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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 1, 2000
AAROW ENVIRONMENTAL GROUP, INC.
(Exact name of registrant as specified in its charter)
NEVADA 000-06292 73-0788886
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
110 WEST 7TH STREET, SUITE 200
TULSA, OKLAHOMA 74119-1108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 583-7700
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On May 1, 2000, Aarow-Global Wireless Acquisiton, Inc., an Oklahoma
corporation ("Acquisition Corp."), merged with and into Global Wireless
Technologies, Inc., an Oklahoma corporation ("Global Wireless") and became a
wholly-owned subsidiary of Aarow Environmental Group, Inc. (the
"Merger-Acquisition"). The Merger-Acquisition was completed in accordance
with the Agreement and Plan of Merger dated May 1, 2000 (the "Merger
Agreement"). Pursuant to the Merger Agreement, (i) Aarow Environmental Group,
Inc. (the "Company") agreed to issue and deliver 22,175,961 shares of the
Company's common stock to the shareholders of Global Wireless of which
6,000,000 shares are to be represented by 2,000,000 shares of the Company's
Series I Convertible Preferred Stock, which are to be convert into 6,000,000
shares of common stock upon amendment of the Company's Articles of
Incorporation to increase the number of authorized shares of commons stock to
100,000,000. Furthermore, (i) 20,000 shares of the Company's outstanding
Series I Preferred Stock are to be converted into 60,000 shares of common
stock and 1,986,888 outstanding shares of the Company's Series I Convertible
Preferred Stock (convertible into 5,960,664 shares of common stock) and
4,773,872 shares of common stock are to be returned to the Company by certain
shareholders for cancellation, which represented a form of shareholder
recapitalization. Furthermore, effective May 1, 2000, the officers and
directors of Global Wireless became the officers and directors of the Company.
The following table presents certain information as to the
beneficial ownership of the Company's common stock as adjusted to give effect
to the Merger-Acquisition of (i) each person that beneficially owns more than
five percent thereof, (ii) each one of the Company's executive officers and
directors, and (iii) all executive officers and directors as a group. All
persons listed have sole voting and investment power with respect to their
shares, and there is no family relationship between the executive officers
and directors.
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY BENEFICIALLY
OWNED OWNED SHARES
------------ -------------
<S> <C> <C>
Ronald L. Baker(1)................................................. 12,133,333 29.0%
110 West 7th Street, Suite 200
Tulsa, Oklahoma 74119-1108
J. Michael Erhart(2)............................................... 935,537 2.2%
Michael W. Canfield(3)............................................. 366,280 *
Norman S. Leighty(4)............................................... 420,345 *
Richard R. Stutsman(5)............................................. 520,345 *
Executive Officers and Directors
as a Group (five persons)(6)................................... 14,375,840 33.9%
</TABLE>
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* Less than 1%.
(1) The shares beneficially owned and the percentage include 676,012 shares
owned by Jesslyn Dee Baker, wife of Mr. Baker, and 6,000,000 shares
into which 2,000,000 shares of the Company's Series I Convertible
Preferred Stock will be converted upon amendment of the Company's
Articles of Incorporation to increase the number of the Company's
authorized shares of common stock.
(2) The shares beneficially owned and the percentage include 745,312 shares
owned by Mr. Erhart's living trust and 190,225 shares owned by Doris
Erhart, wife of Mr. Erhart.
(3) The shares beneficially owned and the percentage include 135,207 shares
owned by Dollie E. Canfield, wife of Mr. Canfield.
(4) The shares beneficially owned and the percentage include 209,563 shares
owned by Sharon J. Leighty, wife of Mr. Leighty.
(5) The number of shares and percentage include 100,000 shares of common
stock issuable upon exercise of common stock purchase warrants held by
Mr. Stutsman and 135,207 shares owned by Nancy L. Stutsman, wife of Mr.
Stutsman.
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(6) The shares beneficially owned and the percentage include the shares
beneficially owned by Messrs. Baker, Erhart, Canfield, Leighty and
Stutsman, the Company's officers and directors.
Prior to the Merger-Acquisition, D. Frederick Shefte was President
and a Director of the Company, Sammy D. Yates was Secretary and Chairman of
the Board of Directors, and Stan Sisemore was Vice President and a Director
of the Company. In connection with the Merger-Acquisition, Mr. Shefte agreed
to return 42,000 shares of common stock to the company, Mr. Sisemore agreed
to return 933,333 shares of Series I Convertible Preferred Stock which was
convertible into and represented 2,799,999 beneficial shares of common stock
and 200,000 shares of common stock and Mr. Yates agreed to return 300,000
shares of common stock. The returned shares will be held as treasury stock
until canceled by the Company.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 1, 2000, Aarow-Global Wireless Acquisiton, Inc., an Oklahoma
corporation ("Acquisition Corp."), merged with and into Global Wireless
Technologies, Inc., an Oklahoma corporation ("Global Wireless") and became a
wholly-owned subsidiary of Aarow Environmental Group, Inc. (the
"Merger-Acquisition"). The Merger-Acquisition was completed in accordance
with the Agreement and Plan of Merger dated May 1, 2000 (the "Merger
Agreement"). The Merger-Acquisition was accounted for under the purchase
method of accounting. Global Wireles is a devleopment state enterprise
engaged in the development of wireless communications networks and the
marketing of related products and services.
Pursuant to the Merger Agreement, Aarow Environmental Group, Inc.
(the "Company") agreed to issue and deliver 22,175,961 shares of the
Company's common stock to the shareholders of Global Wireless of which
6,000,000 shares are to be represented by 2,000,000 shares of the Company's
Series I Convertible Preferred Stock, which are to be convert into 6,000,000
shares of common stock upon amendment of the Company's Articles of
Incorporation to increase the number of authorized shares of commons stock to
100,000,000. Furthermore, 20,000 shares of the Company's outstanding Series I
Preferred Stock are to be converted into 60,000 shares of common stock and
1,986,888 outstanding shares of the Company's Series I Convertible Preferred
Stock (convertible into 5,960,664 shares of common stock) and 4,773,872
shares of common stock are to be returned to the Company by certain
shareholders for cancellation, which represented a form of shareholder
recapitalization. In addition, the Company issued Warrants to Purchase Stock
exercisable on or before June 30, 2005, for the purchase of 1,850,000 shares
of common stock for $.375 per share. These Warrants were issued to five
individuals who assisted in and were instrumental in completion of the
Merger-Acquisition.
The shares of common stock and the Series I Convertible Preferred
Stock and the Warrants to Purchase Common Stock to be issued in connection
with the Merger-Acquisition will be issued without registration pursuant to
Rule 506 of Regulation D promulgated under the Securities Act of 1933, as
amended, and applicable state securities acts.
The Company, through its subsidiary Global Wireless intends to
develop wireless communications networks and market the related products and
services. Global Wireless is a development stage enterprise and has not
realized any revenue. There is no assurance that the Company will be able to
develop the wireless communications networks or, if successful at such
development, then further develop a market for the related products and
services. As a result of the Merger-Acquisition, the Company's principal
offices have been relocated to 110 West 7th Street, Tulsa, Oklahoma
74119-1108 and the telephone number is 918-583-7700.
In connection with the Merger-Acquisition, because of the nature of
the assets of Global Wireless, it is anticipated that the Company, on a
consolidated financial reporting basis, will be required to record
substantially all of the purchase price of Global Wireless as goodwill (an
intangible asset) which will be amortized on a straight-line basis over 5 to
10 years, or the estimated period that the Company will be benefitted by the
Merger- Acquisition, whichever is the shorter period. The carrying value and
recoverability of the goodwill will be periodically reviewed by management of
the Company. If the facts and circumstances suggest that the goodwill may be
impaired, the carrying value of the goodwill will be adjusted which will
result in an immediate expense or
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charge against income during the period of adjustment an/or the length of the
remaining amortization period may be shortened which will result in an
increase in the amount of amortization during the period of adjustment and
each period thereafter until fully amortized. Once adjusted, there can be no
assurance that there will not be further adjustments for impairment and
recoverability in future periods of such intangible assets. Of the various
factors to be considered by management of the Company in determining
impairment of goodwill, the most significant will be (i) the unsuccessful
development of the wireless communications networks (ii) inability to develop
markets for the related products and services, (iii) losses from operations,
(iv) developments within the wireless communications industry, including the
Company's inability to develop and maintain market share, development of
other communications technologies, and (v) imposition of additional
regulatory requirements. In the event management of the Company determines
that goodwill has become impaired, the adjustments for impairment and
recoverability may occur during a period of operations in which the Company
has sustained losses or has only marginal profitability from operations, and
the impairment and/or increased amortization amount will either increase such
losses from operations or reduce profitability.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS AND EXHIBITS.
As of the date of this filing with the Commission, it is impracticable
to provide the required financial statements and pro forma financial
information related to the acquisition of Global Wireless Technologies,
Inc. by the Company, and there are no financial statements available
for filing. It is anticipated that the financial statements and pro
forma financial information will be filed with the Commission within
approximately 60 days of this filing or as soon as practicable, but not
later than July 14, 2000 (60 days after the date on which this report
must be filed with the Commission).
(b) PRO FORMA FINANCIAL INFORMATION.
The pro forma financial information related to the acquisition of
Global Wireless Technologies, Inc. by the Company will be filed with
the Commission at such time that the financial statements are filed.
See "(a) Financial Statements and Exhibits," above.
(c) EXHIBITS.
2.1 Agreement and Plan of Merger, amongst Registrant, Aarow-Global
Wireless Acquisition, Inc., Global Wireless Technologies,
Inc., Ronald L. Baker, Stan Sisemore, Lloyd Phillips, Jeff
Martin, David Surgnier, Virgil Plagge, Mitch Villines, D. Fred
Shefte, Sam Yates, and Tommy Phillips , dated May 1, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AAROW ENVIRONMENTAL GROUP, INC.
(Registrant)
By: /s/ Ronald L. Baker
----------------------------------
Ronald L. Baker
Chief Executive Officer
Date: May 15, 2000
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 1, 2000 (this
"AGREEMENT"), among AAROW ENVIRONMENTAL GROUP, INC., a Nevada corporation
("PARENT"), AAROW-GLOBAL WIRELESS ACQUISITION, INC., an Oklahoma corporation
and a wholly-owned subsidiary of Parent ("MERGER SUB"), GLOBAL WIRELESS
TECHNOLOGIES, INC., an Oklahoma corporation (the "COMPANY"), the holder of a
majority of the outstanding common stock of the Company, namely Ronald L.
Baker (the "COMPANY SHAREHOLDER"), and the holders of a majority of the
outstanding preferred and common stock of Parent, namely Stan Sisemore, Lloyd
Phillips, Jeff Martin, David Surgnier, Virgil Plagge, Mitch Villines, D. Fred
Shefte, Sam Yates, and Tommy Phillips (the "PARENT SHAREHOLDERS").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Merger Sub, the
Company, the Company Shareholder and Parent Shareholders have each determined
that it is advisable and in their best interests and the best interests of
the other shareholders of Parent for Parent to cause the Merger Sub to merge
with and into the Company upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance of such combination, the Boards of
Directors of Parent, Merger Sub and the Company and the Company Shareholder,
Parent Shareholders and the Parent as the sole shareholder of Merger Sub have
each approved (as evidenced by their execution of this Agreement) the merger
(the "MERGER") of Merger Sub with and into the Company in accordance with the
applicable provisions of the Oklahoma General Corporation Act (the "OGCA"),
and upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Parent, Merger Sub, the Company, Company
Shareholder and Parent Shareholders intend, by approving resolutions
authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "CODE"), and the regulations promulgated thereunder;
and
WHEREAS, pursuant to the Merger, each outstanding share
(each, a "COMMON SHARE") of the Company's Common Stock, par value $.001 per
share (the "COMPANY COMMON STOCK"), shall be converted into the right to
receive the Merger Consideration (as defined in Section 1.7(b)), upon the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Merger Sub, the Company, Company Shareholder and Parent
Shareholders hereby agree as follows:
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ARTICLE VII
THE MERGER
SECTION 7.1 THE MERGER. (a) EFFECTIVE TIME. At the
Effective Time (as defined in Section 1.2), and subject to and upon the terms
and conditions of this Agreement and the OGCA, the Company shall be merged
with and into Merger Sub, the separate corporate existence of the Company
shall cease, and Merger Sub shall continue as the surviving corporation.
Merger Sub as the surviving corporation after the Merger is hereinafter
sometimes referred to as the "SURVIVING CORPORATION."
(b) CLOSING. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 7.1 and subject to the satisfaction or waiver of the
conditions set forth in Article VI, the consummation of the Merger will take
place as promptly as practicable (and in any event within two business days)
after satisfaction or waiver of the conditions set forth in Article VI at the
offices of Dunn Swan & Cunningham, 2800 Oklahoma Tower, 210 Park Avenue,
Oklahoma City, Oklahoma (the "CLOSING"), unless another date, time or place
is agreed to in writing by the parties hereto.
SECTION 7.2 EFFECTIVE TIME. As promptly as practicable
after the satisfaction or waiver of the conditions set forth in Article VI,
the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger as contemplated by the OGCA (the "CERTIFICATE OF
MERGER"), together with any required related certificates, with the Secretary
of State of the State of Oklahoma, in such form as required by, and executed
in accordance with the relevant provisions of, the OGCA (the time of such
filing being the "EFFECTIVE TIME").
SECTION 7.3 EFFECT OF THE MERGER. At the Effective Time,
the effect of the Merger shall be as provided in this Agreement, the
Certificate of Merger and the applicable provisions of the OGCA. Without
limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
SECTION 7.4 CERTIFICATE OF INCORPORATION; BY-LAWS. (a)
CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of the
Company, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by the OGCA and such Certificate of Incorporation.
(b) BYLAWS. The Bylaws of the Company, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by the OGCA, the Certificate
of Incorporation of the Surviving Corporation and such Bylaws.
SECTION 7.5 DIRECTORS AND OFFICERS. The directors of the
Company immediately prior to the Effective Time shall become the directors of
the Surviving Corporation and Parent, each to hold office in accordance with
the Certificate of Incorporation and Bylaws of the Surviving Corporation or
Parent (as the case may be), and the officers of the Company immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation and Parent (as the case may be), in each case until their
respective successors are duly elected or appointed and qualified.
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SECTION 7.6 EFFECT ON CAPITAL STOCK. At the Effective Time,
by virtue of the Merger and without any action on the part of the Parent,
Merger Sub, the Company or the holders of any of the following securities:
(a) PARENT SHAREHOLDERS SHARE RECAPITALIZATION. Each
of the respective Parent Shareholders hereby exercises his right to convert
the Series I Convertible Preferred Stock of Parent ("PARENT PREFERRED STOCK")
to Parent Common Stock, as may be necessary, and contribute and transfer to
Parent for cancellation immediately prior to the Effective Time the number of
shares of Parent Common Stock and Parent Preferred Stock so as to result in
the beneficial ownership of each of the Parent Shareholders becoming not more
than the number of shares of Parent Common Stock set opposite each of the
Parent Shareholders' names following the Closing Date as follows:
<TABLE>
<CAPTION>
Parent Shares Contributed Parent Shares Owned
------------------------- After Closing Date
Parent Shareholders Preferred Stock Common Stock Common Stock
- ------------------- --------------- ------------ -------------------
<S> <C> <C> <C>
Stan Sisemore................................... 933,333 575,000 375,000
Lloyd Phillips.................................. 263,996 976,872 196,539
Jeff Martin..................................... 333,334 800,000 205,000
David Surgnier.................................. - 900,000 100,000
Virgil Plagge................................... - 1,080,000 120,000
Mitch Villines.................................. 276,225 - 82,867
D. Fred Shefte.................................. - 42,000 100,000
Sam Yates....................................... - 400,000 100,000
Tommy Phillips.................................. 200,000 - 60,000
</TABLE>
For purposes of the foregoing, "beneficial ownership" shall have the
meaning a defined in Rule 13d-3 promulgated by the U.S. Securities and
Exchange Commission under the Securities Act of 1934, as amended, including,
without giving effect to the applicable 60-day period, the right to acquire
(i) through the exercise of any option, warrant or right, (ii) through the
conversion of a security, (iii) pursuant to the power to revoke a trust,
discretionary account, or similar arrangement, or (iv) pursuant to the
automatic termination of a trust, discretionary account or similar
arrangement . Each of the Parent Shareholders hereby represents that the
above-listed shares of Parent Common Stock and Parent Preferred Stock
constitute all of his beneficial ownership of the securities of Parent.
