ACQUISITION AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 12, 2000
BETWEEN
COPSIL CORPORATION
AND
COCHSTEDT INTERNATIONAL AIRPORT, INC.
TABLE OF CONTENTS
ARTICLE 1. The Merger
Section 1.1. The Merger
Section 1.2. Effective Time
Section 1.3. Closing of the Merger
Section 1.4. Effects of the Merger
Section 1.5. Board of Directors and Officers
Section 1.6. Conversion of Shares
Section 1.7. Exchange of Certificates
Section 1.8. Stock Options
Section 1.9. Taking of Necessary Action; Further Action
ARTICLE 2. Representations and Warranties of COPSIL
Section 2.1. Organization and Qualification
Section 2.2. Capitalization of COPSIL
Section 2.3.Authority Relative to this Agreement; Recommendation.
Section 2.4. SEC Reports; Financial Statements
Section 2.5. Information Supplied
Section 2.6. Consents and Approvals; No Violations
Section 2.7. No Default
Section 2.8. No Undisclosed Liabilities; Absence of Changes
Section 2.9. Litigation
Section 2.10. Compliance with Applicable Law
Section 2.11. Employee Benefit Plans; Labor Matters
Section 2.12. Environmental Laws and Regulations
Section 2.13. Tax Matters
Section 2.14. Title To Property
Section 2.15. Intellectual Property
Section 2.16. Insurance
Section 2.17. Vote Required
Section 2.18. Tax Treatment
Section 2.19. Affiliates
Section 2.20. Certain Business Practices
Section 2.21. Insider Interests
Section 2.22. Opinion of Financial Adviser
Section 2.23. Brokers
Section 2.24. Disclosure
Section 2.25. No Existing Discussion
Section 2.26. Material Contracts
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ARTICLE 3. Representations and Warranties of CIA.
Section 3.1. Organization and Qualification
Section 3.2. Capitalization of CIA
Section 3.3.Authority Relative to this Agreement; Recommendation
Section 3.4. SEC Reports; Financial Statements
Section 3.5. Information Supplied
Section 3.6. Consents and Approvals; No Violations
Section 3.7. No Default
Section 3.8 No Undisclosed Liabilities; Absence of Changes
Section 3.9. Litigation
Section 3.10. Compliance with Applicable Law
Section 3.11. Employee Benefit Plans; Labor Matters
Section 3.12. Environmental Laws and Regulations
Section 3.13. Tax Matters
Section 3.14. Title to Property
Section 3.15. Intellectual Property
Section 3.16. Insurance
Section 3.17. Vote Required
Section 3.18. Tax Treatment
Section 3.19. Affiliates
Section 3.20. Certain Business Practices
Section 3.21. Insider Interests
Section 3.22. Opinion of Financial Adviser
Section 3.23. Brokers
Section 3.24. Disclosure
Section 3.25. No Existing Discussions
Section 3.26. Material Contracts
ARTICLE 4. Covenants
Section 4.1. Conduct of Business of COPSIL
Section 4.2. Conduct of Business of CIA
Section 4.3. Preparation of 8-K and the Proxy Statement
Section 4.4. Other Potential Acquirers
Section 4.5. Meetings of Stockholders
Section 4.6. NASD OTC:BB Listing
Section 4.7. Access to Information
Section 4.8. Additional Agreements; Reasonable Efforts.
Section 4.9.Employee Benefits; Stock Option and Employee Purchase Plans
Section 4.10. Public Announcements
Section 4.11. Indemnification
Section 4.12. Notification of Certain Matters
ARTICLE 5. Conditions to Consummation of the Merger
Conditions to Each Party's Obligations to Effect the
Section 5.1. Merger
Section 5.2. Conditions to the Obligations of COPSIL
Section 5.3. Conditions to the Obligations of CIA
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ARTICLE 6. Termination; Amendment; Waiver
Section 6.1. Termination
Section 6.2. Effect of Termination
Section 6.3. Fees and Expenses
Section 6.4. Amendment
Section 6.5. Extension; Waiver
ARTICLE 7. Miscellaneous
Section 7.1. Nonsurvival of Representations and Warranties
Section 7.2. Entire Agreement; Assignment
Section 7.3. Validity
Section 7.4. Notices
Section 7.5. Governing Law
Section 7.6. Descriptive Headings
Section 7.7. Parties in Interest
Section 7.8. Certain Definitions
Section 7.9. Personal Liability
Section 7.10. Specific Performance
Section 7.11. Counterparts
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of May
12, 2000, is between Copsil Corporation, a Nevada corporation ("COPSIL"), and
Cochstedt International Airport, Inc., a Nevada corporation ("CIA").
Whereas, the Boards of Directors of COPSIL and CIA each have, in light
of and subject to the terms and conditions set forth herein, (i) determined
that the Merger (as defined below) is fair to their respective stockholders
and in the best interests of such stockholders and (ii) approved the Merger
in accordance with this Agreement;
Whereas, for Federal income tax purposes, it is intended that the Merger
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
Whereas, COPSIL and CIA desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
to prescribe various conditions to the Merger.
Now, therefore, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, COPSIL and CIA hereby agree as follows:
ARTICLE I
The Merger
Section 1.1. The Merger. At the Effective Time (as defined below) and
upon the terms and subject to the conditions of this Agreement and in
accordance with the General Corporation Law of the state of Nevada (the
"NGCL"), CIA shall be merged with and into COPSIL (as defined below) (the
''Merger). Following the Merger, COPSIL shall continue as the surviving
corporation (the "Surviving Corporation"), shall continue to be governed by
the laws of the jurisdiction of its incorporation or organization and the
separate corporate existence of CIA shall cease. Prior to the Effective Time,
the parties hereto shall mutually agree as to the name of the Surviving
Corporation; however, initially the Surviving Corporation shall be named
Cochstedt International Airport, Inc. a Nevada corporation. The Merger is
intended to qualify as a tax-free reorganization under Section 368 of the
Code as relates to the non-cash exchange of stock referenced herein.
Section 1.2. Effective Time. Subject to the terms and conditions set forth in
this Agreement, a Certificate of Merger (the "Merger Certificate") shall be
duly executed and acknowledged by each of CIA and COPSIL, and thereafter the
Merger Certificate reflecting the Merger shall be delivered to the Secretary
of State of the State of Nevada for filing pursuant to the NGCL on the
Closing Date (as defined in Section 1.3). The Merger shall become effective
at such time as a properly executed and certified copy of the Merger
Certificate is duly filed by the Secretary of State of the State of Nevada in
accordance with the NGCL or such later time as the parties may agree upon and
set forth in the Merger Certificate (the time at which the Merger becomes
effective shall be referred to herein as the "Effective Time").
Section 1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Article 5
(the "Closing Date"), at the offices of Sperry Young & Stoecklein, 1850 E.
Flamingo Rd., Suite 111, Las Vegas, Nevada, unless another time, date or
place is agreed to in writing by the parties hereto.
Section 1.4. Effects of the Merger. The Merger shall have the effects
set forth in the NGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights,
privileges, powers of CIA shall vest in the Surviving Corporation, and all
debts, liabilities and duties of CIA shall become the debts, liabilities and
duties of the Surviving Corporation.
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Section 1.5. Board of Directors and Officers of COPSIL. At or prior to
the Effective Time, each of CIA and COPSIL agrees to take such action as is
necessary (i) to cause the number of directors comprising the full Board of
Directors of COPSIL to be two (2) persons and (ii) to cause Friedrich Gradl,
and Norbert Doerr, (the "CIA Designees") to be elected as directors of
COPSIL. In addition, majority stockholders of COPSIL prior to the Effective
Time shall take all action necessary to cause, to the greatest extent
practicable, the CIA Designees to serve on COPSIL's Board of Directors until
the 2000 Annual Meeting. If the CIA Designees, respectively, shall decline or
be unable to serve as a directors prior to the Effective Time, CIA shall
nominate another person to serve in such person's stead which such person
shall be subject to approval of the other party. From and after the Effective
Time, and until successors are duly elected or appointed and qualified in
accordance with applicable law, Friedrich Gradl shall be President and
Norbert Doerr Secretary, and Treasurer of COPSIL.
Section 1.6. Conversion of Shares.
(a) At the Effective Time, each share of common stock, par value $.001
per share of CIA (individually a "CIA Share" and collectively, the "CIA
Shares") issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of CIA,
COPSIL, or the holder thereof, be converted into and shall become fully paid
and nonassessable COPSIL common shares determined by multiplying (i) the
total number of shares of CIA, Three Million Three Hundred Thousand
(3,300,000) outstanding immediately prior to the Effective Time by (ii) Ten
(10) (the "Exchange Ratio"), less 28,300,000 shares which shares are to be
issued to Cochstedt International Airport, Inc. and retained by COPSIL in
Treasury for future financing. The holder of one or more shares of CIA common
stock shall be entitled to receive in exchange therefor a number of shares of
COPSIL Common Stock equal to the product of (x) (the number of shares of CIA
common stock), times (y) (the Exchange Ratio. COPSIL Shares and CIA Shares
are sometimes referred to collectively herein as "Shares." By way of example
the number of shares of CIA common stock held by a stockholder (100,000)
times the Exchange Ratio of 10 equals 1,000,000 shares of COPSIL Shares to be
issued.
(b) At the Effective Time, each CIA Share held in the treasury of CIA,
by CIA immediately prior to the Effective Time shall, by virtue of the Merger
and without any action on the part of CIA or COPSIL be canceled, retired and
cease to exist and no payment shall be made with respect thereto.
Section 1.7. Exchange of Certificates.
