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
April 25, 2000
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Date of Report (date of earliest event reported)
SILVERTHORNE PRODUCTION COMPANY
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(Exact name of registrant as specified in its charter)
Colorado 0-11730 84-0189377
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(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification Number)
7001 Seaview Avenue NW, Suite 210, Seattle, Washington 98117
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (206) 297-6151
N/A
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 25, 2000, Silverthorne Production Company (the "Company")
completed the closing of a stock for stock exchange agreement by and among the
shareholders of Aquila International Telecommunications, Inc., a California
corporation ("Aquila"), (the shareholders of Aquila are referred to collectively
as the "Aquila Shareholders") as Seller, and the Company as Buyer (the
"Exchange). Prior to the closing of the Exchange on April 25, 2000 (the "Closing
Date"), the Aquila Shareholders owned 100% of the issued and outstanding capital
shares of Aquila ("Aquila Shares"). On the Closing Date, the Aquila Shareholders
transferred all of the Aquila Shares to the Company and, in exchange therefor,
the Company issued to the Aquila Shareholders a total of 2,041,445 shares of the
Company's common stock. The number of shares of the Company's common stock
issued to the Aquila Shareholders in exchange for the Aquila Shares was
determined by negotiations between the Aquila Shareholders and the Company and
was based on the market price of the Company's common stock, the fact the
Company's common stock to be issued in the Exchange would not be registered and
estimates of the value of Aquila's assets, staff, technology, revenue-producing
capabilities and physical location. The Aquila assets that were acquired by the
Company pursuant to the Exchange included a facility lease, equipment leases and
Aquila's customer base.
Jimmy L. Boswell is President and Chief Operating Officer of the Company
and is Chairman of the Board, President and Chief Executive Officer of Aquila.
Mr. Boswell is one of the five Aquila Shareholders. Prior to the Exchange, Mr.
Boswell beneficially owned 1,600,000 shares of the common stock of the Company
underlying an option and beneficially owned approximately 18.7% of the Aquila
Shares. Pursuant to the Exchange, Mr. Boswell received 381,750 shares of the
common stock of the Company. Immediately following the Exchange, Mr. Boswell
beneficially owned a total of 1,981,750 shares of the common stock of the
Company, including 1,600,000 shares underlying an option. In addition, a
promissory note which was payable to Mr. Boswell by Aquila was terminated as a
part of the Exchange.
David L. Lucas is the Chief Financial Officer of the Company and is a
Director, Vice President and Chief Financial Officer of Aquila. Mr. Lucas is one
of the five Aquila Shareholders. Prior to the Exchange, Mr. Lucas beneficially
owned 1,600,000 shares of the common stock of the Company underlying an option
and beneficially owned approximately 18.7% of the Aquila Shares. Pursuant to the
Exchange, Mr. Lucas received 381,750 shares of the common stock of the Company.
Immediately following the Exchange, Mr. Lucas beneficially owned a total of
1,981,750 shares of the common stock of the Company, including 1,600,000 shares
underlying an option. In addition, a promissory note which was payable to Mr.
Lucas by Aquila was terminated as a part of the Exchange.
Messrs. Boswell and Lucas are directors and officers of Inter-American
Telecommunications Holding Corporation ("ITHC") and each owns approximately 2.6%
of the outstanding stock of ITHC. ITHC owns 24,195,384 shares of the Company's
common stock and will receive an additional 37,298,444 shares of the Company's
common stock at such time as the Company has a sufficient number of shares
authorized to issue the additional shares.
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On July 22, 1999, Inter-American Telecommunications Holding Corporation
("ITHC") and Aquila entered into a Carrier Service Agreement in which ITHC
agreed to migrate to Aquila certain ITHC customers pursuant to a telemarketing
campaign. The Company assumed the Carrier Service Agreement in connection with
the acquisition by the Company of all of the assets of ITHC. As of March 31,
2000, the Company had provided a total of $543,000 in advance payments to Aquila
to help cover Aquila's costs associated with the migration of ITHC customers to
Aquila.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
The financial statements required by Item 7(a) of Form 8-K will be
filed by amendment by no later than July 10, 2000.