Furthermore, during the period commencing October 1, 1999 through the Closing
Date, each of the Parent Shareholders hereby represents and covenants,
individually and not jointly, that he has not transferred and will not
transfer his beneficial ownership in Parent Common Stock, Parent Preferred
Stock or other Parent securities, other than as provided in this Agreement.
(b) CONVERSION OF SECURITIES. In exchange for all of
the issued and outstanding Common Stock, at Closing, Parent shall issue and
deliver to the shareholders of the Company the greater of (i) 10,734,536
shares of Parent Common Stock or (ii) such number of shares of Parent Common
Stock to cause the shareholders of the Company to have beneficial ownership
of not less than 55.61% immediately following the Closing Date. The number of
shares of Parent Common Stock into which each outstanding Common Share is
converted pursuant to this Section 1.6(b) is referred to herein as the
"EXCHANGE RATIO."
(c) CANCELLATION. Each Common Share held in the
treasury of the Company and each Common Share owned by Parent, Merger Sub or
any direct or indirect wholly-owned subsidiary of the Company or Parent
immediately prior to the Effective Time shall, by virtue of the Merger and
without any
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action on the part of the holder thereof, cease to be outstanding, be
canceled and retired without payment of any consideration therefor and cease
to exist.
(d) ASSUMPTION OF OUTSTANDING STOCK OPTIONS AND
WARRANTS. Omitted.
(e) CAPITAL STOCK OF MERGER SUB. Omitted.
(f) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio
shall be appropriately adjusted to reflect fully the effect of any stock
split, reverse split or stock dividend (including any dividend or
distribution of securities convertible into Parent Common Stock), with
respect to Parent Common Stock having a record date after the date hereof and
prior to the Effective Time.
SECTION 7.7 EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT.
Parent shall instruct the transfer agent and registrar of Parent Common Stock
(the "EXCHANGE AGENT") to reserve and set aside for the benefit of the
shareholders of Company for exchange in accordance with this Section 1.7,
through the Exchange Agent, certificates evidencing the shares of Parent
Common Stock, as applicable into which the outstanding Common Shares, as
applicable, have been converted pursuant to Section 1.6(b) in exchange for
outstanding Common Shares.
(b) EXCHANGE PROCEDURES. As soon as reasonably
practicable after the Effective Time, Parent will instruct the Exchange Agent
to mail to each holder of record of the certificates evidencing and
representing the Common Stock (the "CERTIFICATES") (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 proper delivery of
the Certificates to the Exchange Agent and shall be in such form and have
such other provisions as Parent may reasonably specify), and (ii)
instructions to effect the surrender of the Certificates in exchange for the
certificates evidencing shares of Parent Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter
of transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the shareholders of the Company shall
be entitled to receive in exchange therefor (A) certificates evidencing that
number of whole shares of Parent Common Stock which the Company's
shareholders have the right to receive in accordance with the Exchange Ratio
in respect of the Common Shares formerly evidenced by such Certificate, and
(B) any dividends or other distributions to which such holder is entitled
pursuant to Section 1.7(c) without any interest thereon (the shares of Parent
Common Stock being, collectively, the "MERGER CONSIDERATION"), and the
Certificate so surrendered shall forthwith be canceled.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.
No dividends or other distributions declared or made after the Effective Time
with respect to shares of Parent Common Stock payable to shareholders of
record as of a date after the Effective Time shall be paid to the holder of
any unsurrendered Certificate with respect to the shares of Parent Common
Stock they are entitled to receive pursuant to the provisions hereof until
the holder of such Certificate shall surrender such Certificate pursuant to
Section 1.7(b). Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, at the time of such surrender, the amount of dividends or
other distributions payable to shareholders of record as of a date after the
Effective Time and theretofore paid with respect to such whole shares of
Parent Common Stock.
(d) TRANSFERS OF OWNERSHIP. If any certificate for
shares of Parent Common Stock is to be issued in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it
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will be a condition of the issuance thereof that the Certificate so
surrendered will be properly endorsed and otherwise in proper form for
transfer and that the Person requesting such exchange will have paid to
Parent or any agent designated by it any transfer or other taxes required by
reason of the issuance of a certificate for shares of Parent Common Stock in
any name other than that of the registered holder of the certificate
surrendered, or established to the satisfaction of Parent or any agent
designated by it that such tax has been paid or is not payable.
(e) NO LIABILITY. Parent, Merger Sub or the Company
shall not be liable to any holder of Company Common Stock for any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) WITHHOLDING RIGHTS. Parent or the Exchange Agent
shall be entitled to deduct and withhold from the Merger Consideration
otherwise payable pursuant to this Agreement to any holder of Company Common
Stock, such amounts as Parent or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are
so withheld by Parent or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder
of the Shares in respect of which such deduction and withholding was made by
Parent or the Exchange Agent.
SECTION 7.8. DISSENTING SHARES. Omitted.
SECTION 7.9 STOCK TRANSFER BOOKS. At the Effective Time,
the stock transfer books of the Company shall be closed, and there shall be
no further registration of transfers of the Company Common Stock thereafter
on the records of the Company.
SECTION 7.10 NO FURTHER OWNERSHIP RIGHTS IN COMPANY CAPITAL
STOCK. The Merger Consideration delivered upon the surrender for exchange of
Common Shares in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such Common
Shares and there shall be no further registration of transfers on the records
of the Surviving Corporation of such Common Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article I.
SECTION 7.11 LOST, STOLEN OR DESTROYED CERTIFICATES. In the
event any Certificate shall have been lost, stolen or destroyed, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed Certificate,
upon the making of an affidavit of that fact by the holder thereof, such
shares of Parent Common Stock as may be required pursuant to Section 1.7;
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed Certificate to deliver a bond in such sum as it may reasonably
direct as indemnity against any claim that may be made against Parent or the
Exchange Agent with respect to the Certificate alleged to have been lost,
stolen or destroyed.
SECTION 7.12 TAXES. It is intended by the parties hereto
that the Merger shall constitute a reorganization within the meaning of
Section 368 of the Code. The parties hereto hereby adopt this Agreement as a
"plan of reorganization" within the meaning of sections 1.368-2(g) and
1.368-3(a) of the United States Treasury Regulations.
SECTION 7.13 TAKING OF NECESSARY ACTION; FURTHER ACTION.
Each of Parent, Merger Sub and the Company will take all such reasonable and
lawful action as may be necessary or appropriate in order
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to effectuate the Merger in accordance with this Agreement as promptly as
possible. If, at any time after the Effective Time, any such further action
is necessary or desirable to carry out the purposes of this Agreement and to
vest the Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of the Company
and Merger Sub, the officers and directors of the Company and Merger Sub
immediately prior to the Effective Time are fully authorized in the name of
their respective corporations or otherwise to take, and will take, all such
lawful and necessary action.
SECTION 7.14 MATERIAL ADVERSE EFFECT. When used in
connection with the Company or any of its subsidiaries or Parent or any of
its subsidiaries, as the case may be, the term "MATERIAL ADVERSE EFFECT"
means any change, effect or circumstance that, individually or when taken
together with all other such changes, effects or circumstances that have
occurred prior to the date of determination of the occurrence of the Material
Adverse Effect, is or is reasonably likely to be materially adverse to the
business, operations, assets (including intangible assets), condition
(financial or otherwise), liabilities or results of operations of the Company
and its subsidiaries or Parent and its subsidiaries, as the case may be, in
each case taken as a whole.
SECTION 1.15 INVESTMENT INTENT. The Company represents to
Parent and its officers and directors that the Parent Common Stock that may
be issued to the Company's shareholders pursuant to Section 1.6, at the time
of issuance, will be acquired by such shareholders for investment purposes
only without the intent to resell such Parent Common Stock and will not be
transferred except pursuant to registration under the Securities Act of 1933,
as amended (the "SECURITIES ACT"), and the applicable state securities laws
unless pursuant to exemption from registration under such acts. The Company
hereby acknowledges that the Parent Common Stock that may be issued to the
Company's shareholders pursuant to Section 1.6 will be issued pursuant to
exemption from registration under the Securities Act and the applicable state
securities laws and the certificates evidencing the such Parent Common Stock
will bear appropriate restrictive transfer legends as required pursuant to
the Securities Act and the applicable state securities laws.
SECTION 1.16 COMPANY SHAREHOLDERS APPROVAL. The Company
Shareholder hereby covenants and agrees that he has read and has been fully
advised by legal counsel as to the meaning and effect of this Agreement and
the transactions to be effected by this Agreement, and that he hereby
approves this Agreement and the transactions contemplated in this Agreement.
By execution of this Agreement, (i) the Company Shareholder hereby votes all
of the issued and outstanding shares of the Company Common Stock in favor of
approval of this Agreement and the transactions contemplated in this
Agreement and (ii) the Company Shareholder hereby consents to all corporate
action required to consummate the transactions contemplated in this Agreement
without the necessity for a meeting of the shareholders of the Company, to
the extent and in the event shareholder approval shall be required for
approval of this Agreement and the transactions contemplated in and to be
effect by this Agreement. Parent, as the sole shareholder of Merger Sub by
execution of this Agreement hereby approves this Agreement and the
transactions contemplated hereunder.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub that, except as set forth in the written disclosure schedule
delivered by the Company to Parent (the "COMPANY DISCLOSURE SCHEDULE"):
SECTION 8.1 CORPORATE ORGANIZATION. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Oklahoma and has all requisite corporate
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power and authority to own, operate and lease its properties and assets as
and where the same are owned, operated or leased and to conduct its business
as it is now being conducted. The Company is in good standing and duly
qualified or licensed as a foreign corporation to do business in those
jurisdictions listed in Section 2.1 of the Company Disclosure Schedule, such
jurisdictions being the only jurisdictions in which the location of the
property and assets owned, operated or leased by the Company or the nature of
the business conducted by the Company makes such qualification or licens ing
necessary, except where the failure to be so qualified or licensed could not
reasonably be expected to have a Material Adverse Effect. The Company has
heretofore delivered to the Parent complete and correct copies of the
Company's Certificate of Incorporation and Bylaws, as amended to and as in
effect on the date hereof.
SECTION 8.2 CAPITALIZATION. (a) The authorized capital
stock of the Company consists of 40,000,000 shares of Company Common Stock,
$.001 par value per share, and 10,000,000 shares of preferred stock, $.001
par value per share. As of the date hereof, shares of Company Common Stock
are issued and outstanding.
(b) All outstanding shares of Company Common Stock are
validly issued and outstanding, fully paid and non-assessable, and there are
no preemptive or similar rights in respect of the Company Common Stock. All
outstanding shares of Company Common Stock were issued in compliance with all
requirements of all applicable federal and state securities laws.
SECTION 8.3 SUBSIDIARIES. There are no entities of which
the Company owns 10% or more of the outstanding voting securities or other
equity interests, directly or indirectly through one or more intermediaries,
by the Company.
SECTION 8.4 NO COMMITMENTS TO ISSUE CAPITAL STOCK. There
are no outstanding options, warrants, calls, convertible securities or other
rights, agreements, commitments or other instruments pursuant to which the
Company is or may become obligated to authorize, issue or transfer any shares
of its capital stock or any other equity interest. There are no agreements or
understandings in effect among any of the stockholders of the Company or with
any other Person and by which the Company is bound with respect to the
voting, transfer, disposition or registration under the Securities Act of any
shares of capital stock of the Company.
SECTION 8.5 AUTHORIZATION; EXECUTION AND DELIVERY. The
Company has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by
all requisite corporate action on the part of the Company, including
unanimous approval of this Agreement by the Company's shareholders as
evidenced by their execution of this Agreement. This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms.
SECTION 8.6 GOVERNMENTAL APPROVALS AND FILINGS. No
approval, authorization, consent, license, clearance or order of, declaration
or notification to, or filing or registration with, any governmental or
regulatory authority is required in order (a) to permit the Company to
consummate the Merger or perform its obligations under this Agreement or (b)
to prevent the termination of, or materially and adversely affect, any
governmental right, privilege, authority, franchise, license, permit or
certificate of the Company or any of its Subsidiaries (collectively
"GOVERNMENTAL LICENSES") to enable the Company and its Subsidiaries to own,
operate and lease their properties and assets as and where such properties
and assets are owned, leased or operated and to provide service and carry on
their business as presently provided and conducted, or to prevent
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any material loss or disadvantage to the Company's business, by reason of the
Merger, except for (i) filing and recording of the Certificate of Merger as
required by the OGCA and an Agreement of Merger as required by the OGCA, and
(ii) as set forth in Section 2.6 of the Company Disclosure Schedule.
SECTION 8.7 NO CONFLICT. Subject to compliance with the
Governmental Licenses described in Section 2.6 of the Company Disclosure
Schedule and obtaining the other consents and waivers that are set forth and
described in Section 2.7 of the Company Disclosure Schedule (the "PRIVATE
CONSENTS"), neither the execution, delivery and performance of this Agreement
by the Company, nor the consummation by the Company of the transactions
contemplated hereby, will (i) conflict with, or result in a breach or
violation of, any provision of the Certificate of Incorporation (or similar
organizational document) or bylaws of the Company; (ii) conflict with, result
in a breach or violation of, give rise to a default, or result in the
acceleration of performance, or permit the acceleration of performance, under
(whether or not after the giving of notice or lapse of time or both) any
Encum brance, note, bond, indenture, guaranty, lease, license, agreement or
other instrument, writ, injunction, order, judgment or decree to which the
Company or any of its Subsidiaries or any of their respective properties or
assets is a party or is subject; (iii) give rise to a declaration or
imposition of any Encum brance upon any of the properties or assets of the
Company or any of its Subsidiaries; or (iv) impair the Company's business or
adversely affect any Governmental License necessary to enable the Company to
carry on its business as presently conducted, except, in the case of clauses
(ii), (iii) or (iv), for any conflict, breach, violation, default,
declaration, imposition or impairment that could not reasonably be expected
to have a Material Adverse Effect.
SECTION 8.8 SEC FILINGS. The Company does not have a class
or securities registered under the Securities Act of 1934, as amended, and
does not have any obligation to file forms, reports or other documents with
the United States Securities and Exchange Commission under such Act.
SECTION 8.9 FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED
LIABILITIES; RECEIVABLES. The Company is recently formed and does not have
any liabilities and its only assets consist of cash.
SECTION 8.10 CERTAIN OTHER FINANCIAL REPRESENTATIONS.
Omitted.
SECTION 8.11 ABSENCE OF CHANGES. Omitted.
SECTION 8.12 TAX MATTERS. Omitted.
SECTION 8.13 RELATIONS WITH EMPLOYEES. (a) Except as set
forth in Section 2.13(a) of the Company Disclosure Schedule:
(i) The Company has satisfactory
relationships with their employees.
(ii) The Company is and has been in compliance
with all applicable laws respecting employment and employment practices,
terms and conditions of employment, and wages and hours, including any law,
rule or regulation relating to discrimination, fair labor standards and
occupational health and safety, wrongful discharge or violation of the
personal rights of employees, former employees or prospective employees, and
the Company is not or has not engaged in any unfair labor practices, except
to the extent a failure to so comply could not, alone or together with any
other failure, have a Material Adverse Effect.
