.
"Indemnified Party" means the party indemnified under this
Agreement.
"Indemnifying Party" means the party indemnifying the Indemnified
Party under this Agreement.
"Intellectual Property" means all (a) trademarks, service marks,
trade dress, logos, trade names, and corporate names and registrations and
applications for registration thereof, (b) copyrights and registrations and
applications for registration thereof, (c) computer software, data, and
documentation, (d) trade secrets and confidential business information
(including formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial, marketing, and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information), and (e) all property, tangible or intangible, acquired or used
directly or indirectly in connection with the development and/or maintenance of
the Target's website, including without limitation, the databases and all
information contained therein, the domain names, the technology underlying the
website, all hardware and software, all contents of the website, all information
received from the persons accessing the website, and any and all trademark,
copyright and other intellectual property rights to any or all of the foregoing.
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"Knowledge" means, with respect to the Target or the
Shareholders, actual knowledge by Kenneth L. Uptain, and with respect to the
Parent and Sub, actual knowledge by James R. Ladd.
"Known Claim" has the meaning set forth in Section 12.
"Known Claim Amount" has the meaning set forth in Section 12.
"Laws" means all laws, statutes, codes, rules, regulations,
ordinances, or orders of any Governmental Body.
"Liability" means any liability, debt, obligation, amount or sum
due (whether absolute or contingent, whether liquidated or unliquidated, and
whether due or to become due) including any liability for Taxes.
"Material" or "Material Adverse Effect" means a material adverse
effect (5% or greater) on the assets, financial condition or results of
operations of the Party immediately upon the effectiveness of the Closing on the
Closing Date.
"Most Recent Balance Sheet of Target" and "Most Recent Balance
Sheet of Parent" mean the balance sheets contained within the Most Recent
Financial Statement of Target and the Most Recent Financial Statement of Parent,
respectively.
"Most Recent Financial Statement of Target" and "Most Recent
Financial Statement of Parent" have the meanings set forth in Section 6(f) and
Section 5(b)(xvii).
"Most Recent Fiscal Year End of Target" and "Most Recent Fiscal
Year End of Parent" have the meanings set forth in Section 6(f) and Section
5(b)(xvii).
"Multi-employer Plan" has the meaning set forth in ERISA Sec.
3(37).
"Order" means any order, writ, injunction, decree, judgment,
award, determination or written direction of any court, arbitrator or
Governmental Body.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"Parent" means NextPath Technologies, Inc., a Nevada corporation.
"Parent Financial Statement" has the meaning set forth in Section
5(b)(xvii).
"Party" has the meaning set forth in the preface above.
"Patent" or "Patents" means any U.S. or foreign patents or
applications that are later added to this Agreement, any patents issuing on any
such applications, any reissuance or extensions or reexaminations of any such
patents and any foreign patents or patent applications corresponding to any of
the U.S. patents or patent applications included in the Patent.
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"Permitted Lien" means (i) any Security Interest for which the
underlying liability is disclosed on the Most Recent Balance Sheet of Target or
the Most Recent Balance Sheet of Parent, as the case may be, (ii) any Security
Interest for Taxes not yet due or being contested in good faith, or (iii) any
Security Interest which does not materially detract from the value or materially
interfere with the use of any asset as currently used by the Parent or the
Target in their respective businesses.
"Person" means an individual, corporation, partnership,
association, trust or other entity or organization, including a Governmental
Body or an agency or instrumentality thereof.
"Personal Property" means all tangible property other than Real
Property.
"Pre-Closing Tax Period" means any Tax period ending prior to the
Closing Date.
"Products" means that group of products which has been designed,
developed and/or produced, or which is presently sold or offered for sale by,
the Target.
"Prohibited Transaction" has the meaning set forth in ERISA Sec.
406 and Code Sec. 4975.
"Real Property" means all real estate, improvements, buildings
and fixtures owned or leased by the Target or its subsidiaries in connection
with the Business.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Interest" means any mortgage, pledge, security
interest, encumbrance, charge, or other lien, 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) liens arising under workers' compensation, unemployment
insurance, social security, retirement, and similar legislation, (d) liens
arising in connection with sales of foreign receivables, (e) liens on goods in
transit incurred pursuant to documentary letters of credit, (f) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(g) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Shareholders" means Moneta Holdings, LLC and Kenneth L. Uptain.
"Shares" means all of the outstanding shares of the common stock
of the Target as owned by Moneta on the Effective Date and on the Closing Date.
"Subsidiary" means any partnership, corporation or limited
liability company with respect to which another specified partnership,
corporation or limited liability company has the power to vote or direct the
voting of sufficient securities to elect a majority of the directors or
managers.
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"Sub" means Essentia Water, Inc., a Delaware corporation.
"Target" means Essentia Water, Inc., a Washington corporation.
"Target Financial Statement" has the meaning set forth in Section
6(f).
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty or addition thereto.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
2. The Merger.
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(a) The Merger. At the Effective Time (as defined in Section 2(b)
below), the Target shall be merged with and into the Sub in accordance with the
applicable provisions of Delaware and Washington law, and the separate existence
of the Target shall thereupon cease, and the Sub, as the Surviving Corporation
in the Merger (the "Surviving Corporation"), shall continue its corporate
existence under the laws of the State of Delaware under its present name. Upon
the consummation of the Merger, the Surviving Corporation shall thereupon and
thereafter possess all the rights, privileges, powers, and franchises of a
public as well as private nature, and being subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations, and all
property, real, personal and mixed and all goodwill associated therewith, and
all debts due to either Constituent Corporation on whatever account, as well as
all other things belonging to or due to each of the Constituent Corporations,
shall be vested in the Surviving Corporation without further act or deed. The
Surviving Corporation shall thenceforth be responsible and liable for all debts,
liabilities, duties and obligations of each of the Constituent Corporations, in
accordance with applicable Delaware and Washington law.
(b) Effective Time of the Merger. On the Closing Date, the
Agreement of Merger or a Certificate or Articles of Merger, if permitted,
together with required officers' certificates, shall be duly executed and filed
with the Washington Secretary of State in accordance with Washington law and the
Delaware Secretary of State in accordance with Delaware law. Subject to the laws
of the States of Washington and Delaware, the Merger shall become effective on
the date the Merger Agreement is filed with the Delaware Secretary of State or
such later time or date as may be specified in the Certificate of Merger (the
"Effective Time").
(c) The Surviving Corporation.
-------------------------
(i) Name. The Surviving Corporation shall be the Sub,
Essentia Water, Inc., a Delaware corporation.
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(ii) Certificate of Incorporation. The Certificate of
Incorporation of the Sub in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation.
(iii) Bylaws. The Bylaws of the Sub in effect at the
Effective Time shall be the Bylaws of the Surviving Corporation.
(iv) Directors and Officers. The directors and officers
of the Sub as existing immediately prior to the Effective Time shall be the
directors and officers of the Surviving Corporation.
3. Conversion of Shares and Consideration Therefore.
------------------------------------------------
(a) Conversion of Target Shares. Pursuant to the Merger
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of the Shareholders, the Shares shall be converted into, and become
exchangeable for, the Parent's common stock worth $7,654,294 (the "Parent
Shares") based on the average of bid and ask closing prices of the Parent's
common stock on the OTCBB as "NPTK" over the thirty (30) trading days beginning
thirty-three trading days prior to the Closing Date and ending four trading days
prior to the Closing Date, less a discount of thirty percent (30%) reflecting
the restricted nature of the Parent Shares.
(b) Delivery of Parent Shares. At Closing, the Parent shall
deliver the Parent Shares to which the Shareholders are entitled as set forth in
Disclosure Schedule 3(b), which Parent Shares shall be in the form of
certificates evidencing ownership in the name of Moneta Holdings, LLC. The
Parent Shares will be "Restricted Securities," as defined by Rule 144 under the
Securities Act of 1933, will be restricted as to transferability, and will bear
substantially the following legend:
The Securities represented by this Certificate have not been registered
under the United States Securities Act of 1933 (the "Act") and are
"restricted securities" as that term is defined in Rule 144 under the
Act. The Securities may not be offered for sale, sold or otherwise
transferred except pursuant to an effective registration statement under
the Act, or pursuant to an exemption from registration under the Act,
the availability of which is to be established to the satisfaction of
the Company.
(c) Delivery of Target Shares. At Closing, the Shareholders shall
deliver or cause to be delivered to the Parent all certificates of the Shares
which shall be cancelled and exchanged for the Merger Consideration. From and
after the Effective Time, the stock transfer books of the Target shall be closed
and no transfer of Shares or options to purchase Shares shall thereafter be
made.
(d) Taking of Necessary Action; Further Action. The Parent, Sub,
Target and Shareholders shall take all such action as may be necessary or
appropriate in order to effectuate the Merger as promptly as possible, subject
to all of the terms and conditions of this Agreement. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
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right, title and possession to all assets, property, rights, privileges, powers,
franchises, and all goodwill associated therewith, of either of the Constituent
Corporations, the officers and directors of the Constituent Corporations are
fully authorized in the name of the Constituent Corporations or otherwise to
take, and shall take, all such action.
(e) Registration Rights. The Shareholders, in the aggregate,
shall have unlimited piggyback registration rights and two demand registration
rights, one every twelve months beginning six months after the Closing Date, in
each case in accordance with the terms and conditions of the Registration
Agreement to be signed on the Closing Date in the form of Exhibit L; provided,
however, all registration rights, whether piggyback or demand, shall terminate
on the date the Shareholders are entitled to sell the Parent Shares without
registration under Rule 144(k) in the opinion of Shareholders' counsel.
(f) Re-Issuance of Shareholder Notes. In addition to the
conversion of the Shares into Parent Shares, on the Closing Date, (i) the
Shareholders shall deliver to the Sub all promissory notes made in their favor
by the Target and attached to this Agreement as Exhibit C-1 (the "Shareholder
Notes") marked paid in full, and (ii) the Sub shall execute and deliver to the
Shareholders, in substitution for the Shareholder Notes, the promissory note
attached to this Agreement as Exhibit C-2, in the principal balance of $400,000,
with an annual interest rate of 10.5%, and with a term of six months from the
Closing Date.
(g) Assumption of Target Stock Option Plan. Except for
obligations and liabilities due to breach of the Shareholders' representations
and warranties relating to the Plan and the Stock Option Letter Agreements, from
and after the Effective Time the Parent and Sub shall assume the obligations of
the Target under the Essentia Water, Inc. 1999 Stock Option Plan (the "Plan")
and the Essentia Water, Inc. 1999 Stock Option Plan Incentive and Nonqualified
Stock Option Letter Agreements (the "Letter Agreements"), and the options to
acquire the Target's shares shall be converted to options to acquire the
Parent's shares, in accordance with the terms of such Plan and Letter
Agreements. Disclosure Schedule 3(g), to be prepared by the Target and fixed as
of the Closing Date, sets forth all outstanding option holders of the Target, by
full name and complete address, and the number of shares of the Parent's common
stock to which each will be entitled when vested.
4. The Closing.
-----------
(a) The Closing. The closing of the transaction contemplated by
this Agreement (the "Closing") will take place in Oklahoma City, Oklahoma,
commencing at 9:00 a.m. local time on the later of (a) three (3) business days
after this Agreement has been signed by all Parties, (b) January 21, 2000, or
(c) the first Business Day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated in this Agreement (the "Closing Date"). If the Closing Date does
not occur on or before January 31, 2000, any Party that is not in default of its
obligations hereunder may terminate this Agreement upon written notice to the
other Parties and without obligation to the other Parties.
(b) Deliveries at the Closing. At the Closing, (i) the
Shareholders shall deliver to the Parent the various certificates, instruments,
and documents referred to in Section 9(a), and (ii) the Parent will deliver to
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the Shareholders the various certificates, instruments, and documents referred
to in Section 9(b).
5. Representations and Warranties Concerning the Transaction.
----------------------------------------------------------
(a) Representations and Warranties of the Shareholders. Except as
set forth in Disclosure Schedule 5(a) attached to this Agreement, each
Shareholder severally represents and warrants to the Parent and Sub that the
statements contained in this Section 5(a) are true, correct and complete as of
the Effective Date and will be true, correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
Effective Date throughout this Section 5(a)), except to the extent that those
representations and warranties are expressly made as of another specified date,
and as to those representations and warranties, the same will be true, correct
and complete as of such date.
(i) Authorization of Transaction. Each Shareholder has
full power and authority to execute and deliver this Agreement and to
perform his or its obligations under this Agreement. This Agreement has
been duly executed and delivered by each Shareholder. This Agreement
constitutes the valid and legally binding obligation of each
Shareholder, enforceable in accordance with its terms and conditions,
except that (A) such enforceability may be subject to bankruptcy,
insolvency, reorganization, moratorium or other laws, decisions or
equitable principles now or hereafter in effect relating to or affecting
the enforcement of creditors' rights or debtors' obligations generally,
and to general equity principles, and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefore may be brought (the terms of clause (A)
and (B) are sometimes collectively referred to as the "Equitable
Exceptions"). The Shareholders need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
Governmental Body in order to consummate the transactions contemplated
by this Agreement.
(ii) Noncontravention. Neither the execution and the
delivery of this Agreement by the Shareholders, nor the consummation of
the transactions contemplated by this Agreement by the Shareholders,
will (A) violate any Law or Order or other restriction of any
Governmental Body to which either Shareholder is subject, or (B)
conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any part the right to accelerate,
terminate, modify, or cancel, or require any notice under any contract,
lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness,
Security Interest, or other arrangement to which any Shareholder is a
party or by which he or it is bound or to which any of his or its assets
is subject.
(iii) Broker's Fees. Except as set forth in the Financial
Advisory Agreement between the Target and Venturenow, Inc. dated August
24, 1999, for which the Shareholders shall deliver $270,000 worth of
their Parent Shares (or request the Parent to do so) as set forth on
Disclosure Schedule 3(b) to Groupnow, Inc, (formerly Venturenow, Inc.),
for which the Shareholders shall obtain and deliver to the Sub at
Closing the Release attached to this Agreement as Exhibit M and for
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which the Parent and the Sub shall have no liability, neither
Shareholder 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 for which the Parent or Sub
could become liable or obligated.
(iv) The Shares. Moneta, directly, and Uptain,
beneficially, holds of record and owns beneficially all of its Shares,
free and clear of any restrictions on transfer (other than any
restrictions under the Securities Act of 1933 (the "Securities Act") and
state securities laws), claims, Taxes, Security Interests (other than
those to be removed at Closing), options, warrants, rights, contracts,
calls, commitments, equities, and demands. The Shareholders are not a
party to any option, warrant, right, contract, call, put, or other
agreement or commitment providing for the disposition by the
Shareholders of any capital stock of the Target (other than this
Agreement, including any Exhibits to this Agreement). The Shareholders
are not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any capital stock of the
Target.
(v) Suitability. Each Shareholder is (a) an Accredited
Investor, as that term is defined in Regulation D as promulgated by the
Securities and Exchange Commission, in that (i) he is a natural person
whose individual net worth, or joint net worth with that person's
spouse, at the time of purchase, exceeds $1,000,000, or (ii) who had an
individual income in excess of $200,000 in each of the two most recent
years or joint income with that person's spouse in excess of $300,000 in
each of those years, and who reasonably expects to reach the same income
level in the current year, or (iii) it is an entity whose sole equity
owner is an Accredited Investor, and (b) in either case, either directly
or through his or its professional tax and other advisors, has such
knowledge and experience in financial and business matters that he or it
is capable of evaluating the merits and risks relating to the
acquisition of the Parent Shares and making an informed purchase and
investment decision.
(vi) Absence of Registration. Each Shareholder understands
that the Parent Shares have not been registered under the Securities Act
or any state securities laws, and are being offered and sold under
exemptions from the registration provisions of the Securities Act, and
applicable state securities laws, and that such exemptions may depend
upon, among other things, the bona fide nature of the respective
Shareholder's investment intent as expressed in this Agreement.
(vii) Restrictions on Transferability. Each Shareholder
acknowledges that the Parent Shares may not be offered or sold until
registered under the Securities Act and applicable state securities laws
or unless any proposed transaction involving any of the Parent Shares
qualifies for exemption from registration under the Securities Act and
applicable state securities law. Each Shareholder further acknowledges
that the Parent Shares are and will be subject to the legend set forth
in Section 3(c) as they are "restricted securities" under Rule 144 as
promulgated by the SEC under the Securities Act.
(viii) Access to Information. Each Shareholder has had an
opportunity to discuss, and on or before the Closing Date will have
discussed to his or its satisfaction, the Parent's business, management
and financial affairs with the Parent and others involved in the
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management of the Parent. Each Shareholder has had the opportunity to
ask questions and receive answers, and on or before the Closing Date
will have asked questions and received answers to his or its
satisfaction, concerning the terms and conditions of this transaction,
and has had the opportunity to obtain, and on or before the Closing Date
will have obtained, to his or its satisfaction, any additional
information which the Parent possesses or could acquire without
unreasonable effort or expenses. Each Shareholder has had the
opportunity to review, and on or before the Closing Date will have
reviewed to his or its satisfaction, the Parent's facilities and books
and records as necessary to evaluate the Parent Shares and the business
of the Parent. Each Shareholder acknowledges that the Parent has not
made any representations regarding the Parent Shares or the business of
the Parent or the management or financial affairs of the Parent except
to the extent set forth in this Agreement and the Exhibits to this
Agreement, and any other writing delivered pursuant to this Agreement or
at Closing. Each Shareholder acknowledges the risks inherent in the
quality, character and underlying business of the Parent. At Closing,
each Shareholder will assume the risk of full or partial loss of his or
its investment.
(ix) Investment. Moneta, directly, and Uptain,
beneficially, are acquiring the Parent Shares for investment purpose
only and not with a view to or for sale in connection with any
distribution of them within the meaning of the Securities Act.
Furthermore, each Shareholder acknowledges that neither the Securities
and Exchange Commission nor any state securities commission has passed
upon the merits of an investment in the Parent Shares and that any
representation to the contrary is a criminal offense.
(x) Liability. Each Shareholder represents that as of the
Closing Date the Target and its Subsidiaries, if any, have no Liability
whatsoever to either Shareholder and neither Shareholder has any claims
or causes of action whatsoever against the Target and its Subsidiaries
other than with respect to the promissory note attached as Exhibit C-2
to this Agreement.
(b) Representations and Warranties of the Parent and Sub. Except
as set forth in the Disclosure Schedule 5(b) attached to this Agreement, the
Parent and Sub represent and warrant to the Shareholders that the statements
contained in this Section 5(b) are true, correct and complete as of the
Effective Date and will be true, correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the
Effective Date throughout this Section 5(b)), except to the extent that those
representations and warranties are expressly made as of another specified date,
and as to those representations and warranties, the same will be true, correct
and complete as of such date.
(i) Organization and Qualification. The Parent is a
corporation duly organized, validly existing, and in good standing under
the laws of the State of Nevada. It is duly authorized to conduct
business and is in good standing under the laws of the each other
jurisdiction in which the nature of its businesses or the ownership or
leasing of its properties requires such qualification. The Parent has
full power and authority to carry on its business as it is now being
conducted and to own and operate its assets and business.
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The Sub is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware. It has
full power and authority to carry on its business as it is now being
conducted and to own and operate its assets and business. On the Closing
Date, the Sub will be duly registered and qualified to transact business
as a foreign corporation in Washington and in each other jurisdiction in
which the nature of its businesses or the ownership or leasing of its
properties requires such qualification.
Each of the Parent's subsidiaries is a corporation duly
organized, validly existing, and in good standing under the laws of its
state of incorporation and it has full power and authority to carry on
its business as it is now being conducted and to own and operate its
assets and business.
(ii) Capitalization. The Parent has authorized capital
stock consisting of 100,000,000 shares of common stock, $0.001 par
value, of which approximately 50,000,000 shares have been issued and are
outstanding as of the Effective Date, and 1,000,000 shares of preferred
stock, $0.001 par value, none of which have been issued and are
outstanding as of the Effective Date. The outstanding shares have been
validly issued and are fully paid and nonassessable. Attached as
Disclosure Schedule 5(b)(ii) is a list of shareholders who own more than
5% of the Parent's outstanding shares. Except as described on Disclosure
Schedule 5(b)(ii), there are no outstanding or authorized stock
appreciation or similar rights with respect to the Parent's shares.
The Sub has authorized capital stock consisting of 5,000
shares of common stock, $.01 par value, of which 5,000 shares have been
issued and are outstanding as of the Effective Date, all of which are
owned by the Parent. The outstanding shares have been validly issued and
are fully paid and nonassessable. No subscriptions, options, warrants,
calls, commitments or agreements (including, without limitation, voting
trust agreements or any other agreement relating to the voting of shares
or restricting in any manner the sale or transfer of shares) relating to
the authorized or issued shares of the Sub are outstanding.