(b) Pro Forma Financial Information
The pro forma financial information required by Item 7(b) of Form 8-K
will be filed by amendment by no later than July 10, 2000.
(c) Exhibits.
Exhibit Stock for Stock Exchange Agreement dated April 14, 2000, by
and among the shareholders of Aquila International
Telecommunications Inc. and Silverthorne Production Company.
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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.
SILVERTHORNE PRODUCTION COMPANY
Dated: May 2, 2000 By: /s/ Darrell H. Hughes
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Darrell H. Hughes,
Chief Executive Officer
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EXHIBIT 2
STOCK FOR STOCK EXCHANGE AGREEMENT
THIS STOCK FOR STOCK EXCHANGE AGREEMENT ("Agreement") is made and entered
into as of the 14th day of April, 2000, by and among the shareholders of Aquila
International Telecommunications, Inc., a California corporation ("Aquila"),
listed on Exhibit A that is attached hereto (individually "Aquila Shareholder"
and collectively "Aquila Shareholders"), as Seller, and Silverthorne Production
Company, a Colorado corporation, or its nominee ("Silverthorne"), as Buyer.
Collectively, the Aquila Shareholders and Silverthorne are referred to as
"Parties," and sometimes the Aquila Shareholders and sometimes Silverthorne are
individually referred to as "Party."
WHEREAS, the Aquila Shareholders own 100% of the issued and outstanding
capital shares of Aquila ("Aquila Shares");
WHEREAS, the Aquila Shareholders desire to exchange all of the Aquila
Shares for 2,041,445 shares of Silverthorne's $0.001 par value common stock
("Silverthorne Shares") and Silverthorne desires to effectuate such exchange, on
the terms and subject to the conditions contained herein; and
WHEREAS, the Aquila Shareholders and Silverthorne desire this transaction
to be a tax-free reorganization pursuant to Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended.
NOW, THEREFORE, for and in consideration of the premises and the mutual
promises made herein and in consideration of the covenants, representations,
warranties and conditions set forth herein, the receipt and sufficiency of which
are hereby acknowledged, the Parties, intending to be legally bound, agree as
follows:
ARTICLE 1.
EXCHANGE OF AQUILA SHARES FOR SILVERTHORNE SHARES
1.1. Exchange of Aquila Shares for Silverthorne Shares. Subject to the
terms and conditions of this Agreement, the Aquila Shareholders hereby agree to
transfer to Silverthorne the Aquila Shares and, in exchange therefor,
Silverthorne hereby agrees to issue the Silverthorne Shares to the Aquila
Shareholders. The number of shares held by each Aquila Shareholder in Aquila and
the number of Aquila Shares to be transferred to Silverthorne are set forth on
Exhibit A that is attached hereto and incorporated herein by this reference. The
Silverthorne Shares shall be issued to the Aquila Shareholders on the following
basis:
Jimmy L. Boswell 381,750
David G. Lucas 381,750
Reginald W. Einkauf 381,750
John D. Miller 381,750
Ladia LLC 514,445
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1.2. Increase of Authorized Shares of Silverthorne Common Stock. If the
number of authorized but unissued shares of Silverthorne Common Stock is not
sufficient for Silverthorne to issue all of the Silverthorne Shares as specified
in Section 1.1 above, Silverthorne shall take all steps necessary to have its
shareholders approve an amendment to Silverthorne's Articles of Incorporation to
increase the number of authorized shares of Silverthorne Common Stock so that
Silverthorne will have a sufficient number of authorized but unissued shares of
common stock to issue to the Aquila Shareholders at the Closing ("Shareholder
Consent").
1.3. Aquila Stock Options, Warrants and Convertible Securities. At the
Closing, Aquila will not have outstanding any stock options, warrants or
convertible securities to acquire common stock or other securities of Aquila
(collectively, "Options").
1.4. Change of Control; Resignations. The Aquila Shareholders agree that at
Closing the officers, directors and key employees ("Key Employees") of Aquila
will be as are set forth on Exhibit B that is attached hereto and incorporated
herein by this reference.