(iii) No collective bargaining agreement with
respect to the business of the Company is currently in effect or being
negotiated. The Company does not have any obligation to negotiate
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any such collective bargaining agreement. There are no labor unions
representing, purporting to represent or attempting to represent any employee
of the Company.
(iv) There are no strikes, slowdowns or work
stoppages pending or, to the best of the knowledge of the Company and the
Company's shareholders, threatened with respect to the employees of the
Company, nor has any such strike, slowdown or work stoppage occurred or, to
the best of the knowledge of the Company and the Company Shareholder, been
threatened. There is no representation claim or petition or complaint pending
before the National Labor Relations Board or any state or local labor agency
and, to the best of the knowledge of the Company and the Company Shareholder,
no question concerning representation has been raised or threatened
respecting the employees of the Company.
(v) To the best of the knowledge of the
Company and the Company Shareholder, no charges with respect to or relating
to the business of the Company are pending before the Equal Employment
Opportunity Commission, or any state or local agency responsible for the
prevention of unlawful employment practices, which could reasonably be
expected to have a Material Adverse Effect.
(b) Except as set forth in Section 2.13(b) of the
Company Disclosure Schedule, the Company is not a contractor or subcontractor
with obligations under any federal, state or local government contract.
(c) Except as set forth in Section 2.13(c) of the
Company Disclosure Schedule, the Company has not or could not have any
material liability, whether absolute or contingent, including any obligations
under any of the Employee Benefit Plans described in Section 2.14, with
respect to any misclassification of a person as an independent contractor
rather than as an employee.
(d) Section 2.13(d) of the Company Disclosure Schedule
contains a complete and correct list of all employment, management or other
consulting agreements with any Persons employed or retained by the Company
(including independent consultants), complete and correct copies of which
have been delivered to Parent.
SECTION 8.14 BENEFIT PLANS. (a) Section 2.14(a) of the
Company Disclosure Schedule sets forth each employee benefit plan, policy,
program, practice, agreement, understanding, arrangement or commitment
(whether written or underwritten) providing compensation, benefits or
perquisites of any kind, including executive compensation, deferred
compensation, stock ownership, stock purchase, stock option, restricted
stock, performance share, bonus and other incentive plans, pension, profit
sharing, savings, thrift or retirement plans, employee stock ownership plans,
life, health, dental and disability plans, vacation, severance pay, sick
leave or dependent care plans, any cafeteria or tuition reimbursement plans
and any "employee benefit plans" within the meaning of Section g(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")
(whether or not subject to ERISA), all employment, severance, golden
parachute or similar agreements (individually, an "EMPLOYEE BENEFIT PLAN" and
collectively, the "EMPLOYEE BENEFIT PLANS"), currently or within the past six
years maintained by, contributed by or with respect to which an obligation to
contribute exists on the part of the Company or any of its trades or
businesses, whether or not incorporated, which, together with the Company, is
treated as a single employer under Section 414 of the Code (collectively,
"ERISA AFFILIATES"), or with respect to which the Company or any ERISA
Affiliate may have any liability or obligation (direct, indirect, contingent
or otherwise) to any employee, former employee, director or former director
(or any of their dependents or beneficiaries) of the Company or any of its
Subsidiaries or to any governmental entity. There have been delivered to
Parent complete and correct copies of all written Employee Benefit Plans and
any related trust agreements, insurance and other contracts and other funding
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arrangements, written descriptions of all unwritten Employee Benefit Plans,
the current summary plan descriptions and current summaries of material
modifications relating to each Employee Benefit Plan, the two most recent
Forms 5500 required to have been filed with any appropriate government agency
with respect to each Employee Benefit Plan, the most recent favorable
determination letter issued for each Employee Benefit Plan and related trust
that is intended to satisfy the qualification requirements of sections 401(a)
and 501(a) of the Code (and the latest IRS form 5300 or 5307, whichever is
applicable, filed with the IRS for each such Employee Benefit Plan), and all
collective bargaining agreements pursuant to which an Employee Benefit Plan
is maintained or contributions to an Employee Benefit Plan are or have been
made.
(b) No Employee Benefit Plan is, a "DEFINED BENEFIT
PLAN" within the meaning of section 3(35) of ERISA to which ERISA applies
applicable to or a plan to which the funding requirements of Section 412 of
the Code or 302 of ERISA and neither the Company nor any ERISA Affiliate has
or could have any liability with respect to any such plan. Neither the
Company nor any ERISA Affiliate has ever contributed to, or withdrawn in a
complete or partial withdrawal from, any multi-employer plan (within the
meaning of Subtitle E of Title IV of ERISA) or incurred contingent liability
under Section 4204 of ERISA. No Employee Benefit Plan provides for medical or
health benefits (through insurance or otherwise) to individuals other than
current employees of the Company (or spouses and dependents of such
employees), except to the extent necessary to comply with "APPLICABLE
BENEFITS LAW" (including, without limitation, section 4980B of the Code), and
there has been no communication to any person that could reasonably be
expected to promise or guarantee any employee, former employee (or any
spouse, dependent or domestic partner of any employee or former employee) any
retiree medical, life or other retiree benefits. "Applicable Benefits Law"
refers to the legal requirements (whether imposed by common law, statue or
regulation or otherwise) applicable to employee benefit plans sponsors
thereof or their affiliates, services providers thereto or fiduciaries
thereof or their affiliates or parties related thereto or their affiliates by
the United States or any political subdivision thereof (including any
requirements enforced by the IRS with respect to employee benefit plans
intended to confer tax benefits on the Company or any of its employees).
(c) Each Employee Benefit Plan (and each related
trust, insurance contract and fund) is in compliance in all material respects
in form and in operation with all applicable requirements of Applicable
Benefits Law (including ERISA and the Code), and is being administered in all
material respects in accordance with all relevant plan documents to the
extent consistent with Applicable Benefits Law. There has been no prohibited
transaction with respect to any Employee Benefit Plan which would result in
the imposition of any material unpaid excise tax. No Employee Benefit Plan is
under investigation or audit by the Department of Labor or Internal Revenue
Service other than as part of a routine tax audit of the Company. There are
no legal actions or suits pending or, to the best of the knowledge of the
Company and the Company Shareholder, threat ened against or with respect to
any Employee Benefit Plan or the assets of any such Employee Benefit Plan or
against any fiduciary of any such Employee Benefit Plan and the Company has
no knowledge of any facts that could give rise to any such actions. There has
been full compliance in all material respects with the notice and
continuation requirements of Section 4980B of the Code and Part 6 of Subtitle
B of Title I of ERISA, and the requirement of Part 7 of Subtitle B of Title I
of ERISA and Section 9801, ET. seq. of the Code applicable to any Employee
Benefit Plan. No event has occurred or reasonably is expected to occur as a
result of which the Company or any ERISA Affiliate, directly or indirectly,
could be subject to any material Liability (including under any indemnity or
hold harmless agreement) under ERISA or the Code or any other Applicable
Benefits Law, including, without limitation, Section 4971, 4975 or 4976 of
the Code or Sections 406, 409, 502(i) and 502(l) of the Code.
(d) Except as provided in Section 2.14 (d) of the
Company Disclosure Statement, no provision of any Employee Benefit Plan
becomes effective in the event of a change in control of the employer
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maintaining such Employee Benefit Plan. The Company has not agreed to or has
not announced any plan or commitment (whether or not legally binding) to
create any new employee benefit plan or, with respect to any existing
Employee Benefit Plan, to increase the benefits or change in employee
coverage in an amount that could increase the expense of maintaining such
Employee Benefit Plan or to terminate any Employee Benefit Plan. No provision
of any Employee Benefit Plan prohibits the employer maintaining it from
amending or terminating such Employee Benefit Plan at any time and to the
fullest extent that law permits. Except as provided in Section 2.14 (d) of
the Company Disclosure Schedule, the consummation of the Merger or any other
transaction contemplated by this Agreement, either alone or in combination of
any other event, will not (i) result in an increase in the amount of
compensation or benefits or accelerate the vesting or timing of payment of
any benefits or compensation payable under any Employee Benefit Plan in
respect of any employee or former employee of the Company, (ii) entitle any
such current or former employee to any benefits or payment, or (iii) result
in any "Parachute Payment" under Section 280 G of the Code, whether or not
such payment is considered reasonable compensation for services rendered. No
employee or former employee of the Company will be entitled to any severance
benefits under the terms of any Employee Benefit Plan solely by reason of the
consummation of the Merger or any other transaction contemplated by this
Agreement.
(e) No leased employee (within the meaning of section
414(n) or (o) of the Code) performs any services for the Company.
(f) An Employee Benefit Plan does not own or is not
entitled to receive any of the capital stock of the Company.
(g) Except as set forth in Section 2.14 (g) of the
Company Disclosure Schedule, there are no material liabilities, whether
absolute or contingent, of the Company relating to workers compensation
benefits that are not fully insured against by a BONA FIDE third-party
insurance carrier. Except as set forth in Section 2.14 (g) of the Company
Disclosure Schedule, with respect to each workers' compensation arrangement
that is funded wholly or partially through an insurance policy or public or
private fund, all premiums required to have been paid to date under the
insurance policy or fund have been paid, all premiums required to be paid
under the insurance policy or fund through the Closing Date will have been
paid on or before the Closing Date and, as of the Closing Date, there will be
no material liability of the Company under any such insurance policy, fund or
ancillary agreement with respect to such insurance policy or fund in the
nature of a retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
occurring prior to the Closing Date. Furthermore, at no time since the
organization of the Company has any entity (other than the Company) been an
"ERISA affiliate" of the Company.
SECTION 8.15 TITLE TO PROPERTIES. The Company has good and
indefeasible title to all of its properties and assets, free and clear of all
Encumbrances, except liens for taxes not yet due and payable and such
Encumbrances 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 could not reasonably be expected to have a Material
Adverse Effect.
SECTION 8.16 COMPLIANCE WITH LAWS; LEGAL PROCEEDINGS. (a)
The Company is not in violation of, or in default with respect to, any
applicable law, statute, regulation, ordinance, writ, injunction, order,
judgment, decree or any Governmental License, including any federal state or
local law regarding or relating to trespass or violations of privacy rights,
which violation or default could reasonably be expected to have a Material
Adverse Effect.
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(b) Except as set forth in Section 2.16(b) of the
Company Disclosure Schedule, there is no order, writ, injunction, judgment or
decree outstanding and no legal, administrative, arbitration or other
governmental proceeding or investigation pending or, to the best of the
knowledge of the Company and the Company Shareholder, threatened, and there
are no claims (including unasserted claims of which the Company is aware)
against or relating to the Company or any of its properties, assets or
businesses. There is no legal, administrative or other governmental proceeding
or investigation pending or, to the best of the knowledge of the Company and
the Company Shareholder, threatened against the Company, or any of its
directors or officers, as such, that relates to this Agreement, the Merger or
any of the transactions contemplated hereby. None of the items listed in
Section 2.16(b) of the Company Disclosure Schedule could reasonably be
expected to have a Material Adverse Effect. The Company has not been a
defendant (either originally, by counter-claim or impleading) in any legal
proceedings which have either been filed in the past two (2) fiscal years or
are currently pending (all as set forth in Section 2.16(b) of the Company
Disclosure Schedule). Except as set forth in Section 2.16(b) of the Company
Disclosure Schedule, none of the legal proceedings set forth in Section
2.16(b) of the Company Disclosure Schedule has had or, to the best of the
knowledge of the Company and the Company Shareholder, will have a Material
Adverse Effect.
SECTION 8.17 BROKERS. Except for The Viking Group, LLC and
the Stipe Group (each of which is to receive warrants exercisable on or before
April 30, 2005, for the purchase of 750,000 shares of Parent Common Stock for
$.375 per share) and Michael E. Dunn (who is to receive warrants exercisable
on or before April 30, 2005, for the purchase of 350,000 shares of Parent
Common Stock for $.375 per share), no broker, finder or investment advisor
acted, directly or indirectly, as such for the Company or any shareholder of
the Company in connection with this Agreement or the Merger, and no broker,
finder, investment advisor or other Person is entitled to any fee or other
commission, or other remuneration, in respect thereof based in any way on any
action, agreement, arrangement or understanding taken or made by or on behalf
of the Company or any shareholder of the Company.
SECTION 8.18 INTELLECTUAL PROPERTY. (a) The Company owns, or
is licensed or otherwise possesses legally enforceable rights to use, all
patents, trademarks, trade names, service marks, copyrights, and any
applications therefor, technology, know-how, computer software programs or
applications, and tangible or intangible proprietary information or material
that are used in the business of the Company as currently conducted, except as
would not reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in Section 2.18(b) of the
Company Disclosure Schedule or as could not reasonably be expected to have a
Material Adverse Effect: (i) the Company is not, nor will it be as a result of
the execution and delivery of this Agreement or the performance of its
obligations hereunder, in violation of any licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which the
Company is authorized to use any patents, trademarks, service marks or
copyrights owned by others ("COMPANY THIRD-PARTY INTELLECTUAL PROPERTY
RIGHTS"); (ii) No claims with respect to the patents, registered and material
unregistered trademarks and service marks, registered copyrights, trade names
and any applications therefor owned by the Company (the "COMPANY INTELLECTUAL
PROPERTY RIGHTS"), any trade secret material to the Company, or Company Third
Party Intellectual Property Rights to the extent arising out of any use,
reproduction or distribution of Company Third Party Intellectual Property
Rights by or through the Company, are currently pending or, to the best of the
knowledge of the Company and the Company Shareholder, have been threatened by
any Person; or (iii) The Company does not know of any valid grounds for any
BONA FIDE claims (1) to the effect that the sale, licensing or use of any
product or service as now sold, licensed or used, or proposed for sale,
license or use by the Company infringes on any copyright, patent, trademark,
service mark or trade secret; (2) against the use by the Company of any
trademarks, trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used
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in the business of the Company as currently conducted or as proposed to be
conducted; (3) challenging the ownership, validity or effectiveness of any of
the Company Intellectual Property Rights or other trade secret material to the
Company; or (4) challenging the license or legally enforceable right to use of
Company Third Party Intellectual Rights by the Company.
(c) To the best of the knowledge of the Company and the
Company Shareholder, there is no material unauthorized use, infringement or
misappropriation of any of the Company Intellectual Property Rights by any
third party, including any employee or former employee of the Company.
SECTION 8.19 INSURANCE. Except as set forth in Section 2.19
of the Company Disclosure Schedule, all material fire and casualty, general
liability, business interruption, product liability and other insurance
policies maintained by the Company are with reputable insurers, provide
adequate coverage for all normal risks incident to the Company's assets,
properties and business operations and are in character and amount at least
equivalent to that carried by Persons engaged in a business subject to the
same or similar perils or hazards.
SECTION 8.20 CONTRACTS; ETC. (a) The Company has previously
made available to Parent the following agreements, leases and other
instruments to which the Company is a party or by which Company or its
properties or assets are bound:
(i) each service or other similar type of agreement under
which services are provided by any other Person to the Company which is
material to the business of the Company taken as a whole;
(ii) each agreement that restricts the operation of the
business of the Company or the ability of the Company to solicit
customers or employees;
(iii) each operating lease (as lessor, lessee, sublessor or
sublessee) that is material to the Company taken as a whole of any real
or tangible personal property or assets;
(iv) each agreement under which services are provided by
the Company to any material customer;
(v) each agreement (including capital leases) under which
any money has been or may be borrowed or loaned or any note, bond,
indenture or other evidence of indebtedness has been issued or assumed
(other than those under which there remain no ongoing obligations of
the Company), and each guaranty of any evidence of indebtedness or
other obligation, or of the net worth, of any Person (other than
endorsements for the purpose of collection in the ordinary course of
business);
(vi) each partnership, joint venture or similar agreement;
(vii) each agreement containing restrictions with respect
to the payment of dividends or other distributions in respect of the
Company's capital stock;
(viii) each agreement to make unpaid capital expenditures in
excess of $25,000;
(ix) each agreement providing for accelerated or special
payments as a result of the Merger, including any shareholder rights
plan or other instrument commonly referred as a "poison pill."