(a) Prior to the Effective Time, COPSIL shall enter into an agreement
with, and shall deposit with, Sperry Young & Stoecklein, or such other agent
or agents as may be satisfactory to COPSIL and CIA (the "Exchange Agent'),
for the benefit of the holders of CIA Shares, for exchange through the
Exchange Agent in accordance with this Article I: (i) certificates
representing the appropriate number of COPSIL Shares to be issued to holders
of CIA Shares issuable pursuant to Section 1.6 in exchange for outstanding
CIA Shares.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding CIA Shares (the "Certificates") whose shares were converted into
the right to receive COPSIL Shares pursuant to Section 1.6: (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as CIA and COPSIL may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing COPSIL Shares. Upon surrender of a
Certificate to the Exchange Agent, together with such letter of transmittal,
duly executed, and any other required documents, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole COPSIL Shares and, if applicable, a check
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representing the cash consideration to which such holder may be entitled on
account of the Cash Fund, which such holder has the right to receive pursuant
to the provisions of this Article I, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of CIA Shares
which are not registered in the transfer records of CIA, a certificate
representing the proper number of COPSIL Shares may be issued to a transferee
if the Certificate representing such CIA Shares is presented to the Exchange
Agent accompanied by all documents required by the Exchange Agent or COPSIL
to evidence and effect such transfer and by evidence that any applicable
stock transfer or other taxes have been paid. Until surrendered as
contemplated by this Section 1.7, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon
such surrender the certificate representing COPSIL Shares as contemplated by
this Section 1.8.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to COPSIL Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the COPSIL Shares represented thereby until the holder of
record of such Certificate shall surrender such Certificate.
(d) In the event that any Certificate for CIA Shares or COPSIL Shares
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange therefor, upon the making of an affidavit of that fact by the holder
thereof such COPSIL Shares and cash in lieu of fractional COPSIL Shares, if
any, as may be required pursuant to this Agreement; provided, however, that
COPSIL or the Exchange Agent, may, in its respective discretion, require the
delivery of a suitable bond, opinion or indemnity.
(e) All COPSIL Shares issued upon the surrender for exchange of CIA
Shares in accordance with the terms hereof (including any cash paid pursuant
to Section 1.10 shall be deemed to have been issued in full satisfaction of
all rights pertaining to such CIA Shares. There shall be no further
registration of transfers on the stock transfer books of either of CIA or
COPSIL of the CIA Shares or COPSIL Shares which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to COPSIL for any reason, they shall be canceled and exchanged as
provided in this Article I.
(f) No fractional COPSIL Shares shall be issued in the Merger, but in
lieu thereof each holder of CIA Shares otherwise entitled to a fractional
COPSIL Share shall, upon surrender of its, his or her Certificate or
Certificates, be entitled to receive an additional share to round up to the
nearest round number of shares.
Section 1.8. At the Effective Time, each outstanding option to purchase
CIA Shares, if any (a "CIA Stock Option" or collectively, "CIA Stock
Options") issued pursuant to any CIA Stock Option Plan or CIA Long Term
Incentive Plan whether vested or un-vested, shall be cancelled.
Section 1.9. Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, CIA or COPSIL reasonably determines that any deeds,
assignments, or instruments or confirmations of transfer are necessary or
desirable to carry out the purposes of this Agreement and to vest COPSIL with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of CIA, the officers and directors of COPSIL and CIA
are fully authorized in the name of their respective corporations or
otherwise to take, and will take, all such lawful and necessary or desirable
action.
ARTICLE 2
Representations and Warranties of COPSIL
Except as set forth on the Disclosure Schedule delivered by COPSIL to
CIA (the "COPSIL Disclosure Schedule"), COPSIL hereby represents and warrants
to CIA as follows:
Section 2.1. Organization and Qualification.
(a) COPSIL is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and
has all requisite power and authority to own, lease and operate its
properties and to carry on its businesses as now being conducted, except
where the failure to be so organized, existing and in good standing or to
have such power and authority would not have a Material Adverse Effect (as
defined below) on COPSIL. When used in connection with COPSIL, the term
"Material Adverse Effect" means any change or effect (i) that is or is
reasonably likely to be materially adverse to the business, results of
operations, condition (financial or otherwise) or prospects of COPSIL, other
than any change or effect arising out of general economic conditions
unrelated to any business in which COPSIL is engaged, or (ii) that may impair
the ability of COPSIL to perform its obligations hereunder or to consummate
the transactions contemplated hereby.
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(b) COPSIL has heretofore delivered to CIA accurate and complete copies
of the Certificate of Incorporation and Bylaws (or similar governing
documents), as currently in effect, of COPSIL. Except as set forth on
Schedule 2.1 of the COPSIL Disclosure Schedule, COPSIL is duly qualified or
licensed and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in
such jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not have a Material Adverse Effect on COPSIL.
Section 2.2. Capitalization of COPSIL.
(a) The authorized capital stock of COPSIL consists of: (i) Twenty
Million (20,000,000) Common Shares, of which, as of March 31, 2000, Ten
Million (10,000,000) Common Shares were issued and outstanding, and no Common
Shares were held in treasury, (ii) Five Million (5,000,000) Preferred Shares
at $.001 par value of which no Preferred Shares were issued or outstanding.
Concurrent with the Execution of the Plan of Merger, the authorized common
stock shall be amended to 100,000,000. All of the outstanding COPSIL Shares
have been duly authorized and validly issued, and are fully paid,
nonassessable and free of preemptive rights. Except as set forth herein, as
of the date hereof, there are no outstanding (i) shares of capital stock or
other voting securities of COPSIL, (ii) securities of COPSIL convertible into
or exchangeable for shares of capital stock or voting securities of COPSIL,
except for the preferred shares of COPSIL, (iii) options or other rights to
acquire from COPSIL and, except as described in the COPSIL SEC Reports (as
defined below), no obligations of COPSIL to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock
or voting securities of COPSIL, and (iv) equity equivalents, interests in the
ownership or earnings of COPSIL or other similar rights (collectively,
"COPSIL Securities"). As of the date hereof, except as set forth on Schedule
2.2(a) of the COPSIL Disclosure Schedule there are no outstanding obligations
of COPSIL or its subsidiaries to repurchase, redeem or otherwise acquire any
COPSIL Securities or stockholder agreements, voting trusts or other
agreements or understandings to which COPSIL is a party or by which it is
bound relating to the voting or registration of any shares of capital stock
of COPSIL. For purposes of this Agreement, ''Lien" means, with respect to any
asset (including, without limitation, any security) any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset.
(b) The COPSIL Shares constitute the only class of equity securities of
COPSIL registered or required to be registered under the Exchange Act.
(c) COPSIL does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including membership
interests) of any entity, other than as specifically disclosed in the
disclosure documents.
Section 2.3. Authority Relative to this Agreement; Recommendation.
(a) COPSIL has all necessary corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of COPSIL (the "COPSIL Board") and no other corporate
proceedings on the part of COPSIL are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby, except, as referred to
in Section 2.17, the approval and adoption of this Agreement by the holders
of at least a majority of the then outstanding COPSIL Shares. This Agreement
has been duly and validly executed and delivered by COPSIL and constitutes a
valid, legal and binding agreement of COPSIL, enforceable against COPSIL in
accordance with its terms.
(b) The COPSIL Board has resolved to recommend that the stockholders of
COPSIL approve and adopt this Agreement.
Section 2.4. SEC Reports; Financial Statements.
(a) COPSIL has filed all required forms, reports and documents with the
Securities and Exchange Commission (the "SEC") since March 31, 2000, each of
which has complied in all material respects with all applicable requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and the
<PAGE>
Exchange Act (and the rules and regulations promulgated thereunder,
respectively), each as in effect on the dates such forms, reports and
documents were filed. COPSIL has heretofore delivered or promptly will
deliver prior to the Effective Date to CIA, in the form filed with the SEC
(including any amendments thereto but excluding any exhibits), (i) its Form
10-KSB for period ending December 31, 1999, (ii) all definitive proxy
statements relating to COPSIL's meetings of stockholders (whether annual or
special) held since December 31, 1999, if any, and (iii) all other reports or
registration statements filed by COPSIL with the SEC since March 31, 2000
(all of the foregoing, collectively, the "COPSIL SEC Reports"). None of such
COPSIL SEC Reports, including, without limitation, any financial statements
or schedules included or incorporated by reference therein, contained, when
filed, any untrue statement of a material fact or omitted to state a material
fact required to be stated or incorporated by reference therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited financial statements of
COPSIL included in the COPSIL SEC Reports fairly present, in conformity with
generally accepted accounting principles applied on a consistent basis
(except as may be indicated in the notes thereto), the financial position of
COPSIL as of the dates thereof and its results of operations and changes in
financial position for the periods then ended. All material agreements,
contracts and other documents required to be filed as exhibits to any of the
COPSIL SEC Reports have been so filed.
(b) COPSIL has heretofore made available or promptly will make available
to CIA a complete and correct copy of any amendments or modifications which
are required to be filed with the SEC but have not yet been filed with the
SEC, to agreements, documents or other instruments which previously had been
filed by COPSIL with the SEC pursuant to the Exchange Act.
Section 2.5. Information Supplied. None of the information supplied or
to be supplied by COPSIL for inclusion or incorporation by reference in
connection with the Merger (the "Proxy Statement") will at the date mailed to
stockholders of COPSIL and at the times of the meeting or meetings of
stockholders of COPSIL to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement, insofar as it relates to the meeting of
COPSIL's stockholders to vote on the Merger, will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
Section 2.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the Hart-Scott-Rodino Antitrust Improvements Act
of 1916, as amended (the ''HSR Act''), the rules of the National Association
of Securities Dealers, Inc. ("NASD"), the filing and recordation of the
Merger Certificate as required by the NGCL, and as set forth on Schedule 2.6
of the COPSIL Disclosure Schedule no filing with or notice to, and no permit,
authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency or authority (a
"Governmental Entity") is necessary for the execution and delivery by COPSIL
of this Agreement or the consummation by COPSIL of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on COPSIL.
Except as set forth in Section 2.6 of the COPSIL Disclosure Schedule,
neither the execution, delivery and performance of this Agreement by COPSIL
nor the consummation by COPSIL of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the respective
Certificate of Incorporation or Bylaws (or similar governing documents) of
COPSIL, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration or Lien) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which COPSIL is a party or by which any of its properties or
assets may be bound, or (iii) violate any order, writ, injunction, decree,
law, statute, rule or regulation applicable to COPSIL or any of its
properties or assets, except in the case of (ii) or (iii) for violations,
breaches or defaults which would not have a Material Adverse Effect on
COPSIL.