(iii) Authorization of Transaction. The Parent and the Sub
have full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform their
obligations under this Agreement and this Agreement has been duly
executed and delivered by the Parent and Sub. This Agreement constitutes
the valid and legally binding obligation of the Parent and the Sub,
enforceable in accordance with its terms and conditions except for the
Equitable Exceptions. The Parent and the Sub need not give any notice
to, make any filing with, or obtain any authorization, consent, or
approval of any Governmental Body in order to consummate the
transactions contemplated by this Agreement.
(iv) Noncontravention. Except as set forth in Disclosure
Schedule 5(b)(iv) attached to this Agreement, neither the execution and
the delivery of this Agreement by the Parent and the Sub, nor the
consummation of the transactions contemplated by this Agreement by the
Parent and the Sub, will (A) violate any Law or Order or other
restriction of any Governmental Body to which the Parent or the Sub are
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<PAGE>
subject or any provision of its charter or bylaws, or (B) 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 contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement
or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other arrangement to which the Parent or the Sub is a party
or by which it is bound or to which any of its assets is subject and
which has a Material Adverse Effect on the Parent or the Sub.
(v) Default. Neither the Parent nor the Sub has defaulted
under any agreement to which it is a party or by which it is bound,
which would have a Material Adverse Effect on the Parent or the Sub.
(vi) Litigation. Neither the Parent nor Sub is a party to
any litigation, pending or threatened. No material claim has been made,
asserted or threatened against the Parent or the Sub. Except as set
forth in Disclosure Schedule 5(b)(vi), there are no proceedings
involving the Parent or the Sub pending before any federal, state or
municipal government, or any department, board, body or agency, nor have
any been threatened.
(vii) Suitability. The Parent is an Accredited Investor as
that term is defined in Regulation D. Through its directors and
officers, the Parent has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
relating to the acquisition of the Shares and making an informed
investment decision.
(viii) Absence of Registration. The Parent understands
that the Shares have not been registered under the Securities Act, or
any state securities laws, and are being offered and sold under
exemptions from the registration provisions of the Securities Act, and
applicable state securities laws, and that such exemptions may depend
upon, among other things, the bona fide nature of the Parent's
investment intent as expressed in this Agreement.
(ix) Restrictions on Transferability. The Parent
acknowledges that the Shares may not be offered or sold and must be held
indefinitely unless subsequently registered under the Securities Act and
applicable state securities laws or unless any proposed transaction
involving any of the Shares qualifies for exemption from registration
under the Securities Act and applicable state securities law, and that
no such exemption may be available at any particular time. The Parent
further acknowledges that the Shares are "restricted securities" under
Rule 144 promulgated by the SEC under the Securities Act.
(x) Access to Information. The Parent has had an
opportunity to discuss, and has discussed to its satisfaction, the
Target, the Business and the Target's management and financial affairs
with the Shareholders and others involved in the management of the
Target. The Parent has had the opportunity to ask questions and receive
answers, and has asked questions and received answers to its
satisfaction, concerning the terms and conditions of this transaction,
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<PAGE>
and has had the opportunity to obtain, and has obtained, to its
satisfaction, any additional information which the Target or the
Shareholders possess or could acquire without unreasonable effort or
expenses. The Parent has had the opportunity to review, and has reviewed
to its satisfaction, the Target's facilities and books and records as
necessary to evaluate the Shares and the business of the Target. The
Parent acknowledges that neither the Target nor any of the Shareholders
has made any representations regarding the Shares or the Business,
management or financial affairs of the Target except to the extent set
forth in this Agreement and the Exhibits to this Agreement, and any
other writing delivered pursuant to this Agreement or at Closing. The
Parent acknowledges the risks inherent in the quality, character and
underlying business of the Target. At Closing, the Parent will assume
the risk of full or partial loss of its investment.
(xi) Brokers' Fees. Neither the Parent nor the Sub 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 for which the Shareholders could become liable or obligated.
(xii) Investment. The Parent is acquiring the Shares for
its own account for investment only and not with a view toward any
public sale or distribution of the Shares or any portion of the Shares.
(xiii) Employee Benefit Program. The Parent represents and
warrants that (A) within six months after the Closing Date an employee
benefit program (including a stock option plan) will be established for
the Surviving Corporation which will, be equal to or greater than the
one in place for the Target as of the Effective Date, (B) the Target's
401(k) Plan will be retained, the medical and dental benefits currently
provided by the Target to its employees will not be reduced, (C) the
combination of pay and time off benefits currently provided by the
Target to its employees will not be reduced, and employees and
consultants of Target will receive credit for service with the Target
prior to the Closing Date for purposes of the vesting schedule under the
Surviving Corporation's stock option plan and other employee benefit
plans, and (D) any changes in any employee benefit plan made during the
first year after the Closing Date will be assessed by an outside third
party to assure parity.
(xiv) Directors and Officers Liability Insurance. The
Surviving Corporation will obtain standard directors and officers
liability insurance.
(xv) Financing Needed to Develop Target's Business. The
Parent acknowledges that the Target's business will require substantial
additional financing after the Closing Date and the Parent represents
and warrants that it has sufficient financial resources to provide or
arrange up to Two and a Half Million Dollars ($2,500,000) for the
continued development of the Business during the next two years.
(xvi) Subsidiaries. A complete list of the Parent's direct
and indirect Subsidiaries is set forth in Disclosure Schedule 5(b)(xvi),
and the parent has no other Subsidiaries and does not control, directly
or indirectly, or have any direct or indirect equity participation in,
any other Person.
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(xvii) Parent Financial Statements. Attached hereto as
Exhibit K are the following financial statements (collectively the
"Parent Financial Statements"): (i) audited balance sheet and statement
of income, changes in stockholders' equity, and cash flow as of and for
the fiscal year ended December 31, 1998 (the "Most Recent Fiscal Year
End") for the Parent and its consolidated Subsidiaries, if any, and (ii)
an unaudited balance sheet and statement of income, changes in
stockholders' equity, and cash flow as of and for the stub period ending
October 31, 1999 for the Parent and its consolidated Subsidiaries (the
"Most Recent Financial Statement of Parent"). To the Knowledge of the
Parent, the Parent Financial Statements have been prepared in accordance
with GAAP applied on a consistent basis throughout the periods covered
thereby, are true and complete in all material respects, fairly present
the financial condition of the Parent and its consolidated Subsidiaries
as of such dates, and are consistent with the books and records of the
Parent and its consolidated Subsidiaries (which books and records, to
the Knowledge of the Parent, are true, correct and complete in all
material respects).
(xviii)Events Subsequent to the Most Recent Financial
Statement of Parent. Except as set forth on Disclosure Schedule
5(b)(xvii), since October 31, 1999, there has not been any Material
adverse change in the assets, Liabilities, business, financial
condition, operations, or results of operations of the Parent.
(xix) Business of Parent and Subsidiaries. Disclosure
Schedule 5(b)(xix) sets forth a description of the business activities
of the Parent and its Subsidiaries as of the Effective Date.
(xx) Disclosure. To the Knowledge of the Parent, the
representations and warranties contained in this Section 5(b) as
amended, modified and/or supplemented by the Disclosure Schedules do not
contain any untrue statement of a Material fact or omit to state any
Material fact necessary in order to make the representations,
warranties, statements and information contained in this Section 5(b)
and in any Disclosure Schedule not misleading.
(xxi) Access. Prior to the Closing Date, the Parent will
permit the Shareholders to have access at reasonable times, and in a
manner so as not to interfere with the normal business operations of the
Parent and its Subsidiaries, to the headquarters of the Parent and each
of its Subsidiaries and to all books, records, contracts, Tax records,
and documents of or pertaining to the Parent and its Subsidiaries and
their respective businesses.
6. Representations and Warranties Concerning the Target. Except
-----------------------------------------------------
as set forth in a Disclosure Schedule 6 attached to this Agreement, the
Shareholders, jointly and severally, represent and warrant to the Parent and the
Sub that the statements contained in this Section 6 are true, correct and
complete as of the Effective Date and will be true, correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the Effective Date throughout this Section 6), except to the
extent that those representations and warranties are expressly made as of
another specified date, and as to those representations and warranties, the same
shall be true, correct and complete as of such date.
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(a) Organization and Qualification. The Target is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Washington. It is duly authorized to conduct business and is in good
standing under the laws of the each other jurisdiction in which the nature of
its businesses or the ownership or leasing of its properties requires such
qualification. The Target has full power and authority to carry on its business
as it is now being conducted and to own and operate its assets and business.
(b) Capitalization. The entire authorized capital stock of the
Target consists solely of ten million (10,000,000) shares of no par value common
stock, of which three million six hundred fifty-seven thousand nine hundred
sixty-six (3,657,966) shares are issued and outstanding and owned by Moneta
which in turn is wholly owned by Uptain. The Target has no preferred shares
authorized. None of the Shares are held in treasury. The Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held of
record by the Shareholders. Except for the stock options set forth on Disclosure
Schedule 6(b), there are no outstanding or authorized options, warrants, rights,
contracts, calls, puts, rights to subscribe, conversion rights, or other
agreements or commitments to which the Target is a party or which are binding
upon the Target providing for the issuance, disposition, or acquisition of any
of its capital stock. There are no outstanding or authorized stock appreciation
or similar rights with respect to the Shares.
(c) Notice of Transaction. The Target need not give any notice
to, make any filing with, or obtain any authorization, consent, or approval of,
any Governmental Body in order to consummate the transactions contemplated by
this Agreement.
(d) Noncontravention. Except as set forth on Disclosure Schedule
6(d), the consummation of the transactions contemplated by this Agreement will
not (i) violate any Law or Order or other restriction of any Governmental Body
to which the Target is subject or any provision of their charter or bylaws, 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 contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest, or other
arrangement to which the Target is a party or by 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) and which has a Material Adverse Effect on the Target.
(e) Subsidiaries. The Target has no Subsidiaries and does not
control, directly or indirectly, or have any direct or indirect equity
participation in any other Person.
(f) Target Financial Statements. Attached hereto as Exhibit D are
the following financial statements (collectively the "Target Financial
Statements"): (i) unaudited balance sheet and statement of income, changes in
stockholders' equity, and cash flow as of and for the fiscal years ended
December 31, 1998 (the "Most Recent Fiscal Year End") for the Target, and (ii)
an unaudited balance sheet and statement of income, changes in stockholders'
equity, and cash flow as of and for the stub period ending October 31, 1999 for
the Target (the "Most Recent Financial Statement of Target"). To the Knowledge
of the Shareholders, the Target Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
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covered thereby, are true and complete in all material respects, fairly present
the financial condition of the Target as of such dates, and are consistent with
the books and records of the Target (which books and records, to the Knowledge
of the Shareholders, are true, correct and complete in all material respects).
(g) Events Subsequent to the Most Recent Financial Statement of
Target. Except as set forth on Disclosure Schedule 6(g), since October 31, 1999,
there has not been any Material adverse change in the assets, Liabilities,
Business, financial condition, operations, or results of operations of the
Target. Without limiting the generality of the foregoing since that date:
(i) the Target has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
(ii) the Target has not entered into any contract, lease,
sublease, license or sublicense (or series or related contracts, leases,
subleases, licenses and sublicenses) either involving more than $15,000
or outside the Ordinary Course of Business;
(iii) the Target has not accelerated, terminated,
modified, or canceled any contract, lease, sublease, license or
sublicense (or series of related contracts, leases, subleases, licenses
and sublicenses) involving more than $15,000 to which the Target is a
party or by which it is bound;
(iv) no party has notified the Target of any acceleration,
termination, modification or cancellation of any Material customer
contract or any contract, agreement, lease, sublease, license or
sublicense (or series of related contracts, leases, subleases, licenses
and sublicenses), involving more than $15,000 to which the Target is a
party or by which it is bound;
(v) the Target has not made any capital expenditure (or
series of related capital expenditures) either involving more than
$15,000 individually or $25,000 in the aggregate, or outside the
Ordinary Course of Business;
(vi) the Target has not made any capital investment in,
any loan to, or any acquisition of the securities or assets of any other
person (or series of related capital investments, loans, and
acquisitions) either involving more than $15,000 individually or $25,000
in the aggregate;
(vii) the Target has not delayed or postponed (beyond
their normal practice) the payment of accounts payable and other
Liabilities;
(viii) there has been no change made or authorized to the
Articles of Incorporation or Bylaws of the Target;
(ix) the Target has not experienced any damage,
destruction or loss involving more than $15,000 (whether or not covered
by insurance) to its property;
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(x) the Target has not made any loan to, or entered into
any other transaction with, any of its directors, officers, and
employees outside the Ordinary Course of Business or involving more than
$15,000, giving rise to any claim or right on its part against the
person or on the part of the person against it;
(xi) the Target has not entered into any employment
contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement with any
of its full-time staff employees;
(xii) the Target has not granted an increase in the base
compensation of any of its directors, officers, and employees outside
the Ordinary Course of Business;
(xiii) the Target has not adopted any (A) bonus, (B)
profit-sharing, (C) incentive compensation, (D) pension, (E) retirement,
(F) medical, hospitalization, life, or other insurance, (G) severance,
or (H) other plan, contract or commitment for any of its directors,
officers, and employees, or modified or terminated any existing such
plan, contract or commitment; and
(xiv) the Target has not committed to do any of the
foregoing.
(h) Undisclosed Liabilities. Except as set forth in Disclosure
Schedule 6(h), the Target does not have any Liability to the Knowledge of the
Shareholders which is individually in excess of $15,000, or in excess of $25,000
in the aggregate, except for (i) Liabilities set forth on the face of the Most
Recent Financial Statement, and (ii) Liabilities which have arisen after the
Most Recent Financial Statement in the Ordinary Course of Business.
(i) Tax Matters. Except as set forth on Disclosure Schedule
6(i):
(i) the Target has filed all Tax Returns that it was
required to file. All such Tax Returns are true and complete in all
material respects. All Taxes owed by the Target (whether or not shown on
any Tax Return) have been paid. The Target is not the beneficiary of any
extension of time within which to file any Tax Return. To the Knowledge
of the Shareholders, no claim is currently pending by any authority in
any jurisdiction where the Target does not file Tax Returns that it is
or may be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of the Target that arose in
connection with any failure (or alleged failure) to pay any Tax;
(ii) the Target has not received any notice that any
authority intends to assess any additional Taxes for any period for
which Tax Returns have been filed. There is no dispute or claim
concerning any Tax Liability of the Target either (A) claimed or raised
by any authority in writing, or (B) as to which the Shareholders have
Knowledge based upon personal contact with any agent of such authority.
Disclosure Schedule 6(i) lists all federal, state and local income Tax
Returns filed with respect to the Target for taxable periods ended on or
after December 31, 1994 that currently are the subject of an audit; and
(iii) The Target has not filed a consent under Code Sec.
341(f) concerning collapsible corporations. The Target has not made any
payments, is not obligated to make any payments, and is not a party to
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any agreement that under certain circumstances could obligate it to make
any payments that will not be deductible to the Target under Code Sec.
280G. The Target has not been a United States real property holding
corporation within the meaning of Code Sec. 897(c)(2) during the
applicable period specified in Code Sec. 897(c)(1)(A)(ii). The Target
has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal
income Tax within the meaning of Code Sec. 6662. The Target is not a
party to any Tax allocation or sharing agreement. The Target has not
consented to the extension of the statute of limitations relating to any
tax year.
(j) Tangible Assets. The Target owns or leases all tangible
assets necessary for the conduct of the Business as presently conducted. To the
Knowledge of the Shareholders, each such tangible asset is free from Material
defects (patent and latent), has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to normal
wear and tear), and is suitable for the purposes for which it presently is used.
(k) Real Property. Disclosure Schedule 6(k) sets forth all real
estate, improvements, buildings and fixtures owned or leased by the Target (the
"Real Property"). Subject to the Permitted Liens and any Security Interests
disclosed on Disclosure Schedule 6(k), the Target has good title to, or, in the
case of leased Real Property, has a valid leasehold interest in, the Real
Property. All leases of Real Property are valid, binding and enforceable in
accordance with their respective terms. The Target is not in Material default
under any such leases, and to the Knowledge of the Shareholders, there does not
exist under any such lease any Material default of any other party or any event
which with notice or lapse of time or both would constitute a Material default.
To the Knowledge of the Shareholders, the Real Property is in good operating
condition and repair, normal wear and tear excepted, is in compliance with all
applicable code requirements, and is free from any defects that have, or
reasonably could have, a Material Adverse Effect. Except as set forth on
Disclosure Schedule 6(k), to the Knowledge of the Shareholders there are no
existing structural defects in any of the Real Property.
(l) Personal Property. Disclosure Schedule 6(l) sets forth all
tangible property, other than Real Property, owned or leased by the Target (the
"Personal Property") whose fair market value exceeds $1,000. Subject to the
Permitted Liens and any Security Interests disclosed on Disclosure Schedule
6(l), the Target has good title to, or in the case of leased Personal Property
has a valid leasehold interest in, the Personal Property. All leases of Personal
Property are valid, binding and enforceable in accordance with their respective
terms. The Target is not in Material default under any such leases, and to the
Knowledge of the Shareholders, there does not exist under any such lease any
Material default of any other party or any event which with notice or lapse of
time or both would constitute a Material default. To the Knowledge of the
Shareholders, the Personal Property is in good operating condition and repair,
normal wear and tear excepted, and is free from any defects that have, or
reasonably could have, a Material Adverse Effect. Except as set forth on
Disclosure Schedule 6(l), to the Knowledge of the Shareholders there are no
existing defects in any of the Personal Property.
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(m) Intellectual Property.
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(i) Except as set forth on Disclosure Schedule 6(m), to
the Knowledge of the Shareholders the Target owns or has the right to
use pursuant to license, sublicense, agreement, or permission all
Intellectual Property and all goodwill associated therewith necessary
for the operation of the Business as presently conducted. Each item of
Intellectual Property owned or used by the Target immediately prior to
the Closing will be owned or available for use by the Target on
identical terms and conditions immediately subsequent to the Closing.
(ii) To the Knowledge of the Shareholders, the Target has
not interfered with, infringed upon, misappropriated, or otherwise come
into conflict with, any Intellectual Property rights of third parties;
and the Target has not received within the past three (3) years any
charge, complaint, claim, or notice alleging any such interference,
infringement, misappropriation, or violation.
(iii) Disclosure Schedule 6(m) identifies each patent or
trademark, tradename or copyright registration, and website which has
been issued to the Shareholders and the Target with respect to any of
their Intellectual Property, identifies each pending patent application
or application for trademark, tradename, copyright registration or
website which the Shareholders and the Target has made with respect to
any of their Intellectual Property, and identifies each license,
agreement, or other permission which the Shareholders and the Target has
granted to any third party with respect to any of their Intellectual
Property (together with any exceptions). Except as identified in
Disclosure Schedule 6(m), with respect to each item of Intellectual
Property that the Shareholders and the Target owns:
(A) the identified owner possesses all right,
title, and interest in and to the item;
(B) the item is not subject to any outstanding
Order; and
(C) no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand is pending or, to the
Knowledge of the Shareholders, is threatened, which challenges
the legality, validity, enforceability, use, or ownership of the
item.
(iv) Disclosure Schedule 6(m) also identifies each item of
Intellectual Property that any third party owns and that the Target uses
pursuant to license, sublicense, agreement, or permission (other than
general commercial software). Except as identified in Disclosure
Schedule 6(m), with respect to each such item of used Intellectual
Property:
(A) to the Knowledge of Shareholders, the license,
sublicense, or permission covering the item is legal, valid,
binding, and in full force and effect, subject to the Equitable
Exceptions;
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(B) to the Knowledge of Shareholders, the license,
sublicense, agreement, or permission will continue to be legal,
valid, binding, enforceable, and in full force and effect on
identical terms following the Closing;
(C) the Target is not, and to the Knowledge of the
Shareholders no other party to the license, sublicense,
agreement, or permission is, in breach or default, and no event
has occurred which with notice or lapse of time would constitute
a breach or default or permit termination, modification, or
acceleration thereunder; and
(D) to the Knowledge of the Shareholders, no
charge, complaint, action, suit, proceedings, hearing,
investigation, claim or demand is pending or is threatened which
challenges the legality, validity, or enforceability of the
underlying item of Intellectual Property.
(n) Product Liability/Warranties. Except as disclosed on
Disclosure Schedule 6(n), there is no outstanding claim or action against the
Target and, to the Knowledge of the Shareholders, no threatened claim, action or
investigation against the Target for product liability or for breach of warranty
of fitness to any customer of the Business which individually or in the
aggregate could have a Material Adverse Effect.