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A complete and correct copy of each written agreement, lease or other type of
document, and a true, complete and correct summary of each oral agreement,
lease or other type of document, required to be disclosed pursuant to this
Section 2.20(a) has been previously delivered to Parent.
(b) Each agreement, lease or other type of document
required to be disclosed pursuant to Sections 2.13, 2.14 or 2.20(a) to which
the Company is a party or by which the Company or its properties or assets are
bound (collectively, the "COMPANY CONTRACTS"), except those Company Contracts
the loss of which could reasonably be expected to not have a Material Adverse
Effect, is valid, binding and in full force and effect and is enforceable by
the Company in accordance with its terms. The Company is not (with or without
the lapse of time or the giving of notice, or both) in breach of or in default
under any of the Company Contracts, and, to the best of the knowledge of the
Company and the Company Shareholder, no other party to any of the Company
Contracts is (with or without the lapse of time or the giving of notice, or
both) in breach of or in default under any of the Company Contracts, where
such breach or default could reasonably be expected to have a Material Adverse
Effect. No existing or completed agreement to which the Company is a party is
subject to renegotiation with any governmental body.
SECTION 8.21 PERMITS, AUTHORIZATIONS, ETC. Section 2.21 of
the Company Disclosure Schedule sets forth all Governmental Licenses and each
other material approval, authorization, consent, license, certificate, order
or other permit of any governmental agencies, whether federal, state, local or
foreign, necessary to enable the Company to own, operate and lease its
properties and assets as and where such proper ties and assets are owned,
leased or operated and to provide service and carry on its business as
presently provided and conducted (collectively, the "COMPANY PERMITS") or
required to permit the continued conduct of such business following the Merger
in the manner conducted on the date of this Agreement (indicating in each case
whether or not the consent of any Person is required for the consummation of
the transactions contemplated hereby). The Company has all necessary Company
Permits of all governmental agencies, whether federal, state, local or
foreign, all of which are valid and in good standing with the issuing agencies
and not subject to any proceedings for suspension, modification or revocation,
except for such Company Permits which could not reasonably be expected to have
a Material Adverse Effect.
SECTION 8.22 ENVIRONMENTAL MATTERS. (a) For purposes of this
Agreement, the capitalized terms defined below shall have the meanings
ascribed to them below.
(i) "ENVIRONMENTAL CLAIM" means any accusation,
allegation, notice of violation, action, claim, lien, demand, abatement
or other order or direction (conditional or otherwise) by any
governmental agency or entity or any other Person for personal injury
(including sickness, disease or death), tangible or intangible property
damage, damage to the environment, nuisance, pollution, contamination
or other adverse effects an the environment, or for fines, penalties or
restrictions resulting from or based upon (a) the existence, or the
continuation of the existence, of a Release (including, without
limitation, sudden or non-sudden accidental or non-accidental Releases)
of, or exposure to, any Hazardous Substance, odor or audible noise in,
into or onto the environment (including, without limitation, the air,
soil, surface water or groundwater) at, in, by, from or related to any
property owned, operated or leased by the Company or any activities or
operations thereof; (b) the transportation, storage, treatment or
disposal of Hazardous Substances in connection with any property
owned, operated or leased by the Company or its operations or
facilities; or (c) the violation, or alleged violation, of any
Environmental Law or Environmental Permit of or from any governmental
agency or entity relating to environmental matters connected with any
property owned, leased or operated by the Company.
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(ii) "ENVIRONMENTAL LAW(S)" means all federal, state or
local law (including common law), statute, ordinance, rule, regulation,
code, or other requirement relating to the environment, natural
resources, or public or employee health and safety and includes, but is
not limited to the Comprehensive Environmental Response Compensation
and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq.,
The Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section
6901 et seq., the Clean Water Act, 33 U.S.C. Section Section 1251 et
seq., the Clean Air Act, 33 U.S.C. Section 2601 et seq., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., the Oil
Pollution Act of 1990, 33 U.S.C. Section 2701 et seq., and the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq., as
such laws have been amended or supplemented, and the regulations
promulgated pursuant thereto, and all analogous state or local statutes
and any applicable transfer statutes.
(iii) "ENVIRONMENTAL PERMITS" means all approvals,
authorizations, consents, permits, licenses, registrations and
certificates required by any applicable Environmental Law.
(iv) "HAZARDOUS SUBSTANCE(S)" means, without limitation,
any flammable explosives, radioactive materials, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products
(including but not limited to waste petroleum and petroleum products),
methane, hazardous materials, hazardous wastes, pollutants,
contaminants and hazardous or toxic substances, as defined in or
regulated under any applicable Environmental Laws.
(v) "RELEASE" means any past or present spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of a Hazardous Substance into
the Environment.
(b) The Company has obtained all Environmental Permits
required for its businesses and facilities except for such Environmental
Permits the failure of which to obtain could not reasonably be expected to
have a Material Adverse Effect. The Company (i) is in compliance with all
terms and conditions of their Environmental Permits and of any applicable
Environmental Law, except for such failure to be in compliance that could not
reasonably be expected to have Material Adverse Effect; (ii) has not received
notice of any violation by or claim against the Company under any
Environmental Law; and (iii) is not aware of any facts or circumstances
related to their businesses and facilities likely to give rise to an
Environmental Claim that could reasonably be expected to have a Material
Adverse Effect.
(c) There have been no Releases, or threatened Releases
of any Hazardous Substances into, on or under any of the properties owned or
operated (or formerly owned or operated) by the Company in such a way as to
create any liability (including the costs of investigation and remediation)
under any applicable Environmental Law that could reasonably be expected to
have a Material Adverse Effect.
(d) The Company has not been identified as a
potentially responsible party at any federal or state National Priority List
("SUPERFUND") site, and the Company has not transported, disposed of, or
arranged for the disposal of any Hazardous Substances.
SECTION 8.23 COMPANY ACQUISITIONS. Section 2.23 of the Company
Disclosure Schedule hereto contains a complete and correct list of all
agreements ("COMPANY ACQUISITION AGREEMENTS") executed by the Company pursuant
to which the Company has acquired or agreed to acquire all or any part of the
stock or assets (including any customer list) of any Person. A complete and
correct copy of each of the Company Acquisition Agreements has been delivered to
Parent. The Company does not have any further obligation or
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liability under any of the Company Acquisition Agreements or as a result of
the transactions provided for therein, except as described in reasonable
detail in Section 2.23 of the Company Disclosure Schedule.
SECTION 8.24 BOOKS AND RECORDS. All accounts, books, ledgers
and official and other records prepared and kept by the Company have been kept
and completed in all material respects, and there are no material inaccuracies
or discrepancies contained or reflected therein. Such records of the Company
are located at the Company's offices in Oklahoma City, Oklahoma.
SECTION 8.25 INTERESTED PARTY TRANSACTIONS. Omitted.
SECTION 8.26 OPINION OF FINANCIAL ADVISOR. The Company has
not been advised by a financial advisor regarding, as of the date hereof, the
fairness of the Exchange Ratio from a financial point of view of the Company
Shareholders.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Parent and Merger Sub, jointly and severally, hereby
represent and warrant to the Company that, except as set forth in the written
disclosure schedule delivered by Parent to the Company (the "PARENT DISCLOSURE
SCHEDULE"):
SECTION 9.1 CORPORATE ORGANIZATION. Parent is a corporation
duly organized and validly existing in good standing under the laws of the
State Nevada and Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Oklahoma. Each of Parent
and Merger Sub has all requisite corporate power and authority to own, operate
and lease its properties and assets as and where the same are owned, operated
or leased and to conduct its business as it is now being conducted. Each of
Parent and Merger Sub is in good standing and duly qualified or licensed as a
foreign corporation to do busi ness in those jurisdictions in which the
location of the property and assets owned, operated or leased by Parent or
Merger Sub or the nature of the business conducted by Parent or Merger Sub
makes such qualification or licensing necessary, except where the failure to
be so qualified or licensed could not reasonably be expected to have a
Material Adverse Effect. Parent has heretofore delivered to the Company
complete and correct copies of the Certificate of Incorporation and Bylaws of
Parent and Merger Sub, as amended to and as in effect on the date hereof.
SECTION 9.2 CAPITALIZATION. (a) The authorized capital stock
of Parent consists of 30,000,000 shares of Parent Common Stock, par value
$0.001 per share and 5,000,000 shares of Parent Preferred Stock, par value
$.001 per share. As of the date hereof, 18,248,561 shares of Parent Common
Stock and 2,006,888 shares of Parent Preferred Stock are issued and
outstanding. On or before the Closing, 2,006,888 outstanding shares of Parent
Preferred Stock shall have been converted to Parent Common Stock as may be
necessary or contributed to Parent and canceled in accordance with Section
1.6(a).
(b) All outstanding shares of Parent Common Stock are
validly issued and outstanding, fully paid and non-assessable and there are no
preemptive or similar rights in respect of Parent Common Stock. All
outstanding shares of Parent Common Stock were issued in compliance with all
requirements of all applicable federal and state securities laws.
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(c) Section 3.2 of the Parent Disclosure Schedule sets
forth a complete and correct list of (i) all stock options, including stock
options granted under any Parent stock option plan, (ii) all warrants to
purchase Parent Common Stock indicating as to each holder thereof, and (iii)
and other rights to receive Parent Common Stock indicating as to each holder
thereof, the number of shares of Parent Common Stock subject thereto and the
exercisability, exercise price and termination date therefor, if applicable.
SECTION 9.3 SUBSIDIARIES. (a) Merger Sub and Utica
Publishing Corporation are the only subsidiaries of Parent.
(b) Except as set forth in Section 3.3(b) of the Parent
Disclosure Schedule, Parent or Merger Sub has good and valid title to all such
shares free and clear of all Encumbrances. All of the outstand ing shares of
capital stock of Merger Sub and Utica Publishing Corporation are validly
issued, fully paid and non-assessable, and there are no preemptive or similar
rights in respect of any shares of capital stock of Merger Sub or Utica
Publishing Corporation.
SECTION 9.4 NO COMMITMENTS TO ISSUE CAPITAL STOCK. Except
for the Stock Options and the Warrants and as set forth in Section 3.4 of the
Parent Disclosure Schedule, there are no outstanding options, warrants, calls,
convertible securities or other rights, agreements, commitments or other
instruments pursuant to which the Company or any of its Subsidiaries is or may
become obligated to authorize, issue or transfer any shares of its capital
stock or any other equity interest. Except as set forth in Section 3.4 of the
Parent Disclosure Schedule, there are no agreements or understandings in
effect among any of the stockholders of the Company or any such Subsidiary or
with any other Person and by which the Company or any such Subsidiary is bound
with respect to the voting, transfer, disposition or registration under the
Securities Act of any shares of capital stock of the Company or any of its
Subsidiaries.
SECTION 9.5 AUTHORIZATION; EXECUTION AND DELIVERY. Each of
Parent and Merger Sub has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement by Parent and Merger Sub
and the consummation by Parent or Merger Sub of the transactions contemplated
hereby have been duly authorized by all requisite corporate action on the part
of Parent and Merger Sub. This Agreement has been duly executed and delivered
by Parent and Merger Sub and constitutes the legal, valid and binding
obligation of Parent and Merger Sub, enforceable against Parent and Merger Sub
in accordance with its terms. The shares of Parent Common Stock to be issued
as part of the Merger Consideration have been duly reserved and authorized for
issuance upon consummation of the Merger and when issued pursuant to and in
accordance with this Agreement will be duly authorized, validly issued, fully
paid and non-assessable shares of Parent Common Stock.
SECTION 9.6 GOVERNMENTAL APPROVALS AND FILINGS. No approval,
authorization, consent, license, clearance or order of, declaration or
notification to, or filing or registration with, any governmental or
regulatory authority is required in order (a) to permit Parent or Merger Sub
to consummate the Merger or perform its obligations under this Agreement or
(b) to prevent the termination of, or materially and adversely affect, any
Governmental License of Parent or any of its Subsidiaries to enable Parent and
its Subsidiaries to own, operate and lease their properties and assets as and
where such properties and assets are owned, leased or operated and to provide
its services or carry on its business, or to prevent any material loss or
disadvantage to Parent's business, by reason of the Merger, except for (i)
filing and recording of the Certificate of Merger as required by the OGCA and
(ii) as set forth in Section 3.6 of the Parent Disclosure Schedule.
SECTION 9.7 NO CONFLICT. Subject to compliance with any
Governmental Licenses described in Section 3.7 of the Parent Disclosure
Schedule and obtaining the Private Consents, neither the execution,
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delivery and performance of this Agreement by Parent or Merger Sub, nor the
consummation by Parent or Merger Sub of the transactions contemplated hereby,
will (i) conflict with, or result in a breach or violation of, any provision
of the Certificate of Incorporation (or similar organizational document) or
Bylaws of Parent or Merger Sub; (ii) conflict with, result in a breach or
violation of, give rise to a default, or result in the acceleration of
performance, or permit the acceleration or performance, under (whether or not
after the giving of notice or lapse of time or both) any Encumbrance, note,
bond, indenture, guaranty, lease, license, agreement or other instrument,
writ, injunction, order, judgment or decree to which Parent or Merger Sub or
any of their respective properties or assets is subject; (iii) give rise to a
declaration or imposition of any Encumbrance upon any of the properties or
assets of Parent or Merger Sub; or (iv) impair Parent's business or adversely
affect any Governmental License necessary to enable Parent and Merger Sub to
carry on their business as presently conducted, except, in the cases of
clauses (ii), (iii) or (iv), for any conflict, breach, violation, default,
declaration, imposition or impairment that could not reasonably be expected to
have a Material Adverse Effect.
SECTION 9.8 SEC FILINGS. The Parent Common Stock is the only
class or securities of Parent registered under the Exchange Act. During 1997,
1998 and 1999, Parent has filed all forms, reports or other documents required
to be filed with the SEC (the "PARENT SEC REPORTS"). The Parent SEC Reports
(i) were prepared in accordance, and complied as of their respective dates in
all material respects, with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Parent has filed
with the SEC as exhibits to the Parent SEC Reports all agreements, contracts
and other documents or instruments required to be so filed, and such exhibits
are correct and complete copies of such agreements, contracts and other
documents or instruments. Merger Sub is not required to file any forms,
reports or other documents with the SEC under the Exchange Act.
SECTION 9.9 FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED
LIABILITIES. (a) Parent has heretofore delivered to the Company and the
Company Shareholders complete and correct copies of the follow ing financial
statements (collectively, the "PARENT FINANCIAL STATEMENTS"), all of which
have been prepared from the books and records of Parent in accordance with
GAAP consistently applied and maintained throughout the periods indicated
(except as may be indicated in the notes thereto) and fairly present in all
material respects the financial condition of Parent as at their respective
dates and the results of the Parent's operations and cash flows for the
periods covered thereby:
(i) unaudited balance sheet (the
"PARENT BALANCE SHEET") of Parent as of December 31, 1999 (the
"PARENT BALANCE SHEET DATE") and statement of income for the
year then ended.
Such statements of income do not contain any items of special or nonrecurring
revenue or income or any revenue or income not earned in the ordinary course
of business, except as expressly specified therein.
(b) Except as and to the extent reflected or reserved
against on the Parent Balance Sheet, and except for liabilities which will not
have a Material Adverse Effect, Parent did not have, as of the Parent Balance
Sheet Date, any liabilities, debts or obligations (whether absolute, accrued,
contingent or otherwise) of any nature that would be required as of such date
to have been included on a balance sheet prepared in accordance with GAAP.