Section 2.7. No Default. Except as set forth in Section 2.7 of the
COPSIL Disclosure Schedule, COPSIL is not in breach, default or violation
(and no event has occurred which with notice or the lapse of time or both
would constitute a breach default or violation) of any term, condition or
provision of (i) its Certificate of Incorporation or Bylaws (or similar
governing documents), (ii) any note, bond, mortgage, indenture, lease,
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license, contract, agreement or other instrument or obligation to which
COPSIL is now a party or by which any of its respective properties or assets
may be bound or (iii) any order, writ injunction, decree, law, statute, rule
or regulation applicable to COPSIL or any of its respective properties or
assets, except in the case of (ii) or (iii) for violations, breaches or
defaults that would not have a Material Adverse Effect on COPSIL. Except as
set forth in Section 2.7 of the COPSIL Disclosure Schedule, each note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument
or obligation to which COPSIL is now a party or by which its respective
properties or assets may be bound that is material to COPSIL and that has not
expired is in full force and effect and is not subject to any material
default thereunder of which COPSIL is aware by any party obligated to COPSIL
thereunder.
Section 2.8. No Undisclosed Liabilities; Absence of Changes. Except as
set forth in Section 2.8 of the COPSIL Disclosure Schedule and except as and
to the extent publicly disclosed by COPSIL in the COPSIL SEC Reports, as of
March 31, 2000, COPSIL does not have any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be
required by generally accepted accounting principles to be reflected on a
balance sheet of COPSIL (including the notes thereto) or which would have a
Material Adverse Effect on COPSIL. Except as publicly disclosed by COPSIL,
since March 31, 2000, COPSIL has not incurred any liabilities of any nature,
whether or not accrued, contingent or otherwise, which could reasonably be
expected to have, and there have been no events, changes or effects with
respect to COPSIL having or which reasonably could be expected to have, a
Material Adverse Effect on COPSIL. Except as and to the extent publicly
disclosed by COPSIL in the COPSIL SEC Reports and except as set forth in
Section 2.8 of the COPSIL Disclosure Schedule, since March 31, 2000, there
has not been (i) any material change by COPSIL in its accounting methods,
principles or practices (other than as required after the date hereof by
concurrent changes in generally accepted accounting principles), (ii) any
revaluation by COPSIL of any of its assets having a Material Adverse Effect
on COPSIL, including, without limitation, any write-down of the value of any
assets other than in the ordinary course of business or (iii) any other
action or event that would have required the consent of any other party
hereto pursuant to Section 4.1 of this Agreement had such action or event
occurred after the date of this Agreement.
Section 2.9. Litigation. Except as publicly disclosed by COPSIL in the
COPSIL SEC Reports, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of COPSIL, threatened against
COPSIL or any of its subsidiaries or any of their respective properties or
assets before any Governmental Entity which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on
COPSIL or could reasonably be expected to prevent or delay the consummation
of the transactions contemplated by this Agreement. Except as publicly
disclosed by COPSIL in the COPSIL SEC Reports, COPSIL is not subject to any
outstanding order, writ, injunction or decree which, insofar as can be
reasonably foreseen in the future, could reasonably be expected to have a
Material Adverse Effect on COPSIL or could reasonably be expected to prevent
or delay the consummation of the transactions contemplated hereby.
Section 2.10. Compliance with Applicable Law. Except as publicly
disclosed by COPSIL in the COPSIL SEC Reports, COPSIL holds all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities necessary for the lawful conduct of their respective businesses (the
`'COPSIL Permits"), except for failures to hold such permits, licenses,
variances, exemptions, orders and approvals which would not have a Material
Adverse Effect on COPSIL. Except as publicly disclosed by COPSIL in the
COPSIL SEC Reports, COPSIL is in compliance with the terms of the COPSIL
Permits, except where the failure so to comply would not have a Material
Adverse Effect on COPSIL. Except as publicly disclosed by COPSIL in the
COPSIL SEC Reports, the business of COPSIL is not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity
except that no representation or warranty is made in this Section 2.10 with
respect to Environmental Laws (as defined in Section 2.12 below) and except
for violations or possible violations which do not, and, insofar as
reasonably can be foreseen, in the future will not, have a Material Adverse
Effect on COPSIL. Except as publicly disclosed by COPSIL in the COPSIL SEC
Reports, no investigation or review by any Governmental Entity with respect
to COPSIL is pending or, to the knowledge of COPSIL, threatened, nor, to the
knowledge of COPSIL, has any Governmental Entity indicated an intention to
conduct the same, other than, in each case, those which COPSIL reasonably
believes will not have a Material Adverse Effect on COPSIL.
Section 2.11. Employee Benefit Plans; Labor Matters.
(a) Except as set forth in Section 2.11(a) of the COPSIL Disclosure
Schedule with respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
<PAGE>
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), maintained or contributed to at
any time by COPSIL or any entity required to be aggregated with COPSIL
pursuant to Section 414 of the Code (each, a "COPSIL Employee Plan"), no
event has occurred and to the knowledge of COPSIL, no condition or set of
circumstances exists in connection with which COPSIL could reasonably be
expected to be subject to any liability which would have a Material Adverse
Effect on COPSIL.
(b) (i) No COPSIL Employee Plan is or has been subject to Title IV of
ERISA or Section 412 of the Code; and (ii) each COPSIL Employee Plan intended
to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
Internal Revenue Service determination letter, and nothing has occurred which
could reasonably be expected to adversely affect such determination.
(c) Section 2.11(c) of the COPSIL Disclosure Schedule sets forth a true
and complete list, as of the date of this Agreement, of each person who holds
any COPSIL Stock Options, together with the number of COPSIL Shares which are
subject to such option, the date of grant of such option, the extent to which
such option is vested (or will become vested as a result of the Merger), the
option price of such option (to the extent determined as of the date hereof),
whether such option is a nonqualified stock option or is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Section 2.11(c) of the COPSIL
Disclosure Schedule also sets forth the total number of such incentive stock
options and such nonqualified options. COPSIL has furnished CIA with complete
copies of the plans pursuant to which the COPSIL Stock Options were issued.
Other than the automatic vesting of COPSIL Stock Options that may occur
without any action on the part of COPSIL or its officers or directors, COPSIL
has not taken any action that would result in any COPSIL Stock Options that
are unvested becoming vested in connection with or as a result of the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(d) COPSIL has made available to CIA (i) a description of the terms of
employment and compensation arrangements of all officers of COPSIL and a copy
of each such agreement currently in effect; (ii) copies of all agreements
with consultants who are individuals obligating COPSIL to make annual cash
payments in an amount exceeding $60,000; (iii) a schedule listing all
officers of COPSIL who have executed a non-competition agreement with COPSIL
and a copy of each such agreement currently in effect; (iv) copies (or
descriptions) of all severance agreements, programs and policies of COPSIL
with or relating to its employees, except programs and policies required to
be maintained by law; and (v) copies of all plans, programs, agreements and
other arrangements of COPSIL with or relating to its employees which contain
change in control provisions all of which are set forth in Section 2.11(d) of
the COPSIL Disclosure Schedule.
(e) There shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any COPSIL Employee
Plan or any agreement or arrangement disclosed under this Section 2.11 solely
by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) There are no controversies pending or, to the knowledge of COPSIL,
threatened, between COPSIL and any of their employees, which controversies
have or could reasonably be expected to have a Material Adverse Effect on
COPSIL. Neither COPSIL nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by COPSIL or any of its subsidiaries (and neither COPSIL nor
any of its subsidiaries has any outstanding material liability with respect
to any terminated collective bargaining agreement or labor union contract),
nor does COPSIL know of any activities or proceedings of any labor union to
organize any of its or employees. COPSIL has no knowledge of any strike,
slowdown, work stoppage, lockout or threat thereof, by or with respect to any
of its employees.
Section 2.12. Environmental Laws and Regulations.
(a) Except as publicly disclosed by COPSIL in the COPSIL SEC Reports,
(i) COPSIL is in material compliance with all applicable federal, state,
local and foreign laws and regulations relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"), except for non-compliance that would
<PAGE>
not have a Material Adverse Effect on COPSIL, which compliance includes, but
is not limited to, the possession by COPSIL of all material permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof; (ii) COPSIL has not
received written notice of, or, to the knowledge of COPSIL, is the subject
of, any action, cause of action, claim, investigation, demand or notice by
any person or entity alleging liability under or non-compliance with any
Environmental Law (an ''Environmental Claim") that could reasonably be
expected to have a Material Adverse Effect on COPSIL; and (iii) to the
knowledge of COPSIL, there are no circumstances that are reasonably likely to
prevent or interfere with such material compliance in the future.
(b) Except as publicly disclosed by COPSIL, there are no Environmental
Claims which could reasonably be expected to have a Material Adverse Effect
on COPSIL that are pending or, to the knowledge of COPSIL, threatened against
COPSIL or, to the knowledge of COPSIL, against any person or entity whose
liability for any Environmental Claim COPSIL has or may have retained or
assumed either contractually or by operation of law.
Section 2.13. Tax Matters.
(a) Except as set forth in Section 2.13 of the COPSIL Disclosure
Schedule: (i) COPSIL has filed or has had filed on its behalf in a timely
manner (within any applicable extension periods) with the appropriate
Governmental Entity all income and other material Tax Returns (as defined
herein) with respect to Taxes (as defined herein) of COPSIL and all Tax
Returns were in all material respects true, complete and correct; (ii) all
material Taxes with respect to COPSIL have been paid in full or have been
provided for in accordance with GAAP on COPSIL's most recent balance sheet
which is part of the COPSIL SEC Documents. (iii) there are no outstanding
agreements or waivers extending the statutory period of limitations
applicable to any federal, state, local or foreign income or other material
Tax Returns required to be filed by or with respect to COPSIL; (iv) to the
knowledge of COPSIL none of the Tax Returns of or with respect to COPSIL is
currently being audited or examined by any Governmental Entity; and (v) no
deficiency for any income or other material Taxes has been assessed with
respect to COPSIL which has not been abated or paid in full.
(b) For purposes of this Agreement, (i) "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, sales, use, ad valorem, goods and services, capital,
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property or
other taxes, customs duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority and (ii) "Tax Return"
shall mean any report, return, documents declaration or other information or
filing required to be supplied to any taxing authority or jurisdiction with
respect to Taxes.