ARTICLE 2.
CLOSING
2.1. The Closing. Subject to the conditions precedent contained herein, the
exchange provided for in this Agreement ("Closing") shall take place at the
offices of Smith McCullough, P.C., 4643 South Ulster Street, Suite 900, Denver,
Colorado 80237 at 1:00 p.m. (local time) on (i) April 25, 2000, or (ii) if by
April 25, 2000 (A) the FCC Consent (as hereafter defined) has not been obtained,
(B) the Securities Compliance (as hereafter defined) has not been completed or
(C) the Shareholder Consent, if required, has not been obtained, then on such
later date as the FCC Consent, the Securities Compliance and the Shareholder
Consent (if required) shall have been obtained and completed, or (iii) such
other date and time as is mutually agreed to by the Aquila Shareholders and
Silverthorne ("Closing Date").
ARTICLE 3.
DOCUMENTS TO BE DELIVERED AT CLOSING
3.1. Documents to Be Delivered to Silverthorne. At the Closing, the
following shall be delivered to Silverthorne:
a. Duly executed originals of the share certificates and stock powers
representing the Aquila Shares, together with such signatures guaranteed by
a member of the Medallion Signature Guarantee Program, as necessary to
transfer the ownership rights therein to Silverthorne;
b. A certificate executed by the Aquila Shareholders dated as of the
Closing Date certifying that each of the respective representations and
warranties of the Aquila Shareholders contained in this Agreement are then
true and correct to the best of their knowledge and belief, that the
respective Aquila Shareholders have complied with all agreements and
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conditions required of each of them by this Agreement and all related
agreements to be performed or complied with by them as of the Closing Date
and a certificate executed by the Representing Shareholders (as hereinafter
defined) that the information in the attached Exhibits is then true and
correct to the best of their knowledge and belief and that all accounts
payable of Aquila paid between the date of this Agreement and the Closing
Date were paid in the ordinary course of business consistent with past
payment practices of Aquila;
c. An opinion of counsel for Aquila that: (a) the Aquila Shares
constitute all of the issued and outstanding equity securities in Aquila
and are fully paid and nonassessable; (b) Aquila is a corporation duly
organized, validly existing and in good standing under the laws of the
state of California, with full corporate power and authority to own its
properties and engage in its business as presently conducted or
contemplated, and is duly qualified and in good standing as a foreign
corporation under the laws of each other jurisdiction in which it conducts
business except where the failure to be so qualified would not have a
material adverse effect on the financial condition of Aquila; (c) neither
the execution and delivery of this Agreement nor the consummation of any or
all of the transactions contemplated by this Agreement breaches or
constitutes a default under any agreement or commitment known to counsel to
which Aquila is a party, or violates any provision of the Articles of
Incorporation or Bylaws of Aquila, or causes the acceleration of the
maturity of any debt or obligation of Aquila that is known to counsel, or
violates any statute, law, regulation or rule, or any judgment, decree or
order of any court or other governmental or quasi-governmental body; and
(d) counsel knows of no litigation pending or threatened which would
adversely affect Aquila or the transactions contemplated by this Agreement
and;
d. Written consents of all lessors, financial institutions and
creditors of Aquila and any other third parties or governmental entities
necessary to complete the transactions herein contemplated, including
without limitation the prior written approval by the Federal Communications
Commission of the change in control of Aquila from the Aquila Shareholders
to Silverthorne indicating that Aquila will maintain its ss. 214 license
after the consummation of the transaction herein contemplated.