(o) Contracts. Disclosure Schedule 6(o) lists the following
contracts, agreements, leases, customer contracts or agreements and other
written arrangements to which the Target is a party:
(i) any written arrangement (or group of related written
arrangements) for the lease of Personal Property, Real Property or
Intellectual Property;
(ii) any written arrangement (or group of related written
arrangements) for the purchase or sale of Products, raw materials,
commodities, supplies, or other personal property or for the furnishing
or receipt of services;
(iii) any written arrangement concerning a partnership or
joint venture;
(iv) any written arrangement requiring confidentiality or
non-competition;
(v) any written arrangement involving the Shareholders and
their Affiliates related to the Target; and
(vi) any other written arrangement (or group of related
written arrangements) involving the Target.
The Shareholders have delivered to the Parent a correct and
complete copy of each written arrangement (as amended to date) listed in
Disclosure Schedule 6(o). With respect to each written arrangement so listed:
(A) the written arrangement is legal, valid, binding, enforceable, and in full
force and effect, subject to the Equitable Exceptions; (B) to the Knowledge of
the Shareholders, the written arrangement will continue to be legal, valid,
binding, enforceable and in full force and effect, subject to Equitable
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Exceptions, on identical terms following the Closing; (C) the Target is not, nor
to the Knowledge of the Shareholders, is any other party in breach or default,
and no event has occurred which with notice or lapse of time would constitute a
breach or default or permit termination, modification, or acceleration, under
the written arrangement; and (D) the Target has not, nor to the Knowledge of the
Shareholders, has any other party, repudiated any provision of any of the
written arrangements.
(p) Insurance. Disclosure Schedule 6(p) sets forth an accurate
and complete list of all policies of fire, liability, key man life insurance,
worker's compensation, products liability and other forms of insurance owned or
held by or beneficially for the Target. All such policies are in full force and
effect, no premiums with respect to them are past due and no notice of
cancellation or termination has been received by the Shareholders or the Target
with respect to any of them.
(q) Litigation. Disclosure Schedule 6(q) sets forth each instance
in which the Target (i) is subject to any unsatisfied judgment, order, decree,
stipulation, injunction, or charge, or (ii) is a party or, to the Knowledge of
the Shareholders, is threatened to be made a party to any charge, complaint,
action, suit, proceeding, hearing, or investigation of or in any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator.
(r) Employees. Disclosure Schedule 6(r) lists all of the
Employees of the Target. To the Knowledge of the Shareholders, no key employee
or full-time group of employees has any plans to terminate employment with the
Target. Except as set forth on Disclosure Schedule 6(r), the Target is not a
party to or bound by any collective bargaining agreement, nor has it experienced
any strikes, grievances, claims of unfair labor practices, or other collective
bargaining disputes. To the Knowledge of the Shareholders, the Target has not
committed any unfair labor practice.
(s) Employee Benefits. Disclosure Schedule 6(s) lists all
Employee Benefit Plans that the Target maintains or to which the Target
contributes for the benefit of any current or former employee of the Target. To
the Knowledge of the Shareholders:
(i) each Employee Benefit Plan (and each related trust or
insurance contract) complies in form and in operation with the
applicable requirements of ERISA and the Code (including all filing
requirements);
(ii) all contributions (including all employer
contributions and employee salary reduction contributions) which are due
have been paid to each Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing Date which
are not yet due have been paid to each Employee Pension Benefit Plan or
accrued in accordance with the past custom and practice of the Target.
All premiums or other payments which are due for all periods ending on
or before the Closing Date have been paid with respect to each Employee
Pension Benefit Plan;
(iii) each Employee Benefit Plan which is an Employee
Pension Benefit Plan meets the requirements of a "qualified plan" under
Code Sec. 401(a);
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(iv) no Employee Pension Benefit Plan (other than any
Multi-employer Plan) has been completely or partially terminated or been
the subject of a Reportable Event as to which notices would be required
to be filed with the Pension Benefit Guaranty Corporation ("PBGC"). No
proceeding by the PBGC to terminate any Employee Pension Benefit Plan
(other than any Multi-employer Plan) has been instituted or threatened;
(v) there have been no Prohibited Transactions with
respect to any Employee Benefit Plan. No Fiduciary has any Liability for
breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of any
Employee Benefit Plans. No charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand with respect to the
administration or the investment of the assets of any Employee Benefit
Plan (other than routine claims for benefits) is pending or threatened
and there is no Basis therefore; and
(vi) the Target has not incurred, and the Shareholders
have no reason to expect that the Target will incur, any Liability to
the PBGC (other than PBGC premium payments) or otherwise under Title IV
of ERISA (including any withdrawal Liability) or under the Code with
respect to any Employee Pension Benefit Plan that the Target and the
Controlled Group of Corporations which includes the Target maintains or
ever has maintained or to which it contributes, ever has contributed, or
ever has been required to contribute. The Target does not maintain, nor
have they ever maintained or contributed to, or ever has been required
to contribute to any Employee Welfare Benefit Plan providing health,
accident, or life insurance benefits to former employees, their spouses,
or their dependents (other than in accordance with Code Sec. 162(k)).
(t) Health and Safety Matters. Except as set forth on Disclosure
Schedule 6(t), to the Knowledge of the Shareholders:
(i) the Target is in substantial compliance with all Laws
concerning public health and safety, and employee health and safety, and
no charge, complaint, action, suit, proceeding, hearing, investigation,
claim, demand, or notice has been filed or commenced against any of them
alleging any failure to comply with any such Laws; and
(ii) the Target has no Material Liability under the
Occupational Safety and Health Act, as amended, or any other Law
concerning employee health and safety.
(u) Environmental Matters. Except as set forth on Disclosure
Schedule 6(u), to the Knowledge of the Shareholders:
(i) Hazardous Materials. The current and former owners and
tenants, occupants, and users of the Real Property and any other persons
or concerns, have not: (i) engaged in or permitted any operations or
activities upon, or any use or occupancy of, the Real Property, or any
portion of the Real Property, for the purpose of, or in any way
involving, the handling, manufacture, treatment, storage, use,
generation, release, discharge, refining, dumping, or disposal of any
Hazardous Materials (whether legal or illegal, accidental or
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intentional) on, under, in, or about, the Real Property, or (ii)
unlawfully transported any Hazardous Materials to, from, or across, the
Real Property. No Hazardous Materials are constructed, deposited,
stored, or otherwise located on, under, in, or about, the Real Property,
and, to the Knowledge of the Shareholders, no Hazardous Materials have
migrated, or are likely to migrate, from other properties upon, about,
or beneath, the Real Property. No Hazardous Materials generated by the
Target, if any, or, to the Knowledge of the Shareholders, located under,
in, or about, the Real Property in the past have been unlawfully
transported to any waste disposal facility or other site.
(ii) Environmental Requirements. Prior users of the Real
Property and activities on the Real Property and all activities and
conduct of business related to the Real Property have at all times
complied with all Environmental Requirements (as defined in Section 1),
and no activity on, or condition of, the Real Property has constituted a
nuisance or tortious condition with respect to any third party. The Real
Property and the existing uses and activities on the Real Property and
all activities and conduct of business related to the Real Property
(including the Business), comply with all Environmental Requirements,
and no activity on, or condition of, the Real Property constitutes a
nuisance or constitutes a tortious condition with respect to any third
party.
(iii) Notice of Violations. Neither the Target nor any
other owner, tenant, occupant, or user of the Real Property has ever
received any notice or other communication concerning any alleged
violation of Environmental Requirements, or notice or other
communication concerning alleged liability for Environmental Damages (as
defined in Section 1) in connection with the Real Property. There is no
(i) writ, injunction, decree, order, or judgment outstanding in relation
to the ownership, use, maintenance, or operation of the Real Property by
any person or concern; (ii) lawsuit, claim, proceeding, citation,
directive, summons, or investigation pending or, to the Knowledge of the
Shareholders, threatened in relation to the ownership, use, maintenance,
or operation of the Real Property by any person or concern; or (iii)
alleged violation of Environmental Requirements. Neither the Target nor,
to the Knowledge of the Shareholders, any other person or company has
been ordered or requested by any regulatory authority to take any steps
to remedy any condition on the Real Property constituting a violation of
Environmental Requirements.
(iv) Underground Inspection and Storage Tanks. There is
not now and, to the Knowledge of the Shareholders, there has never been
located on the Real Property, any (i) underground improvement, including
without limitation, any treatment or storage tank or water, gas, or oil
well, or (ii) above-ground storage tank.
(v) Environmental Acts. The Target has no Material
Liability (and there is no Basis related to the past or present
operations, properties, or facilities of the Target and its respective
predecessors and Affiliates for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand
against the Target giving rise to any Liability) under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Resource Conservation and Recovery Act of 1976, the Federal Water
Pollution Control Act of 1972, the Clean Air Act of 1970, the Safe
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Drinking Water Act of 1974, the Toxic Substances Control Act of 1976,
the Refuse Act of 1997, or the Emergency Planning and Community
Right-to-Know Act of 1986 (each as amended), or any other Law or Order
of any Governmental Body, concerning release or threatened release of
hazardous substances, public health and safety, or pollution or
protection of the environment;
(vi) Material Liability. The Target has no Material
Liability (and the Target and its predecessors have not handled or
disposed of any substance, arranged for the disposal of any substance,
or owned or operated any property or facility in any manner that could
form the Basis for, any present or future charge, complaint, action,
suit, proceeding, heating, investigation, claim, or demand (under the
common law or pursuant to any statute) against the Target giving rise to
any Material Liability) for damage to any site (including the Real
Property), location, or body of water (surface or subsurface) or for
illness or personal injury;
(vii) Permits. The Target has obtained and been in
compliance in all material respects with all of the terms and conditions
of all permits, licenses, and other authorizations which are required
under, and has complied with, all other Laws and Orders of any
Governmental Body relating to public health and safety, worker health
and safety, and pollution or protection of the environment, including
laws relating to emissions, discharge, releases, or threatened releases
of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes into ambient air, surface water, ground water,
or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling
of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
(v) Legal Compliance. Except as set forth in Disclosure
Schedule 6(v), to the Knowledge of the Shareholders:
(i) The Target has complied with all non-environmental
Laws. No charge, complaint, action, suit, proceeding, hearing,
investigation, claim, demand, or notice has been filed or commenced
against the Target which is currently pending and alleges any failure to
comply with any such non-environmental Law;
(ii) The Target has not violated in any respect or
received a notice or charge asserting any violation of any state or
federal law; and
(iii) The Target has filed in a timely manner all reports,
documents, and other materials it was required to file (and the
information contained therein was correct and complete in all material
respects) under all applicable Laws.
(w) Certain Business Relationships with the Target. Except as set
forth on Disclosure Schedule 6(w), neither the Shareholders nor their Affiliates
have been involved in any business arrangement or relationship with the Target
within the past twelve (12) months, and neither the Shareholders nor their
Affiliates owns directly any material property or right, tangible or intangible,
which is used in the Target's Business.
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(x) Brokers' Fees. Other than as set forth in Disclosure Schedule
6(x) the Target does not have any Liability or obligation to pay any fees or
commissions to any broker, finder, or similar representative with respect to the
transactions contemplated by this Agreement.
(y) Year 2000 Compliance. Except as set forth on Disclosure
Schedule 6(y):
(i) to the Knowledge of the Shareholders, all devices,
systems, machinery, information technology, computer software and
hardware, and other date sensitive technology (jointly and severally the
"Systems") necessary for the Target to carry on the Business as
presently conducted and as contemplated to be conducted in the future
are Year 2000 Compliant or will be Year 2000 Compliant within a period
of time calculated to result in no material disruption of any of the
Target's business operations. For purposes of these provisions, "Year
2000 Compliant" means that the Systems are designed to be used prior to,
during and after the Gregorian calendar year 2000 A.D. and will operate
during each such time period without error relating to date data,
specifically including any error relating to, or the product of date
data which represents or references different centuries or more than one
century.
(ii) The Target has reviewed its own business and
operations, has made written inquiry of its suppliers and customers, and
has responded to written inquiries made by others, on Year 2000
Compliance matters as described in Disclosure Schedule 6(y).
(z) Customer List. Disclosure Schedule 6(z) is a true and
complete list of all customers of the Target as of the Effective Date, by name,
address and telephone number. On the Closing Date, the Shareholders will deliver
a then current list of all customers of the Target, by name, address and
telephone number together with any and all files, records and accounts related
to the customers.
(aa) Acquired Accounts Receivable. Disclosure Schedule 6(aa) is a
true and complete list of all accounts receivable of the Target as of the
Effective Date, by name, address and telephone number. On the Closing Date, the
Shareholders will deliver a then current list of all accounts receivable of the
Target, by name, address and telephone number (the "Acquired Accounts
Receivable").
(bb) Accounts Payable. Disclosure Schedule 6(bb) is a true and
complete list of all accounts payable of the Target as of the Effective Date, by
name, address and telephone number. On the Closing Date, the Shareholders will
deliver a then current list of all accounts payable of the Target, by name,
address and telephone number.
(cc) Target Liability. Except as set forth in Disclosure Schedule
6(cc), the Target has no Liability whatsoever to the Shareholders, or any
current or former officer, director, shareholder, employee, consultant or other
party, other than as a result of the Promissory Note attached as Exhibit C-2 to
this Agreement.
(dd) Minutes. Attached to this Agreement as Disclosure Schedule
6(dd) is a complete list of all minutes related to the Target for the past three
years.
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(ee) Disclosure. To the Knowledge of the Shareholders, the
representations and warranties contained in this Section 6 as amended, modified
and/or supplemented by the Disclosure Schedules do not contain any untrue
statement of a Material fact or omit to state any Material fact necessary in
order to make the representations, warranties, statements and information
contained in this Section 6 and in any Disclosure Schedule not misleading.
7. Pre-Closing Covenants. With respect to the period between the
---------------------
Effective Date of this Agreement and the Closing, the Parties agree as follows:
(a) General. Each of the Parties will use its reasonable best
efforts to take all action and to do all things necessary, proper, or advisable
to consummate and make effective the transactions contemplated by this Agreement
(including satisfying the closing conditions set forth in Section 9.
(b) Notices and Consents. The Shareholders will cause the Target
to give any notices to third parties, and will cause the Target to use its
reasonable best efforts to obtain any third-party consent, that the Parent may
reasonably request in connection with the matters pertaining to the Target
disclosed or required to be disclosed in the Disclosure Schedules. The Parties
will take any additional action (and the Shareholders will cause the Target to
take any additional action) that may be necessary, proper, or advisable in
connection with any other notices to, filings with, and authorizations,
consents, and approvals of, Governmental Bodies and third parties that he, it or
it may be required to give, make, or obtain.
(c) Operation of Business. Except as contemplated in this
Agreement, or as may be incidental to or in furtherance of the transactions
contemplated by this Agreement, or as may have been set forth in this Agreement
or in the Disclosure Schedules, the Shareholders will not cause or permit the
Target to engage in any practice, take any action, embark on any course of
inaction, or enter into any transaction outside the Ordinary Course of Business.
(d) Preservation of Business. Except as contemplated by this
Agreement, or as may be incidental to, or in furtherance of, the transactions
contemplated by this Agreement, or as may have been set forth in this Agreement
or in the Disclosure Schedules, the Shareholders will cause the Target to use
its best efforts to keep its business, properties and assets substantially
intact, including its present operations, physical facilities, working
conditions, and relationships with lessors, licensors, suppliers, customers and
employees.
(e) Access.
------
(i) The Shareholders will permit, and the Shareholders
will cause the Target to permit, representatives of the Parent to have
access at reasonable times, and in a manner so as not to interfere with
the normal business operations of the Target, to the headquarters of the
Target, and to all books, records, contracts, Tax records, and documents
of or pertaining to the Target and the Business. Notwithstanding the
above, the Parent's on-site investigation of the Target shall be limited
to five (5) Business Days, unless otherwise agreed to by the Parent and
the Shareholders in writing; provided, however, that such limitation of
time shall not otherwise limit the Parent's investigation of the Target
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off-site. During the Parent's on-site investigation of the Target,
except as otherwise provided in this Agreement, the Parent shall not
discuss any aspects of the operation of the Target with any employee of
the Target, and the Parent shall direct all requests for information and
material only through the Shareholders, unless otherwise agreed to by
the Parent and the Shareholders in writing.
(ii) The Shareholders shall arrange a mutually agreeable
time and place at which the Parent may conduct interviews with key
employees and/or customers of the Target. The interviews shall be in
strict conformity with the format mutually agreed to by the Shareholders
and the Parent and shall take place and be completed wholly within the
last twenty (20) days prior to the Closing unless otherwise agreed to by
the Parent and the Shareholders in writing.
(f) Notice of Developments. Prior to the Closing Date, the
Shareholders will give prompt written notice to the Parent of any Material
developments affecting the assets, Liabilities, Business, financial condition,
operations, results of operations, or future prospects of the Target, and the
Parent will give prompt written notice to the Shareholders of any Material
developments affecting the assets, Liabilities, business, financial condition,
operations, results of operations, or future prospects of the Parent and its
Subsidiaries. Each Party will give prompt written notice to the others of any
Material development affecting the ability of the Parties to consummate the
transactions contemplated by this Agreement.
(g) Exclusivity. During the period from the date this Agreement
is signed until January 31, 2000, the Shareholders will not (and the
Shareholders will not cause or permit the Target to) (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
any (A) liquidation, dissolution, or recapitalization, (B) merger or
consolidation, (C) acquisition or purchase of securities or assets, or (D)
similar transaction or business combination involving the Target, or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any person to do or seek any of the
foregoing.
(h) Plant Closing Notification. The Parent shall be responsible
for providing any notice of layoff or plant closing required with respect to any
manufacturing facility of the Target pursuant to the Federal Worker Adjustment
and Retraining Notification Act of 1988 (the "WARN Act"), any successor federal
law and any applicable state or local plant closing notification statute, for
any such layoffs or plant closings which will commence effective on or
subsequent to the Closing Date.
(i) Intercompany Items. As of the Closing Date, there shall not
be any inter-company payables, receivables and/or indebtedness of the
Shareholders to the Target, except for the promissory note attached to this
Agreement as Exhibit C-2.
8. Additional Covenants. The Parties further covenant and agree
---------------------
as follows:
(a) General. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
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Party reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Section 12. The Shareholders acknowledge and agree that from and after the
Closing Date the Parent will be entitled to possession of all documents, books,
records, agreements, and financial data of any sort relating to the Target and
the Business; provided that the Shareholders may retain any copies of the
foregoing as shall be necessary to comply with applicable tax and other laws,
regulations and ordinances.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand in connection with (i) any
transaction contemplated under this Agreement, or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Target, each of the other Parties will cooperate with him, its or
it and his, its or its counsel in the contest or defense, make available their
personnel, and provide such testimony and access to their books and records as
shall be necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under Section 12).
(c) Transition. The Shareholders will not take any action that is
primarily designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of the Target from
maintaining the same business relationships with the Target after the Closing
Date for a period of twelve (12) months thereafter as it maintained with the
Target prior to the Closing Date. The Shareholders will refer all customer
inquiries relating to the Target's Business to the Parent and/or the Target from
and after the Closing Date for a period of twelve (12) months thereafter.
(d) Confidentiality. The Parties will (i) treat and hold as such
all of the Confidential Information, (ii) refrain from using any of the
Confidential Information except in connection with this Agreement for a period
of twelve (12) months from the Closing Date, and (iii) upon termination of this
Agreement, deliver promptly to the other Party or destroy, at the request and
option of the other Party, all tangible embodiments (and all copies) of the
Confidential Information which are in their possession. In the event that a
Party is requested or required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar process) to disclose any Confidential Information, such Party
will notify the other Party promptly of the request or requirement so that the
other Party may seek an appropriate protective order or waive compliance with
the provisions of this Section 8(d). If, in the absence of a protective order or
the receipt of a waiver under this Section 8(d), a Party is, on the advice of
counsel, compelled to disclose any Confidential Information to any tribunal or
else stand liable for contempt, such Party may disclose the Confidential
Information to the tribunal; provided, however, that such Party shall use his or
its reasonable best efforts to obtain, at the reasonable request of the other
Party, an order or other assurance that confidential treatment will be accorded
to the portion of the Confidential Information required to be disclosed as the
other Party shall designate. The foregoing provisions shall not apply to any
Confidential Information which is generally available to the public immediately
prior to the time of disclosure.
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(e) Additional Tax Matters.
----------------------
(i) The Shareholders shall prepare or cause to be prepared
and shall file or cause to be filed Form 1120S, U.S. Income Tax Return
of an S Corporation, for Target's fiscal year ending on December 31,
1999 and for Target's fiscal year ending on the day before the Closing
Date. Except as set forth above, Parent or Sub shall prepare or cause to
be prepared and file or cause to be filed with the appropriate
Governmental Bodies all Tax Returns required to be filed by Target for
any Pre-Closing Tax Period and will remit any taxes due in respect to
such Tax Returns.