Section 2.14. Title to Property. COPSIL has good and defensible title to
all of its properties and assets, free and clear of all liens, charges and
encumbrances except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby
or which, individually or in the aggregate, would not have a Material Adverse
Effect on COPSIL; and, to COPSIL's knowledge, all leases pursuant to which
COPSIL leases from others real or personal property are in good standing,
valid and effective in accordance with their respective terms, and there is
not, to the knowledge of COPSIL, under any of such leases, any existing
material default or event of default (or event which with notice of lapse of
time, or both, would constitute a default and in respect of which COPSIL has
not taken adequate steps to prevent such a default from occurring) except
where the lack of such good standing, validity and effectiveness, or the
existence of such default or event, would not have a Material Adverse Effect
on COPSIL.
Section 2.15. Intellectual Property.
(a) COPSIL owns, or possesses adequate licenses or other valid rights to
use, all existing United States and foreign patents, trademarks, trade names,
service marks, copyrights, trade secrets and applications therefor that are
material to its business as currently conducted (the "COPSIL Intellectual
Property Rights").
(b) The validity of the COPSIL Intellectual Property Rights and the
title thereto of COPSIL is not being questioned in any litigation to which
COPSIL is a party.
(c) Except as set forth in Section 2.15(c) of the COPSIL Disclosure
Schedule, the conduct of the business of COPSIL as now conducted does not, to
COPSIL's knowledge, infringe any valid patents, trademarks, trade names,
<PAGE>
service marks or copyrights of others. The consummation of the transactions
completed hereby will not result in the loss or impairment of any COPSIL
Intellectual Property Rights.
(d) COPSIL has taken steps it believes appropriate to protect and
maintain its trade secrets as such, except in cases where COPSIL has elected
to rely on patent or copyright protection in lieu of trade secret protection.
Section 2.16. Insurance. COPSIL currently does not maintain general
liability and other business insurance.
Section 2.17. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding COPSIL Shares is the only vote of the
holders of any class or series of COPSIL's capital stock necessary to approve
and adopt this Agreement and the Merger.
Section 2.18. Tax Treatment. Neither COPSIL nor, to the knowledge of
COPSIL, any of its affiliates has taken or agreed to take action that would
prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
Section 2.19. Affiliates. Except for Principal COPSIL Stockholder
("PVS") and the directors and executive officers of COPSIL, each of whom is
listed in Section 2.19 of the COPSIL Disclosure Schedule, there are no
persons who, to the knowledge of COPSIL, may be deemed to be affiliates of
COPSIL under Rule 1-02(b) of Regulation S-X of the SEC (the "COPSIL
Affiliates").
Section 2.20. Certain Business Practices. None of COPSIL or any
directors, officers, agents or employees of COPSIL has (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended (the "FCPA"), or (iii) made any
other unlawful payment.
Section 2.21. Insider Interests. Except as set forth in Section 2.21 of
the COPSIL Disclosure Schedule, neither PVS nor any officer or director of
COPSIL has any interest in any material property, real or personal, tangible
or intangible, including without limitation, any computer software or COPSIL
Intellectual Property Rights, used in or pertaining to the business of
COPSIL, expect for the ordinary rights of a stockholder or employee stock
option holder.
Section 2.22. Opinion of Financial Adviser. No advisers, as of the date
hereof, have delivered to the COPSIL Board a written opinion to the effect
that, as of such date, the exchange ratio contemplated by the Merger is fair
to the holders of COPSIL Shares.
Section 2.23. Brokers. No broker, finder or investment banker (other
than the COPSIL Financial Adviser, a true and correct copy of whose
engagement agreement has been provided to CIA) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf
of COPSIL.
Section 2.24. Disclosure. No representation or warranty of COPSIL in
this Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to CIA pursuant hereto or in connection herewith
contains, as of the date of such representation, warranty or instrument, or
will contain any untrue statement of a material fact or, at the date thereof,
omits or will omit to state a material fact necessary to make any statement
herein or therein, in light of the circumstances under which such statement
is or will be made, not misleading.
Section 2.25. No Existing Discussions. As of the date hereof, COPSIL is
not engaged, directly or indirectly, in any discussions or negotiations with
any other party with respect to any Third Party Acquisition (as defined in
Section 4.4).
Section 2.26. Material Contracts.
(a) COPSIL has delivered or otherwise made available to CIA true,
correct and complete copies of all contracts and agreements (and all
<PAGE>
amendments, modifications and supplements thereto and all side letters to
which COPSIL is a party affecting the obligations of any party thereunder) to
which COPSIL is a party or by which any of its properties or assets are bound
that are, material to the business, properties or assets of COPSIL taken as a
whole, including, without limitation, to the extent any of the following are,
individually or in the aggregate, material to the business, properties or
assets of COPSIL taken as a whole, all: (i) employment, product design or
development, personal services, consulting, non-competition, severance,
golden parachute or indemnification contracts (including, without limitation,
any contract to which COPSIL is a party involving employees of COPSIL); (ii)
licensing, publishing, merchandising or distribution agreements; (iii)
contracts granting rights of first refusal or first negotiation; (iv)
partnership or joint venture agreements; (v) agreements for the acquisition,
sale or lease of material properties or assets or stock or otherwise entered
into since March 31, 2000; (vi) contracts or agreements with any Governmental
Entity. and (vii) all commitments and agreements to enter into any of the
foregoing (collectively, together with any such contracts entered into in
accordance with Section 4.1 hereof, the "COPSIL Contracts"). COPSIL is not a
party to or bound by any severance, golden parachute or other agreement with
any employee or consultant pursuant to which such person would be entitled to
receive any additional compensation or an accelerated payment of compensation
as a result of the consummation of the transactions contemplated hereby.
(b) Each of the COPSIL Contracts is valid and enforceable in accordance
with its terms, and there is no default under any COPSIL Contract so listed
either by COPSIL or, to the knowledge of COPSIL, by any other party thereto,
and no event has occurred that with the lapse of time or the giving of notice
or both would constitute a default thereunder by COPSIL or, to the knowledge
of COPSIL, any other party, in any such case in which such default or event
could reasonably be expected to have a Material Adverse Effect on COPSIL.
(c) No party to any such COPSIL Contract has given notice to COPSIL of
or made a claim against COPSIL with respect to any breach or default
thereunder, in any such case in which such breach or default could reasonably
be expected to have a Material Adverse Effect on COPSIL.
ARTICLE 3
Representations and Warranties of CIA
Except as set forth on the Disclosure Schedule delivered by CIA to
COPSIL (the "CIA Disclosure Schedule"), CIA hereby represents and warrants to
COPSIL as follows:
Section 3.1. Organization and Qualification.
(a) Each of CIA and its subsidiaries is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
or organization and has all requisite power and authority to own, lease and
operate its properties and to carry on its businesses as now being conducted,
except where the failure to be so organized, existing and in good standing or
to have such power and authority would not have a Material Adverse Effect (as
defined below) on CIA. When used in connection with CIA, the term "Material
Adverse Effect'' means any change or effect (i) that is or is reasonably
likely to be materially adverse to the business, results of operations,
condition (financial or otherwise) or prospects of CIA and its subsidiaries,
taken as a whole, other than any change or effect arising out of general
economic conditions unrelated to any businesses in which CIA and its
subsidiaries are engaged, or (ii) that may impair the ability of CIA to
consummate the transactions contemplated hereby.
(b) CIA has heretofore delivered to COPSIL accurate and complete copies
of the Certificate of Incorporation and Bylaws (or similar governing
documents), as currently in effect, of CIA. Each of CIA and its subsidiaries
is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect on CIA.
Section 3.2. Capitalization of CIA.
(a) As of March 31, 2000, the authorized capital stock of CIA consists
of; (i) Twenty-Five Million (25,000,000) CIA common Shares, $.001 par value,
<PAGE>
3,300,000 common Shares were issued and were outstanding, and (ii) no
preferred shares were authorized. All of the outstanding CIA Shares have been
duly authorized and validly issued, and are fully paid, nonassessable and
free of preemptive rights.
(b) Except as set forth in Section 3.2(b) of the CIA Disclosure
Schedule, CIA is the record and beneficial owner of all of the issued and
outstanding shares of capital stock of its subsidiaries.
(c) Except as set forth in Section 3.2(c) of the CIA Disclosure
Schedule, between March 31, 2000 and the date hereof, no shares of CIA's
capital stock have been issued and no CIA Stock options have been granted.
Except as set forth in Section 3.2(a) above, as of the date hereof, there are
no outstanding (i) shares of capital stock or other voting securities of CIA,
(ii) securities of CIA or its subsidiaries convertible into or exchangeable
for shares of capital stock or voting securities of CIA, (iii) options or
other rights to acquire from CIA or its subsidiaries, or obligations of CIA
or its subsidiaries to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of CIA, or (iv) equity equivalents, interests in the ownership or
earnings of CIA or its subsidiaries or other similar rights (collectively,
"CIA Securities"). As of the date hereof, there are no outstanding
obligations of CIA or any of its subsidiaries to repurchase, redeem or
otherwise acquire any CIA Securities. There are no stockholder agreements,
voting trusts or other agreements or understandings to which CIA is a party
or by which it is bound relating to the voting or registration of any shares
of capital stock of CIA.
(d) Except as set forth in Section 3.2(d) of the CIA Disclosure
Schedule, there are no securities of CIA convertible into or exchangeable
for, no options or other rights to acquire from CIA, and no other contract,
understanding, arrangement or obligation (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of any capital
stock or other ownership interests in, or any other securities of, any
subsidiary of CIA.
(e) The CIA Shares constitute the only class of equity securities of CIA
or its subsidiaries.
(f) Except as set forth in Section 3.2(f) of the CIA Disclosure
Schedule, CIA does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including membership
interests) of any entity.
Section 3.3. Authority Relative to this Agreement; Recommendation.
(a) CIA has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of CIA (the "CIA Board"), and no other corporate
proceedings on the part of CIA are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby, except, as referred to in
Section 3.17, the approval and adoption of this Agreement by the holders of
at least a majority of the then outstanding CIA Shares. This Agreement has
been duly and validly executed and delivered by CIA and constitutes a valid,
legal and binding agreement of CIA, enforceable against CIA in accordance
with its terms.
(b) The CIA Board has resolved to recommend that the stockholders of CIA
approve and adopt this Agreement.