3.2. Documents to Be Delivered to the Aquila Shareholders. At the Closing,
the following shall be delivered to the Aquila Shareholders by Silverthorne:
a. The Silverthorne Shares in accordance with Section 1.1 above;
b. A certificate executed by an authorized officer of Silverthorne
dated as of the Closing Date certifying that each of the representations
and warranties of Silverthorne contained in this Agreement are then true
and correct to the best of their knowledge and belief and that Silverthorne
has complied with all agreements and conditions required by this Agreement
and all related agreements to be performed or complied with by it as of the
Closing Date; and
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c. A copy of the directors' resolution or of the minutes of the
meeting of the board of directors of Silverthorne approving the execution
and performance of the transactions contemplated by this Agreement.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE AQUILA SHAREHOLDERS
4.1. Representations and Warranties of Certain of the Aquila Shareholders.
Jimmy L. Boswell, David G. Lucas, Reginald W. Einkauf and John D. Miller
(collectively "Representing Shareholders"), in their individual capacities, as a
material inducement to Silverthorne to enter into this Agreement, hereby jointly
and severally represent and warrant to Silverthorne that the following
statements are true and correct as of the date hereof and will be true and
correct through the Closing of the sale of the Aquila Shares as if made on the
Closing Date. These representations and warranties may be relied upon fully by
Silverthorne and/or any assigns.
a. The authorized equity securities of Aquila as of the date of this
Agreement consist of those issued and outstanding shares of common stock or
other stock in Aquila as set forth on Exhibit A. The Representing
Shareholders are and will be on the Closing Date the sole record and
beneficial owners and holders of the Aquila Shares set forth on Exhibit A
as being owned by them, which shares are free and clear of all liens,
claims, rights or other encumbrances of any nature whatsoever. The Aquila
Shares are the sole equity interests or securities of Aquila that will be
issued or outstanding on the Closing Date.
b. This Agreement constitutes the legal, valid and binding obligation
of the Representing Shareholders enforceable against the Representing
Shareholders in accordance with its terms. Upon the execution and delivery
by the Representing Shareholders of the closing documents listed under
Section 3.1 of this Agreement ("Aquila Shareholders' Closing Documents"),
such closing documents that are delivered by them will constitute the
legal, valid and binding obligations of the Representing Shareholders,
enforceable against the Representing Shareholders in accordance with their
respective terms. The Representing Shareholders have absolute and
unrestricted right, power, capacity and authority to execute and deliver
this Agreement and the Aquila Shareholders' Closing Documents that are
delivered by them, to perform their obligations under this Agreement and
the Aquila Shareholders' Closing Documents that are delivered by them, and
to deliver the Aquila Shares owned by them to Silverthorne on the terms
contained herein.
c. All of the Aquila Shares have been duly authorized and validly
issued, are fully paid and nonassessable, and are in all respects in proper
form and valid. Except as contemplated by this Agreement, there are no
commitments, options, subscription agreements, warrants, contracts or any
other undertaking by Aquila or by the Representing Shareholders to issue,
sell or transfer any equity interests or other securities in Aquila to any
party. None of the outstanding equity interests or other securities of
Aquila were issued in violation of the Securities Act of 1933, as amended
("Securities Act"), or any other applicable law.
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d. The Representing Shareholders are not insolvent and are receiving
new consideration at least equal to the full and fair value of the Aquila
Shares owned by them.
e. Aquila is a corporation duly organized, validly existing and in
good standing under the laws of the State of California; is duly qualified
to transact business as a foreign corporation and is in good standing in
such states in which the conduct of its business or ownership or use of
property requires such qualification; and has all corporate power necessary
to engage in the business in which it is presently engaged. Aquila has no
subsidiary corporations or affiliated entities. The Representing
Shareholders have delivered to Silverthorne copies of the Articles of
Incorporation and Bylaws of Aquila currently in effect as of the date of
this Agreement.
f. The Representing Shareholders have furnished Silverthorne with
copies of the audited balance sheets of Aquila as of December 31, 1999 and
1998 (including any notes thereto), and the related statements of income,
changes in stockholders' equity and cash flows for each of the years then
ended and with the unaudited balance sheet(s) of Aquila for the month(s)
ended January 31, 2000 and February 29, 2000 and the related statements of
income, stockholders' equity and cash flows for the month(s) then ended
(collectively, the "Aquila Financial Statements"). The Aquila Financial
Statements fairly present the financial condition and the results of
operations, changes in stockholders' equity and cash flows of Aquila at the
respective dates of and for the periods referred to in the Aquila Financial
Statements, which were prepared in conformity with generally accepted
United States accounting principles ("GAAP"), consistently applied.