(ii) The Parent and the Shareholders recognize that each
of them will need access, from time to time, after the Closing Date, to
certain accounting and Tax records and information concerning the Target
held by the Parent and/or the Surviving Corporation and its Subsidiaries
to the extent the records and information pertain to events occurring on
or prior to the Closing Date; therefore, the Parent agrees to cause the
Surviving Corporation and its Subsidiaries to (A) use their best efforts
to properly retain and maintain those records for a period of six (6)
years from the date the Tax Returns for the year in which the Closing
occurs are filed or until the expiration of the statute of limitations
that applies to the Tax Return in question (i.e., including Tax Returns
for years preceding the year in which the Closing occurs), whichever is
later, and (B) allow the Shareholders and their agents and
representatives at times and dates mutually acceptable to the Parties,
to inspect, review and make copies of those records that the other party
may deem necessary or appropriate from time to time, those activities to
be conducted during normal business hours and at the other Party's
expense.
(f) Covenant Not to Compete. Without the prior written permission
of the Parent, which permission may be withheld in the sole discretion of the
Parent, or unless they are an employee, officer, director or consultant with the
Surviving Corporation and its Subsidiaries or the Parent, for a period of two
(2) years from and after the Closing Date, each Shareholder will not directly or
indirectly, as principal, agent, trustee or through the agency of any
corporation, partnership, association or agent or agency, (i) participate or
engage in the Business existing as of the Closing Date, (ii) service or solicit
any of the Surviving Corporation's and its Subsidiaries' business from any
customer of the Surviving Corporation and its Subsidiaries, (iii) request or
advise any customer of the Target to withdraw, curtail or cancel such customer's
business with the Surviving Corporation and its Subsidiaries, or (iv) solicit
for employment any person employed by the Target on the Closing Date; provided
however, that (i) no owner of less than five percent (5%) of the outstanding
stock of any publicly traded corporation shall, for purposes of this Section
8(f), be deemed to engage solely by reason of that stock position in any of its
businesses and (ii) the future acquisition by any of the Shareholders, or his or
its Affiliates, of any Person or company engaged in the Business shall not be
deemed to violate this Section 8(f) if less than twenty-five percent (25%) of
the total revenues of such acquired business or Person are derived from the
Business.
(g) Employment Matters. Disclosure Schedule 6(r) lists all of the
current employees of the Target (the "Current Employees"). For a period of one
(1) year after the Closing Date, the Surviving Corporation agrees that it will
not substantially reduce the base salary or wage rate in effect immediately
prior to the Closing Date of any Current Employee other than for Cause. In
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addition, the Parent agrees that on the Closing Date it will cause the Surviving
Corporation to enter into the Consulting Agreement with Kenneth L.
Uptain in the form attached to this Agreement as Exhibit E.
(h) Covenants with Respect to Tax-Free Reorganization. Following
the Effective Time, Parent and Sub covenant, to the extent necessary to preserve
the treatment of the transaction as a tax-free reorganization under Code Section
368(a), that:
(i) The Sub will hold at least ninety (90) percent of the fair
market value of the net assets and at least seventy (70) percent of the
fair market value of the gross assets held by the Target immediately
prior to the transaction. For purposes of this covenant, the Target
assets used to pay reorganization expenses, and all redemptions and
distributions (except for regular, normal dividends) made by the Target
immediately preceding the transaction, will be included as assets of
Target held immediately prior to the transaction.
(ii) Neither the Parent, through redemption or otherwise, nor
any party related to the Parent within the meaning of Treasury
Regulation Section 1.368-1(e)(3), will reacquire any of the Parent's
stock issued in the transaction.
(iii) The Sub will not issue additional shares of its stock that
would result in the Parent losing control of the Sub within the meaning
of Code Section 368(c)(1).
(iv) The Parent will not liquidate the Sub; merge the Sub with
or into another corporation; sell or otherwise dispose of the stock of
the Sub except transfer of stock to corporations controlled by the
Parent; or cause the Sub to sell or otherwise dispose of any of the
assets of the Target acquired in the transaction, except for
dispositions made in the ordinary course of business or transfers of
assets to a corporation controlled by the Sub.
(v) The Sub will continue the historic business of the Target or
use a significant portion of the Target's business assets in a business
in a manner that satisfies the continuity of business enterprise
requirements set forth in Treasury Regulation Section 1.368-1(d).
9. Conditions to Obligations to Close.
----------------------------------
(a) Conditions to Obligation of the Parent and Sub. The
obligation of the Parent and Sub to consummate the transactions to be performed
by it in connection with the Closing is subject to satisfaction or waiver of the
following conditions:
(i) the representations and warranties of the Shareholders
as set forth in Sections 5(a) and Section 6 must be true, correct and
complete in all Material respects at and as of the Closing Date as
evidenced by the delivery by the Shareholders to the Parent at Closing
of the Shareholders' Closing Certificate to the effect that the
representations and warranties of the Shareholders as set forth in
Section 5(a) and Section 6 are true, correct and complete in all
Material Respects as of the Closing Date to be attached to this
Agreement as Exhibit F;
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(ii) the Shareholders shall have performed and complied
with all of their covenants in this Agreement in all Material respects
through the Closing;
(iii) the Target shall have procured all necessary third
party consents specified in Section 7(b);
(iv) 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 wherein an
unfavorable judgment, order, decree, stipulation, injunction, 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, or (C) affect
adversely the right of the Parent to own, operate, or control the Shares
or the Target (and no such judgment, order, decree, stipulation,
injunction, or charge shall be in effect);
(v) the Shareholders shall have delivered to the Parent
the Shareholders' Closing Certificate (without qualification as to
knowledge or Materiality or otherwise) to the effect that each of the
conditions specified in Section 9(a)(i)-(iv) is satisfied in all
respects to be attached to this Agreement as Exhibit F;
(vi) the acquisition by the Parent of the Shares must
represent all of the issued and outstanding capital stock of the Target
and all of the Shares must be free and clear of any Security Interests
or other liens, claims or encumbrances of any nature whatsoever;
(viii) the Parent must have received from counsel to the
Shareholders an opinion in substantially the form attached to this
Agreement as Exhibit G;
(ix) the Parent must have received the resignations,
effective as of the Closing, of each officer and director of the Target;
(x) no Material adverse change shall have occurred in the
Target's Business or its future prospects;
(xi) except as set forth in the Disclosure Schedules,
since the Effective Date the Target must not have transferred, conveyed,
disposed of and/or sold any Material assets, except in the Ordinary
Course of Business;
(xii) the Shareholders must have delivered to the Parent
certificates representing the Shares, which shall be cancelled and
exchanged for the Merger Consideration, and otherwise must have
satisfied fully all of their obligations required by this Agreement to
be satisfied before or at Closing;
(xiii) the Target must not be in a bankruptcy,
reorganization or insolvency proceeding nor any such proceeding
contemplated;
(xiv) Kenneth L. Uptain must have signed and delivered the
Consulting Agreement (Exhibit E) with attached Confidentiality
Agreement;
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(xv) the Shareholders must have delivered to the Parent a
Certificate of Existence/Authorization from the State of Washington,
dated within ten (10) days prior to the Closing Date, certifying that
the Target is in existence in the State of Washington;
(xvi) the Shareholders must have delivered to the Parent
the Release attached to this Agreement as Exhibit H and dated as of the
Closing Date, whereby the Shareholders release the Target from any and
all claims and causes of action they may have against the Target as of
the Closing Date other than that evidenced by the Promissory Note
attached as Exhibit C-2 to this Agreement;
(xvii) the Shareholders must have delivered to the Parent
all minutes related to the Target for the past three (3) years; and
(xviii) the Shareholders must have delivered to the
Parent, Officer, Directors and Significant Employee Questionnaires in
the form as prepared by the Parent and completed by Kenneth L. Uptain,
James S. Tonkin, Keith Huetson and Ron Kendrick.
(xix) the Shareholders must have delivered to the Parent
the Venturenow, Inc. Release in the form attached as Exhibit M to this
Agreement.
The Parent may waive any condition specified in this Section 9(a)
if it executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligations of the Shareholders. The
obligations of the Shareholders to consummate the transactions to be performed
by them in connection with the Closing are subject to satisfaction or waiver of
the following conditions:
(i) the representations and warranties set forth in
Section 6(b) must be true, correct and complete in all Material respects
at and as of the Closing Date as evidenced by the delivery by the Parent
to the Shareholders at Closing of a Parent's Closing Certificate to the
effect that the representations and warranties of the Parent as set
forth in Section 6(b) are true, correct and complete in all Material
respects as of the Closing Date to be attached to this Agreement as
Exhibit I;
(ii) the Parent and Sub must have performed and complied
with all of their covenants under this Agreement in all Material
respects through the Closing;
(iii) no action, suit or proceeding must be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction wherein an
unfavorable judgment, order, decree, stipulation, injunction, or charge
would (A) prevent consummation of any of the transactions contemplated
by this Agreement, or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation or (C) affect
adversely the right of the Shareholders to own the Parent Shares (and no
such judgment, order, decree, stipulation, injunction, or charge must be
in effect);
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(iv) the Parent must have delivered to the Shareholders
the Parent's Closing Certificate (without qualification as to knowledge
or Materiality or otherwise) to the effect that each of the conditions
specified in Section 9(b)(i)-(iii) is satisfied in all respects to be
attached to this Agreement as Exhibit I;
(v) the Shareholders must have received from counsel to
the Parent an opinion in substantially the form attached to this
Agreement as Exhibit J;
(vi) no Material adverse change shall have occurred in the
Parent's or its Subsidiaries' businesses or their future prospects;
(vii) all actions to be taken by the Parent and Sub in
connection with the consummation of the transactions contemplated by
this Agreement must be reasonably satisfactory in form and substance to
the Shareholders;
(viii) the Parent and Sub must have delivered the Parent
Shares to the Shareholders, and otherwise must have satisfied fully all
of their other obligations required by this Agreement to be satisfied
before or at Closing;
(ix) the Parent and its Subsidiaries must not be in a
bankruptcy, reorganization or insolvency proceeding, nor must any such
proceeding be contemplated; and
(x) the Sub must have executed and delivered to Kenneth L.
Uptain the Consulting Agreement attached to this Agreement as Exhibit E.
The Shareholders may waive any condition specified in this
Section 9(b) if they execute a writing so stating at or prior to the Closing.
10. Closing Deliveries.
------------------
(a) Deliveries by the Shareholders at Closing. Provided the
conditions precedent described in Section 9(b) have been satisfied, the
Shareholders shall deliver the following to the Parent at Closing:
(i) the Shares which shall be cancelled and exchanged
for the Merger Consideration;
(ii) the executed resignations of Kenneth L. Uptain and
James S. Tonkin and all other officers and directors of the Target;
(iv) the executed Consulting Agreement of Kenneth L.
Uptain as attached to this Agreement as Exhibit E;
(v) the Release of Venturenow, Inc.; and
(vi) any and all other instruments required by this
Agreement to be delivered by the Shareholders to the Parent and Sub at
Closing.
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(b) Deliveries by the Parent and Sub at Closing. Provided the
conditions precedent described in Section 9(a) have been satisfied, the Parent
and/or Sub shall deliver the following at Closing:
(i) a certificate for the Parent Shares in the name
of Moneta Holdings, LLC;
(ii) the promissory note attached to this Agreement as
Exhibit C-2;
(iii) the executed Consulting Agreement of Kenneth L.
Uptain as attached to this Agreement as Exhibit E; and
(iv) any and all other instruments required by this
Agreement to be delivered by the Parent and/or Sub to the Shareholders
at Closing.
11. Audit. As soon as is reasonably practicable following the
Effective Date, the Parent may, but shall not be required to, cause an audit of
the Target to be conducted at the Parent's expense. The Shareholders agree to
cooperate, and to cause the Target to cooperate, as reasonably requested by the
Parent, with the audit. A copy of the final audit report shall be provided to
the Shareholders. In addition, the Shareholders agree to cooperate and to cause
the Target to cooperate, as reasonably required in the preparation in a form
satisfactory to the Parent and the Parent's accountants, of any other financial
and other information needed by the Parent to comply with reporting and filing
requirements imposed on the Parent by federal, state and securities exchange
regulations. All expenses paid and incurred in the preparation of the Audit will
be borne solely by the Parent.
12. Indemnification.
---------------
(a) Survival. All of the representations, warranties and
covenants of the Parties contained in this Agreement shall survive the Closing
and will continue in full force and effect for a period of two (2) years
thereafter, except (a) those with regard to taxes, intellectual property and
environmental matters and those with regard to Employee Benefit Plans, and
Employee Pension Benefit Plans, and the Target's Stock Option Plans being
assumed by the Parent and Sub, all of which shall survive for the applicable
statute of limitation periods, and (b) the covenants set forth in Section 8(h),
which shall survive for the statute of limitations relating to the Tax Returns
upon which the Merger is reported or reportable.
(b) Indemnification by the Shareholders. The Shareholders,
jointly and severally, agree to defend, indemnify and hold the Parent and Sub
harmless from and against any and all loss, damage, liability, cost, and
expense, including without limitation reasonable attorney fees, suffered or
incurred by the Parent or Sub, as and when incurred, by reason of, relating to,
or arising out of (i) any misrepresentation, breach of representation or
warranty, or breach or non-fulfillment of any agreement or covenant of the
Shareholders or Target contained in this Agreement or in any document executed
and delivered in connection with this Agreement; and (ii) the Shareholders'
operation of the Business prior to the Closing Date. In addition, the
Shareholders, jointly and severally, agree to defend, indemnify and hold the
Parent and Sub harmless from and against any and all loss, damage, liability,
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cost, and expense, including without limitation reasonable attorney fees,
suffered or incurred by the Parent or Sub, as and when incurred, by reason of,
relating to, or arising out of (y) any and all Taxes of Shareholders with
respect to any period, and (z) any and all Taxes of Target with respect to any
period (or a portion thereof) up to and including the Closing Date, except
Washington State Business and Occupation Taxes incurred in the Ordinary Course
of Business which have not yet become due. The Shareholders shall have the
right, but not the obligation, to assume the defense of the Parent and Sub with
respect to any action covered by this Section 12(b). If the Shareholders elect
not to assume the defense of the Parent and Sub as provided in Section 12(d),
then the Parent and Sub shall have the right, upon a final and binding
conclusion of the action, to make a claim against the Shareholders, jointly and
severally, for reimbursement of reasonable expenses and attorney's fees incurred
by the Parent and Sub in the defense of the action. Notwithstanding any other
provision in this Section 12(b) or elsewhere in this Agreement, in no event
shall the liability of the Shareholders to the Parent and the Sub in the
aggregate exceed $8,000,000 and the Shareholders shall be released from any
further liability under this Agreement upon tender of $8,000,000 to the Parent
or the Sub.
(c) Indemnification by the Parent. The Parent agrees to defend,
indemnify, and hold the Shareholders, jointly and severally, harmless from and
against any and all loss, damage, liability, cost, and expense, including
without limitation reasonable attorneys' fees, suffered or incurred by the
Shareholders, as and when incurred, by reason of or arising out of (i) any
misrepresentation, breach of representation or warranty, or breach or
non-fulfillment of any agreement or covenant of the Parent and Sub contained in
this Agreement or in any document executed and delivered in connection with this
Agreement, and (ii) the Sub's operation of the Business after the Closing Date.
The Parent and Sub shall have the right, but not the obligation, to assume the
defense of the Shareholders with respect to any action covered by this Section
12(c). If the Parent and Sub elect not to assume the defense of the
Shareholders, then the Shareholders shall have the right, upon a final and
binding conclusion of the action, to make a claim against the Parent for
reimbursement of reasonable expenses and attorney's fees incurred by the
Shareholders in the defense of the action. Notwithstanding any other provision
in this Section 12(c) or elsewhere in this Agreement, in no event shall the
liability of the Sub and the Parent to the Shareholders exceed $8,000,000 in the
aggregate.
(d) Notice and Opportunity to Defend. The Indemnified Party shall
notify the Indemnifying Party in writing (the "Indemnity Demand Notice") within
thirty (30) days after a claim is presented to the Indemnified Party, and the
Indemnifying Party may assume the defense of such claim at its sole expense. The
notice shall contain (i) a copy of the claim (the "Known Claim"), and (ii) if
not stated in the Known Claim, a good faith estimate of the amount in
controversy under the Known Claim (the "Known Claim Amount"). If the
Indemnifying Party does not assume the defense of the Indemnified Party or
settle the Known Claim within thirty (30) days of the date of the receipt of the
Indemnity Demand Notice, the Indemnified Party shall pay the expenses of such
defense, and the Indemnified Party may settle or compromise the Known Claim upon
prior written notice to the Indemnifying Party without the Indemnifying Party's
consent and the Indemnified Party shall be entitled to reimbursement as provided
in this Section 12.
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13. Termination.
-----------
(a) Termination of Agreement. The Parties may terminate this
Agreement as provided below:
(i) The Parent, Sub, Target and Shareholders may terminate
this Agreement by mutual written consent at any time prior to the
Closing.
(ii) The Parent may terminate this Agreement by giving
written notice to the Shareholders at any time prior to the Closing in
the event the Shareholders or Target are in breach of any Material
representation, warranty, or covenant contained in this Agreement in any
Material respect and the breach has not been cured within fifteen (15)
days of written notice. The Shareholders may terminate this Agreement by
giving written notice to the Parent at any time prior to the Closing in
the event the Parent or Sub is in breach of any Material representation,
warranty, or covenant contained in this Agreement in any Material
respect and the breach has not been cured within fifteen (15) days of
written notice.
(iii) The Parent may terminate this Agreement by giving
written notice to the Shareholders if the Closing shall not have
occurred on or before January 31, 2000 by reason of the failure of any
condition precedent under Section 9(a) (unless the failure results
primarily from the Parent's or Sub's breach of any representation,
warranty or covenant contained in this Agreement).
(iv) The Shareholders may terminate this Agreement by
giving written notice to the Parent if the Closing shall not have
occurred on or before January 31, 2000 by reason of the failure of any
condition precedent under Section 9(b) (unless the failure results
primarily from a Shareholder's or Target's breach of any representation,
warranty or covenant contained in this Agreement).
Nothing contained in this Section 13(a) shall alter, affect,
modify or restrict the Parties' rights to rely on and/or seek indemnification
for a breach of any of the representations, warranties or covenants of any of
the Parties contained in this Agreement.
(b) Effect of Termination. If either the Parent or the
Shareholders terminate this Agreement pursuant to Section 13(a), all obligations
of the Parties under this Agreement shall terminate without any Liability of any
Party to any other Party, except that each Party shall remain liable for a
breach of any of its representations, warranties or covenants contained in this
Agreement.
14. Miscellaneous.
-------------
(a) Disclosure Schedules. Any Disclosure Schedule may be updated
one or more times prior to the Closing Date. Any updated Disclosure Schedule,
with supporting documents, must be delivered at least three (3) Business Days
prior to the Closing Date unless the updated Disclosure Schedule is required by
this Agreement to be current as of the Closing Date. An updated Disclosure
Schedule shall only be deemed to modify a representation and/or warranty made as
of the Effective Date in the event, and only in the event, that the representing
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and/or warranting Party acted in good faith and used its best efforts when
preparing the original Disclosure Schedule delivered to the Parties on the
Effective Date. In the event any updated Disclosure Schedule indicates a
Material Adverse Change from information previously provided to the receiving
Party, the receiving Party shall be entitled to terminate this Agreement
(without any liability whatsoever to the other Parties) by written notice
delivered to the other Parties following receipt of the updated Disclosure
Schedule.
(b) Press Releases and Announcements. Except as may be required
by applicable securities laws or stock exchange requirements, if any, no Party
may issue any press release or announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written consent of the
other Parties, which written approval will not be unreasonably withheld;
provided, however, that any Party may make any public disclosure it believes in
good faith is required by law or regulation (in which case the disclosing Party
will advise the other Parties prior to making the disclosure). Notwithstanding
anything to the contrary in this Section 14(b), the Parties specifically agree
and consent that the Parent may (i) issue a Press Release and (ii) make other
disclosures concerning this Agreement as in the opinion of its counsel are
required to comply with federal and state securities laws.
(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.
(d) Entire Agreement. This Agreement (including the Exhibits,
Disclosure Schedules and other documents referred to in this Agreement, all of
which are incorporated into this Agreement by reference) constitutes the entire
agreement among the Parties and supersedes any prior understandings, agreements,
or representations by or among the Parties, written or oral, that may have
related in any way to the subject matter of this Agreement.
(e) Succession and Assignment. This Agreement shall be binding
upon, and shall inure to the benefit of, the Parties and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations under this Agreement without
the prior written approval of the other Parties; provided, however, that the
Parent or Sub may assign any or all of their rights and interests under this
Agreement to a wholly-owned Subsidiary (in which case the Parent or Sub, as the
case may be, nonetheless shall remain liable and responsible for the performance
of all of its obligations under this Agreement).