Section 3.4. SEC Reports; Financial Statements. CIA is not required to
file forms, reports and documents with the SEC.
Section 3.5. Information Supplied. None of the information supplied or
to be supplied by CIA for inclusion or incorporation by reference to (i) the
8-K will, at the time the 8-K is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and (ii)
the Proxy Statement will, at the date mailed to stockholders of COPSIL, if
any, and at the times of the meeting or meetings of stockholders of COPSIL to
be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
<PAGE>
circumstances under which they are made, not misleading. The Proxy Statement,
insofar as it relates to the meeting of CIA's stockholders to vote on the
Merger, will comply as to form in all material respects with the provisions
of the Exchange Act and the rules and regulations thereunder, and the 8-K
will comply as to form in all material respects with the provisions of the
Securities Act and the rules and regulations thereunder.
Section 3.6. Consents and Approvals; No Violations. Except as set forth
in Section 3.6 of the CIA Disclosure Schedule, and for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, the rules of the NASD, and the
filing and recordation of the Merger Certificate as required by the NGCL, no
filing with or notice to, and no permit, authorization, consent or approval
of, any Governmental Entity is necessary for the execution and delivery by
CIA of this Agreement or the consummation by CIA of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on CIA.
Neither the execution, delivery and performance of this Agreement by CIA
nor the consummation by CIA of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
Certificate of Incorporation or Bylaws (or similar governing documents) of
CIA or any of CIA's subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration or Lien) under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which CIA or any of CIAis subsidiaries is a
party or by which any of them or any of their respective properties or assets
may be bound or (iii) violate any order, writ, injunction, decree, law,
statute, rule or regulation applicable to CIA or any of CIA's subsidiaries or
any of their respective properties or assets, except in the case of (ii) or
(iii) for violations, breaches or defaults which would not have a Material
Adverse Effect on CIA.
Section 3.7. No Default. None of CIA or any of its subsidiaries is in
breach, default or violation (and no event has occurred which with notice or
the lapse of time or both would constitute a breach, default or violation) of
any term, condition or provision of (i) its Certificate of Incorporation or
Bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which CIA or any of its subsidiaries is now a party or by which
any of them or any of their respective properties or assets may be bound or
(iii) any order, writ, injunction, decree, law, statute, rule or regulation
applicable to CIA, its subsidiaries or any of their respective properties or
assets, except in the case of (ii) or (iii) for violations, breaches or
defaults that would not have a Material Adverse Effect on CIA. Each note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which CIA or any of its subsidiaries is now a
party or by which any of them or any of their respective properties or assets
may be bound that is material to CIA and its subsidiaries taken as a whole
and that has not expired is in full force and effect and is not subject to
any material default thereunder of which CIA is aware by any party obligated
to CIA or any subsidiary thereunder.
Section 3.8. No Undisclosed Liabilities; Absence of Changes. Except as
and to the extent disclosed by CIA in the CIA, none of CIA or its
subsidiaries had any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by generally
accepted accounting principles to be reflected on a consolidated balance
sheet of CIA and its consolidated subsidiaries (including the notes thereto)
or which would have a Material Adverse Effect on CIA. Except as disclosed by
CIA, none of CIA or its subsidiaries has incurred any liabilities of any
nature, whether or not accrued, contingent or otherwise, which could
reasonably be expected to have, and there have been no events, changes or
effects with respect to CIA or its subsidiaries having or which could
reasonably be expected to have, a Material Adverse Effect on CIA. Except as
and to the extent disclosed by CIA there has not been (i) any material change
by CIA in its accounting methods, principles or practices (other than as
required after the date hereof by concurrent changes in generally accepted
accounting principles), (ii) any revaluation by CIA of any of its assets
having a Material Adverse Effect on CIA, including, without limitation, any
write-down of the value of any assets other than in the ordinary course of
business or (iii) any other action or event that would have required the
consent of any other party hereto pursuant to Section 4.2 of this Agreement
had such action or event occurred after the date of this Agreement.
Section 3.9. Litigation. Except as set forth in Schedule 3.9 of the CIA
Disclosure Schedule there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of CIA, threatened against CIA or
any of its subsidiaries or any of their respective properties or assets
before any Governmental Entity which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on CIA or could
<PAGE>
reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement. Except as disclosed by CIA, none
of CIA or its subsidiaries is subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen in the
future, could reasonably be expected to have a Material Adverse Effect on CIA
or could reasonably be expected to prevent or delay the consummation of the
transactions contemplated hereby.
Section 3.10. Compliance with Applicable Law. Except as disclosed by
CIA, CIA and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for
the lawful conduct of their respective businesses (the "CIA Permits"), except
for failures to hold such permits, licenses, variances, exemptions, orders
and approvals which would not have a Material Adverse Effect on CIA. Except
as disclosed by CIA, CIA and its subsidiaries are in compliance with the
terms of the CIA Permits, except where the failure so to comply would not
have a Material Adverse Effect on CIA. Except as disclosed by CIA, the
businesses of CIA and its subsidiaries are not being conducted in violation
of any law, ordinance or regulation of any Governmental Entity except that no
representation or warranty is made in this Section 3.10 with respect to
Environmental Laws and except for violations or possible violations which do
not, and, insofar as reasonably can be foreseen, in the future will not, have
a Material Adverse Effect on CIA. Except as disclosed by CIA no investigation
or review by any Governmental Entity with respect to CIA or its subsidiaries
is pending or, to the knowledge of CIA, threatened, nor, to the knowledge of
CIA, has any Governmental Entity indicated an intention to conduct the same,
other than, in each case, those which CIA reasonably believes will not have a
Material Adverse Effect on CIA.
Section 3.11. Employee Benefit Plans; Labor Matters.
(a) With respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of ERISA), maintained or
contributed to at any time by CIA, any of its subsidiaries or any entity
required to be aggregated with CIA or any of its subsidiaries pursuant to
Section 414 of the Code (each, a "CIA Employee Plan"), no event has occurred
and, to the knowledge of CIA, no condition or set of circumstances exists in
connection with which CIA or any of its subsidiaries could reasonably be
expected to be subject to any liability which would have a Material Adverse
Effect on CIA.
(b) (i) No CIA Employee Plan is or has been subject to Title IV of ERISA
or Section 412 of the Code; and (ii) each CIA Employee Plan intended to
qualify under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code is the subject of a favorable Internal
Revenue Service determination letter, and nothing has occurred which could
reasonably be expected to adversely affect such determination.
(c) Section 3.11(c) of the CIA Disclosure Schedule sets forth a true and
complete list, as of the date of this Agreement, of each person who holds any
CIA Stock Options, together with the number of CIA Shares which are subject
to such option, the date of grant of such option, the extent to which such
option is vested (or will become vested as a result of the Merger), the
option price of such option (to the extent determined as of the date hereof),
whether such option is a nonqualified stock option or is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Section 3.11(c) of the CIA
Disclosure Schedule also sets forth the total number of such incentive stock
options and such nonqualified options. CIA has furnished COPSIL with complete
copies of the plans pursuant to which the CIA Stock Options were issued.
Other than the automatic vesting of CIA Stock Options that may occur without
any action on the part of CIA or its officers or directors, CIA has not taken
any action that would result in any CIA Stock Options that are unvested
becoming vested in connection with or as a result of the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(d) CIA has made available to COPSIL (i) a description of the terms of
employment and compensation arrangements of all officers of CIA and a copy of
each such agreement currently in effect; (ii) copies of all agreements with
consultants who are individuals obligating CIA to make annual cash payments
in an amount exceeding $60,000; (iii) a schedule listing all officers of CIA
who have executed a non-competition agreement with CIA and a copy of each
such agreement currently in effect; (iv) copies (or descriptions) of all
severance agreements, programs and policies of CIA with or relating to its
employees, except programs and policies required to be maintained by law; and
(v) copies of all plans, programs, agreements and other arrangements of the
CIA with or relating to its employees which contain change in control
provisions.
<PAGE>
(e) Except as disclosed in Section 3.11(e) of the CIA Disclosure
Schedule there shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any CIA Employee
Plan or any agreement or arrangement disclosed under this Section 3.11 solely
by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) There are no controversies pending or, to the knowledge of CIA
threatened, between CIA or any of its subsidiaries and any of their
respective employees, which controversies have or could reasonably be
expected to have a Material Adverse Effect on CIA. Neither CIA nor any of its
subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by CIA or any of its
subsidiaries (and neither CIA nor any of its subsidiaries has any outstanding
material liability with respect to any terminated collective bargaining
agreement or labor union contract), nor does CIA know of any activities or
proceedings of any labor union to organize any of its or any of its
subsidiaries' employees. CIA has no knowledge of any strike, slowdown, work
stoppage, lockout or threat thereof by or with respect to any of its or any
of its subsidiaries' employees.
Section 3.12. Environmental Laws and Regulations.
(a) Except as disclosed by CIA, (i) each of CIA and its subsidiaries is
in material compliance with all Environmental Laws, except for non-compliance
that would not have a Material Adverse Effect on CIA, which compliance
includes, but is not limited to, the possession by CIA and its subsidiaries
of all material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof; (ii) none of CIA or its subsidiaries has received written notice of,
or, to the knowledge of CIA, is the subject of, any Environmental Claim that
could reasonably be expected to have a Material Adverse Effect on CIA; and
(iii) to the knowledge of CIA, there are no circumstances that are reasonably
likely to prevent or interfere with such material compliance in the future.
(b) Except as disclosed by CIA, there are no Environmental Claims which
could reasonably be expected to have a Material Adverse Effect on CIA that
are pending or, to the knowledge of CIA, threatened against CIA or any of its
subsidiaries or, to the knowledge of CIA, against any person or entity whose
liability for any Environmental Claim CIA or its subsidiaries has or may have
retained or assumed either contractually or by operation of law.