Since the Parent Balance Sheet Date, Parent has not incurred or suffered to
exist any liability, debt or obligation (whether absolute, accrued, contingent
or otherwise), except liabilities, debt and obligations incurred in the
ordinary course of business, consistent with past practice, none of which will
have
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a Material Adverse Effect or incurred in connection with this Agreement and
the transactions contemplated herein. Other than the transactions contemplated
by this Agreement, since the Parent Balance Sheet Date, there has been no
material adverse change in the business, operations, assets (including
intangible assets), condition (financial or otherwise), liabilities or results
of operations of Parent, taken as a whole, and no event has occurred which is
reasonably likely to cause any such material adverse change.
(c) All receivables of Parent (including accounts
receivable, loans receivable and advanc es) which are reflected in the Parent
Balance Sheet, and all such receivables which have arisen thereafter and prior
to the Effective Time, have arisen or will have arisen only from BONA FIDE
transactions in the ordinary course of business and shall be fully collectible
at the aggregate recorded amounts thereof (except to the extent of appropriate
reserves therefor established in accordance with prior practice and GAAP) and
are not and will not be subject to defense, counterclaim or offset.
SECTION 9.10 CERTAIN OTHER FINANCIAL REPRESENTATIONS. Since
the Parent Balance Sheet Date, the Parent's accounts payable have been accrued
and paid in a manner consistent with the Parent's prior practice.
SECTION 9.11 ABSENCE OF CHANGES. Except as disclosed in the
Parent Financial Statements or as set forth in Section 3.11 of the Parent
Disclosure Schedule, since December 31, 1999, Parent has conducted its
business only in the ordinary course and Parent has not:
(a) amended or otherwise modified its Certificate of
Incorporation or Bylaws (or similar organizational document);
(b) issued or sold or authorized for issuance or sale,
or granted any options or warrants or amended or modified in any respect of
any previously granted option or warrant or made other agreements (other than
this Agreement) of the type referred to in Section 3.4 with respect to, any
shares of its capital stock or any other of its securities, or altered any
term of any of its outstanding securities or made any change in its
outstanding shares of capital stock or other ownership interests or its
capitalization, whether by reason of a reclassification, recapitalization,
stock split or combination, exchange or readjustment of shares, stock dividend
or otherwise or redeemed, purchased or otherwise acquired any of its or its
parent's capital stock or agreed to do any of the foregoing (whether or not
legally enforceable);
(c) recorded or accrued any item of revenue, except as
a result of the provision of services in the ordinary course of business and
consistent with prior practice;
(d) incurred any indebtedness for borrowed money,
entered into any lease that should be capitalized in accordance with GAAP or
subjected to any Encumbrance or other restriction any of its properties,
business or assets except Encumbrances or other restrictions that could not
reasonably be expected to have a Material Adverse Effect;
(e) discharged or satisfied any Encumbrance, or paid
any obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due, other than current liabilities shown on Parent's
consolidated balance sheet as of December 31, 1999 and current liabilities
incurred since that date in the ordinary course of business and consistent
with prior practice;
(f) sold, transferred, leased to others or otherwise
disposed of any material properties or assets or purchased, leased from others
or otherwise acquired any material properties or assets except in the ordinary
course of business;
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(g) canceled or compromised any debt or claim or waived
or released any right of substantial value;
(h) terminated or received any notice of termination of
any contract, lease, license or other agreement or any Governmental License, or
suffered any damage, destruction or loss (whether or not covered by insurance)
that could reasonably be expected to have a Material Adverse Effect;
(i) made any change in the rate of compensation,
commission, bonus or other remuneration payable, or paid, agreed, or promised
(in writing or otherwise) to pay, provide or modify, conditionally or otherwise,
any bonus, extra compensation, pension, severance or vacation pay or any other
benefit or perquisite of any other kind, to any director, officer, employee,
salesman or agent of the Company or any of its Subsidiaries except in the
ordinary course of business consistent with prior practice and pursuant to or in
accordance with plans disclosed in Section 3.11(a) of the Parent Disclosure
Schedule that were in effect as of December 31, 1999;
(j) made any increase in or commitment (whether or not
legally enforceable) to increase or communicated any intention to increase any
employee benefits, adopted or made any commitment to adopt any additional
employee benefit plan or made any contribution, other than regularly scheduled
contributions, to any Employee Benefit Plan (as defined in Section 2.14(a));
(k) lost the employment services of a senior manager or
other employee of equal or higher ranking;
(l) made any loan or advance to any Person other than
travel and other similar routine advances in the ordinary course of business
consistent with past practice, or acquired any capital stock or other securities
of any other corporation or any ownership interest in any other business
enterprise;
(m) instituted, settled or agreed to settle any material
litigation, action or proceeding before any court or governmental body relating
to Parent or its properties or assets;
(n) entered into any transaction, contract or commitment
other than in the ordinary course of business;
(o) changed any accounting practices, policies or
procedures utilized in the preparation of Parent Financial Statements (including
procedures with respect to revenue recognition, payment of accounts payable or
collection of accounts receivable); or
(p) entered into any agreement or made any commitment to
take any of the types of action described in subparagraphs (a) through (o) of
this Section 3.11.
SECTION 9.12 TAX MATTERS. (a) For purposes of this Agreement,
"TAX" or "TAXES" shall mean taxes, fees, levies, duties, tariffs, imposts and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, local or foreign taxing authority,
including (without limitation) (i) income, franchise, profits, gross receipts,
AD VALOREM, net worth, value added, sales, use, service, real or personal
property, special assessments, capital stock, license, payroll, withholding,
employment, social security, workers' compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, and (ii) interest, penalties, additional
taxes and additions to tax imposed with respect thereto; and "TAX RETURNS" shall
mean returns, reports, and information statements with respect to Taxes required
to be filed with the Internal Revenue Service (the "IRS")
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or any other taxing authority, domestic or foreign, including, without
limitation, consolidated, combined and unitary tax returns, including returns
required in connection with any Employee Benefit Plan (as defined in Section
2.14(a)).
(b) Parent represents that, other than as disclosed in
Section 3.12(a) of the Parent Disclosure Schedule, Parent has timely filed all
United States federal income Tax Returns and all other material Tax Returns
required to be filed by it. All such Tax Returns are complete and correct in all
material respects (except to the extent a reserve has been established as
reflected in the Parent Balance Sheet). Parent has timely paid and discharged
all Taxes due in connection with or with respect to the periods or transactions
covered by such Tax Returns and have paid all other Taxes as are due, except
such as are being contested in good faith by appropriate proceedings (to the
extent that any such proceedings are required), and there are no other Taxes
that would be due if asserted by a taxing authority, except with respect to
which Parent is maintaining reserves unless the failure to do so could not have
a Material Adverse Effect. Except as does not involve or would not result in
liability to Parent that could have a Material Adverse Effect, (i) there are no
tax liens on any assets of Parent; (ii) Parent has not granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any Tax; (iii) no unpaid (or unreserved) deficiencies for Taxes
have been claimed, proposed or assessed by any taxing or other governmental
authority with respect to Parent; (iv) there are no pending or threatened
audits, investigations or claims for or relating to any liability in respect of
Taxes of Parent; and (v) Parent has not requested any extension of time within
which to file any currently unfiled Tax Returns. The accruals and reserves for
Taxes (including deferred taxes) reflected in the Parent Balance Sheet are in
all material respects adequate to cover all Taxes accruable through the date
thereof (including Taxes being contested) in accordance with GAAP.
(c) Parent represents that, other than as disclosed in
Section 3.12(b) of Parent Disclosure Schedule and other than with respect to
items the inaccuracy of which could not have a Material Adverse Effect: (i)
Parent has not filed or been included in a combined, consolidated or unitary
return (or substantial equivalent thereof) of any Person other than Parent; (ii)
Parent is not liable for Taxes of any Person other than Parent, or currently
under any contractual obligation to indemnify any Person with respect to Taxes,
or a party to any tax sharing agreement or any other agreement providing for
payments by Parent with respect to Taxes; (iii) Parent is not a party to any
joint venture, partnership or other arrangement or contract which could be
treated as a partnership for United States federal income tax purposes; (iv)
Parent is not a party to any agreement, contract, arrangement or plan that
would result (taking into account the transactions contemplated by this
Agreement), separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code; (v) Parent
is not a "consenting corporation" under Section 341(f) of the Code or any
corresponding provision of state, local or foreign law; and (vi) Parent has
not made an election or is required to treat any of its assets as owned by
another Person for federal income tax purposes or as tax-exempt bond financed
property or tax-exempt use property within the meaning of Section 168 of the
Code (or any corresponding provision of state, local or foreign law).
SECTION 9.13 RELATIONS WITH EMPLOYEES. (a) Except as set forth
in Section 3.13 of the Parent Disclosure Schedule:
(i) Parent has satisfactory relationships with
their employees in all material respects.
(ii) Parent is and has been in compliance with
all applicable laws respecting employment and employment practices, terms and
conditions of employment, and wages and hours, including any law, rule or
regulation relating to discrimination, fair labor standards and occupational
health and safety,
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wrongful discharge or violation of the personal rights of employees, former
employees or prospective employees, and Parent is not or has not engaged in
any unfair labor practices, except to the extent a failure to so comply could
not, alone or together with any other failure, have a Material Adverse Effect.
(iii) No collective bargaining agreement with
respect to the business of Parent is currently in effect or being negotiated.
Parent does not have any obligation to negotiate any such collective bargaining
agreement. There are no labor unions representing, purporting to represent or
attempting to represent any employee of Parent.
(iv) There are no strikes, slowdowns or work
stoppages pending or, to the best of Parent's knowledge, threatened with respect
to the employees of Parent, nor has any such strike, slowdown or work stoppage
occurred or, to the best of Parent's knowledge, been threatened. There is no
representation claim or petition or complaint pending before the National Labor
Relations Board or any state or local labor agency and, to the best of Parent's
knowledge, no question concerning representation has been raised or threat ened
respecting the employees of Parent.
(v) To the best of Parent's knowledge, no
charges with respect to or relating to the business of Parent are pending before
the Equal Employment Opportunity Commission, or any state or local agency
responsible for the prevention of unlawful employment practices, which could
reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth in Section 3.13(b) of Parent
Disclosure Schedule, Parent is not a contractor or subcontractor with
obligations under any federal, state or local government contract.
(c) Except as set forth in Section 3.13(c) of Parent
Disclosure Schedule, Parent has not or could not have any material liability,
whether absolute or contingent, including any obligations under any of the
Employee Benefit Plans described in Section 3.13 of the Parent Disclosure
Schedule, with respect to any misclassification of a person as an independent
contractor rather than as an employee.
(d) Section 3.13(d) of Parent Disclosure Schedule
contains a complete and correct list of all employment, management or other
consulting agreements with any Persons employed or retained by Parent (including
independent consultants), complete and correct copies of which have been
delivered to the Company.
SECTION 9.14 BENEFIT PLANS. (a) Section 3.14(a) of Parent
Disclosure Schedule sets forth each Employee Benefit Plan, currently or within
the past three years maintained by, contributed by or with respect to which an
obligation to contribute exists on the part of Parent or any of its ERISA
Affiliates, or with respect to which Parent or any ERISA Affiliate may have any
liability or obligation (direct, indirect, contingent or otherwise) to any
employee, former employee, director or former director (or any of their
dependents or beneficiaries) of Parent or to any governmental entity. There have
been delivered to the Company complete and correct copies of all written
Employee Benefit Plans and any related trust agreements, insurance and other
contracts and other funding arrangements, written descriptions of all unwritten
Employee Benefit Plans, the current summary plan descriptions and current
summaries of material modifications relating to each Employee Benefit Plan[, the
two most recent Forms 5500 required to have been filed with any appropriate
government agency with respect to each Employee Benefit Plan, the most recent
favorable determination letter issued for each Employee Benefit Plan and related
trust that is intended to satisfy the qualification requirements of sections
401(a) and 501(a) of the Code (and the latest IRS form 5300 or 5307, whichever
is applicable, filed with the IRS for each such Employee Benefit Plan), and all
collective bargaining agreements pursuant to which an Employee Benefit Plan is
maintained or contributions to an Employee Benefit Plan are or have been made.
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(b) No Employee Benefit Plan is, a "defined benefit plan"
within the meaning of section 3(35) of ERISA to which ERISA applies applicable
to or a plan to which the funding requirements of Section 412 of the Code or 302
of ERISA and neither Parent nor any ERISA Affiliate has or could have any
liability with respect to any such plan. Neither Parent nor any ERISA Affiliate
has ever contributed to, or withdrawn in a complete or partial withdrawal from,
any multi-employer plan (within the meaning of Subtitle E of Title IV of ERISA)
or incurred contingent liability under Section 4204 of ERISA. No Employee
Benefit Plan provides for medical or health benefits (through insurance or
otherwise) to individuals other than current employees of Parent (or spouses and
dependents of such employees), except to the extent necessary to comply with
Applicable Benefits Law (including, without limitation, section 4980B of the
Code), and there has been no communication to any person that could reasonably
be expected to promise or guarantee any employee, former employee (or any
spouse, dependent or domestic partner of any employee or former employee) any
retiree medical, life or other retiree benefits.
(c) Each Employee Benefit Plan (and each related trust,
insurance contract and fund) is in compliance in all material respects in form
and in operation with all applicable requirements of Applicable Benefits Law
(including ERISA and the Code), and is being administered in all material
respects in accordance with all relevant plan documents to the extent consistent
with Applicable Benefits Law. There has been no prohibited transaction with
respect to any Employee Benefit Plan which would result in the imposition of any
material unpaid excise tax. No Employee Benefit Plan is under investigation or
audit by the Department of Labor or Internal Revenue Service other than as part
of a routine tax audit of Parent. There are no legal actions or suits pending
or, to the best of Parent's knowledge, threatened against or with respect to any
Employee Benefit Plan or the assets of any such Employee Benefit Plan or against
any fiduciary of any such Employee Benefit Plan and Parent has no knowledge of
any facts that could give rise to any such actions. There has been full
compliance in all material respects with the notice and continuation
requirements of Section 4980B of the Code and Part 6 of Subtitle B of Title I of
ERISA, and the requirement of Part 7 of Subtitle B of Title I of ERISA and
Section 9801, ET. SEQ. of the Code applicable to any Employee Benefit Plan.
No event has occurred or reasonably is expected to occur as a result of which
Parent or any ERISA Affiliate, directly or indirectly, could be subject to
any material Liability (including under any indemnity or hold harmless
agreement) under ERISA or the Code or any other Applicable Benefits Law,
including, without limitation, Section 4971, 4975 or 4976 of the Code or
Sections 406, 409, 502(i) and 502(l) of the Code.
(d) Except as provided in Section 3.14(d) of Parent
Disclosure Statement, no provision of any Employee Benefit Plan becomes
effective in the event of a change in control of the employer maintaining such
Employee Benefit Plan. Parent has not agreed to or has not announced any plan or
commitment (whether or not legally binding) to create any new employee benefit
plan or, with respect to any existing Employee Benefit Plan, to increase the
benefits or change in employee coverage in an amount that could increase the
expense of maintaining such Employee Benefit Plan or to terminate any Employee
Benefit Plan. No provision of any Employee Benefit Plan prohibits the employer
maintaining it from amending or terminating such Employee Benefit Plan at any
time and to the fullest extent that law permits. Except as provided in Section
3.14 (d) of Parent Disclosure Schedule, the consummation of the Merger or any
other transaction contemplated by this Agreement, either alone or in combination
of any other event, will not (i) result in an increase in the amount of
compensation or benefits or accelerate the vesting or timing of payment of any
benefits or compensation payable under any Employee Benefit Plan in respect of
any employee or former employee of the Company, (ii) entitle any such current or
former employee to any benefits or payment, or (iii) result in any "PARACHUTE
PAYMENT" under Section 280 G of the Code, whether or not such payment is
considered reasonable compensation for services rendered. No employee or former
employee of the Company will be entitled to any
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severance benefits under the terms of any Employee Benefit Plan solely by
reason of the consummation of the Merger or any other transaction
contemplated by this Agreement.