(f) Counterparts/Facsimile. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. A facsimile, telecopy or
other reproduction of this Agreement may be executed by one or more Parties, and
an executed copy of this Agreement may be delivered by one or more Parties by
facsimile or similar instantaneous electronic transmission device pursuant to
which the signature of or on behalf of the Party can be seen, and such execution
and delivery shall be considered valid, binding and effective for all purposes.
At the request of any Party, all Parties agree to execute an original of this
Agreement as well as any facsimile, telecopy or other reproduction of this
Agreement.
-39-
<PAGE>
(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 under this Agreement must be in writing. Any notice, request,
demand, claim, or other communication under this Agreement 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 Parent or Sub:
NextPath Technologies, Inc.
James R. Ladd, President
114 South Churton Street, Suite 101
Hillsborough, NC 27278
If to Shareholders or Target:
Kenneth L. Uptain
Essentia Water, Inc.
24100 State Route 9, SE, Bldg. A
Woodinville, WA 98072
Any Party may give any notice, request, demand, claim, or other communication
under this Agreement using any other means (including personal delivery,
expedited courier, messenger service, facsimile, 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 individual for whom it is intended. Any Party may change the address to
which notices, requests, demands, claims, and other communications under this
Agreement are to be delivered by giving the other Parties written notice in the
manner set forth in this Section 14(h).
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless it is in writing and signed by the Parties. No
waiver by any Party of any default, misrepresentation, or breach of warranty or
covenant under this Agreement, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant under this Agreement or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
(j) 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 of this
Agreement or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision of this
Agreement is invalid or unenforceable, the Parties agree that the court making
the determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable term or provision
with a term or provision that is valid and enforceable and that comes closest to
-40-
<PAGE>
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
(k) Expenses. Each of the Parties will bear his or its own costs
and expenses (including legal fees and expenses and investment banking fees, if
any) incurred in connection with the negotiation of this Agreement and the
transactions contemplated by this Agreement. The Shareholders acknowledge and
agree that the Target has not borne, nor will it bear, any of the Shareholders'
costs and expenses (including any of their legal fees and expenses and
investment banking fees, if any) in connection with this Agreement or any of the
transactions contemplated by this Agreement.
(l) 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. This
Agreement shall be interpreted and enforced under the laws of the State of
Washington. The prevailing party in any dispute to enforce this Agreement shall
be entitled to recover from the losing party its costs and a reasonable
attorneys' fee to be determined by the court.
(m) Incorporation of Exhibits and Schedules. The Exhibits and
Disclosure Schedules identified in this Agreement are incorporated into this
Agreement by reference and made a part of this Agreement.
(n) Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or are otherwise breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to specifically
enforce this Agreement and the terms and provisions of this Agreement in any
action instituted in any court of the United States or any state having
jurisdiction over the Parties and the matter, in addition to any other remedy to
which they may be entitled, at law or in equity.
IN WITNESS WHEREOF, the Parties have executed this Agreement and
Plan of Merger as of the Effective Date.
PARENT: NextPath Technologies, Inc., a Nevada
corporation
By:
---------------------------------------
Frederic F. Wolfer, Jr., Vice President
-41-
<PAGE>
SUB: Essentia Water, Inc., a Delaware
corporation
By:
---------------------------------------
Frederic F. Wolfer, Jr., Vice President
TARGET: Essentia Water, Inc., a Washington
corporation
By:
---------------------------------------
Kenneth L. Uptain, CEO
SHAREHOLDERS: Moneta Holdings, LLC
By:
---------------------------------------
Kenneth L. Uptain, Manager,
Sole Owner
---------------------------------------
Kenneth L. Uptain
-42-
<PAGE>
EXHIBIT A
AGREEMENT OF MERGER
<PAGE>
AGREEMENT OF MERGER
This Agreement of Merger (the "Merger Agreement") is entered into as of
January 21, 2000 by and among NextPath Technologies, Inc., a Nevada corporation
(the "Parent"), Essentia Water, Inc., a Delaware corporation (the "Sub"), and
Essentia Water, Inc., a Washington corporation (the "Target"). The Parent, Sub
and Target are referred to in this Agreement individually as a "Party" and
collectively as the "Parties." The Target and Sub are referred to in this
Agreement collectively as the "Constituent Corporations").
WHEREAS, prior to the execution of this Merger Agreement, the Parent,
Sub, Target and all shareholders of the Target entered into an Agreement and
Plan of Merger dated as of January 21, 2000 (the "Agreement"), providing for
certain representations, warranties, covenants and agreements in connection with
the transaction contemplated;
WHEREAS, the shareholders and the Boards of Directors of the Parent, Sub
and Target have approved the acquisition of the Target by Parent, and the merger
of the Target into the Sub (the "Merger"), in accordance with the applicable
provisions of the statutes of the States of Delaware and Washington and subject
to the conditions set forth herein and in the Agreement; and
WHEREAS, for Federal income tax purposes, it is intended that the
transaction contemplated by the Agreement and this Merger Agreement shall be a
forward triangular merger which qualifies as a reorganization pursuant to
Sections 368 of the Code.
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereby covenant and agree as
follows:
ARTICLE I
1.1 The Merger. At the Effective Time (as defined in Section 1.2 below),
the Target shall be merged with and into the Sub in accordance with the
applicable provisions of Delaware and Washington law, and the separate existence
of the Target shall thereupon cease, and the Sub, as the Surviving Corporation
in the Merger (the "Surviving Corporation"), shall continue its corporate
existence under the laws of the State of Delaware under its present name. Upon
the consummation of the Merger, the Surviving Corporation shall thereupon and
thereafter possess all the rights, privileges, powers, and franchises as well of
public as of a private nature, and being subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations, and all
property, real, personal and mixed and all goodwill associated therewith, and
all debts due to either Constituent Corporation on whatever account, as well as
all other things in action, or belonging to or due to each of the Constituent
Corporations, shall be vested in the Surviving Corporation without further act
or deed. The Surviving Corporation shall thenceforth be responsible and liable
for all debts, liabilities, duties and obligations of each of the Constituent
Corporations, in accordance with applicable Delaware law.
1.2 Effective Time of the Merger. On the Closing Date, as defined in the
Agreement, this Merger Agreement, together with required officers' certificates,
shall be duly executed and filed with the Delaware and Washington Secretaries of
State in accordance with Delaware and Washington law. Subject to the laws of the
State of Delaware and Washington, the Merger shall become effective on the date
the Merger Agreement is filed with the Delaware Secretary of State and the
Washington Secretary of State or such later time or date as may be specified in
the Certificate of Merger (the "Effective Time").
1.3 Effect of Merger. At and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises as
well of public as of a private nature, and be subject to all the restrictions,
disabilities and duties, of each of the Constituent Corporations so merged; and
all and singular, the rights, privileges, powers and franchises of each of the
Constituent Corporations, and all property, real, personal and mixed, and all
<PAGE>
debts due to any of the Constituent Corporations on whatever account, as well
for stock subscriptions as all other things in action or belonging to each of
the Constituent Corporations, shall be vested in the Surviving Corporation; and
all property, rights, privileges, powers and franchises, and all and every other
interest shall be thereinafter as effectively the property of the Surviving
Corporation as they were of the respective Constituent Corporations; and the
title to any real estate vested by deed or otherwise in either of such
Constituent Corporations, shall not revert or be in any way impaired by reason
of Washington or Delaware law; but all rights of creditors and all liens upon
any property of either of the Constituent Corporations shall be preserved
unimpaired; and all debts, liabilities and duties of the respective Constituent
Corporations shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts, liabilities and duties
had been incurred or contracted by it. Any action or proceeding, whether civil,
criminal or administrative, pending by or against either of the Constituent
Corporations may be prosecuted as if the Merger had not taken place, or the
Surviving Corporation may be substituted in such action or proceeding.
1.4 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or any other acts are necessary or desirable to (a) vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation its
rights, title or interest in, to or under any of the rights, properties or
assets of the Target acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Agreement, or (b) otherwise carry out
the purposes of this Merger Agreement, the Target and its proper officers and
directors shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such rights, properties or
assets in the Surviving Corporation and otherwise to carry out the purpose of
this Merger Agreement; and the proper officers and directors of the Surviving
Corporation are fully authorized in the name of the Target or otherwise to take
any and all such action.
ARTICLE II
2.1 Name. The Surviving Corporation shall be the Sub, Essentia Water,
Inc., a Delaware corporation.
2.2 Certificate of Incorporation. The Certificate of Incorporation of
the Sub in effect at the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation.
2.3 Bylaws. The Bylaws of the Sub in effect at the Effective Time shall
be the Bylaws of the Surviving Corporation.
2.4 Directors and Officers. The directors and officers of the Sub as
existing immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation.
ARTICLE III
3.1 Conversion of Target Shares. Pursuant to this Merger Agreement, at
the Effective Time, by virtue of the Merger and without any action on the part
of the shareholders of the Target, all issued and outstanding shares of the
Target's common stock (the "Shares") shall be converted into, and become
exchangeable for, the Parent's common stock worth $7,654,294 (the "Parent
Shares") based on the average of bid and ask closing prices of the Parent's
common stock on the OTCBB as "NPTK" over the thirty (30) trading days beginning
thirty-three trading days prior to the Closing Date and ending four trading days
prior to the Closing Date, less a discount of thirty percent reflecting the
restricted nature of the Parent Shares.
<PAGE>
3.2 Delivery of Parent Shares. At Closing, the Parent shall deliver the
Parent Shares to which the Shareholders are entitled as set forth on Disclosure
Schedule 3(b) to the Agreement, which Parent Shares shall be in the form of
certificates evidencing ownership in the name of Moneta Holdings, LLC. The
Parent Shares will be "Restricted Securities," as defined by Rule 144 under the
Securities Act of 1933, will be restricted as to transferability, and will bear
substantially the following legend:
The Securities represented by this Certificate have not been
registered under the United States Securities Act of 1933 (the
"Act") and are "restricted securities" as that term is defined in
Rule 144 under the Act. The Securities may not be offered for
sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act, or pursuant to an
exemption from registration under the Act, the availability of
which is to be established to the satisfaction of the Company.
3.3 Delivery of Shares. At Closing, shareholders of the Target shall
deliver to the Parent all certificates of the Shares which shall be cancelled
and exchanged for the Parent Shares and other consideration under the Agreement.
From and after the Effective Time, the stock transfer books of the Target shall
be closed and no transfer of Target shares or options to purchase Target shares
shall thereafter be made.
3.4 Taking of Necessary Action; Further Action. The Parent, Sub and
Target shall take all such action as may be necessary or appropriate in order to
effectuate the Merger as promptly as possible, subject to all of the terms and
conditions of this Merger Agreements. If, at any time after the Effective Time,
any further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
either of the Constituent Corporations, the officers and directors of the
Constituent Corporations are fully authorized in the name of the corporation or
otherwise to take, and shall take, all such action.
3.5 Assumption of Target Stock Option Plan. Except for obligations and
liabilities due to breach of the Shareholders' representations and warranties
relating to the Plan and the Stock Option Letter Agreements as set forth in the
Agreement, from and after the Effective Time the Parent and Sub shall assume the
obligations of the Target under the Essentia Water, Inc. 1999 Stock Option Plan
(the "Plan") and the Essentia Water, Inc. 1999 Stock Option Plan Incentive and
Nonqualified Stock Option Letter Agreements (the "Letter Agreements"), and the
options to acquire the Target's shares shall be converted to options to acquire
the Parent's Shares, in accordance with the terms of the Plan and Letter
Agreements. Disclosure Schedule 3(g) to the Agreement, to be prepared by the
Target and fixed as of the Effective Time, sets forth all outstanding option
holders of the Target, by full name and complete address, and the number of
shares of the Parent's common stock to which each will be entitled when vested.
ARTICLE IV
4.1 Counterparts. This Merger Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one agreement.
4.2 Governing Law. This Merger Agreement shall be governed in all
respects, including, but not limited to, validity, interpretation, effect and
performance, by the laws of the State of Delaware.
4.3 Amendments and Waivers. No amendment of any provision of this Merger
Agreement shall be valid unless it is in writing and signed by the Parties. No
waiver by any Party of any default, misrepresentation, or breach of warranty or
covenant under this Merger Agreement, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach under this Merger Agreement or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.
<PAGE>
4.4 Severability. Any term or provision of this Merger 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 of this
Merger Agreement or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction. If the final
judgment of a court of competent jurisdiction declares that any term or
provision of this Merger Agreement is invalid or unenforceable, the Parties
agree that the court making the determination of invalidity or unenforceability
shall have the power to reduce the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Merger Agreement shall be enforceable
as so modified after the expiration of the time within which the judgment may be
appealed.
4.5 Binding Agreement. This Merger Agreement shall be binding upon, and
shall inure to the benefit of, the Parties and their respective successors and
permitted assigns. No Party may assign either this Merger Agreement or any of
its rights, interests, or obligations under this Merger Agreement without the
prior written approval of the other Parties.
4.6 Termination. This Merger Agreement shall terminate upon the
termination of the Agreement and there shall be no liability on the part of any
of the Parties hereto (or any of their respective directors or officers).
IN WITNESS WHEREOF, the Parties have caused this Merger Agreement to be
executed on their behalf by their officers hereunto duly authorized, all as of
the date first above written.
PARENT: NextPath Technologies, Inc., a Nevada
corporation
By:
-----------------------------------------
Frederic F. Wolfer, Jr., Vice President
SUB: Essentia Water, Inc., a Delaware corporation
By:
-----------------------------------------
Frederic F. Wolfer, Jr., Vice President
TARGET: Essentia Water, Inc., a Washington
corporation
By:
-----------------------------------------
Kenneth L. Uptain, CEO
<PAGE>
EXHIBIT A
DELIVERY OF PARENT SHARES
Name of Holder Parent Shares
-------------- -------------
Moneta Holdings, LLC 565,127
Groupnow, Inc. 20,633
<PAGE>
EXHIBIT B
CERTIFICATE OF MERGER - DELAWARE
<PAGE>
CERTIFICATE OF MERGER
ESSENTIA WATER, INC.
a Washington Corporation
INTO
ESSENTIA WATER, INC.,
a Delaware corporation
The undersigned corporation, Essentia Water, Inc., a Delaware corporation,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the constituent
corporations of the merger is as follows:
Name State of Incorporation
---- ----------------------
Essentia Water, Inc. Delaware
Essentia Water, Inc. Washington
SECOND: That an Agreement of Merger between the parties to the merger
has been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of Section 252 of
the General Corporation Law of Delaware.
THIRD: That the name of the surviving corporation of the merger is
Essentia Water, Inc., a Delaware corporation.
FOURTH: That the Certificate of Incorporation of Essentia Water, Inc.,
a Delaware corporation, which is surviving the merger, shall be the Certificate
of Incorporation of the surviving corporation.
FIFTH: That the executed Agreement of Merger is on file at an office of
the surviving corporation, the address of which 24100 State Route 9 SE, Building
A, Woodinville, WA 98072.
SIXTH: That a copy of the Agreement of Merger will be furnished by the
surviving corporation, on request and without cost, to any stockholder of any
constituent corporation.
SEVENTH: The authorized capital stock of each foreign corporation which
is a party to the merger is as follows:
Par value per share or
statement that shares are
Corporation Class Number of Shares without par value
----------- ----- ---------------- --------------------------
Essentia Water, Inc., Common 10,000,000 No Par Value
a Washington corporation
EIGHTH: That this Certificate of Merger shall be effective on upon its
filing.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned corporations has caused these
Articles of Merger to be executed in its name by its president or vice president
and its secretary as of January 21, 2000.
Attest: Essentia Water, Inc., a Washington
corporation
By: By:
-------------------------- -------------------------------
Secretary Kenneth L. Uptain, CEO
Attest: Essentia Water, Inc., a Delaware
corporation
By: By:
-------------------------- -------------------------------
Secretary Frederic F. Wolfer, Jr., Vice
President
<PAGE>
EXHIBIT B-1
ARTICLES OF MERGER - WASHINGTON
<PAGE>
ARTICLES OF MERGER
OF
ESSENTIA WATER, INC., A WASHINGTON CORPORATION
INTO
ESSENTIA WATER, INC., A DELAWARE CORPORATION
Pursuant to the provisions of RCW 23B.11.050, the following Articles of
Merger are executed for the purpose of merging ESSENTIA WATER, INC., a
WASHINGTON CORPORATION (the "Disappearing Corporation"), into ESSENTIA WATER,
INC., a DELAWARE CORPORATION (the "Surviving Corporation").
1. The plan of merger set forth in the Agreement of Merger (the "Plan")
was approved by the sole shareholder of the Disappearing Corporation and the
Board of Directors of the Disappearing Corporation and the Surviving Corporation
and is attached hereto as Exhibit A and incorporated herein by reference.
2. The Merger (as defined in the Plan) was duly approved by the Board of
Directors of the Disappearing Corporation and the Surviving Corporation pursuant
to RCW 23B.11.030 and by the sole shareholder of the Disappearing Corporation
pursuant to RCW 23B.11.030. With respect to the Surviving Corporation,
shareholder approval is not required under subsection 7 of RCW 23B.11.030.
3. The Merger of the Disappearing Corporation with and into the
Surviving Corporation in accordance with the Plan shall be effective upon the
filing of these Articles of Merger in the Office of the Secretary of State of
the State of Washington, as provided and at the time set forth in the Plan.
Dated: January 21, 2000.
ESSENTIA WATER, INC., a WASHINGTON CORPORATION
By:
-------------------------------------------
Kenneth L. Uptain, Chief Executive Officer
<PAGE>
EXHIBIT C
SHAREHOLDER NOTES AND PROMISSORY NOTE
<PAGE>
EXHIBIT C-1
SHAREHOLDER NOTES
<PAGE>
EXHIBIT C-2
PROMISSORY NOTE
<PAGE>
PROMISSORY NOTE
Number 1 Woodinville, Washington
USD $400,000 January 21, 2000
FOR VALUE RECEIVED, the undersigned Essentia Water, Inc., a Delaware corporation
("Borrower"), hereby promises to pay to the order of Moneta Holdings, LLC, a
Washington limited liability company ("Lender"), at 23711 Meridian Avenue South,
Bothell, Washington 98021, or at such other place as the holder hereof may from
time to time designate in writing, the principal sum of Four Hundred Thousand
United States Dollars ($400,000), together with interest on the unpaid balance
at the rate specified in Paragraph 1 below.
1. Interest Accrual. Interest shall accrue at the per annum rate at 10.5%
on the outstanding principal balance of the Note.
2. Application of Payments. Any payment that is received from Borrower,
including repayments, shall first be applied to the payment of accrued
interest and, to the extent payment exceeds accrued interest, to the
reduction of principal.
3. Prepayment. Borrower shall have the right to prepay amounts due
hereunder with no penalty.
4. Maturity Date. The principal and accrued interest of this loan shall be
due and payable on or before July 21, 2000.
5. Payment in Immediately Available Funds. All amounts payable under this
Note shall be paid in immediately available funds in United States
Dollars.
6. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Washington.
7. Collection Costs. In the event that this Note is not paid when due,
Borrower promises to pay all collection costs and expenses, including
attorneys fees, incurred by Lender in collecting this Note and enforcing
its rights and remedies hereunder.
EXECUTED as of the date set forth above.
Essentia Water, Inc.
By:
----------------------------------------
Frederic F. Wolfer, Jr., Vice President
<PAGE>
EXHIBIT D
TARGET FINANCIAL STATEMENTS
<PAGE>
EXHIBIT E
CONSULTING AGREEMENT - KENNETH L. UPTAIN
<PAGE>
CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is entered into and
effective as January 21, 2000 (the "Effective Date"), by and between Essentia
Water, Inc., a Delaware corporation (the "Company"), and Kenneth L. Uptain, an
individual (the "Consultant"). The Company and the Consultant are collectively
referred to as the "Parties."
RECITALS
WHEREAS, the Company is the surviving corporation of the merger of
Essentia Water, Inc., a Delaware corporation, and Essentia Water, Inc., a
Washington corporation (the "Target"), pursuant to the terms of an Agreement and
Plan of Merger dated January 21, 2000.
WHEREAS, the Company is engaged in the business of developing,
manufacturing, packaging and marketing bottled water products (the "Business");
and
WHEREAS, the Company desires to retain the Consultant to provide
consulting services to the Company regarding the management of its operations
and the Business.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
Section 1. Services to be Performed by the Consultant.
Section 1.1 Past Services. The Parties acknowledge that as the
Chief Executive Officer of the Target the Consultant provided valuable
services to and for the benefit of the Target prior to the Effective
Date, which services have been completed in all respects and for which
services the Consultant has been fully compensated as of the Effective
Date.