Section 3.13. Tax Matters. Except as set forth in Section 3.13 of the
CIA Disclosure Schedule: (i) CIA and each of its subsidiaries has filed or
has had filed on its behalf in a timely manner (within any applicable
extension periods) with the appropriate Governmental Entity all income and
other material Tax Returns with respect to Taxes of CIA and each of its
subsidiaries and all Tax Returns were in all material respects true, complete
and correct; (ii) all material Taxes with respect to CIA and each of its
subsidiaries have been paid in full or have been provided for in accordance
with GAAP on CIA's most recent balance sheet which is part of the CIA SEC
Documents; (iii) there are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal, state, local or
foreign income or other material Tax Returns required to be filed by or with
respect to CIA or its subsidiaries; (iv) to the knowledge of CIA none of the
Tax Returns of or with respect to CIA or any of its subsidiaries is currently
being audited or examined by any Governmental Entity; and (v) no deficiency
for any income or other material Taxes has been assessed with respect to CIA
or any of its subsidiaries which has not been abated or paid in full.
Section 3.14. Title to Property. CIA and each of its subsidiaries have
good and defensible title to all of their properties and assets, free and
clear of all liens, charges and encumbrances except liens for taxes not yet
due and payable and such liens or other imperfections of title, if any, as do
not materially detract from the value of or interfere with the present use of
the property affected thereby or which, individually or in the aggregate,
would not have a Material Adverse Effect on CIA; and, to CIA's knowledge, all
leases pursuant to which CIA or any of its subsidiaries lease from others
real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, to the knowledge of
CIA, under any of such leases, any existing material default or event of
default (or event which with notice or lapse of time, or both, would
constitute a material default and in respect of which CIA or such subsidiary
has not taken adequate steps to prevent such a default from occurring) except
where the lack of such good standing, validity and effectiveness, or the
existence of such default or event of default would not have a Material
Adverse Effect on CIA.
<PAGE>
Section 3.15. Intellectual Property.
(a) Each of CIA and its subsidiaries owns, or possesses adequate
licenses or other valid rights to use, all existing United States and foreign
patents, trademarks, trade names, services marks, copyrights, trade secrets,
and applications therefor that are material to its business as currently
conducted (the "CIA Intellectual Property Rights").
(b) Except as set forth in Section 3.15(b) of the CIA Disclosure
Schedule the validity of the CIA Intellectual Property Rights and the title
thereto of CIA or any subsidiary, as the case may be, is not being questioned
in any litigation to which CIA or any subsidiary is a party.
(c) The conduct of the business of CIA and its subsidiaries as now
conducted does not, to CIA's knowledge, infringe any valid patents,
trademarks, tradenames, service marks or copyrights of others. The
consummation of the transactions contemplated hereby will not result in the
loss or impairment of any CIA Intellectual Property Rights.
(d) Each of CIA and its subsidiaries has taken steps it believes
appropriate to protect and maintain its trade secrets as such, except in
cases where CIA has elected to rely on patent or copyright protection in lieu
of trade secret protection.
Section 3.16. Insurance. CIA and its subsidiaries maintain general
liability and other business insurance that CIA believes to be reasonably
prudent for its business.
Section 3.17. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding CIA Shares is the only vote of the
holders of any class or series of CIA's capital stock necessary to approve
and adopt this Agreement and the Merger.
Section 3.18. Tax Treatment. Neither CIA nor, to the knowledge of CIA,
any of its affiliates has taken or agreed to take any action that would
prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
Section 3.19. Affiliates. Except for the directors and executive
officers of CIA, each of whom is listed in Section 3.19 of the CIA Disclosure
Schedule, there are no persons who, to the knowledge of CIA, may be deemed to
be affiliates of CIA under Rule 1-02(b) of Regulation S-X of the SEC (the
"CIA Affiliates").
Section 3.20. Certain Business Practices. None of CIA, any of its
subsidiaries or any directors, officers, agents or employees of CIA or any of
its subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or
violated any provision of the FCPA, or (iii) made any other unlawful payment.
Section 3.21. Insider Interests. Except as set forth in Section 3.21 of
the CIA Disclosure Schedule, no officer or director of CIA has any interest
in any material property, real or personal, tangible or intangible, including
without limitation, any computer software or CIA Intellectual Property
Rights, used in or pertaining to the business of CIA or any subsidiary,
except for the ordinary rights of a stockholder or employee stock
optionholder.
Section 3.22. Opinion of Financial Adviser. No advisers, as of the date
hereof, have delivered to the CIA Board a written opinion to the effect that,
as of such date, the exchange ratio contemplated by the Merger is fair to the
holders of CIA Shares.
Section 3.23. Brokers. No broker, finder or investment banker (other
than the CIA Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to COPSIL) is entitled to any brokerage, finders
or other fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of CIA.
Section 3.24. Disclosure. No representation or warranty of CIA in this
Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to COPSIL pursuant hereto or in connection
<PAGE>
herewith contains, as of the date of such representation, warranty or
instrument, or will contain any untrue statement of a material fact or, at
the date thereof, omits or will omit to state a material fact necessary to
make any statement herein or therein, in light of the circumstances under
which such statement is or will be made, not misleading.
Section 3.25. No Existing Discussions. As of the date hereof, CIA is not
engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to any Third Party Acquisition (as defined in
Section 5.4).
Section 3.26. Material Contracts.
(a) CIA has delivered or otherwise made available to COPSIL true,
correct and complete copies of all contracts and agreements (and all
amendments, modifications and supplements thereto and all side letters to
which CIA is a party affecting the obligations of any party thereunder) to
which CIA or any of its subsidiaries is a party or by which any of their
properties or assets are bound that are, material to the business, properties
or assets of CIA and its subsidiaries taken as a whole, including, without
limitation, to the extent any of the following are, individually or in the
aggregate, material to the business, properties or assets of CIA and its
subsidiaries taken as a whole, all: (i) employment, product design or
development, personal services, consulting, non-competition, severance,
golden parachute or indemnification contracts (including, without limitation,
any contract to which CIA is a party involving employees of CIA); (ii)
licensing, publishing, merchandising or distribution agreements; (iii)
contracts granting rights of first refusal or first negotiation; (iv)
partnership or joint venture agreements; (v) agreements for the acquisition,
sale or lease of material properties or assets or stock or otherwise. (vi)
contracts or agreements with any Governmental Entity; and (vii) all
commitments and agreements to enter into any of the foregoing (collectively,
together with any such contracts entered into in accordance with Section 5.2
hereof, the 'CIA Contracts"). Neither CIA nor any of its subsidiaries is a
party to or bound by any severance, golden parachute or other agreement with
any employee or consultant pursuant to which such person would be entitled to
receive any additional compensation or an accelerated payment of compensation
as a result of the consummation of the transactions contemplated hereby.
(b) Each of the CIA Contracts is valid and enforceable in accordance
with its terms, and there is no default under any CIA Contract so listed
either by CIA or, to the knowledge of CIA, by any other party thereto, and no
event has occurred that with the lapse of time or the giving of notice or
both would constitute a default thereunder by CIA or, to the knowledge of
CIA, any other party, in any such case in which such default or event could
reasonably be expected to have a Material Adverse Effect on CIA.
(c) No party to any such CIA Contract has given notice to CIA of or made
a claim against CIA with respect to any breach or default thereunder, in any
such case in which such breach or default could reasonably be expected to
have a Material Adverse Effect on CIA.
ARTICLE 4
Covenants
Section 4.1. Conduct of Business of COPSIL. Except as contemplated by
this Agreement or as described in Section 4.1 of the COPSIL Disclosure
Schedule, during the period from the date hereof to the Effective Time,
COPSIL will conduct its operations in the ordinary course of business
consistent with past practice and, to the extent consistent therewith, with
no less diligence and effort than would be applied in the absence of this
Agreement, seek to preserve intact its current business organization, keep
available the service of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that goodwill and ongoing businesses shall be unimpaired
at the Effective Time. Without limiting the generality of the foregoing,
except as otherwise expressly provided in this Agreement or as described in
Section 4.1 of the COPSIL Disclosure Schedule, prior to the Effective Time,
COPSIL will not, without the prior written consent of CIA:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) amend the terms of any stock of any class or any other securities
(except bank loans) or equity equivalents.
<PAGE>
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of COPSIL (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person.
(iii) make any loans, advances or capital contributions to, or investments
in, any other person; (iv) pledge or otherwise encumber shares of capital
stock of COPSIL; or (v) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any material Lien
thereupon (other than tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent COPSIL from (i) entering into employment
agreements or severance agreements with employees in the ordinary course of
business and consistent with past practice or (ii) increasing annual
compensation and/or providing for or amending bonus arrangements for
employees for fiscal 1999 in the ordinary course of year-end compensation
reviews consistent with past practice and paying bonuses to employees for
fiscal 1999 in amounts previously disclosed to CIA (to the extent that such
compensation increases and new or amended bonus arrangements do not result in
a material increase in benefits or compensation expense to COPSIL);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions (other than in the ordinary
course of business);
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets including, without
limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to COPSIL; (iii) authorize any new
capital expenditure or expenditures which, individually is in excess of
$1,000 or, in the aggregate, are in excess of $5,000; provided, however that
none of the foregoing shall limit any capital expenditure required pursuant
to existing contracts;
(k) make any tax election or settle or compromise any income tax
liability material to COPSIL;
(l) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
COPSIL;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or in the
ordinary course of business; or
<PAGE>
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1(a) through 4.1(m) or any action which would make
any of the representations or warranties of contained in this Agreement
untrue or incorrect.