g. Aquila's financial statements are able to be prepared in accordance
with Regulation S-X or S-B, as applicable, adopted under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), for the periods
specified therein that Silverthorne may need to file to timely comply with
its proxy statement and reporting requirements under the Exchange Act.
h. Aquila has good and marketable title to all the properties and
assets (whether real, personal or mixed and whether tangible or intangible)
it purports to own that are reflected in the Aquila Financial Statements,
and such properties and assets are subject to no mortgage, security
interest, pledge, lien or other encumbrance except as disclosed in the
Aquila Financial Statements and notes thereto.
i. The buildings, plants, structures, machines and equipment owned or
leased by Aquila are structurally sound, are in good operating condition
and repair, are in good working order, and are fit for their intended uses
and purposes. None of such buildings, plants, structures, machines or
equipment is in need of maintenance or repairs except for ordinary
maintenance and repairs that are not material in nature or cost, and such
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buildings, plants, structures, machines and equipment are free of any
latent defects. All buildings, plants and structures owned or leased by
Aquila lie wholly within the boundaries of the real property owned or
leased by Aquila and do not encroach upon the property of, or otherwise
conflict with the property rights of, any other person.
j. All accounts receivable of Aquila that are reflected in the Aquila
Financial Statements or accounting records as of the Closing Date represent
or will represent valid obligations arising from sales actually made or
services actually performed in the ordinary course of business. Unless paid
prior to the Closing, the accounts receivable are or will be as of the
Closing current and collectible net of the respective reserves shown on the
Aquila Financial Statements, which reserves are adequate and calculated
consistent with past practice and GAAP. There is no contest, claim or right
of set-off, other than returns in the ordinary course of business, under
any contract with any obligor of an account receivable relating to the
amount or validity of such account receivable.
k. Aquila is not a defendant, nor plaintiff against whom a
counterclaim has been asserted, in any litigation, pending or, to the best
of the Representing Shareholders' knowledge and belief, threatened, nor has
any material claim been made, asserted or pending against Aquila, nor to
the best of the Representing Shareholders' knowledge and belief, threatened
before any federal, state or municipal government, or any governmental,
quasi-governmental or private department, board, body or agency thereof,
involving Aquila or that relates to or would otherwise affect the business
of or any assets owned by or used by Aquila. Neither Aquila nor any of the
Representing Shareholders are subject to a judgment, order or other legal
proceeding relating to the business of, or any assets owned or used by,
Aquila.
l. Except as set forth on Exhibit C, the Representing Shareholders
have no actual or potential claims, demands, proceedings, causes of action,
orders, obligations, contracts, agreements, debts or liabilities
whatsoever, whether known or unknown, suspected or unsuspected, both at law
and in equity, against Aquila or its past, present and future
representatives, affiliates, officers, shareholders, controlling persons,
subsidiaries, successors or assigns ("Affiliated Persons").
m. Aquila is not in material default under any agreement, contract,
lease, debt, guarantee, written commitment, loan, license, permit or other
material agreement to which it is a party nor is it in material default in
the payment of any material obligations. Aquila has not received any
notices alleging any material default in the performance of its obligations
under any agreement, contract, lease, debt, guarantee, written commitment,
loan, license, permit or other material agreement. Neither Aquila nor the
Representing Shareholders have commenced or engaged in any unlawful
activities or course of conduct at or upon the property or facilities of
Aquila or have violated any federal, state, local, municipal, foreign,
international, multinational or other administrative order, constitution,
law, ordinance, principle of common law, rule, regulation, statute or
treaty.
n. Aquila has not infringed, and is not now infringing upon,
any trademark, trade name, service mark, patent or copyright belonging
to any other third person, firm or
n. Aquila has not infringed, and is not now infringing upon, any
trademark, trade name, service mark, patent or copyright belonging to any
other third person, firm or corporation. Aquila is not a party to any
license agreement or other agreement with respect to any trademarks,
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service marks, trade names or applications for same or any patents or
copyrights. Aquila does not own or hold licenses or other rights to use any
trademarks, trade names, service marks, patents, copyrights or other
intellectual property of any kind.