Section 1.2 Future Services. During the term of this Agreement,
the Consultant agrees to provide the Company with advice and consulting
services relating to developing, manufacturing, packaging and marketing
bottled water products (the "Services") on a full time basis. Until
further notice, the Consultant shall serve as the Chief Executive
Officer and a member of the Board of Directors of the Company. The
Consultant agrees that during the term of this Agreement he will not
provide material advice or consulting services regarding the Business to
any person or entity not affiliated with the Company without the prior
written consent of the Company. The Services to be performed at the
Company's request will include, and may not be limited to:
a. advising the Company's management on issues related
to the developing, manufacturing, packaging and
marketing bottled water products;
b. reviewing and evaluating pricing scenarios with
respect to the Company's products;
c. assisting in negotiating contracts;
d. suggesting improvements or changes to the Company's
design, engineering and marketing practices and
policies; and
e. suggesting improvements or changes to the Company's
products and systems.
<PAGE>
None of the specifically enumerated tasks or services to be
performed by the Consultant, as they appear in this Agreement, are to be
construed as omitting any other services not specifically mentioned
which are necessary or helpful to the Company's operations or any other
aspects of the Business.
Section 1.3 Place of Performance. The Services to be performed
pursuant to this Agreement shall be rendered at or from Woodinville,
Washington (or such other place as may be mutually acceptable to the
Parties).
Section 1.4 Confidentiality. The Consultant acknowledges that in
performing the Services he may have access to confidential information
regarding the operations of the Company and its affiliates and the
Business ("Confidential Information"). Without the prior written consent
of the Company, the Consultant (a) shall use the Confidential
Information only for performing the Services, (b) except as otherwise
required by law, shall not release, reveal or disclose to any third
party any Confidential Information, and (c) shall not duplicate any
Confidential Information. Upon execution of this Agreement, the Employee
shall sign and deliver the Confidentiality Agreement attached to this
Agreement to the Company.
Section 1.5 Rights in Work Product. All materials, inventions,
discoveries, improvements and designs developed by the Consultant in the
performance of the Services during the term of this Agreement and all
goodwill associated therewith, and all related documents, data, models,
plans, specifications and similar materials, shall become the sole and
exclusive property of the Company when prepared or created, and shall be
immediately disclosed to the Company by the Consultant. The Consultant
hereby assigns all rights, title and interest in all such items and all
related intellectual property and all goodwill associated therewith to
the Company. In addition, the Consultant agrees that any copyrightable
materials created under this Agreement constitute "work made for hire"
under 17 U.S.C. ss. 101. If for any reason such material do not
constitute works made for hire, the Consultant hereby irrevocably and
exclusively grants, assigns and conveys all right, title and interest
thereto, including any copyrights relating thereto, to the Company. The
Consultant agrees to execute such further documents as the Company deems
necessary to confirm the Company's ownership of the items and
intellectual property described in this Section 1.5.
Section 1.6 Competitive Activities. Without the prior written
permission of the Company, which permission may be withheld in the sole
discretion of the Company, the Consultant agrees that during the term of
this Agreement and for a period of two (2) years thereafter, he will
not, alone or with others, directly or indirectly, as principal, agent,
trustee or through the agency of any corporation, partnership,
association or agent or agency, (i) participate or engage in the
Business, (ii) service or solicit any of the Company's business from any
customer of the Company, (iii) request or advise any customer of the
Company to withdraw, curtail or cancel such customer's business with the
Company, or (iv) solicit for employment any person employed by the
Company; provided however, that (i) no owner of less than five percent
(5%) of the outstanding stock of any publicly traded corporation shall,
for purposes of this Section 1.6, be deemed to engage solely by reason
of his stock position in any of its businesses, and (ii) the future
acquisition by the Consultant or his affiliates of any company engaged
in the Business shall not be deemed to violate this Section 1.6 if less
than ten percent (10%) of the total revenues of the acquired company are
derived from the Business. In the event this provision is breached, the
Company may terminate this Agreement and pursue all rights and remedies
available to the Company at law, in equity or by statute.
<PAGE>
Section 2. Consideration.
Section 2.1 Compensation. In exchange for and in consideration of
(a) the Services to be rendered by the Consultant as requested by the
Company, and (b) the Consultant's promise not to render similar services
to any person or entity not affiliated with the Company during the term
of this Agreement, the Company agrees to pay the Consultant the annual
sum of $84,000 in equal monthly installments of $7,000, payable in
advance on the Effective Date and on the same date of each month
thereafter.
Section 2.2 Reimbursement of Out-of-Pocket Expenses. In addition
to the compensation of the Consultant set forth in Section 2.1, the
Company agrees to promptly reimburse the Consultant for any reasonable,
Company related business expenses incurred by him during the term of
this Agreement provided, however, any reimbursable business expense in
excess of $250 must be pre-approved in writing by the Company.
Section 2.3 Other Benefits. In addition to the compensation of
the Consultant set forth in Section 2.1 and the reimbursement of
out-of-pocket expenses set forth in Section 2.2, the Company agrees to
provide the Consultant with an office, office furniture and equipment,
telecommunications, reception and secretarial services, all of which
shall be located within the offices of the Company in Woodinville,
Washington (or such other place as may be mutually acceptable to the
Parties) and during normal business hours of the Company.
Section 3. Relationship Between the Parties.
Section 3.1 Independent Contractor. The Parties expressly
understand and agree that the Consultant is acting as an independent
contractor unrelated to the Company or any of its subsidiary or
affiliated companies. Nothing in this Agreement is intended to create a
relationship, express or implied, of employer-employee or
principal-agent between the Company and the Consultant.
Section 3.2 Taxes and Withholding. The Consultant shall be solely
responsible, at his own expense, and represents that he has the
necessary accounting resources and an employer identification number,
for withholding or paying all local, state and federal income,
employment, unemployment, and other taxes, making all filings and
reports with respect to FICA and FUTA taxes, and making all filings and
reports in connection with or relating to the Services to be rendered by
the Consultant. The Consultant shall indemnify the Company against any
breach of these obligations.
Section 3.3 No Fringe Benefits from the Company. The Consultant
acknowledges that as an independent contractor he will not be entitled
to participate, in or request any benefits from, the Company, including
but not limited to: any life, accident, health, dental, disability or
other insurance plans offered to the Company's employees or any plans,
arrangements or distributions by the Company pertaining to or in
connection with any pension, bonus, profit sharing or other fringe
benefit plan. Notwithstanding the foregoing, at the request of
Consultant, and at his sole cost and expense, the Company agrees to
continue providing the same benefits to Consultant as he had prior to
the Effective Date, but only to the extent the Company is permitted to
do so by applicable law.
Section 3.4 No Authority to Bind or Pledge Credit. Consultant
shall have all the powers of the Chief Executive Officer and a member of
the Board of Directors for so long as he is appointed as such by the
Company. If Consultant resigns or is removed as an officer and director
of the Company, the Consultant thereafter shall not have, nor shall he
represent himself as having, any authority to make contracts in the name
of, or binding on, the Company or to pledge the Company's credit or to
<PAGE>
extend credit in the Company's name. Likewise, the Company shall not
have, nor shall it represent itself as having, any authority to make
contracts in the name of, or binding on, the Consultant or to pledge
credit in the name of the Consultant.
Section 4. Term; Termination.
Section 4.1 Term. Except as otherwise provided in this Section 4
or unless mutually terminated by the Parties, the Term of this Agreement
shall be for a period of three (3) years beginning on the Effective
Date.
Section 4.2 Termination for Cause. The Company may, but shall not
be obligated to, terminate this Agreement for "Cause" on ten (10) days
written notice to the Consultant in which case termination shall be
effective on the eleventh (11th) day following the date of the notice.
As used in this Agreement, "Cause" shall mean the Consultant's
conviction of (a) a felony, or (b) a misdemeanor involving embezzlement,
fraud, conversion, or misuse of the Company's funds or resources or that
affect the Company's business, operations or reputation or substantially
impairs the Consultant's qualifications, character or ability to perform
his duties under this Agreement. "Cause" shall also mean the breach of
any provision of this Agreement.
Section 4.3 Termination Without Cause. Either party may terminate
this Agreement without Cause for any reason whatsoever upon sixty (60)
days written notice to the other Party. The termination shall be
effective on the sixty-first (61st) day following the date of the
notice. If termination is by the Company without Cause, the Consultant
shall be entitled to compensation through the date of termination
pursuant to Section 2.1 regardless of whether the Consultant continues
to render Services during this time period. In addition, in the event
that the Consultant is terminated by the Company without Cause, the
Consultant shall be entitled to receive the compensation set forth in
Section 2.1 for the remainder of the original three year term of this
Agreement. Provided, however, the compensation the Consultant would
otherwise be entitled to shall be subject to pro rata reduction in the
event the Consultant has reduced his hours as set forth in Section 4.5.
If termination is by the Consultant without Cause, the Consultant shall
be entitled to compensation through the date of termination pursuant to
Section 2.1, but only if the Consultant continues to render Services
during this time period and subject to pro rata reduction in the event
the Consultant has reduced is hours as set forth in Section 4.5.
Section 4.4 Death or Incapacity of the Consultant. This Agreement
shall immediately terminate upon the death or incapacity of the
Consultant. Incapacity shall mean the Consultant's physical or mental
inability to perform the duties as Chief Executive Officer of the
Company for a continuous period of six (6) months. Provided, however, in
the event of the Consultant's death or incapacity, any accrued but
unpaid compensation or other right or benefit extended to the Consultant
under this Agreement shall inure to the benefit of the Consultant's
assignees, designees, heirs or legatees as the case may be.
Section 4.5. Termination or Reduction of Working Hours by the
Consultant. The Consultant may, at his option at any time after one year
from the Effective Date of this Agreement, reduce his hours, or, having
reduced his hours previously, increase his hours, with a corresponding
reduction or increase in compensation, but not more than once during
every six month period.
Section 4.6 Termination Not To Affect Accrued Rights. The
termination of this Agreement shall not affect any right or claim of
either party incurred or accruing prior to the date of termination,
including without limitation, any right or claim of the Consultant for
compensation for Services rendered or reimbursable expenses incurred
prior to the date of termination.
<PAGE>
Section 5. Notices.
Section 5.1 Notice to the Company. Any notice to be given to the
Company under this Agreement shall be sent via certified mail, return
receipt requested, to:
President
Essentia Water, Inc.
24100 State Route 9 SE, Bldg. A
Woodinville, WA 98072
Section 5.2 Notice to the Consultant. Any notice to be given to
the Consultant under this Agreement shall be sent via certified mail,
return receipt requested, to:
Kenneth L. Uptain
23711 Meridian Avenue South
Bothell, WA 98021
Section 5.3 Notices Effective upon Mailing. Except as may
otherwise be specifically provided in this Agreement, any notice sent to
either party shall be effective on, and the time for any action to be
taken in response to such notice shall be calculated from, the date such
notice was deposited in the United States mail as certified mail, return
receipt requested.
Section 6. General Provisions.
Section 6.1 Assignability. The Parties agree that the benefits
accruing to the Consultant under this Agreement (but not the obligations
of the Consultant) may be freely assigned. The Parties further agree
that the Company may neither assign any of the benefits derived from
this Agreement nor delegate any of its responsibilities or obligations
under this Agreement without the prior, written consent of the
Consultant, which written consent will not be unreasonably withheld or
delayed; provided, however, the Company may assign its rights under this
Agreement to an affiliate without the Consultant's consent.
Section 6.2 Binding Effect. This Agreement is binding upon, and
shall inure to the benefit of, the Parties and their respective heirs,
successors, personal representatives and permitted assigns.
Section 6.3 Amendment. This Agreement may only be amended or
modified by a writing signed by the Parties and no oral statement shall
in any manner amend, modify or otherwise affect the terms and conditions
of this Agreement.
Section 6.4 Waiver. No failure or delay by a party in exercising
any right or remedy under this Agreement will waive any provision of
this Agreement. Nor will any single or partial exercise by a party of
any right or remedy under this Agreement preclude it from otherwise or
further exercising any rights or remedies which it may have, or any
other rights or remedies granted by any law or any related document.
Section 6.5 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. This Agreement shall be interpreted and enforced under the
laws of the State of Washington. The prevailing party in any dispute to
enforce this Agreement shall be entitled to recover from the losing
<PAGE>
party its costs and a reasonable attorneys' fee to be determined by the
court.
Section 6.6 Severability. In the event that any provision of this
Agreement shall be held invalid, illegal or unenforceable by any court
of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision of this Agreement.
Section 6.7 Survival of Terms. The terms and provisions of
Sections 1.4, 1.6, 3.4, 4.3 and 4.5 shall survive the termination or
expiration of this Agreement.
Section 6.8 Captions. The captions are for convenience only, and
are not part of this Agreement and do not, in any way, limit or amplify
the terms and provisions of this Agreement.
Section 6.9 Counterparts/Facsimile. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and the same
instrument. A facsimile or other reproduction of this Agreement may be
executed by one or more of the Parties, and an executed copy of this
Agreement may be delivered by one or more of the Parties by facsimile or
similar instantaneous electronic transmission device pursuant to which
the signature of or on behalf of such party can be seen, and such
execution and delivery shall be considered valid, binding and effective
for all purposes. At the request of either Party, the Parties agree to
execute an original of this Agreement as well as any facsimile or other
reproduction of this Agreement.
Section 6.10 Entire Agreement. This Agreement constitutes the
entire agreement between the Parties and supersedes any prior
understandings, agreements or representations by or between the Parties,
whether oral or written, that may have related in any way to the subject
matter of this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Consulting Agreement
as of the Effective Date.
Essentia Water, Inc.,
a Delaware corporation
By:
---------------------------- ----------------------------------
Kenneth L. Uptain Frederic F. Wolfer, Jr., Director
<PAGE>
CONFIDENTIALITY AGREEMENT
This Confidentiality Agreement (the "Agreement") is made effective as of
January 21, 2000 (the "Effective Date"), by and between Essentia Water, Inc.,
with a principal place of business at 24100 State Route 9 SE, Building A,
Woodinville, WA 98072 (the "Company"), and Kenneth L. Uptain, whose address is
23711 Meridian Avenue South, Bothell, Washington 98021 (the "Consultant"), to
assure the protection and preservation of the confidential and proprietary
nature of information to be disclosed or made available by the Company to the
Consultant in connection with the business affairs of the Company. The Company
and the Consultant are collectively referred to as the "Parties."
WHEREAS, the Company is the surviving corporation of the merger of
Essentia Water, Inc., a Washington corporation, into Essentia Water, Inc., a
Delaware corporation, pursuant to the terms of that certain Agreement and Plan
of Merger dated January 21, 2000;
WHEREAS, the Company intends to disclose to the Consultant certain data
and other information of a proprietary and confidential nature (as defined in
Section 1 and as referred to in this Agreement as "Confidential Information").
NOW THEREFORE, in reliance upon and in consideration of the covenants
and undertakings contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
Section 1. Confidential Information. Subject to the exclusions contained
in Section 2, the term "Confidential Information" shall mean any information,
technical data or know-how related to any aspect of the Company's business
(including without limitation, research findings, products, proposals, formulas,
test results, product developments, discoveries, inventions, processes, designs,
drawings, engineering studies, marketing reports, customer lists and financial
information) which is disclosed by the Company to the Consultant, either
directly or indirectly, in writing, orally, electronically, graphically, or by
drawings, plans or inspection of products, tests or otherwise. If Confidential
Information is disclosed in oral form, the Company agrees to summarize it in
writing and transmit the writing to the Consultant within thirty (30) days of
the oral disclosure.
Section 2. Exclusions. The term "Confidential Information" shall not
include any information, technical data or know-how which:
a. is already (or otherwise becomes) publicly known, not
as a result of any action or inaction of the Consultant;
b. is in the Consultant's possession prior to disclosure by
the Company as can be shown by the Consultant's files and records as
they existed immediately prior to the disclosure;
c. is approved for release by written authorization of the
Company;
d. is independently developed and disclosed by a third party
to the Consultant; or
e. disclosure is required by law or regulation. In the event that
Confidential Information is required to be disclosed pursuant to this
Subsection 2.e., the Consultant shall give the Company at least thirty
(30) days written notice to allow the Company to assert whatever
exclusions or exemptions may be available to it under such law or
regulation.
Section 3. Use of Confidential Information. The Consultant shall
maintain in trust and confidence and shall not disclose to any third party or
use for any unauthorized purpose any Confidential Information received from the
Company. The Consultant may use any Confidential Information only to the extent
required to effectuate the purposes set forth in this Agreement. Confidential
<PAGE>
Information shall not be used for any purpose or in any manner that would
constitute a violation of any laws or regulations, including, without
limitation, the export control laws of the United States. No other rights or
licenses to trademarks, inventions, copyrights or patents are granted or implied
under this Agreement.
Section 4. Reproduction of Confidential Information. Without the prior
written consent of the Company, Confidential Information supplied to the
Consultant shall not be reproduced in any form except as required to effectuate
the purposes set forth in this Agreement.
Section 5. Responsibility of the Consultant. The responsibility of the
Consultant is limited to using his best efforts to protect the Confidential
Information from unauthorized use or disclosure. The Consultant shall advise his
agents who might have access to Confidential Information of its confidential
nature and they shall be bound by the terms of this Agreement. No Confidential
Information shall be disclosed to any agent of the Consultant who does not have
a need to know such information to effectuate the purposes set forth in this
Agreement.
Section 6. Ownership of Confidential Information. All Confidential
Information (including copies) shall remain the property of the Company, and
shall be returned to the Company after the Consultant's need for it has expired,
or upon the request of the Company, and in any event, upon termination of this
Agreement. Notwithstanding the foregoing, the Consultant shall be permitted to
keep a single copy of the Confidential Information he has received in order to
monitor his obligations under this Agreement.
Section 7. Term and Termination. This Agreement shall terminate on the
later of (a) five (5) years from the Effective Date, or (b) two (2) years after
the date the Consultant ceases to be an Consultant of the Company. This
Agreement may be terminated at any earlier date by mutual written agreement of
the Parties. However, the termination of this Agreement shall not relieve either
party of the obligations imposed by this Agreement with respect to Confidential
Information disclosed prior to the date of the termination of this Agreement and
the provisions of Sections 3, 4, 5 and 6 of this Agreement shall survive the
termination of this Agreement for a period of two (2) years from the date of its
termination.
Section 8. Construction. This Agreement shall be construed and governed
by the laws of the State of Washington. The prevailing party in any dispute to
enforce this Agreement shall be entitled to recover from the losing party its
costs and a reasonable attorney's fee to be determined by the court.
Section 9. Disclosure of the Existence of Confidential Information.
Without the prior written consent of the Company, the Consultant shall not
reveal that Confidential Information has been disclosed pursuant to this
Agreement or that he is using the Confidential Information. It is understood
that disclosure pursuant to this Agreement is not a public disclosure, but is
made for the limited purpose of effectuating the purposes set forth in this
Agreement.
Section 10. Remedies Upon Breach. The Consultant acknowledges and agrees
that in the event of any breach of this Agreement by him, including, without
limitation, the actual or threatened disclosure of the Confidential Information
without the prior written consent of the Company, the Company will suffer an
irreparable injury, such that no remedy at law will afford it adequate
protection against, or appropriate compensation for such injury. Accordingly,
the Consultant agrees that the Company may seek specific performance of the
Consultant's obligations under this Agreement, as well as such further
injunctive or other relief as may be granted by a court of competent
jurisdiction.
Section 11. Counterparts/Facsimile. 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. A facsimile or other
<PAGE>
reproduction of this Agreement may be executed by one or more of the Parties,
and an executed copy of this Agreement may be delivered by one or more of the
Parties by facsimile or similar instantaneous electronic transmission device
pursuant to which the signature of or on behalf of the Party can be seen, and
such execution and delivery shall be considered valid, binding and effective for
all purposes. At the request of either Party, the Parties agree to execute an
original of this Agreement as well as any facsimile, telecopy or other
reproduction of this Agreement.
Section 12. Captions. The captions appearing in this Agreement are for
convenience only, are not part of this Agreement, and do not, in any way, limit
or amplify the terms and provisions of this Agreement.
Section 13. Notices. All notices, requests or other writings involving
this Agreement shall be deemed to have been fully given, made or sent when made
in writing and faxed, couriered, or mailed, prepaid and addressed, to the
Parties at the addresses first above written or as may be changed by either
party from time to time by written notice to the other Party.
Section 14. Survival of Rights; Transferability. This Agreement shall be
binding on, and shall inure to the benefit of, the Parties and their respective
successors and assigns. The Consultant may not assign or otherwise transfer any
of his rights and obligations under this Agreement.
Section 15. Entire Agreement, Amendment and Enforceability. There are no
verbal understandings between the Parties. This Agreement contains the entire
agreement between the Parties and may not be changed, modified, amended or
supplemented except by a written instrument signed by the Parties. The
unenforceability of any provision of this Agreement shall not affect the
enforceability of any other provision of this Agreement. Neither this Agreement
nor the disclosure of any Confidential Information pursuant to this Agreement by
the Company shall restrict the Company from disclosing any of its Confidential
Information to any third party.
IN WITNESS WHEREOF, the Parties have signed this Confidentiality
Agreement as of the Effective Date.