Section 4.2. Conduct of Business of CIA. Except as contemplated by this
Agreement or as described in Section 4.2 of the CIA Disclosure Schedule
during the period from the date hereof to the Effective Time, CIA will
conduct its operations in the ordinary course of business consistent with
past practice and, to the extent consistent therewith, with no less diligence
and effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organization, keep available the service
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end
that goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement or as described in Section 4.2 of the
CIA Disclosure Schedule, prior to the Effective Time, CIA will not, without
the prior written consent of:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any other securities (except bank loans) or equity
equivalents (including, without limitation, any stock options or stock
appreciation rights;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution, merger
consolidation, restructuring, recapitalization or other reorganization of CIA
(other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business. (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person;
(iii) make any loans, advances or capital contributions to or investments in,
any other person; (iv) pledge or otherwise encumber shares of capital stock
of CIA or its subsidiaries; or (v) mortgage or pledge any of its material
assets, tangible or intangible, or create or suffer to exist any material
Lien thereupon (other than tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent CIA or its subsidiaries from (i) entering
into employment agreements or severance agreements with employees in the
ordinary course of business and consistent with past practice or (ii)
increasing annual compensation and/or providing for or amending bonus
arrangements for employees for fiscal 1999 in the ordinary course of yearend
compensation reviews consistent with past practice and paying bonuses to
employees for fiscal 1999 in amounts previously disclosed to (to the extent
that such compensation increases and new or amended bonus arrangements do not
result in a material increase in benefits or compensation expense to CIA);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions other than in the ordinary
course of business;
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
<PAGE>
(i) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory of writing-off notes
or accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership, or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to CIA; (iii) authorize any new capital
expenditure or expenditures which, individually, is in excess of $1,000 or,
in the aggregate, are in excess of $5,000: provided, however that none of the
foregoing shall limit any capital expenditure required pursuant to existing
contracts;
(k) make any tax election or settle or compromise any income tax
liability material to CIA and its subsidiaries taken as a whole;
(l) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
CIA;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or except in
the ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.2(a) through 4.2(m) or any action which would make
any of the representations or warranties of the CIA contained in this
Agreement untrue or incorrect.
Section 4.3. Preparation of 8-K and the Proxy Statement. CIA and shall
promptly prepare and file with the SEC the Proxy Statement, if required by
counsel.
Section 4.4. Other Potential Acquirers.
(a) CIA, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore
with respect to any Third Party Acquisition.
Section 4.5. Meetings of Stockholders. Each of CIA and COPSIL shall take
all action necessary, in accordance with the respective General Corporation
Law of its respective state, and its respective certificate of incorporation
and bylaws, to duly call, give notice of, convene and hold a meeting of its
stockholders as promptly as practicable, to consider and vote upon the
adoption and approval of this Agreement and the transactions contemplated
hereby. The stockholder votes required for the adoption and approval of the
transactions contemplated by this Agreement shall be the vote required by the
NGCL and its charter and bylaws, in the case of COPSIL and the General
Corporation Law of its respective state, and its charter and bylaws, in the
case of CIA. COPSIL and CIA will, through their respective Boards of
Directors, recommend to their respective stockholders approval of such
matters
Section 4.6. OTC:BB Listing. The parties shall use all reasonable
efforts to cause the COPSIL Shares, subject to Rule 144, to be traded on the
Over The Counter Bulletin Board (OTC:BB).
Section 4.7. Access to Information.
(a) Between the date hereof and the Effective Time, COPSIL will give CIA
and its authorized representatives, and CIA will give COPSIL and its
authorized representatives, reasonable access to all employees, plants,
offices, warehouses and other facilities and to all books and records of
itself and its subsidiaries, will permit the other party to make such
inspections as such party may reasonably require and will cause its officers
and those of its subsidiaries to furnish the other party with such financial
and operating data and other information with respect to the business and
properties of itself and its subsidiaries as the other party may from time to
time reasonably request.
<PAGE>
(b) Between the date hereof and the Effective Time, COPSIL shall furnish
to CIA, and CIA will furnish to COPSIL, within 25 business days after the end
of each quarter, quarterly statements prepared by such party in conformity
with its past practices) as of the last day of the period then ended.
(c) Each of the parties hereto will hold and will cause its consultants
and advisers to hold in confidence all documents and information furnished to
it in connection with the transactions contemplated by this Agreement.
Section 4.8. Additional Agreements, Reasonable Efforts. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
(i) cooperating in the preparation and filing of the Proxy Statement and the
8-K, any filings that may be required under the HSR Act, and any amendments
to any thereof; (ii) obtaining consents of all third parties and Governmental
Entities necessary, proper or advisable for the consummation of the
transactions contemplated by this Agreement; (iii) contesting any legal
proceeding relating to the Merger and (iv) the execution of any additional
instruments necessary to consummate the transactions contemplated hereby.
Subject to the terms and conditions of this Agreement, CIA and COPSIL agree
to use all reasonable efforts to cause the Effective Time to occur as soon as
practicable after the stockholder votes with respect to the Merger. In case
at any time after the Effective Time any further action is necessary to carry
out the purposes of this Agreement, the proper officers and directors of each
party hereto shall take all such necessary action.
Section 4.9. Employee Benefits; Stock Option and Employee Purchase
Plans. Subject to the provisions of Section 1.6(d) hereof, prior to the
Effective Time, COPSIL will take or cause to be taken all action necessary to
adopt and or revise the employment agreements of Ralph Massetti with COPSIL.
It is the parties' present intent to provide after the Effective Time to
employees of CIA employee benefit plans (other than stock option or other
plans involving the potential issuance of securities of COPSIL) which, in the
aggregate, are not less favorable than those currently provided by CIA.
Notwithstanding the foregoing, nothing contained herein shall be construed as
requiring the parties to continue any specific employee benefit plans.
Section 4.10. Public Announcements. CIA, and COPSIL will consult with
one another before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement,
including, without limitation, the Merger, and shall not issue any such press
release or make any such public statement prior to such consultation, except
as may be required by applicable law or by obligations pursuant to any
listing agreement with the NASD Over The Counter Bulletin Board (OTC:BB) as
determined by CIA or COPSIL.
Section 4.11. Indemnification.
(a) To the extent, if any, not provided by an existing right under one
of the parties' directors and officers liability insurance policies, from and
after the Effective Time, COPSIL shall, to the fullest extent permitted by
applicable law, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director, officer or employee of the parties hereto or any
subsidiary thereof (each an "Indemnified Party" and, collectively, the
''Indemnified Parties") against all losses, expenses (including reasonable
attorneys' fees and expenses), claims, damages or liabilities or, subject to
the proviso of the next succeeding sentence, amounts paid in settlement
arising out of actions or omissions occurring at or prior to the Effective
Time and whether asserted or claimed prior to, at or after the Effective
Time) that are in whole or in part (i) based on, or arising out of the fact
that such person is or was a director, officer or employee of such party or a
subsidiary of such party or (ii) based on, arising out of or pertaining to
the transactions contemplated by this Agreement. In the event of any such
loss expense, claim, damage or liability (whether or not arising before the
Effective Time), (i) COPSIL shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to COPSIL, promptly after statements therefor are
received and otherwise advance to such Indemnified Party upon request
reimbursement of documented expenses reasonably incurred, in either case to
the extent not prohibited by the NGCL or its certificate of incorporation or
bylaws, (ii) COPSIL will cooperate in the defense of any such matter and
(iii) any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under the
NGCL and COPSIL's certificate of incorporation or bylaws shall be made by
<PAGE>
independent counsel mutually acceptable to COPSIL and the Indemnified Party;
provided, however, that COPSIL shall not be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld). The Indemnified Parties as a group may retain only one law firm
with respect to each related matter except to the extent there is, in the
opinion of counsel to an Indemnified Party, under applicable standards of
professional conduct, c conflict on any significant issue between positions
of any two or more Indemnified Parties.
(b) In the event COPSIL or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity or such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to
any person, then and in either such case, proper provision shall be made so
that the successors and assigns of COPSIL shall assume the obligations set
forth in this Section 4.11.
(c) To the fullest extent permitted by law, from and after the Effective
Time, all rights to indemnification now existing in favor of the employees,
agents, directors or officers of COPSIL and CIA and their subsidiaries with
respect to their activities as such prior to the Effective Time, as provided
in COPSIL's and CIA's certificate of incorporation or bylaws, in effect on
the date thereof or otherwise in effect on the date hereof, shall survive the
Merger and shall continue in full force and effect for a period of not less
than six years from the Effective Time.
(d) The provisions of this Section 4.11 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 4.12. Notification of Certain Matters. The parties hereto shall
give prompt notice to the other parties, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at or prior to the Effective
Time, (ii) any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, (iii) any notice of, or other communication relating to, a default
or event which, with notice or lapse of time or both, would become a default,
received by such party or any of its subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, under any contract or
agreement material to the financial condition, properties, businesses or
results of operations of such party and its subsidiaries taken as a whole to
which such party or any of its subsidiaries is a party or is subject, (iv)
any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement, or (v) any material adverse
change in their respective financial condition, properties, businesses,
results of operations or prospects taken as a whole, other than changes
resulting from general economic conditions; provided, however, that the
delivery of any notice pursuant to this Section 4.12 shall not cure such
breach or non-compliance or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
ARTICLE 5
Conditions to Consummation of the Merger
Section 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) this Agreement shall have been approved and adopted by the requisite
vote of the stockholders of COPSIL and CIA;
(b) this Agreement shall have been approved and adopted by the Board of
Directors of COPSIL and CIA;
(c) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority which prohibits,
restrains, enjoins or restricts the consummation of the Merger;
<PAGE>
(d) any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired, and any other governmental or regulatory notices
or approvals required with respect to the transactions contemplated hereby
shall have been either filed or received; and
Section 5.2. Conditions to the Obligations of COPSIL. The obligation of
COPSIL to effect the Merger is subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) the representations of CIA contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except to
the extent that the breach thereof would not have a Material Adverse Effect
on CIA) at and as of the Effective Time with the same effect as if made at
and as of the Effective Time (except to the extent such representations
specifically related to an earlier date, in which case such representations
shall be true and correct as of such earlier date), and at the Closing CIA
shall have delivered to COPSIL a certificate to that effect;
(b) each of the covenants and obligations of CIA to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time
and at the Closing CIA shall have delivered to COPSIL a certificate to that
effect;
(d) CIA shall have obtained the consent or approval of each person
whose consent or approval shall be required in order to permit the Merger, as
relates to any obligation, right or interest of CIA under any loan or credit
agreement, note, mortgage, indenture, lease or other agreement or instrument,
except those for which failure to obtain such consents and approvals would
not, in the reasonable opinion of COPSIL, individually or in the aggregate,
have a Material Adverse Effect on CIA;
(e) there shall have been no events, changes or effects with respect to
CIA or its subsidiaries having or which could reasonably be expected to have
a Material Adverse Effect on CIA; and
Section 5.3. Conditions to the Obligations of CIA. The respective
obligations of CIA to effect the Merger are subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) the representations of COPSIL contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except to
the extent that the breach thereof would not have a Material Adverse Effect
on COPSIL) at and as of the Effective Time with the same effect as if made at
and as of the Effective Time (except to the extent such representations
specifically related to an earlier date, in which case such representations
shall be true and correct as of such earlier date), and at the Closing COPSIL
shall have delivered to CIA a certificate to that effect;
(b) each of the covenants and obligations of COPSIL to be performed at
or before the Effective Time pursuant to the terms of this Agreement shall
have been duly performed in all material respects at or before the Effective
Time and at the Closing COPSIL shall have delivered to CIA a certificate to
that effect;
(c) there shall have been no events, changes or effects with respect to
COPSIL having or which could reasonably be expected to have a Material
Adverse Effect on COPSIL.