(e) No leased employee (within the meaning of section
414(n) or (o) of the Code) performs any services for Parent.
(f) An Employee Benefit Plan does not own or is not
entitled to receive any of the capital stock of Parent.
(g) Except as set forth in Section 3.14 (g) of Parent
Disclosure Schedule, there are no material liabilities, whether absolute or
contingent, of Parent relating to workers compensation benefits that are not
fully insured against by a BONA FIDE third-party insurance carrier. Except as
set forth in Section 3.14 (g) of Parent Disclosure Schedule, with respect to
each workers' compensation arrangement that is funded wholly or partially
through an insurance policy or public or private fund, all premiums required to
have been paid to date under the insurance policy or fund have been paid, all
premiums required to be paid under the insurance policy or fund through the
Closing Date will have been paid on or before the Closing Date and, as of the
Closing Date, there will be no material liability of Parent or any of its
Subsidiaries under any such insurance policy, fund or ancillary agreement with
respect to such insurance policy or fund in the nature of a retroactive rate
adjustment, loss sharing arrangement or other actual or contingent liability
arising wholly or partially out of events occurring prior to the Closing Date.
Furthermore, at no time since the organization of Parent has any entity (other
than Parent) been an "ERISA affiliate" of Parent.
SECTION 9.15 TITLE TO PROPERTIES. Except as set forth in
Section 3.15 of Parent Disclosure Schedule, Parent has good and indefeasible
title to all of its properties and assets, free and clear of all Encumbrances,
except liens for taxes not yet due and payable and such Encumbrances 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
could not reasonably be expected to have a Material Adverse Effect, and except
for Encumbrances which secure indebtedness reflected in Parent Balance Sheet.
SECTION 9.16 COMPLIANCE WITH LAWS; LEGAL PROCEEDINGS. (a)
Parent is not in violation of, or in default with respect to, any applicable
statute, regulation, ordinance, writ, injunction, order, judgment, decree or any
Governmental License, including any federal state or local law regarding or
relating to trespass or violations of privacy rights, which violation or default
could reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth in Section 3.13(b) of the Parent
Disclosure Schedule, there is no order, writ, injunction, judgment or decree
outstanding and no legal, administrative, arbitration or other governmental
proceeding or investigation pending or, to the best of Parent's knowledge,
threatened, and there are no claims (including unasserted claims of which Parent
is aware) against Parent or Merger Sub or any of their respective properties,
assets or businesses that could reasonably be expected to have a Material
Adverse Effect or against Parent or any of its directors or officers, as such,
that relate to this Agreement, the Merger or the other transactions contemplated
hereby. None of the items listed in Section 3.16(b) of Parent Disclosure
Schedule could reasonably be expected to have a Material Adverse Effect. Parent
has not been a defendant (either originally, by counter-claim or impleading) in
any legal proceedings which have either been filed in the past two (2) fiscal
years or are currently pending (all as set forth in Section 3.16(b) of Parent
Disclosure Schedule). Except as set forth in Section 3.16(b) of Parent
Disclosure Schedule, none of the legal proceedings set forth in Section 3.16(b)
of Parent Disclosure Schedule has had or, to the best of Parent's knowledge,
will have a Material Adverse Effect.
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SECTION 9.17 BROKERS. Except for The Viking Group, LLC and the
Stipe Group (each of which is to receive warrants exercisable on or before April
30, 2005, for the purchase of 750,000 shares of Parent Common Stock for $.375
per share) and Michael E. Dunn (who is to receive warrants exercisable on or
before April 30, 2005, for the purchase of 350,000 shares of Parent Common Stock
for $.375 per share), no broker, finder or investment advisor acted directly or
indirectly as such for Parent, Merger Sub or any shareholder of Parent in
connection with this Agreement or the Merger, and no broker, finder, investment
advisor or other Person is entitled to any fee or other commission, or other
remuneration, in respect thereof based in any way on any action, agreement,
arrangement or understanding taken or made by or on behalf of Parent, Merger Sub
or any shareholder of Parent.
SECTION 9.18 INTELLECTUAL PROPERTY. (a) Parent owns, or is
licensed or otherwise possesses legally enforceable rights to use, all patents,
trade names, service marks, copyrights, and any applications therefor,
technology, know-how, computer software programs or applications, and tangible
or intangible proprietary information or material that are used in the business
of Parent as currently conducted, except as could not reasonably be expected to
have a Material Adverse Effect.
(b) Except as disclosed in Section 3.18(b) of Parent
Disclosure Schedule or as could not reasonably be expected to have a Material
Adverse Effect: (i) Parent is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its obligations hereunder,
in violation of any licenses, sublicenses and other agreements as to which
Parents is a party and pursuant to which Parent is authorized to use any
patents, trademarks, service marks or copyrights owned by others ("PARENT
THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS"); (ii) No claims with respect to the
patents, registered and material unregistered trademarks and service marks,
registered copyrights, trade names and any applications therefor owned by Parent
or Merger Sub (the "PARENT INTELLECTUAL PROPERTY RIGHTS"), any trade secret
material to Parent, or Parent Third Party Intellectual Property Rights to the
extent arising out of any use, reproduction or distribution of Parent Third
Party Intellectual Property Rights by or through Parent, are currently
pending or, to the best of Parent's knowledge, have been threatened by any
Person; or (iii) Parent does not know of any valid grounds for any BONA FIDE
claims (1) to the effect that the sale, licensing or use of any product or
service as now sold, licensed or used, or proposed for sale, license or use
by Parent infringes on any copyright, patent, trademark, service mark or
trade secret; (2) against the use by Parent of any trademarks, trade names,
trade secrets, copyrights, patents, technology, know-how or computer software
programs and applications used in the business of Parent as currently conducted
or as proposed to be conducted; (3) challenging the ownership, validity or
effectiveness of any of Parent Intellectual Property Rights or other trade
secret material to Parent; or (4) challenging the license or legally enforceable
right to use of Parent Third Party Intellectual Rights by Parent.
(c) To the best of Parent's knowledge, there is no
material unauthorized use, infringement or misappropriation of any of Parent
Intellectual Property Rights by any third party, including any employee or
former employee of Parent.
SECTION 9.19 INSURANCE. Except as set forth in Section 3.19 of
the Parent Disclosure Schedule, all material fire and casualty, general
liability, business interruption, product liability and other insurance policies
maintained by Parent are with reputable insurers, provide adequate coverage for
all normal risks incident to Parent's assets, properties and business operations
and are in character and amount at least equivalent to that carried by Persons
engaged in a business subject to the same or similar perils or hazards.
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SECTION 9.20 CONTRACTS; ETC. (a) Set forth on Section 3.20 of
Parent Disclosure Schedule is a complete and correct list of each of the
following agreements, leases and other instruments, both oral and written, to
which Parent is a party or by which Parent or its properties or assets are
bound:
(i) each service or other similar type of agreement under
which services are provided by any other Person to Parent which is
material to the business of Parent taken as a whole;
(ii) each agreement that restricts the operation of the
business of Parent or the ability of Parent to solicit customers or
employees;
(iii) each operating lease (as lessor, lessee, sublessor or
sublessee) that is material to Parent taken as a whole of any real or
tangible personal property or assets;
(iv) each agreement under which services are provided by
Parent to any material cus tomer;
(v) each agreement (including capital leases) under which
any money has been or may be borrowed or loaned or any note, bond,
indenture or other evidence of indebtedness has been issued or assumed
(other than those under which there remain no ongoing obligations of
Parent), and each guaranty of any evidence of indebtedness or other
obligation, or of the net worth, of any Person (other than endorsements
for the purpose of collection in the ordinary course of business);
(vi) each partnership, joint venture or similar agreement;
(vii) each agreement containing restrictions with respect
to the payment of dividends or other distributions in respect of
Parent's capital stock;
(viii) each agreement to make unpaid capital expenditures in
excess of $25,000;
(ix) each agreement providing for accelerated or special
payments as a result of the Merger, including any shareholder rights
plan or other instrument commonly referred as a "poison pill."
A complete and correct copy of each written agreement, lease or other type of
document, and a true, complete and correct summary of each oral agreement, lease
or other type of document, required to be disclosed pursuant to this Section
3.20(a) has been previously made available to the Company.
(b) Each agreement, lease or other type of document
required to be disclosed pursuant to Sections 3.13, 3.14 or 3.20(a) to which
Parent is a party or by which Parent or its properties or assets are bound
(collectively, the "Parent Contracts"), except those Parent Contracts the loss
of which could reasonably be expected to not have a Material Adverse Effect, is
valid, binding and in full force and effect and is enforceable by Parent in
accordance with its terms. Parent is not (with or without the lapse of time or
the giving of notice, or both) in breach of or in default under any of the
Parent Contracts, and, to the best of Parent's knowledge, no other party to any
of the Parent Contracts is (with or without the lapse of time or the giving of
notice, or both) in breach of or in default under any of the Parent Contracts,
where such breach or default could reasonably be expected to have a Material
Adverse Effect. No existing or completed agreement to which Parent is a party is
subject to renegotiation with any governmental body.
SECTION 9.21 PERMITS, AUTHORIZATIONS, ETC. Section 3.21 of
Parent Disclosure Schedule sets forth all Governmental Licenses and each other
material approval, authorization, consent, license,
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certificate, order or other permit of any governmental agencies, whether
federal, state, local or foreign, necessary to enable Parent to own, operate
and lease its properties and assets as and where such properties and assets
are owned, leased or operated and to provide service and carry on its business
as presently provided and conducted (collectively, the "PARENT PERMITS") or
required to permit the continued conduct of such business following the
Merger in the manner conducted on the date of this Agreement (indicating in
each case whether or not the consent of any Person is required for the
consummation of the transactions contemplated hereby). Parent has all
necessary Parent Permits of all governmental agencies, whether federal,
state, local or foreign, all of which are valid and in good standing with the
issuing agencies and not subject to any proceedings for suspension,
modification or revocation, except for such Parent Permits which could not
reasonably be expected to have a Material Adverse Effect.
SECTION 9.22 ENVIRONMENTAL MATTERS. (a) Parent has obtained
all Environmental Permits that are required for the lawful operation of its
business except for such Environmental Permits the failure of which to obtain
could not reasonably be expected to have a Material Adverse Effect. Parent (i)
is in compliance with all terms and conditions of their Environmental Permits
and are in compliance with and not in default under any applicable Environmental
Law, except for such failure to be in compliance that could not reasonably be
expected to have Material Adverse Effect, (ii) has not received written notice
of any material violation by or material claim against Parent under any
Environmental Law, and (iii) is not aware of any facts or circumstances related
to their businesses and facilities likely to give rise to an Environmental Claim
that could reasonably be expected to have a Material Adverse Effect.
(b) There have been no Releases or threatened Releases of
any Hazardous Substances (i) into, on or under any of the properties owned or
operated (or formerly owned or operated) by Parent or any such Subsidiary in
such a way as to create any liability (including the costs of investigation or
remediation) under any applicable Environmental Law that could reasonably be
expected to have a Material Adverse Effect.
(c) Parent has not been identified as a potentially
responsible party at any federal or stated National Priority List ("superfund")
site, and Parent has not transported, disposed of, or arranged for the disposal
of any Hazardous Substances.
SECTION 9.23 PARENT ACQUISITIONS. Section 3.23 of Parent
Disclosure Schedule hereto contains a complete and correct list of all
agreements ("PARENT ACQUISITION AGREEMENTS") executed by Parent pursuant to
which Parent has acquired or agreed to acquire all or any part of the stock or
assets (including any customer list) of any Person. A complete and correct copy
of each of the Parent Acquisition Agreements has been delivered to the Company.
Parent does not have any further obligation or liability under any of the Parent
Acquisition Agreements or as a result of the transactions provided for therein,
except as described in reasonable detail in Section 3.23 of Parent Disclosure
Schedule.
SECTION 9.24 BOOKS AND RECORDS. All accounts, books, ledgers
and official and other records prepared and kept by Parent and Merger Sub have
been kept and completed in all material respects, and there are no material
inaccuracies or discrepancies contained or reflected therein. Such records of
Parent and Merger Sub are located at Parent's offices in Oklahoma City and
Norman, Oklahoma.
SECTION 9.25 INTERESTED PARTY TRANSACTIONS. Except as set
forth in Section 3.25 of Parent Disclosure Schedule, since January 1, 1998, no
event has occurred that would be required to be
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reported as a Certain Relationship or Related Transaction, pursuant to Item 404
of Regulation S-B promulgated by the U.S. Securities and Exchange Commission.
SECTION 9.26 OPINION OF FINANCIAL ADVISOR. Parent has not been
advised by a financial advisor regarding, as of the date hereof, the fairness of
the Exchange Ratio from a financial point of view to Parent shareholders.
SECTION 9.27 PROXY OR INFORMATION STATEMENT. Omitted.
SECTION 9.28 BANK ACCOUNTS AND POWERS OF ATTORNEY. Section
3.28 of Parent Disclosure Schedule sets forth the name of each bank in which
Parent have an account, lock box or safe deposit box, the number of each such
account, lock box or safe deposit box and the names of the Persons authorized to
draw thereon or have access thereto. Except as set forth on Section 3.28 of
Parent Disclosure Schedule, no Person holds any power of attorney from Parent.
SECTION 9.29 CERTAIN PAYMENTS. Parent, Merger Sub nor any
director, officer, agent, or employee thereof, or to the knowledge of Parent,
any other Person associated with or acting for or on behalf of Parent, has
directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of Parent or any affiliate of
Parent, or (iv) in violation of any legal requirement, or (b) established or
maintained any fund or asset that has not been recorded in the books and
records of Parent.
SECTION 9.30 CUSTOMERS; CUSTOMER RELATIONSHIPS. Omitted.
SECTION 9.31 OWNERSHIP OF MERGER SUB; NO PRIOR ACTIVITIES. (a)
Merger Sub is a direct, wholly-owned subsidiary of Parent and was formed solely
for the purpose of engaging in the transactions contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, expect
for obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and expect for
this Agreement and any other agreements or arrangements contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any Person.
ARTICLE X
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 10.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. Except as disclosed in Section 4.1 of the Company Disclosure Schedule,
during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, the Company
covenants and agrees that, unless Parent shall otherwise agree in writing, the
Company shall conduct its business only in, and shall not take any action except
in, the ordinary course of business and in a manner consistent with past
practice; and the Company shall use reasonable commercial efforts to preserve
substantially intact the business organization of the Company, to keep
available the services of
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the present officers, employees, agents and consultants of the Company and to
preserve the present relationships of the Company with customers, suppliers
and other Persons with which the Company has significant business relations.