COMPANY: Essentia Water, Inc., a Delaware corporation
By:
-----------------------------------------
Frederic F. Wolfer, Jr., Director
CONSULTANT:
-----------------------------------------
Kenneth L. Uptain
<PAGE>
EXHIBIT F
CLOSING CERTIFICATE - SHAREHOLDERS
<PAGE>
EXHIBIT F
CLOSING CERTIFICATE - SHAREHOLDERS
Pursuant to Section 9(a)(i) of the Agreement and Plan of Merger dated
January 21, 2000 (the "Agreement") by and among NextPath Technologies, Inc., a
Nevada corporation (the "Parent"), Essentia Water, Inc., a Delaware corporation
(the "Sub"), Essentia Water, Inc., a Washington corporation (the "Target"), and
Moneta Holdings, LLC and Kenneth L. Uptain (collectively, the "Shareholders"),
the Shareholders, jointly and severally, certify to the Parent and the Sub as
follows:
1. The representations and warranties of the Shareholders as set forth
in Section 5(a) and as set forth in Section 6 of the Agreement (copies of which
are attached and incorporated herein) are true, correct and complete in all
Material respects as of the date of this Closing Certificate; and
2. Each of the conditions specified in Section 9(a)(i)-(iv) of the
Agreement (a copy of which is attached and incorporated herein) has been
satisfied in all respects.
Dated as of January 21, 2000.
Moneta Holdings, LLC
By:
------------------------------
Kenneth L. Uptain, Manager,
Sole Owner
------------------------------
Kenneth L. Uptain
<PAGE>
EXHIBIT G
OPINION OF COUNSEL - SHAREHOLDERS
<PAGE>
NextPath Technologies, Inc.
[Closing Date]
Page 3
EXHIBIT G
January 21, 2000
NextPath Technologies, Inc.
114 South Churton Street, Suite 101
Hillsborough, NC 27278
Ladies and Gentlemen:
We have acted as special counsel to Moneta Holdings, LLC, a Washington limited
liability company ("Moneta"), and Kenneth L. Uptain ("Uptain") (collectively,
the "Shareholders") and Essentia Water, Inc., a Washington corporation (the
"Target"), in connection with the Agreement and Plan of Merger dated January 21,
2000 (the "Agreement") between the Shareholders, Essentia Water, Inc., a
Delaware corporation (the "Sub"), the Target and NextPath Technologies, Inc.
(the "Parent"). This opinion letter is provided to you at the request of the
Shareholders and the Target pursuant to Section 9(a)(viii) of the Agreement.
Capitalized terms used and not otherwise defined in this opinion letter have the
meanings assigned to them in the Agreement.
We have examined the Agreement and the originals or copies of such other
documents, certificates and records, as we have deemed relevant and necessary as
the basis for the opinions hereinafter expressed. We have assumed the
genuineness of all signatures, the authenticity of documents, certificates and
records submitted to us as originals, the conformity to the originals of all
documents, certificates and records submitted to us as certified or reproduction
copies, the legal capacity of all natural persons executing documents,
certificates and records, and the completeness and accuracy as of the date of
this opinion letter of the information contained in such documents, certificates
and records.
This opinion letter is subject to all assumptions, qualifications and
limitations not inconsistent herewith that are described in the Legal Opinion
Accord of the ABA Section of Business Law (1991) at Section 4 ("Reliance by
Opinion Giver on Assumptions"), Section 14 ("Other Common Qualifications"),
Section 16 ("No Violation of Law") and Section 19 ("Specific Legal Issues").
The law covered by the opinions expressed herein is limited to the law of the
State of Washington, except we express no opinion as to compliance with the
Securities Act of Washington.
As used in this opinion letter, the expression "to our knowledge" or expressions
of like import means the conscious awareness of facts or other information by
the lawyers in our firm representing the Shareholders and the Target in
connection with the negotiation of the transaction pursuant to and preparation
of the Agreement. It does not include information that might be revealed if
there were to be undertaken a canvass of all lawyers in all of our offices or a
review of all of our files.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Target has corporate and Moneta has limited liability company power
and authority to execute and deliver the Agreement and to perform their
respective obligations under the Agreement. The Agreement has been duly
executed and delivered by the Shareholders and the Target. The Agreement
constitutes the valid and legally binding obligation of the Shareholders
<PAGE>
and the Target, enforceable against the Shareholders and the Target in
accordance with its terms and conditions, except:
(a) The enforceability thereof may be affected by bankruptcy, insolvency,
moratorium, fraudulent transfer and other similar laws affecting the rights and
remedies of creditors generally and by the effect of general principles of
equity, including without limitation, equitable defenses and concepts of
materiality, reasonableness, unconscionability, impracticability, impossibility,
good faith and fair dealing, and the possible unavailability of specific
performance or injunctive relief, whether applied in an action at law or in
equity;
(b) The courts of the State of Washington may consider extrinsic evidence to
elucidate the meaning of the words used in the Agreement; and
(c) We express no opinion as to the enforceability of the covenants not to
compete contained in Section 8(f) of the Agreement or the enforceability of
Section 12(b) of the Agreement to the extent an indemnification claim thereunder
is based upon the breach of a covenant not to compete made by a Shareholder in
the Agreement or any other document executed and delivered by a Shareholder in
connection with the Agreement.
2. To our knowledge, except as set forth on Disclosure Schedule 5(a) and
6(d), neither the execution and the delivery of the Agreement by the
Shareholders and the Target, nor the consummation of the transactions
contemplated by the Agreement by the Shareholders and the Target,
will (A) violate any Law or Order that names a Shareholder or the
Target and is specifically directed to it or its property, or (B)
conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any part the right to accelerate,
terminate, modify, or cancel, or require any notice under any Material
contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which any of
the Shareholders or the Target is a party.
3. The Target is a corporation duly incorporated and validly existing under
the laws of the State of Washington. Moneta is a limited liability
company duly formed and validly existing under the laws of the State of
Washington.
4. The authorized capital stock of the Target consists of ten million
(10,000,000) shares of no par value common stock, of which, to our
knowledge, three million six hundred fifty-seven thousand nine hundred
sixty-six (3,657,966) shares are issued and outstanding and owned of
record by Moneta and which in turn is wholly owned by Uptain. To
our knowledge, the Shares have been duly authorized and are validly
issued, fully paid and nonassessable. To our knowledge, there are no
outstanding or authorized options, warrants, rights, contracts, calls,
puts, rights to subscribe, conversion rights, or other agreements or
commitments to which the Target is a party providing for the issuance,
disposition, or acquisition of any of its capital stock. To our
knowledge, there are no outstanding or authorized stock appreciation or
similar rights with respect to the Shares.
5. To our knowledge, except as set forth on Disclosure Schedule 6, neither
the Shareholders nor Target need give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any,
Governmental Body in order to consummate the transactions contemplated
by the Agreement, except the filings in the States of Delaware and
Washington required to effect the merger as set forth in Section 2 of
the Agreement.
<PAGE>
This opinion letter is delivered as of its date and without any undertaking to
advise you of any changes of law or fact that occur after the date of this
opinion letter even though the changes may affect a legal analysis or conclusion
or an information confirmation in this opinion letter.
This opinion letter may be relied upon by you only in connection with the
transaction described in the initial paragraph of this opinion letter and may
not be used or relied upon by you for any other purpose or by any other person
for any purpose whatsoever without, in each instance, our prior written consent.
Very truly yours,
<PAGE>
EXHIBIT H
RELEASE
<PAGE>
EXHIBIT H
RELEASE
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Moneta Holdings, LLC and Kenneth L. Uptain, whose
addresses are 23711 Meridian Avenue South, Bothell, Washington 98021, jointly
and severally, and for themselves and their successors and heirs, do hereby
forever release and discharge Essentia Water, Inc., a Washington corporation and
Essentia Water, Inc., a Delaware corporation, and their affiliates,
subsidiaries, successors, officers, directors, managers, agents, servants,
attorneys and employees of and from any and all claims, complaints, petitions,
damages, attorney fees, costs, expenses, losses, demands, actions and causes of
action, known or unknown, which either of them may have, own or hold by reason
of any conduct, matter or thing whatsoever which has been done, omitted or
suffered to have been done prior to the date of this Release except for the
Promissory Note dated as of this date in the principal amount of $400,000 made
by Essentia Water, Inc., a Delaware corporation, in favor of Moneta Holdings,
LLC, the Agreement and Plan of Merger dated as of this date among NextPath
Technologies, Inc., a Nevada corporation, Essentia Water, Inc., a Delaware
corporation, Essentia Water, Inc., a Washington corporation, Moneta Holdings,
LLC, a Washington limited liability company, and Kenneth L. Uptain, and all
agreements delivered pursuant to the foregoing Agreement and Plan of Merger,
including without limitation the Consulting Agreement dated as of this date
between Essentia Water, Inc., a Delaware corporation, and Kenneth L. Uptain.
This Release shall be governed by and construed and enforced under the
laws of the State of Washington.
Executed January 21, 2000.
Moneta Holdings, LLC
By:
-----------------------------
Kenneth L. Uptain, Manager,
Sole Owner
-----------------------------
Kenneth L. Uptain
<PAGE>
EXHIBIT I
CLOSING CERTIFICATE - PARENT AND SUB
<PAGE>
EXHIBIT I
CLOSING CERTIFICATE - PARENT AND SUB
Pursuant to Section 9(b)(i) of the Agreement and Plan of Merger dated as
of January 21, 2000 (the "Agreement") by and among NextPath Technologies, Inc.,
a Nevada corporation (the "Parent"), Essentia Water, Inc., a Delaware
corporation (the "Sub"), Essentia Water, Inc., a Washington corporation (the
"Target"), and Moneta Holdings, LLC and Kenneth L. Uptain (collectively, the
"Shareholders"), the Parent and the Sub certify to the Shareholders as follows:
1. The representations and warranties of the Parent and Sub as set
forth in Section 5(b) of the Agreement (a copy of which is
attached and incorporated herein) are true, correct and complete
in all Material respects as of the date of this Closing
Certificate; and
2. Each of the conditions specified in Section 9(b)(i)-(iii) of the
Agreement (a copy of which is attached and incorporated herein)
has been satisfied in all respects.
Dated as January 21, 2000.
NextPath Technologies, Inc.
By:
---------------------------------------
Frederic F. Wolfer, Jr., Vice President
Essentia Water, Inc., a Delaware
corporation
By:
---------------------------------------
Frederic F. Wolfer, Jr., Vice President
<PAGE>
EXHIBIT J
OPINION OF COUNSEL - PARENT
<PAGE>
Moneta Holdings, LLC
Kenneth L. Uptain
January 21, 2000
Page 3
January 21, 2000
Moneta Holdings, LLC23711 Meridian Avenue South
Bothell, WA 98021
Mr. Kenneth L. Uptain
23711 Meridian Avenue South
Bothell, WA 98021
Re: NextPath/Essentia Agreement and Plan of Merger
Opinion of Counsel
Our File No. 30868-68
Dear Ladies and Gentlemen:
We have acted as special counsel to NextPath Technologies, Inc. (the "Parent")
and Essentia Water, Inc., a Delaware corporation (the "Sub"), in connection with
the Agreement and Plan of Merger dated January 21, 2000 (the "Agreement") among
the Parent, Sub, Essentia Water, Inc., a Washington corporation (the "Target"),
and you (the "Shareholders"). This opinion letter is issued to you in response
to the requirement of Section 9(b)(v) of the Agreement.
Capitalized terms used and not otherwise defined in this opinion letter have the
meanings assigned to them in the Agreement.
In arriving at the opinions expressed in this opinion letter, we have relied
solely upon certificates of public officials of the State of Nevada and
Delaware. As to all matters of fact (including factual conclusions and
characterizations and descriptions of purpose, intention and other states of
mind), we have relied solely upon representations in the Parent's and Sub's
Closing Certificate, and upon the representations and warranties of the Parent
and the Sub in the Agreement, and we have assumed, without independent inquiry,
the accuracy of those representations.
We have also examined other documents and records of, or pertaining to, the
Parent and Sub to the extent we deemed necessary and appropriate as a basis for
the opinions set forth in this opinion letter. In making our examination, we
have assumed (a) the authenticity and accuracy of all documents submitted to us
as originals, (b) the genuineness of all signatures, (c) the legal capacity of
all natural persons and persons signing in a representative capacity, (d) the
conformity of the original documents to all documents submitted to us as copies,
(e) the authenticity of the originals of such copies, and (f) that each of the
Shareholders has received all documents he or she was to receive under the
Agreement and any other document contemplated by the Agreement.
Based upon the facts, assumptions, qualifications, exclusions and other
limitations which are set forth in this opinion letter, we are of the following
opinions:
1. To our knowledge, the Parent is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada. To
our knowledge, it has full power and authority to carry on its business
as it is now being conducted and to own and operate its assets and
business. To our knowledge, the Sub is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
<PAGE>
Delaware. To our knowledge, it has full power and authority to carry on
its business as it is now being conducted and to own and operate its
assets and business.
2. The Parent has authorized capital stock consisting of (a) 100,000,000
shares of common stock, $0.001 par value, of which to our knowledge
approximately 50,000,000 shares have been issued and are outstanding as
of the Effective Date, and (b) 1,000,000 shares of preferred stock,
$0.001 par value, none of which, to our knowledge, have been issued and
are outstanding as of the Effective Date. The Sub has authorized capital
stock consisting of 5,000 shares of common stock, $.01 par value, of
which to our knowledge, 5,000 shares have been issued and are
outstanding as of the Effective Date. To our knowledge, the outstanding
shares have been validly issued and are fully paid and nonassessable
3. To our knowledge, the Parent and Sub have full power and authority
(including full corporate power and authority) to execute and deliver
the Agreement and to perform their obligations under the Agreement and
the Agreement has been duly executed and delivered by the Parent and
Sub. To our knowledge, this Agreement constitutes the valid and legally
binding obligation of the Parent and Sub, enforceable in accordance with
its terms and conditions except for the Equitable Exceptions. To our
knowledge, the Parent and Sub need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of, any
Governmental Body in order to consummate the transactions contemplated
by the Agreement.
4. To our knowledge, neither the execution and the delivery of the
Agreement by the Parent and Sub, nor the consummation of the
transactions contemplated by the Agreement by the Parent and Sub, will
(a) violate any Law or Order or other restriction of any Governmental
Body to which the Parent and Sub are subject or any provision of their
charter or bylaws, or (b) 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 contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest, or
other arrangement to which either the Parent or Sub is a party or by
which they are bound or to which any of their assets are subject and
which has a Material Adverse Effect on the Parent and Sub.
5. To our knowledge (a) the Parent and Sub are not a party to any
litigation, pending or threatened, (b) no material claim has been made,
asserted or threatened against the Parent or Sub, and (c) with the
exception of the SEC's current investigation In the Matter of NextPath
Technologies, Inc. (HO-8876) and a market review being conducted by NASD
Regulation, Inc., there are no proceedings involving the Parent or the
Sub pending before any federal, state or municipal government, or any
department, board, body or agency, nor have any been threatened.
Whenever a statement in this opinion letter is qualified "to our knowledge," it
is intended to indicate that during the course of our representation of the
Parent and Sub, no information that would give us current actual knowledge of
the inaccuracy of the statement has come to our attention. We have not, however,
undertaken any independent investigation to determine the accuracy of the
statement.
Our opinions are limited to matters of Oklahoma law. We express no opinion to
the extent that the laws of Nevada, Delaware or any jurisdiction other than
Oklahoma are applicable to the subject matter of this opinion letter.
<PAGE>
This opinion letter is furnished by us as special counsel for the Parent and
Sub, and is solely for your benefit. It may be relied upon only by you. The
opinions are not to be quoted, reproduced, circulated or otherwise relied upon
by any other party except with our prior written consent. This opinion letter is
based solely on laws, facts and circumstances existing on the date of this
opinion letter. We assume no obligation to revise, supplement or update this
opinion letter to reflect any changes in such laws, facts and circumstances.
Very truly yours,
McKinney & Stringer, P.C.
<PAGE>
EXHIBIT K
PARENT FINANCIAL STATEMENTS
<PAGE>
EXHIBIT L
REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT M
RELEASE - VENTURENOW, INC.
<PAGE>
EXHIBIT M
RELEASE
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Groupnow, Inc. (formerly Venturenow, Inc.), a
Delaware corporation whose address is 516 N.E. 9th Avenue, Fort Lauderdale,
Florida 33301, for itself and its successors and heirs, does hereby forever
release and discharge Essentia Water, Inc., a Washington corporation, and
Essentia Water, Inc., a Delaware corporation, and their affiliates,
subsidiaries, successors, officers, directors, managers, agents, servants,
attorneys and employees of and from any and all claims, complaints, petitions,
damages, attorney fees, costs, expenses, losses, demands, actions and causes of
action, known or unknown, which either of them may have, own or hold by reason
of any conduct, matter or thing whatsoever which has been done, omitted or
suffered to have been done prior to the date of this Release.
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Essentia Water, Inc. a Washington corporation,
Essentia Water, Inc. a Delaware Corporation, Kenneth Uptain and Moneta Holdings,
LLC, for themselves and their successors and heirs, do hereby forever release
and discharge Venturenow, Inc., a Delaware corporation, and their affiliates,
subsidiaries, successors, officers, directors, managers, agents, servants,
attorneys and employees of and from any and all claims, complaints, petitions,
damages, attorney fees, costs, expenses, losses, demands, actions and causes of
action, known or unknown, which either of them may have, own or hold by reason
of any conduct, matter or thing whatsoever which has been done, omitted or
suffered to have been done prior to the date of this Release.
<PAGE>
This Release shall be governed by and construed and enforced under the
laws of the State of Washington.
Essentia Water, Inc., a Delaware corporation
By: January 21, 2000
------------------------------------------
Frederic F. Wolfer, Jr., Vice President
Essentia Water, Inc., a Washington corporation
By: January 21, 2000
-------------------------------------------
Kenneth L. Uptain, CEO
Groupnow, Inc. (formerly Venturenow, Inc.), a Delaware corporation
By: January 21, 2000
-------------------------------------------
David J. Simonetti,
Chief Executive Officer
Moneta Holdings, LLC
By: January 21, 2000
-------------------------------------------
January 21, 2000
-------------------------------------------
Kenneth Uptain
<PAGE>
DISCLOSURE SCHEDULES
<PAGE>
DISCLOSURE SCHEDULE 3(b)
Calculation of Parent Shares
CALCULATION OF NEXTPATH SHARES TO BE ISSUED AT CLOSING
FACTS:
A. Exchange price before adjustment for vested Essentia
stock options............................................$8,000,000
B. VentureNow fee per Financial Advisory Agreement..........$ 270,000
C. Essentia shares outstanding (100% Moneta Holdings)....... 3,657,966 shs
D. Essentia shares allocated for stock option plan.......... 840,000 shs
E. Stock option plan vested shares.......................... 165,072 shs
F. Remaining options shares subject to vesting over next
4-5 years.................................................. 674,928 shs
G. Stock option plan shares exercised......................... zero
H. Exchange price per share [A / (C + E)]..................... $2.0925
I. Exchange price net of vested options (C x H).............$7,654,294
CALCULATION OF NUMBER OF NEXTPATH
SHARES TO BE ISSUED AT CLOSING:
a. Assumed NextPath common stock valuation per Subsection 3(a) formula... $18.66
b. NextPath common stock valuation after 30% discount... $13.0667 c. Number of
Essentia shares exchanged for one NextPath share (b / H)... 6.2445 shs d.
NextPath shares required in exchange for outstanding Essentia shares (C /
c)...585,790
shs
e. NextPath shares tendered to VentureNow (B / b)... 20,663 shs f. NextPath
shares tendered to Moneta Holdings (d - e)... 565,127 shs g. Equivalent NextPath
shares allocated for stock option plan (D / c)... 134,518 shs h. Equivalent
NextPath shares for options vested at closing (E / c)... 26,435 shs i.
Equivalent NextPath shares for options subject to vesting over 4-5 years(F /
c)...
108,083 shs
<PAGE>
DISCLOSURE SCHEDULE 3(g)
Target Stock Options
Outstanding Option Holders
JAMES S. TONKIN... 29,978 NextPath Shares
7559 E Woodshire Cove
Scottsdale, AZ 85258
KEITH C. HUETSON... 14,413 NextPath Shares
844 Sprague Street
Edmonds, WA 98020
RONALD E. KENDRICK... 14,413 NextPath Shares
622 Robinson Street
Coquitlam, British Columbia, Canada V3J 4E3
DR. RALPH E. HOLSWORTH, JR., D.O... 14,413 NextPath Shares
c/o Craig Medical Center
580 Pershing Street
Craig, CO 81625
CHERYL L. DAVIS... 7,879 NextPath Shares
924 Sprague Street
Edmonds, WA 98020
JERRY MILLER... 4,036 NextPath Shares
398 N Sicily Place
Chandler, AZ 85226
WAYNE ADDISON... 4,036 NextPath Shares
24722 Dana Point Drive
Dana Point, CA 92629
CARRIE A. WOODS... 4,036 NextPath Shares
5515 158th Place SW
Edmonds, WA 98026
MARYANN MIHAEL... 4,036 NextPath Shares
1602 Kings Mill Way
Madison, WI 53718
UNDISTRIBUTED SHARES 37,278 NextPath Shares
<PAGE>
DISCLOSURE SCHEDULE 5(a)
Shareholders' Amended Representations and Warranties
Nothing to disclose.