o. Between the date of the Aquila Financial Statements and the Closing
Date, Aquila, without Silverthorne's prior written consent, will not have
paid or declared any dividends on or made any distributions in respect of
or issued, purchased or redeemed, any of the authorized or outstanding
shares of Aquila's capital stock (other than to terminate any outstanding
stock options, warrants and convertible securities as contemplated under
Section 2.2 above); made or authorized any amendments to its Articles of
Incorporation or Bylaws; made any disbursements or incurred any obligations
or liabilities involving more than $5,000; entered into any transaction or
transactions which in the aggregate would be considered material to
Silverthorne otherwise than in the normal course of business; mortgaged or
pledged or subjected to any lien, charge or other encumbrance any of its
assets, tangible or intangible; sold, leased or transferred or contracted
to sell, lease or transfer any assets, tangible or intangible, except in
the usual and ordinary course of business; made any loan or advance to any
shareholder of Aquila, or to any other person, firm or corporation; entered
into any employment agreements with, or made any material change in any
existing employment agreement, or increased the compensation payable, or
made any arrangements for the payment of any bonus or the increase in
benefits to any officer, director, employee or agent, in each case, except
as set forth in Aquila Financial Statements or notes thereto; changed the
nature of its businesses, operations, property or financial condition; nor,
granted any stock option or right to purchase or receive shares of capital
stock or other equity interests of Aquila.
p. Attached hereto as Exhibit D that is incorporated herein by this
reference is a description of each contract and agreement to which Aquila
is a party as of the date of this Agreement which involves the sale,
purchase or leasing of goods or services for consideration in excess of
$5,000; each contract and agreement to which Aquila is a party as of the
date hereof which relates to borrowing or lending money; all contracts or
debt guarantees under which Aquila has a direct or contingent liability;
all employment agreements, union agreements or collective bargaining
agreements of Aquila; all health and welfare plans of Aquila; all bonus,
deferred compensation, profit sharing or retirement plans of Aquila
including severance arrangements; all agreements, written commitments,
loans to and from and all guarantees, regardless of the amount, between or
with respect to Aquila and affiliated (as such terms defined by the rule or
otherwise under the Securities Act) persons or entities. Aquila has
complied with and performed all of its obligations with respect to the
contracts, agreements and plans described in this subsection as of the
Closing Date. Aquila has no liabilities with respect to the matters
described in this subsection relating to services rendered prior to the
Closing, which are not set forth in the Aquila Financial Statements or
notes thereto.
q. Attached hereto as Exhibit E that is incorporated herein by this
reference is a complete and accurate list of all of Aquila's bank accounts,
commercial accounts, savings accounts or other similar accounts, together
with the signatories thereto. The Representing Shareholders represent that
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they will take such action as is deemed necessary by Silverthorne to change
the authorized signatories on such accounts to persons designated by
Silverthorne upon or after Closing.
r. Attached hereto as Exhibit F that is incorporated herein by this
reference is a complete and accurate list of all of Aquila's real property
interests, leasehold interests, options, rights to purchase or lease real
property and other interests owned by Aquila.
s. No officer or employee of Aquila, or any spouse, child or other
relative of any of these persons, will own or have any interest, directly
or indirectly, in any of the real or personal property own by, leased or
utilized by Aquila or any copyrights, patents, trademarks, trade names or
trade secrets licensed to or utilized by Aquila.
t. Attached hereto as Exhibit G that is incorporated herein by this
reference is a complete and accurate list of Aquila's vendors.
u. Aquila has no liabilities or obligations whatsoever, either
accrued, absolute, contingent or otherwise, whether direct or indirect,
determined or determinable, except to the extent reflected or reserved
against on Aquila Financial Statements or notes thereto; those incurred in
or as a result of the ordinary course of business since the most recent
date of the Aquila Financial Statements that are similar in nature and
magnitude to obligations and liabilities customarily incurred by Aquila;
and any obligations arising under the leases described in Exhibit F. There
is no basis for any material claim against Aquila which involves an amount
in excess of $5,000.