By way of amplification and not limitation, except as contemplated by this
Agreement, the Company shall not, during the period from the date of this
Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, directly or indirectly do, or propose to do,
any of the following without the prior written consent of Parent:
(a) amend or otherwise change the Company's Certificate
of Incorporation or Bylaws;
(b) issue, sell, pledge, dispose of or encumber, or
authorize the issuance, sale, pledge, disposition or encumbrance of,
any shares of capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any
shares of capital stock, or any other ownership interest (including,
without limitation, any phantom interest) in the Company or any of its
Affiliates, except for the issuance of shares of Company Common Stock
issuable upon the exercise of the Stock Options and Warrants and other
commitments listed in Section 2.4 of the Company Disclosure Schedule;
(c) sell, transfer, lease to others or otherwise dispose
of or subject to any Encumbrance any material assets or properties of
the Company or purchase, lease from others or otherwise acquire any
material assets or properties (except for (i) purchases or sales of
assets in the ordinary course of business and in a manner consistent
with past practice, (ii) dispositions of obsolete or worthless assets,
and (iii) purchases or sales of immaterial assets not in excess of
$20,000);
(d) (i) declare, set aside, make or pay any dividend or
other distribution (whether in cash, stock or property or any
combination thereof) in respect of any of its capital stock, (ii)
split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or
(iii) amend the terms or change the period of exercisability of,
purchase, repurchase, redeem or otherwise acquire, or permit any Person
to purchase, repurchase, redeem or otherwise acquire, any of its
securities, including shares of Company Common Stock or any option,
warrant or right, directly or indirectly, to acquire shares of Company
Common Stock;
(e) (i) acquire (by merger, consolidation, or acquisition
of stock or assets) any corporation, partnership or other business
organization or division thereof; (ii) incur any indebtedness for
borrowed money, except for borrowings and reborrowing under the
Company's existing credit facilities or issue any debt securities or
assume, guarantee or endorse or otherwise as an accommodation become
responsible for, the obligations of any Person, or make any loans or
advances, except in the ordinary course of business consistent with
past practice; (iii) authorize any capital expenditures or purchases of
fixed assets which are, in the aggregate, in excess of the amount set
forth in Section 4.1 of the Company Disclosure Schedule for the Company
taken as a whole; or (iv) enter into or amend any contract, agreement,
commitment or arrangement to effect any of the matters prohibited by
this Section 4.1(e);
(f) make any change in the rate of compensation,
commission, bonus or other remuneration payable, or pay or agree or
promise to pay, conditionally or otherwise, any bonus, extra
compensation, pension or severance or vacation pay, to any director,
officer, employee, salesman or agent of the Company except in the
ordinary course of business consistent with prior
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practice and pursuant to or in accordance with plans disclosed in
Section 2.14(a) of the Company Disclosure Schedule that were in effect
as of the date of this Agreement or make any increase in or commitment
to increase any employee benefits, adopt or make any commitment to
adopt any additional employee benefit plan or make any contribution,
other than regularly scheduled contributions, to any Employee Benefit
Plan;
(g) take any action to change accounting practices,
policies or procedures (including procedures with respect to revenue
recognition, payments of accounts payable or collection of accounts
receivable);
(h) make any material tax election inconsistent with past
practice or settle or compromise any material federal, state, local or
foreign Tax liability or agree to an extension of a statute of
limitations;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than
the payment, discharge or satisfaction when due, in the ordinary course
of business or incurred after the date of this Agreement in the
ordinary course of business and consistent with past practice;
(j) enter into any transaction, contract or commitment
other than in the ordinary course of business; or
(k) take, or agree in writing or otherwise to take, any
of the actions described in Sections 4.1(a) through (j) above, or any
action which would make any of the representations or warranties of the
Company contained in this Agreement untrue or incorrect or prevent the
Company from performing or cause the Company not to perform its
covenants herein.
SECTION 10.2 CONDUCT OF BUSINESS BY PARENT PENDING THE
MERGER. During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time,
Parent covenants and agrees that, except as set forth in Section 4.2 of the
Parent Disclosure Schedule or unless the Company shall otherwise agree in
writing, Parent shall conduct its business, and cause the businesses of Merger
Sub to be conducted, in the ordinary course of business and consistent with
past practice, other than actions taken by Parent or Merger Sub in contemplation
of the Merger, and shall not directly or indirectly do, or propose to do, any
of the following without the prior written consent of the Company:
(a) amend or otherwise change Parent's Certificate of
Incorporation or Bylaws;
(b) issue, sell, pledge, dispose of or encumber, or
authorize the issuance, sale, pledge, disposition or encumbrance of,
any shares of capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any
shares of capital stock, or any other ownership interest (including,
without limitation, any phantom interest) in Parent, Merger Sub or any
of their Affiliates, except for the issuance of shares of Parent Common
Stock issuable upon the exercise of the Stock Options and Warrants and
other commitments listed in Section 3.2 of the Parent Disclosure
Schedule;
(c) sell, transfer, lease to others or otherwise dispose
of or subject to any Encumbrance any material assets or properties of
Parent or purchase, lease from others or otherwise acquire any material
assets or properties (except for (i) purchases or sales of assets in
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the ordinary course of business and in a manner consistent with past
practice, (ii) dispositions of obsolete or worthless assets, and (iii)
purchases or sales of immaterial assets not in excess of $20,000);
(d) (i) declare, set aside, make or pay any dividend or
other distribution (whether in cash, stock or property or any
combination thereof) in respect of any of its capital stock, (ii)
split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or
(iii) amend the terms or change the period of exercisability of,
purchase, repurchase, redeem or otherwise acquire, or permit any Person
to purchase, repurchase, redeem or otherwise acquire, any of its
securities or any securities of Merger Sub, including shares of Parent
Common Stock or any option, warrant or right, directly or indirectly,
to acquire shares of Parent Common Stock;
(e) (i) acquire (by merger, consolidation, or acquisition
of stock or assets) any corporation, partnership or other business
organization or division thereof; (ii) incur any indebtedness for
borrowed money, except for borrowings and reborrowing under Parent's
existing credit facilities or issue any debt securities or assume,
guarantee or endorse or otherwise as an accommodation become
responsible for, the obligations of any Person, or make any loans or
advances, except in the ordinary course of business consistent with
past practice; (iii) authorize any capital expenditures or purchases
of fixed assets which are, in the aggregate, in excess of the amount
set forth in Section 4.2 of the Parent Disclosure Schedule for
Parent taken as a whole; or (iv) enter into or amend any contract,
agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 4.2(e);
(f) make any change in the rate of compensation,
commission, bonus or other remuneration payable, or pay or agree or
promise to pay, conditionally or otherwise, any bonus, extra
compensation, pension or severance or vacation pay, to any director,
officer, employee, salesman or agent of Parent except in the ordinary
course of business consistent with prior practice and pursuant to or in
accordance with plans disclosed in Section 3.12(a) of Parent Disclosure
Schedule that were in effect as of December 31, 1999 or make any
increase in or commitment to increase any employee benefits, adopt or
make any commitment to adopt any additional employee benefit plan or
make any contribution, other than regularly scheduled contributions, to
any Employee Benefit Plan;
(g) take any action to change accounting practices,
policies or procedures (including procedures with respect to revenue
recognition, payments of accounts payable or collection of accounts
receivable);
(h) make any material tax election inconsistent with past
practice or settle or compromise any material federal, state, local or
foreign Tax liability or agree to an extension of a statute of
limitations, except to the extent the amount of any such settlement has
been reserved for in Parent Financial Statements;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than
the payment, discharge or satisfaction when due, in the ordinary course
of business and consistent with past practice of liabilities reflected
or reserved against in Parent Financial Statements or incurred after
December 31, 1999, in the ordinary course of business and consistent
with past practice;
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(j) enter into any transaction, contract or commitment
other than in the ordinary course of business; or
(k) take, or agree in writing or otherwise to take, any
of the actions described in Sections 4.1(a) through (j) above, or any
action which would make any of the representations or warranties of
Parent contained in this Agreement untrue or incorrect or prevent
Parent and Merger Sub from performing or cause Parent and Merger Sub
not to perform its covenants herein.
ARTICLE XI
ADDITIONAL AGREEMENTS
SECTION 11.1 PROXY OR INFORMATION STATEMENT. Omitted.
SECTION 11.2 COMPANY SHAREHOLDERS APPROVAL. The Company
Shareholders by execution of this Agreement hereby approves the Merger in all
respects as contemplated in this Agreement.
SECTION 11.3 ACCESS TO INFORMATION; CONFIDENTIALITY. Upon
reasonable notice and subject to restrictions contained in confidentiality
agreements to which such party is subject (from which such party shall use
reasonable efforts to be released), the Company and Parent shall each (and shall
cause each of their Subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of the other reasonable access,
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, the Company and
Parent each shall (and shall cause each of their Subsidiaries to) furnish
promptly to the other all information concerning its business, properties and
personnel as such other party may reasonably request, and each shall make
available to the other the appropriate individuals (including attorneys,
accountants and other professionals) for discussion of the other's business,
properties and personnel as either Parent or the Company may reasonably request.
Each party shall keep such information confidential.
SECTION 11.4 CONSENTS; APPROVALS. The Company and Parent
shall each use their reasonable best efforts to obtain all consents, waivers,
approvals, authorizations or orders (including, without limitation, all United
States and foreign governmental and regulatory rulings and approvals), and the
Company and Parent shall make all filings (including, without limitation, all
filings with United States and foreign governmental or regulatory agencies)
required in connection with the authorization, execution and delivery of this
Agreement by the Company and Parent and the consummation by them of the
transactions contemplated hereby. The Company and Parent shall furnish all
information required to be included in the Prospectus and the Registration
Statement or for any application or other filing to be made pursuant to the
rules and regulations of any United States or foreign governmental body in
connection with the transactions contemplated by this Agreement.
SECTION 11.5 AGREEMENTS WITH RESPECT TO AFFILIATES. Omitted.
SECTION 11.6 INDEMNIFICATION AND INSURANCE. (a) The Bylaws and
Certificate of Incorporation of the Surviving Corporation shall contain the
provisions with respect to indemnification set forth in the Bylaws and
Certificate of Incorporation of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of three years from the
Effective Time in any manner that would adversely affect the rights thereunder
as of the Effective Time of individuals who at the Effective Time were directors
or officers of the Company, unless such modification is required after the
Effective Time by law.
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(b) The Surviving Corporation shall, to the fullest
extent permitted under applicable law or under the Surviving Corporation's
Certificate of Incorporation or Bylaws, indemnify and hold harmless each present
and former director or officer of the Company (collectively, the "INDEMNIFIED
PARTIES") against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative
(collectively, "ACTIONS"), (x) arising out of or pertaining to the transactions
contemplated by this Agreement, or (y) otherwise with respect to any acts or
omissions occurring at or prior to the Effective Time, to the same extent as
provided in the Company's Certificate of Incorporation or Bylaws or any
applicable contract or agreement as in effect on the date hereof, in each
case for a period of three years after the Effective Time; PROVIDED, HOWEVER,
that, in the event that any claim or claims for indemnification are asserted
or made within such three-year period, all rights to indemnification in
respect of any such claim or claims shall continue until the disposition of
any and all such claims. In the event of any such Action (whether arising
before or after the Effective Time), the Indemnified Parties shall promptly
notify the Surviving Corporation in writing, and the Surviving Corporation
shall have the right to assume the defense thereof, including the employment
of counsel reasonably satisfactory to such Indemnified Parties. The Indemnified
Parties shall have the right to employ separate counsel in any such Action
and to participate in (but not control) the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Parties
unless (a) the Surviving Corporation has agreed to pay such fees and expenses,
(b) the Surviving Corporation shall have failed to assume the defense of such
Action or (c) the named parties to any such Action (including any impleaded
parties) include both the Surviving Corporation and the Indemnified Parties
and such Indemnified Parties shall have been reasonably advised in writing by
counsel that there may be one or more legal defenses available to the
Indemnified Parties which are in conflict with those available to the
Surviving Corporation. In the event such Indemnified Parties employ separate
counsel at the expense of the Surviving Corporation pursuant to clauses (b)
or (c) of the previous sentence, (i) any counsel retained by the Indemnified
Parties for any period after the Effective Time shall be reasonably satisfactory
to the Surviving Corporation; (ii) the Indemnified Parties as a group may
retain only one law firm to represent them in each applicable jurisdiction
with respect to any single Action unless there is, under applicable standards
of professional conduct, a conflict on any significant issue between the
positions of any two or more Indemnified Parties, in which case each
Indemnified Person with respect to whom such a conflict exists (or group of
such Indemnified Persons who among them have no such conflict) may retain one
separate law firm in each applicable jurisdiction; (iii) after the Effective
Time, the Surviving Corporation shall pay the reasonable fees and expenses of
such counsel, promptly after statements therefor are received; and (iv) the
Surviving Corporation will cooperate in the defense of any such Action. The
Surviving Corporation shall not be liable for any settlement of any such
Action effected without its written consent.
(c) The provisions of this Section 5.6 shall survive the
consummation of the Merger at the Effective Time, is intended to benefit the
Company, the Surviving Corporation and the Indemnified Parties, shall be binding
on all successors and assigns of the Surviving Corporation and shall be
enforceable by the Indemnified Parties.
SECTION 11.7 NOTIFICATION OF CERTAIN MATTERS. The Company
shall give prompt notice to Parent, and Parent shall give prompt notice to the
Company, 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 materially untrue or inaccurate, or (ii) any
failure of the Company, Parent or Merger Sub, as the case may be, materially to
comply with or satisfy any covenant,
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condition or agreement to be complied with or satisfied by it hereunder;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section
5.7 shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice; and PROVIDED FURTHER that failure to give
such notice shall not be treated as a breach of covenant for the purposes of
Sections 6.2(b) or 6.3(b) unless the failure to give such notice results in
material prejudice to the other party.
SECTION 11.8 FURTHER ACTION/TAX TREATMENT. Upon the terms
and subject to the conditions hereof, each of the parties hereto shall use all
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all other things reasonably necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, to obtain in a timely manner all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings, and otherwise to satisfy or cause to be satisfied all
conditions precedent to its obligations under this Agreement. The foregoing
covenant shall not include any obligation by Parent to agree to divest, abandon,
license or take similar action with respect to any assets (tangible or
intangible) of Parent or the Company. Each of Parent, Merger Sub and the Company
shall use its commercially reasonable efforts to cause the Merger to qualify,
and will not (both before and after con summation of the Merger) take any
actions which to its knowledge could reasonably be expected to prevent the
Merger from qualifying, as a reorganization under the provisions of Section 368
of the Code.
SECTION 11.9 PUBLIC ANNOUNCEMENTS. Parent and the Company
shall consult with each other before issuing any press release with respect to
the Merger or this Agreement and shall not issue any such press release or
make any such public statement without the prior consent of the other party,
which shall not be unreasonably withheld; PROVIDED, HOWEVER, that a party
may, without the prior consent of the other party, issue such press release
or make such public statement as may upon the advice of counsel be required
by law if it has used all reasonable efforts to consult with the other party.
SECTION 11.10 CONVEYANCE TAXES. Parent and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed on or before the Effective
Time and the Surviving Corporation shall be responsible for the payment of all
such taxes and fees.
SECTION 11.11 NO SOLICITATION. Upon execution of this
Agreement, Parent, the Company and the Company Shareholders do not have, or
shall immediately terminate, any discussions with any third party concerning an
Alternative Acquisition (as defined below). From and after the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, Parent, the Company and the Company
Shareholders shall not, and shall not permit any officer, director, employee,
affiliate, investment banker or other agent or other representative of Parent or
the Company to, directly or indirectly, other than in connection with the
performance and consummation of the transactions contemplated in this Agreement,
(1) solicit, engage in discussions or negotiate with any Person (whether such
discussions or negotiations are initiated by Parent or the Company, such other
Person or otherwise) or take any other action intended or designed to facilitate
the efforts of any Person relating to the possible acquisition of the Company or
Parent (whether by way of merger, purchase of capital stock, purchase of assets
or otherwise) or any material portion of its or their capital stock or assets
(with any such efforts by any such Person, including a firm proposal to make
such an acquisition, being referred to as an "ALTERNATIVE ACQUISITION"), (2)
provide information with respect to Parent or the
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Company to any Person relating to a possible Alternative Acquisition by any
Person, (3) enter into an agreement with any Person providing for a possible
Alternative Acquisition, or (4) make or authorize any statement,
recommendation or solicitation in support of any possible Alternative
Acquisition by any Person.
ARTICLE XII
CONDITIONS TO THE MERGER
SECTION 12.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) DELIVERY OF AUDITED FINANCIAL STATEMENTS. Omitted.