ARTICLE 6
Termination; Amendment; Waiver
Section 6.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval and adoption of this Agreement by COPSIL's or CIA's
stockholders:
(a) by mutual written consent of COPSIL and CIA;
(b) by CIA or COPSIL if (i) any court of competent jurisdiction in the
United States or other United States Governmental Entity shall have issued a
<PAGE>
final order, decree or ruling or taken any other final action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling
or other action is or shall have become nonappealable or (ii) the Merger has
not been consummated by June 1, 2000; provided, however, that no party may
terminate this Agreement pursuant to this clause (ii) if such party's failure
to fulfill any of its obligations under this Agreement shall have been the
reason that the Effective Time shall not have occurred on or before said
date;
(c) by COPSIL if (i) there shall have been a breach of any
representation or warranty on the part of CIA set forth in this Agreement, or
if any representation or warranty of CIA shall have become untrue, in either
case such that the conditions set forth in Section 5.2(a) would be incapable
of being satisfied by June 1, 2000 (or as otherwise extended), (ii) there
shall have been a breach by CIA of any of their respective covenants or
agreements hereunder having a Material Adverse Effect on CIA or materially
adversely affecting (or materially delaying) the consummation of the Merger,
and CIA, as the case may be, has not cured such breach within 20 business
days after notice by COPSIL thereof, provided that COPSIL has not breached
any of its obligations hereunder, (iii) COPSIL shall have convened a meeting
of its stockholders to vote upon the Merger and shall have failed to obtain
the requisite vote of its stockholders; or (iv) COPSIL shall have convened a
meeting of its Board of Directors to vote upon the Merger and shall have
failed to obtain the requisite vote;
(d) by CIA if (i) there shall have been a breach of any representation
or warranty on the part of COPSIL set forth in this Agreement, or if any
representation or warranty of COPSIL shall have become untrue, in either case
such that the conditions set forth in Section 5.3(a) would be incapable of
being satisfied by June 1, 2000 (or as otherwise extended), (ii) there shall
have been a breach by COPSIL of its covenants or agreements hereunder having
a Material Adverse Effect on COPSIL or materially adversely affecting (or
materially delaying) the consummation of the Merger, and COPSIL, as the case
may be, has not cured such breach within twenty business days after notice by
CIA thereof, provided that CIA has not breached any of its obligations
hereunder, (iii) the COPSIL Board shall have recommended to COPSIL's
stockholders a Superior Proposal, (iv) the COPSIL Board shall have withdrawn,
modified or changed its approval or recommendation of this Agreement or the
Merger or shall have failed to call, give notice of, convene or hold a
stockholders' meeting to vote upon the Merger, or shall have adopted any
resolution to effect any of the foregoing, (v) CIA shall have convened a
meeting of its stockholders to vote upon the Merger and shall have failed to
obtain the requisite vote of its stockholders or (vi) COPSIL shall have
convened a meeting of its stockholders to vote upon the Merger and shall have
failed to obtain the requisite vote of its stockholders.
Section 6.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part
of any party hereto or its affiliates, directors, officers or stockholders,
other than the provisions of this Section 6.2 and Sections 4.7(c) and 6.3
hereof. Nothing contained in this Section 6.2 shall relieve any party from
liability for any breach of this Agreement.
Section 6.3. Fees and Expenses. Except as specifically provided in this
Section 6.3, each party shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
Section 6.4. Amendment. This Agreement may be amended by action taken by
COPSIL and CIA at any time before or after approval of the Merger by the
stockholders of COPSIL and CIA (if required by applicable law) but, after any
such approval, no amendment shall be made which requires the approval of such
stockholders under applicable law without such approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of the
parties hereto.
Section 6.5. Extension; Waiver. At any time prior to the Effective Time,
each party hereto may (i) extend the time for the performance of any of the
obligations or other acts of any other party, (ii) waive any inaccuracies in
the representations and warranties of any other party contained herein or in
any document, certificate or writing delivered pursuant hereto or (iii) waive
compliance by any other party with any of the agreements or conditions
contained herein. Any agreement on the part of any party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such
rights.
<PAGE>
ARTICLE 7
Miscellaneous
Section 7.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 7.1 shall not
limit any covenant or agreement of the parties hereto which by its terms
requires performance after the Effective Time.
Section 7.2. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all other prior agreements and
understandings both written and oral, between the parties with respect to the
subject matter hereof and (b) shall not be assigned by operation of law or
otherwise.
Section 7.3. Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby,
and to such end, the provisions of this Agreement are agreed to be severable.
Section 7.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested), to each other party as follows:
If to CIA:
Cochstedt International Airport, Inc.
6170 W. Desert Inn Rd.
Las Vegas, Nevada 89146
<PAGE>
with a copy to:
Donald J. Stoecklein
Sperry Young & Stoecklein
1850 East Flamingo Rd. Suite 111
Las Vegas, Nevada 89119
(702) 792-2590
(702) 794-0744
if to COPSIL:
COPSIL CORPORATION
7621 Genzer Drive
Las Vegas, Nevada 89128
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without regard
to the principles of conflicts of law thereof.
Section 7.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
Section 7.7. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Sections 4.9 and 4.11, nothing
in this Agreement, express or implied, is intended to or shall confer upon
any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 7.8. Certain Definitions. For the purposes of this Agreement,
the term:
(a) "affiliate" means (except as otherwise provided in Sections 2.19,
3.19 and 4.13) a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
the first mentioned person;
(b) "business day" means any day other than a day on which Nasdaq is
closed;
(c) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(d) "knowledge'' or "known'' means, with respect to any matter in
question, if an executive officer of COPSIL or CIA or its subsidiaries, as
the case may be, has actual knowledge of such matter;
(e) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity; and
(f) "subsidiary" or "subsidiaries" of COPSIL, CIA or any other person,
means any corporation, partnership, limited liability company, association,
trust, unincorporated association or other legal entity of which COPSIL, CIA
or any such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, 50% or
more of the capital stock, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of
such corporation or other legal entity.
<PAGE>
Section 7.9. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part
of any direct or indirect stockholder of COPSIL or CIA or any officer,
director, employee, agent, representative or investor of any party hereto.
Section 7.10. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder; provided, however, that,
if a party hereto is entitled to receive any payment or reimbursement of
expenses pursuant to Sections 6.3(a), (b) or (c), it shall not be entitled to
specific performance to compel the consummation of the Merger.
Section 7.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
In Witness Whereof, each of the parties has caused this Agreement to be duly
executed on its behalf as of the day and year first above written.
Cochstedt International Airport, Inc.
By:/s/ Friedrich Gradl
Name: Friedrich Gradl
Title: President
Copsil Corporation
By:/s/ Debra Nicholson
Name: Debra Nicholson
Title: President
<PAGE>
COPSIL DISCLOSURE SCHEDULE
Schedule 2.1 Organization See Amended
Articles/Bylaws/Minutes
Schedule 2.6 Consents & Approvals None Required
Schedule 2.7 No Default Not Applicable
Schedule 2.8 No Undisclosed Liability None Exist
Schedule 2.9 Litigation None Exist
Schedule 2.10 Compliance with Applicable Law Not Applicable - full
disclosed in 10KSB
Schedule 2.11 Employee Benefit Plans Section 2.11(a) Not Applicable -
None Exist
Section 2.11(b) No Benefit Plan Exist
Section 2.11( c)No Options Exist
Section 2.11(d) No Agreements Exist
Schedule 2.12 Environmental Laws and Regs Not Applicable
Schedule 2.13 Tax Matters None Exist
Schedule 2.14 Title to Property None Exist
Schedule 2.15 Intellectual Property None Exist
Schedule 2.16 Insurance None Exist
Schedule 2.17 Vote Required See Shareholder Meeting
Certificate
Schedule 2.18 Tax Treatment Not Applicable
Schedule 2.19 Affiliates Debra Nicholson
Schedule 2.20 Certain Business Practices None Exist
Schedule 2.21 Insider Interest None Exist
Schedule 2.22 Opinion of Financial Adviser Waived - None Exist
Schedule 2.23 Broker None Exist
Schedule 4.1 Conduct of Business See Amended & Restated Articles
<PAGE>
CIA DISCLOSURE SCHEDULE
Schedule 3.2(b) Subsidiary Stock None Exist
Schedule 3.2(c) Capital Stock Rights None Exist other than as in
Articles
Schedule 3.2(d) Securities conversions None Exist
Schedule 3.2 (f) Subsidiaries None Exist
Schedule 3.6 Consents & Approvals None Required
Schedule 3.7 No Default Not Applicable
Schedule 3.8 No Undisclosed Liability None Exist
Schedule 3.9 Litigation None Exist
Schedule 3.10 Compliance with Applicable Law Not Applicable
Schedule 3.11 Employee Benefit Plans Section 3.11( c)No Options Exist
Section 3.11(e) No Agreements Exist
Schedule 3.12 Environmental Laws and Regs Not Applicable
Schedule 3.13 Tax Matters None Exist
Schedule 3.14 Title to Property None Exist
Schedule 3.15(b) Intellectual Property None Exist
Schedule 3.16 Insurance None Exist
Schedule 3.17 Vote Required See Shareholder Meeting
Certificate
Schedule 3.18 Tax Treatment Not Applicable
Schedule 3.19 Affiliates Friedrich Gradl
Jorg Bartholomaus
Norbert Doerr
Schedule 3.20 Certain Business Practices None Exist
Schedule 3.21 Insider Interest None Exist
Schedule 3.22 Opinion of Financial Adviser Waived - None Exist
<PAGE>
Schedule 2.23 Broker None Exist
Schedule 4.2 Conduct of Business See Amended & Restated Articles