v. The Representing Shareholders have furnished to Silverthorne copies
of the signed federal, state and local tax returns of Aquila for the fiscal
year ended December 31, 1998. All federal, state, local and municipal
income taxes, ad valorem, excise, sales, use, capital gains, value-added,
property, gift, estate, franchise, payroll and other taxes, levies, duties,
tariffs and assessments (herein collectively referred to as "Taxes") which
are due and payable by Aquila directly or as a transferee have been duly
reported, fully paid and discharged, and there are no unpaid Taxes which
are or could become a lien on the property or assets of, or require payment
by, any of the foregoing, except for current and deferred Taxes not yet due
and payable. All federal, state, local and municipal tax returns filed by
Aquila are true and complete and have been correctly prepared in accordance
with all laws and regulations pertaining thereto. All such current Taxes
not yet due and payable have nevertheless been properly accrued on Aquila
Financial Statements, in adequate amount as determined pursuant to GAAP.
Aquila has not incurred any liabilities for penalties, assessments or
interest under federal, state, local or foreign tax laws. No unexpired
waiver executed by or on behalf of Aquila or with respect to any of the
foregoing is in effect.
w. Aquila's policies of insurance and any self-insurance arrangements
in force are listed on Exhibit H that is attached hereto and incorporated
herein by this reference. Aquila will have paid all premiums due as of the
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Closing Date. Such policies will be valid, outstanding and enforceable as
of the Closing Date and will continue in full force and effect following
the consummation of the transactions contemplated by this Agreement.
x. Neither the execution and delivery of this Agreement nor the
consummation of the transactions herein contemplated (i) contravene,
conflict with, cancel, terminate, modify, result in the breach of or
accelerate the performance required by, any terms of any contract or other
agreement, (ii) result in the creation of any lien, charge or encumbrance
upon any of the properties or assets of Aquila under the terms of any such
agreement, or (iii) give any federal, state or local government or other
political subdivision or agency the right to revoke, withdraw, suspend,
cancel, terminate or modify any authorization that is held by Aquila or
that otherwise relates to the business of, or any of the assets owned or
used by, Aquila;
y. Aquila is not in violation of any terms of its Articles of
Incorporation, its Bylaws, any resolution adopted by its board of directors
or shareholders, any mortgage, indenture, contract, license, permit,
agreement or instrument to which it is a party, or judgment, decree, order,
statute, rule or regulation which violation might have an adverse effect on
the business of Aquila, and the execution, delivery and performance of and
compliance with this Agreement will not contravene, conflict with or result
in any such violation by Aquila or be in conflict with or constitute a
default under any of the foregoing. No employee is in violation of any term
of any employment contract, patent, nondisclosure agreement or any other
contract or agreement relating to the right of any such employee to be
employed by Aquila or for any other reason and the continued employment by
Aquila of their present employees will not result in any such violations.
Aquila is not or will not be required to give any notice to or obtain any
consent, approval, waiver or authorization from any person or entity,
including any governmental entity, in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated herein, except for those consents obtained by the Representing
Shareholders and delivered to Silverthorne at Closing in accordance with
Section 3.1 above.