(b) APPROVAL OF SHAREHOLDERS OF PARENT. Omitted.
(c) GOVERNMENTAL ACTIONS. There shall not have been
instituted, pending or threatened any action or proceeding (or any
investigation or other inquiry that might result in such an action or
proceeding) by any governmental authority or administrative agency
before any governmental authority, administrative agency or court of
competent jurisdiction, domestic or foreign, nor shall there be in
effect any judgment, decree or order of any governmental authority,
administrative agency or court of competent jurisdiction, or any other
legal restraint (i) preventing or seeking to prevent consummation of
the Merger, (ii) prohibiting or seeking to prohibit or limiting or
seeking to limit Parent from exercising all material rights and
privileges pertaining to its ownership of the Surviving Corporation or
the ownership or operation by Parent or any of its Subsidiaries of all
or a material portion of the business or assets of Parent or Merger
Sub, or (iii) compelling or seeking to compel Parent or Merger Sub to
dispose of or hold separate all or any material portion of the business
or assets of Parent or the Surviving Corporation, as a result of the
Merger or the transactions contemplated by this Agreement.
(d) ILLEGALITY. Except as set forth in the Company
Disclosure Schedule, no statute, rule, regulation or order shall be
enacted, entered, enforced or deemed applicable to the Merger which
makes the consummation of the Merger illegal.
SECTION 12.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT
AND MERGER SUB. The obligations of Parent and Merger Sub to effect the Merger
are also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company and the Company Shareholders contained in
this Agreement and in the Company Disclosure Schedule shall be true and
correct in all respects on and as of the Effective Time with the same
force and effect as if made on and as of the Effective Time, except for
(i) changes contemplated by this Agreement, (ii) those representations
and warranties which address matters only as of a particular date
(which shall have been true and correct as of such date, subject to
clause (iii)), or (iii) where the failure to be true and correct would
not reasonably be expected to have a Material Adverse Effect, and
Parent and Merger Sub shall have received a certificate dated as of the
Closing to such effect signed by the Chief Executive Officer of the
Company;
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(b) AGREEMENTS AND COVENANTS. The Company shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with
by it on or prior to the Closing, and Parent and Merger Sub shall have
received a certificate dated as of the Closing to such effect signed by
the Chief Executive Officer of the Company;
(c) CONSENTS OBTAINED. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and all
filings required to be made, by the Company for the authorization,
execution and delivery of this Agreement, the consummation by it of the
transactions contemplated hereby and the continuation in full force and
effect of any and all material rights, documents, agreements or
instruments of the Company shall have been obtained and made by the
Company, except where the failure to receive such consents, waivers,
approvals, authorizations or orders would not reasonably be expected to
have a Material Adverse Effect on the Parent.
SECTION 6.3 ADDITIONAL CONDITIONS TO OBLIGATION OF THE
COMPANY. The obligation of the Company to effect the Merger is also subject
to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Parent and Merger Sub contained in this Agreement and
the Parent Disclosure Schedule shall be true and correct in all
respects on and as of the Effective Time with the same force and effect
as if made on and as of the Effective Time, except for (i) changes
contemplated by this Agreement, (ii) those representations and
warranties which address matters only as of a particular date (which
shall have been true and correct as of such date, subject to clause
(iii)), or (iii) where the failure to be true and correct could not
reasonably be expected to have a Material Adverse Effect, and the
Company shall have received a certificate dated as of the Closing to
such effect signed by the Chief Executive Officer of Parent;
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall
have performed or complied in all material respects with all agreements
and covenants required by this Agreement to be performed or complied
with by them on or prior to the Effective Time, and the Company shall
have received a certificate dated as of the Closing to such effect
signed by the Chief Executive Officer of Parent; and
(c) CONSENTS OBTAINED. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and all
filings required to be made, by Parent or Merger Sub for the
authorization, execution and delivery of this Agreement, the
consummation by them of the transactions contemplated hereby and the
continuation in full force and effect of any and all material rights,
documents, agreements or instruments of Parent shall have been obtained
and made by Parent and Merger Sub, except where the failure to receive
such consents, waivers, approvals, authorizations or orders could not
be reasonably be expected to have a Material Adverse Effect on Parent.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. This Agreement may be terminated
at any time prior to the Effective Time, notwithstanding approval thereof by
the shareholders of the Company or Parent:
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(a) by mutual written consent duly authorized by the
Boards of Directors of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall
not have been consummated by July 31, 2000 (provided that the right to
terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date); or
(c) by either Parent or the Company if a court of
competent jurisdiction or governmental, regulatory or administrative
agency or commission shall have issued a non-appealable final order,
decree or ruling or taken any other action having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger
(provided that the right to terminate this Agreement under this Section
7.1(c) shall not be available to any party who has not complied with
its obligations under Section 5.7 and such noncompliance materially
contributed to the issuance of any such order, decree or ruling or the
taking of such action); or
(d) by Parent or the Company if any representation or
warranty of the Company, or Parent and Merger Sub, respectively, set
forth in this Agreement shall be untrue when made, such that the
conditions set forth in Sections 6.2(a) or 6.3(a), as the case may be,
would not be satisfied (a "TERMINATING MISREPRESENTATION"); PROVIDED,
HOWEVER, that, if such Terminating Misrepresentation is curable by the
Company or Parent, as the case may be, through the exercise of its
commercially reasonable efforts and for so long as the Company or
Parent, as the case may be, continues to exercise such reasonable
efforts, neither Parent nor the Company, respectively, may terminate
this Agreement under this Section 7.1(d); or
(e) by Parent if any representation or warranty of the
Company shall have become untrue such that the condition set forth in
Section 6.2(a) would not be satisfied (a "COMPANY TERMINATING CHANGE"),
or by the Company if any representation or warranty of Parent and
Merger Sub shall have become untrue such that the condition set forth
in Section 6.3(a) would not be satisfied (a "PARENT TERMINATING CHANGE"
and together with a Company Terminating Change, a "TERMINATING
CHANGE"), in either case other than by reason of a Terminating Breach
(as hereinafter defined); PROVIDED, HOWEVER, that if any such
Terminating Change is curable by the Company or Parent, as the case may
be, through the exercise of its commercially reasonable efforts, and
for so long as the Company or Parent, as the case may be, continues to
exercise such commercially reasonable efforts, neither Parent nor the
Company, respectively, may terminate this Agreement under this Section
7.1(e); or
(f) by Parent or the Company upon a breach of any
covenant or agreement on the part of the Company or Parent,
respectively, set forth in this Agreement, such that the conditions set
forth in Sections 6.2(b) or 6.3(b), as the case may be, would not be
satisfied (a "TERMINATING BREACH"); PROVIDED, HOWEVER, that, if such
Terminating Breach is curable by the Company or Parent, as the case may
be, through the exercise of its commercially reasonable efforts and for
so long as the Company or Parent, as the case may be, continues to
exercise such commercially reasonable efforts, neither Parent nor the
Company, respectively, may terminate this Agreement under this Section
7.1(f).
SECTION 7.2 EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and there shall be no liability on the
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part of any party hereto or of any of its Affiliates, directors, officers or
stockholders except (i) as set forth in Section 7.3 and Section 8.1, and (ii)
except as provided in Section 7.3, nothing herein shall relieve any party
from liability for any breach hereof.
SECTION 7.3 FEES AND EXPENSES. Except as otherwise provided
in this Section 7.3, all fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the Merger is consummated, including
without limitation the costs and expenses attributable to the preparation of
audited and unaudited financial statements of Parent on the one hand and the
Company and those entities acquired by the Company pursuant to the Company
Acquisition Agreements on the other hand. Parent shall bear all fees, costs
and expenses of preparation and filing of the Proxy or Information Statement
and any amendments thereto.
SECTION 7.4 REMEDIES. Upon termination of this Agreement by
either Parent or the Company, the respective parties hereto may seek any and
all remedies available to it under applicable law.
ARTICLE XIII
GENERAL PROVISIONS
SECTION 8.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES
AND AGREEMENTS. Except as otherwise provided in this Section 8.1, the
representations, warranties, covenants and agreements of each party hereto
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any Person
controlling any such party or any of their officers, directors or
representatives, whether prior to or after the execution of this Agreement.
The representations, warranties and agreements in this Agreement and in the
Disclosure Schedules shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Section 7.1, as the case may be,
except that the covenants and agreements set forth in Article I and Section
5.6 shall survive the Effective Time and those set forth in Section 7.3 shall
survive such termination.
Any disclosure made with reference to one or more sections of the
Company Disclosure Schedule or the Parent Disclosure Schedule shall be deemed
disclosed with respect to each other section therein as to which such
disclosure is relevant provided that such relevance is reasonably apparent.
Disclosure of any matter in the Company Disclosure Schedule or the Parent
Disclosure Schedule shall not be deemed an admission that such matter is
material.
SECTION 8.02 NOTICES. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made if and when delivered personally or by overnight
courier to the parties at the following addresses or sent by electronic
transmission, with confirmation received, to the facsimile numbers specified
below (or at such other address, facsimile or telephone number or other
Person's attention for a party as shall be specified by like notice):
(a) If to Parent or Merger Sub:
Aarow Environmental Group, Inc.
1505 W. Walnut
Roger, Arkansas 72756
Facsimile No.: (501) 621-0044
Attention: D. Fred Shefte, Chief Executive Officer
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(b) If to the Company:
Global Wireless Technologies, Inc.
110 West Seventh Street
Tulsa, Oklahoma 74119
Telephone No.: (918) 583-7700
Attention: Ronald L. Baker, Chief Executive Officer
SECTION 8.03 CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:
(a) "Affiliates" means 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 banks in New York or Oklahoma City are required or authorized to
be closed;
(c) "Control" (including the terms "controlled by" and
"under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause
the direction of the management or policies of a Person, whether
through the ownership of stock, as trustee or executor, by contract or
credit arrangement or otherwise;
(d) "Person" means an individual, corporation,
partnership, limited liability company, association, trust,
unincorporated organization other entity or group (as defined in
Section 13(d)(3) of the Exchange Act); and
(e) "Subsidiary" or "Subsidiaries" of the Company, the
Surviving Corporation, Parent or any other Person means any
corporation, partnership, limited liability company, or other legal
entity of which the Company, the Surviving Corporation, Parent or such
other Person, as the case may be (either alone or through or together
with any other subsidiary), owns, directly or indirectly, more than 10%
of the stock or other equity interests 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.
SECTION 8.04 AMENDMENT. This Agreement may be amended by
the Company Shareholders and the Company's Board of Directors and the Board
of Directors of Parent and Merger Sub at any time prior to the Effective
Time. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.05 WAIVER. At any time prior to the Effective
Time, any party hereto may with respect to any other party hereto (a) extend
the time for the performance of any of the obligations or other acts, (b)
waive any inaccuracies in the representations and warranties contained herein
or in any document delivered pursuant hereto, or (c) waive compliance with
any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby. For purposes of this Agreement, time
shall be of the essence.
SECTION 8.06 HEADINGS; CONSTRUCTION. The headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. In this Agreement (a)
words denoting the singular include the plural and vice versa, (b) "it"
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or "its" or words denoting any gender include all genders, (c) the word
"including" shall mean "including without limitation," whether or not
expressed, (d) any reference to a statute shall mean the statute and any
regulations thereunder in force as of the date of this Agreement or the
Closing, as applicable, unless otherwise expressly provided, (e) any
reference herein to a Section, Article or Schedule refers to a Section or
Article of or a Schedule to this Agreement, unless otherwise stated, (f) when
calculating the period of time within or following which any act is to be
done or steps taken, the date which is the reference day in calculating such
period shall be excluded and if the last day of such period is not a Business
Day, then the period shall end on the next day which is a Business Day and
(g) any reference to a party's "best efforts" or "reasonable efforts" shall
not include any obligation of such party to pay, or guarantee the payment of,
money or other consideration to any third party or to agree to the imposition
on such party or its Affiliates of any condition reasonably considered by
such party to be materially burdensome to such party or its Affiliates.
SECTION 8.07 SEVERABILITY. If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent reasonably possible.
SECTION 8.08 ENTIRE AGREEMENT. This Agreement constitutes
the entire agreement and supersedes all prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof, except as otherwise expressly provided herein.
SECTION 8.09 ASSIGNMENT; MERGER SUB. This Agreement shall
not be assigned by operation of law or otherwise, except that all or any of
the rights of Merger Sub hereunder may be assigned to any direct,
wholly-owned Subsidiary of Parent provided that no such assignment shall
relieve the assigning party of its obligations hereunder. Parent guarantees
the full and punctual performance by Merger Sub of all the obligations
hereunder of Merger Sub or any such assignees.
SECTION 8.10 PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and the
Company Designees, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement,
including, without limitation, by way of subrogation, other than Section 5.6
(which is intended to be for the benefit of the Indemnified Parties and may
be enforced by such Indemnified Parties).
SECTION 8.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of any party hereto in the
exercise of any right hereunder shall impair such right or be construed to be
a waiver of, or acquiescence in, any breach of any representation, warranty,
covenant or agreement herein, nor shall any single or partial exercise of any
such right preclude other or further exercise thereof or of any other right.
All rights and remedies existing under this Agreement are cumulative to, and
not exclusive of, any rights or remedies otherwise available.
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SECTION 8.12 CERTAIN DEFINITIONS. GOVERNING LAW. This
Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of Oklahoma applicable to contracts executed and
fully performed within the State of Oklahoma.
SECTION 8.13 COUNTERPARTS. This Agreement may be executed
in one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
SECTION 8.14 WAIVER OF JURY TRIAL. THE COMPANY SHAREHOLDER,
PARENT SHAREHOLDERS, PARENT, MERGER SUB, AND THE COMPANY HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 8.15 JURISDICTION; SERVICE OF PROCESS. Any action
or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against any of the parties in
the courts of the State of Oklahoma, County of Cleveland or the United States
District Court for the Western District of Oklahoma, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue
laid therein.
IN WITNESS WHEREOF, as of the date first written above,
Parent, Merger Sub, the Company, the Company Shareholders and the Parent
Shareholders have caused this Agreement to be executed and the respective
officers of Parent, Merger Sub, the Company are duly authorized to execute
this Agreement.
"Parent" AAROW ENVIRONMENTAL GROUP, INC.
By /s/ D. FRED SHEFTE
-----------------------------------------------
D. Fred Shefte, Chief Executive Officer
"Merger-Sub" AAROW-GLOBAL WIRELESS ACQUISITION, INC.
By /s/ D. FRED SHEFTE
-----------------------------------------------
D. Fred Shefte, Chief Executive Officer
"Company" GLOBAL WIRELESS TECHNOLOGIES, INC.
By /s/ RONALD L. BAKER
-----------------------------------------------
Ronald L. Baker, Chief Executive Officer
"Company Shareholder" /s/ RONALD L. BAKER
-----------------------------------------------
Ronald L. Baker
"Parent Shareholders" /s/ STAN SISEMORE
-----------------------------------------------
Stan Sisemore
/s/ LLOYD PHILLIPS
-----------------------------------------------
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Lloyd Phillips
/s/ JEFF MARTIN
-----------------------------------------------
Jeff Martin
/s/ DAVID SURGNIER
-----------------------------------------------
David Surgnier
/s/ VIRGIL PLAGGE
-----------------------------------------------
Virgil Plagge
/s/ MITCH VILLINES
-----------------------------------------------
Mitch Villines
/s/ D. FRED SHEFTE
-----------------------------------------------
D. Fred Shefte
/s/ SAM YATES
-----------------------------------------------
Sam Yates
/s/ TOMMY PHILLIPS
-----------------------------------------------
Tommy Phillips
(Schedules will be provided upon request of the Company)
Company's Disclosure Schedule
Parent's Disclosure Schedule
42