<PAGE>
DISCLOSURE SCHEDULE 5(b)
Amended Representations and Warranties Concerning the Parent and
Sub
Nothing to disclose.
<PAGE>
DISCLOSURE SCHEDULE 5(b)(ii)
5% or More Shareholders of Parent
Ownership ranked by amount of holding as of January 14, 2000
Name Shares Percent
---- ------ -------
LION SHARE HOLDINGS LLC 8,000,000 16.268
WOW CONSULTING GROUP 5,848,885 11.894
18352 DALLS PRKWAY #136-440
DALLAS, TX 75287
CEDE & CO 4,999,790 10.167
BOX 20 BOWLING GREEN STATION
NY, NY 10274
MERIDIAN CAPITAL FUND LLC 3,600,000 7.321
11150 W. OLYMPIC BLVD.
LOS ANGELES, CA 90064
JAMES R. LADD 2,713,000 5.517
7106 SUNRISE RD
CHAPEL HILL, NC 27514
<PAGE>
DISCLOSURE SCHEDULE 5(b)(iv)
Parent Approvals
Nothing to disclose.
<PAGE>
DISCLOSURE SCHEDULE 5(b)(vi)
Litigation
On November 29, 1999, NextPath was orally advised by Theodore Dowd, a
Regulatory Analyst-Market Regulation with NASD Regulation, Inc. in Rockville,
Maryland, that the NASD was conducting a "routine market review" of NextPath due
to the fact that the price of NextPath stock had increased in recent months at a
rate in excess of the NASD's benchmark. Mr. Dowd orally requested a number of
documents concerning NextPath's News Releases and related transactions, which
were provided to him in two parts on December 8, 1999 and January 4, 2000.
NextPath has advised Mr. Dowd that it intends to fully cooperate with the NASD
as it conducts its review.
On January 11, 2000, NextPath Technologies, Inc. received a copy of the
SEC's December 20, 1999 Order Directing Private Investigation In the Matter of
NextPath Technologies, Inc. (the "Order"). The Order is a confidential document
directing a non-public investigation. While the Order is not available to the
public, it appears to focus on the increase in the trading price of NextPath's
common stock during the past six months. NextPath has advised the SEC that it
intends to fully cooperate with its staff as it conducts its investigation. In
the meantime, NextPath intends to continue to execute its business plan and to
pursue, negotiate, and close acquisitions, joint ventures and other strategic
alliances which it believes will allow NextPath and its subsidiaries to become
significant participants in a number of rapidly expanding technology market
sectors and which it believes will result in increases in the revenues and
profitability of NextPath, its subsidiaries, and the companies joining or joint
venturing with NextPath.
<PAGE>
DISCLOSURE SCHEDULE 5(b)(xvii)
Events Subsequent to Most Recent Financial Statement of Parent
Nothing to disclose.
<PAGE>
DISCLOSURE SCHEDULE 5(b)(xvi)
Parent Subsidiaries (1)
NAME STATE OWNERSHIP DATE FORMED
---- ----- --------- -----------
Essentia Water, Inc. DE NextPath 12/30/99
Global Certified Mail, Inc. DE NextPath - 100% 10/14/99
(2)
Laser Wireless, Inc. DE NextPath 10/12/99
Laser Wireless, Inc. PA NextPath 3/2/98
NextPath AES, Inc. DE NextPath 11/23/99
NextPath Environmental Services, Inc. DE NextPath 11/23/99
NextPath Technologies, Inc. DE NextPath 11/23/99
NextPath Technologies, Inc. CA NextPath 12/8/99
PriMedium, Inc. DE NextPath 10/14/99
Sagebrush Technology, Inc. DE NextPath 10/12/99
Universal Systems Solutions, Inc. AL Tom Carter (3)
Willow Systems, Inc. DE NextPath 10/12/99
-------------------------------
(1) See also Disclosure Schedule 5(b)(xix)
(2) To be 80% NextPath, 20% Tom Carter after transaction has closed.
(3) To be 20% NextPath, 80% Tom Carter after the transaction has closed.
<PAGE>
DISCLOSURE SCHEDULE 5(b)(xix)
Business of Parent and Subsidiaries
Attached is NextPath's Proforma Corporate Organization as of January 1, 2000.
NextPath has also executed a Subscription Agreement to purchase $10,000,000 of
Series A Preferred Stock, at a price of $10 per share (10,000 shares) of
Venturenow, Inc., a Delaware corporation with its principal place of business in
Fort Lauderdale, Florida.
<PAGE>
DISCLOSURE SCHEDULE 6
Amended Representations and Warranties Concerning the Target
Nothing to disclose.
<PAGE>
DISCLOSURE SCHEDULE 6(b)
Target Stock Options
Outstanding Option Holders
JAMES S. TONKIN... 29,978 NextPath Shares
7559 E Woodshire Cove
Scottsdale, AZ 85258
KEITH C. HUETSON... 14,413 NextPath Shares
844 Sprague Street
Edmonds, WA 98020
RONALD E. KENDRICK... 14,413 NextPath Shares
622 Robinson Street
Coquitlam, British Columbia, Canada V3J 4E3
DR. RALPH E. HOLSWORTH, JR., D.O... 14,413 NextPath Shares
c/o Craig Medical Center
580 Pershing Street
Craig, CO 81625
CHERYL L. DAVIS... 7,879 NextPath Shares
924 Sprague Street
Edmonds, WA 98020
JERRY MILLER... 4,036 NextPath Shares
398 N Sicily Place
Chandler, AZ 85226
WAYNE ADDISON... 4,036 NextPath Shares
24722 Dana Point Drive
Dana Point, CA 92629
CARRIE A. WOODS... 4,036 NextPath Shares
5515 158th Place SW
Edmonds, WA 98026
MARYANN MIHAEL... 4,036 NextPath Shares
1602 Kings Mill Way
Madison, WI 53718
UNDISTRIBUTED SHARES 37,278 NextPath Shares
<PAGE>
DISCLOSURE SCHEDULE 6(d)
Target Approvals
Nothing to disclose.
<PAGE>
DISCLOSURE SCHEDULE 6(g)
Events Subsequent to the Most Recent Financial Statement of Target
(11/30/99)
In the fourth quarter of 1999, Target contracted to provide customer PETsMART
with private label bottled water. The initial order, to be delivered during the
first quarter of 2000, is anticipated to approximate 48,000 cases comprising 12
one-liter bottles. In that regard, Target has released initial purchase orders
aggregating $271,000 for the production of bottles, cups, closures, boxes and
labels. The manufacturers are requiring $48,000 in advance payments before these
materials are produced.
Target amended its Articles of Incorporation effective October 14, 1999 to
authorize the issuance of 10,000,000 shares of common stock.
Effective October 31, 1999, Target's sole shareholder converted $500,000 of
interest-bearing debt into 304,878 shares of common stock.
Effective November 1, 1999, and in the interest of cost containment, Target
modestly downgraded its group medical coverage.
During December 1999, Target signed a warehouse/fulfillment contract with LaGrou
Distribution System, Inc. of Chicago.
Target anticipates a December, 1999 operating loss of approximately $75,000.
Effective January 1, 2000, Target will be required to change its Life & Long
Term Disability Plan because of the reduced size of the employee base. Benefits
will be smaller with annual premiums increasing by approximately $3,200.
During January, 2000, Target signed manufacturing agreements with Renegade of
America of Glendale, AZ and Meadow Creek Mountain Water Co. of Greeneville, TN.
Target has recently begun shipping to distributors serving the northeast states.
In that regard, and as evidenced by Document One attached, Target is
encountering licensing regulations not before encountered in the rest of the
country. The respective state agencies enforcing these regulations have not
prohibited sale of Target's products but have noted that the "product cannot be
legally sold until your company is licensed." Target is not finding the
licensing requirements to be particularly onerous and, as evidenced by Document
Two attached, is in the process of complying with agency requests.
<PAGE>
DISCLOSURE SCHEDULE 6(h)
Target Liabilities
Nothing to disclose.
<PAGE>
DISCLOSURE SCHEDULE 6(i)
Tax Matters
Nothing to disclose.
<PAGE>
DISCLOSURE SCHEDULE 6(k)
Real Property
The following list specifies all real property leased by Target:
Target sub-leases 710 sq. ft. of office space and 308 sq. ft. of
warehouse space at 24100 SR 9 SE, Bldg A, woodinville, WA 98072 from
Pure Packaging, Inc. for $855 per month.
<PAGE>
DISCLOSURE SCHEDULE 6(l)
Personal Property
The following list specifies all personal property with an initial purchase
value of more than $1,000 owned by the Target:
AL-50GR Ionic Separator $284,644
Four MW15 Ionic Separators $25,000
Phone System $ 2,000
Network Server & Internet Connections $ 5,202
Trade Show Display System $ 4,011
Mail Order Software $ 4,676
Fax/Copiers/Printers (2) $ 2,175
Copy Machine $ 2,389
<PAGE>
Disclosure Schedule 7(m)
Page 1
DISCLOSURE SCHEDULE 6(m)
Intellectual Property
The following documents are hereby disclosed as pertaining to intellectual
property rights and ownership:
EXCLUSIVE LICENSING AND MANUFACTURING AGREEMENT with PTX Food
Corporation, dated September 17, 1998. Licenses Target to exclusive use
of several formulations as additives for bottle water and beverage
products.
EXCLUSIVE LICENSE AND DISTRIBUTION AGREEMENT with A.R.V. Co., Ltd.,
dated June 24, 1998. Licenses Target to exclusive rights to use, market
and distribute patented technology and equipment within North America.
OTHER INTELLECTUAL PROPERTIES as evidenced by the attached trademark,
trade name and trade dress items.
During the first quarter of 1999, Target was instructed to "cease and desist" in
the use of the "Micropure" mark in its marketing and packaging materials. Target
agreed in the third quarter to phase and relinquish use of the mark.
<PAGE>
DISCLOSURE SCHEDULE 6(n)
Product Liability/Warranties
Nothing to disclose.
<PAGE>
DISCLOSURE SCHEDULE 6(o)
Contracts
SUB-LEASE AGREEMENT with Pure Packaging, Inc. (a.k.a. ODP)
EXCLUSIVE LICENSING AND MANUFACTURING AGREEMENT with PTX Food Corporation.
EXCLUSIVE LICENSE AND DISTRIBUTION AGREEMENT with A.R.V. Co., Ltd.
PRIVATE LABEL MANUFACTURING AND PURCHASE AGREEMENT with PETsMART, Inc.
PRIVATE LABEL MANUFACTURING AND PURCHASE AGREEMENT with Wild Oats Markets, Inc.
CO-PACKAGING AGREEMENT with California Bottling Company
MANUFACTURING AGREEMENTS with:
Renegade of America, Inc.
Meadow Creek Mountain Water Co.
LOGISTICS AND FULFILLMENT SERVICES AGREEMENTS with:
California Distribution Centers
Distribution Services of Atlanta, Inc.
Hess Trucking Company
La Grou Distribution System
Pure Packaging System
SALES/BROKER REPRESENTATIVE AGREEMENTS with:
Advantage Natural Northwest
Aloha Natural Brokers
Chromatic Marketing (a.k.a. Rocky Mountain Presence)
Michael Theodor Brokerage, Inc.
Pezrow
Presence Marketing/Dynamic Presence
Sunbelt Organic's Inc.
Sunbelt Sales & Marketing, Inc.
Sunshine Specialties (Irvine, CA)
Sunshine Specialties (Sacramento, CA)
ASSIGNMENT & ASSUMPTION AGREEMENTS with GW Holdings, LLC FINANCIAL ADVISORY
AGREEMENT with Venturenow, Inc. LETTER OF UNDERSTANDING with Jonathan Hall
EXECUTIVE EMPLOYMENT AGREEMENT with Jim Tonkin EMPLOYMENT AGREEMENT with Maryann
Mihael INDEPENDENT CONTRACTOR AGREEMENT with Wayne Addison
INDEPENDENT CONTRACTOR AGREEMENT with Catalyst Development, Inc. (Ron Kendrick)
CONSULTING AGREEMENT with Dr. Ralph Holsworth, Jr. CONSULTING AGREEMENT with
Jerry Miller CONSULTING AGREEMENT with Tod Miller CONSULTING AGREEMENT with LDI
Group
<PAGE>
DISCLOSURE SCHEDULE 6(p)
Insurance
The following is an accurate and complete list of all policies of fire,
liability, key man life insurance, worker's compensation, products liability and
other forms of insurance owned or held by or beneficially for the Target:
ATLANTIC MUTUAL INSURANCE - POLICY #484302632
Property Insurance (see Document One attached)
Commercial General Liability Insurance (see Document Two attached)
Excess Liability Insurance (see Document Three attached)
Business Automobile Insurance (see Document Four attached)
Crime Insurance (see Document Five attached)
AWB HEALTHCHOICE - GROUP #GLOBA1079237
Premera Blue Cross Medical Plan
WDS Dental Program No. 750
RELIANCE STANDARD LIFE INSURANCE
Policy #GL 033061 Basic Group Life, Basis AD&D Insurance
Policy #LTD100090 Long Term Disability Insurance
WISCONSIN WORKERS' COMPENSATION
Applied For
<PAGE>
DISCLOSURE SCHEDULE 6(q)
Litigation
Nothing to disclose.
<PAGE>
Disclosure Schedule 6(r)
Page 1
DISCLOSURE SCHEDULE 6(r)
Employees
The following is a list of all full time employees of the Target entitled to
employee benefits per Target policies:
Cheryl Davis
Keith Huetson
Maryann Mihael
James Tonkin
Ken Uptain
Carrie Woods
The following is a list of all part time casual employees of the Target not
entitled to employee benefits per Target policies, who have worked in such
capacity in CY1999:
Nothing to disclose
The following is a list of all employees to be given new Consulting or
Employment Agreements, their proposed salary, and their title:
Kenneth L. Uptain, CEO (To Be Determined)
Maryann Mihael, Regional Sales Manager $ 60,000 per annum
The following is a biographical sketch of each officer, director and significant
employee:
Ken Uptain (see Document One attached)
James Tonkin (see Document Two attached)
Keith Huetson (see Document Three attached)
Ronald Kendrick* (see Document Four attached)
*Not an employee. See Consulting Agreement with Catalyst Development,
Inc.
<PAGE>
DISCLOSURE SCHEDULE 6(s)
Employee Benefit (ERISA) Matters
The following is a list of all Employee Benefit Plans that the Target maintains
or to which the Target contributes for the benefit of any current or former
employee of the Target:
AWB HEALTHCHOICE - GROUP #GLOBA1079237
Premera Blue Cross Medical Plan
WDS Dental Program No. 750
RELIANCE STANDARD LIFE INSURANCE
Policy #GL 033061 Basic Group Life, Basis AD&D Insurance
Policy #LTD100090 Long Term Disability Insurance
ESSENTIA WATER, INC. 401(k) PLAN & TRUST
(Target is a non-contributory sponsor)
FUNDED "OUT OF STATE" PERSONAL MEDICAL PLANS
James Tonkin, Arizona
Maryann Mihael, Wisconsin
<PAGE>
DISCLOSURE SCHEDULE 6(t)
Health and Safety Matters
Nothing to disclose.
<PAGE>
DISCLOSURE SCHEDULE 6(u)
Environmental Matters
Nothing to disclose.
<PAGE>
DISCLOSURE SCHEDULE 6(v)
Legal Compliance
Nothing to disclose.
<PAGE>
DISCLOSURE SCHEDULE 6(w)
Business Relationships
Shareholders own 100% of Target's outstanding common stock.
Shareholders have loaned Target $900,000 since inception of business ($600,000
in last twelve months) as evidenced by promissory notes.
Shareholders have converted $500,000 of outstanding loans to Target's common
stock.
Shareholders have accepted Target's new promissory note of $400,000 as evidence
of Target's remaining obligation to Shareholders.
Target has paid $26,188 to Shareholders representing all interest accrued on
promissory notes through October 31, 1999
Shareholders have purchased approximately $1550 of product from Target.
Target carries a $17,479 receivable on its book as of November 30, 1999 that is
owed by a company in which Shareholders have a 67.6% ownership. Balance is
expected to increase to approximately $22,000 by Closing Date.
<PAGE>
DISCLOSURE SCHEDULE 6(x)
Brokers' Fees
FINANCIAL ADVISORY AGREEMENT with Venturenow, Inc.
<PAGE>
DISCLOSURE SCHEDULE 6(y)
Year 2000 Compliance
Target has made no inquiries relating to its key suppliers, vendors or customers
other than a verbal inquiry of California Bottling Company as to their Y2K
readiness. Target has responded favorably to less than five queries regarding
the status of Y2K compliance of Target. No record of these inquiries has been
retained. Target has experienced no Y2K problems subsequent to December 31,
1999.
<PAGE>
DISCLOSURE SCHEDULE 6(z)
Customer List
Attached is a true and complete list of all current customers of the Target, by
name and address, as of the Closing Date. See Document One.
<PAGE>
DISCLOSURE SCHEDULE 6(aa)
Acquired Accounts Receivable
The following is a true and complete list of all accounts receivable of the
Target as of the Closing Date.
Essentia Water, Inc.
Customer Balance Summary
All Transactions
Dec. 31, `99
------------
American Fitness 2,042.00
Apache Distribution 1,491.00
Associated Grocers, Inc. (617.84)
Bob Metzger 41.27
Body Electric, Inc. 1,386.10
Cheryl Davis 97.74
Chris Pollak 154.76
Duane Knapp 721.45
Food For Health 2,135.62
Fred Meyer 1,260.10
Gordon W. Ballsky, Ph.D 13.41
Hypericum Buyer Club 33.00
Jim Tonkin 126.00
Keith Huetson 52.13
Ken Uptain 305.16
KNBRP 89.05
Mark H. Elenowitz 26.45
MPW-CA-Moutain Peoples Warehouse 4,833.73
MPW-NW-Nutrasource 1,653.03
Nature's Best 6,160.09
Northeast Cooperatives 5,435.96
Organics USA, Inc. 10,903.37
Pure Packaging - Customer 15.20
Rainbow - Denver 11,213.28
Terry Syron 7.60
TOL-MW 350.00
TOL-NE 1,970.78
TOL-SE 10,908.50
TOL-SW 12,229.37
TOL-WW 760.79
Wash Sign 432.23
Pure Packaging, Inc. 15,203.66
California Bottling Co. 1,285.75
---------
TOTAL 92,720.74
<PAGE>
DISCLOSURE SCHEDULE 6(bb)
Accounts Payable
The following is a true and complete list of all accounts payable of the Target
as of the Closing Date.
Essentia Water, Inc.
Vendor Balance Summary
All Transactions
Dec. 31, `99
------------
CBC-Calif Bottling 23,026.47
CDC-Calif Distribution 2,497.75
COM TEC Printing & Graphics 7,612.39
Corporate Express 397.93
FedEx 193.00
Global Trnsportation 4,750.00
Kinko's 561.73
Linear Logistics 6,475.00
PTX Food Corp. 6,335.34
Richmark 5,540.39
Rocky Mountain Presence (521.11)
SEANET Corporation 13.00
Sequoia Analytical 615.00
Southeast Freight Lines 151.27
UPS 272.68
----------
TOTAL 57,920.84
<PAGE>
DISCLOSURE SCHEDULE 6(cc)
Target Liability
Nothing to disclose.
<PAGE>
DISCLOSURE SCHEDULE 6(dd)
Target Minutes
CONSENT TO ACTION OF BOARD OF DIRECTORS IN LIEU OF ORGANIZATIONAL MEETING OF
DIRECTORS - Dated June 30, 1998
WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF ESSENTIA WATER, INC. - Dated July
8, 1998
WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF ESSENTIA WATER, INC. (NO. 1) -
Dated July 24, 1998
WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF ESSENTIA WATER, INC. (NO. 2) -
Dated July 24, 1998
MINUTES OF ACTION BY WRITTEN CONSENT OF THE BOARD OF DIRECTORS AND SOLE
SHAREHOLDER OF ESSENTIA WATER, INC. - Dated June 1, 1999
JOINT CONSENT TO ACTION OF DIRECTORS AND SHAREHOLDERS - Dated October 14, 1999
CONSENT TO ACTION OF BOARD OF DIRECTORS OF ESSENTIA WATER, INC. - Dated October
31, 1999