z. Aquila is, and at all times has been, in full compliance with, and
has not been and is not in violation of or liable under, any federal,
state, local, municipal or foreign environmental law, statute, regulation,
ordinance, rule, code, license, permit, authorization, approval, consent,
order, judgment, decree, injunction, agreement with any governmental or
quasi-governmental entity or any other legal requirement designed to
prevent, minimize, punish, remedy or otherwise affect the consequences of
actions that damage or threaten the environment or public health and safety
("Environmental Laws"). The Representing Shareholders have no basis to
expect, nor have Aquila or the Representing Shareholders or any other
person for whose conduct they are or may be held to be responsible
received, any actual or threatened order, notice or other communication
from (i) any governmental or quasi-governmental body or private citizen
acting in the public interest, or (ii) the current or prior owner or
operator of Aquila's real property, leaseholds or other interests, or of
any buildings, plants, structures, machines or equipment (including motor
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vehicles, tank cars and rolling stock) currently or formerly owned or
operated by Aquila (collectively "Properties"), of any actual, potential or
alleged violation or failure to comply with any Environmental Laws, or of
any actual, potential, alleged or threatened obligation to undertake or
bear the cost of any environmental, health or safety liability with respect
to any of the facilities, Properties or assets (whether real, personal or
mixed), in which Aquila has had an interest, or at which any hazardous
materials or substances (as defined under any Environmental Laws) were
generated, manufactured, refined, transferred, imported, used or processed
by Aquila, the Representing Shareholders, or any other person for whose
conduct they are or may be held responsible, or from which hazardous
materials or substances have been transported, treated, stored, handled,
transferred, disposed, recycled or received. All hazardous materials or
substances present on, in the environment at, or released from any of the
Aquila facilities, Properties or assets (whether real, personal or mixed),
or at any geologically or hydrologically adjoining property, including any
hazardous materials or substances contained in barrels, above or
underground storage tanks, landfills, land deposits, dumps, equipment or
other containers, and deposited or located in land, water, sumps or any
other part of the facilities, Properties or such adjoining properties, or
incorporated into any structure therein or thereon, have been and are
currently in full compliance with all applicable Environmental Laws.
aa. The books of account, minute books, stock record books and other
records of Aquila are complete and correct and have been maintained in
accordance with sound business practices and the requirements of Section
13(b)(2) of the Securities Exchange Act of 1934, as amended (regardless of
whether or not Aquila is subject to that Section), including the
maintenance of an adequate system of internal controls. The minute books of
Aquila contain accurate and complete records of all meetings held of, and
corporate action taken by, the shareholders, the board of directors or
committees thereof, and no meeting of any such shareholders, board of
directors or committee has been held for which minutes have not been
prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of Aquila.
bb. The Representing Shareholders have provided Silverthorne with full
and complete access to all material aspects of, and information with
respect to, Aquila. All written information which has been communicated by
the Representing Shareholders to Silverthorne with respect to the assets,
liabilities, business, operations, financial condition and business
prospects of Aquila is true, correct and complete to the best of the
knowledge and belief of the Representing Shareholders.
cc. No representation nor warranty by the Representing Shareholders
and no statement in the Exhibits attached hereto contains any untrue
statement or omits to state a material fact necessary to make the
statements herein, in light of the circumstances in which they were made,
not misleading.
4.2. Representations and Warranties of Ladia LLC. Ladia LLC, as a material
inducement to Silverthorne to enter into this Agreement, hereby represents and
warrants to Silverthorne that the following statements are true and correct as
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of the date hereof and will be true and correct through the Closing of the sale
of the Aquila Shares as if made on the Closing Date. These representations and
warranties may be relied upon fully by Silverthorne.
a. Ladia LLC is and will be on the Closing Date the sole record and
beneficial owner and holder of 4,042 of the Aquila Shares, which 4,042
shares are free and clear of all liens, claims, rights or other
encumbrances of any nature whatsoever.
b. This Agreement constitutes a legal, valid and binding obligation of
Ladia LLC enforceable against Ladia LLC in accordance with its terms. Ladia
LLC has absolute and unrestricted right, power, capacity and authority to
execute and deliver this Agreement and any Closing Documents applicable to
Ladia LLC, to perform Ladia LLC's obligations under this Agreement and the
Aquila Shareholders' Closing Documents that are delivered by Ladia LLC, and
to deliver the Aquila Shares owned by Ladia LLC to Silverthorne on the
terms contained herein.
c. There are no commitments, options, subscription agreements,
warrants, contracts or any other undertaking by Ladia LLC to sell or
transfer any equity interests or other securities in Aquila to any party.
d. Ladia LLC is not insolvent.
4.3. Securities Representations and Warranties. Each Aquila Shareholder, as
a further material inducement to Silverthorne to enter into this Agreement,
hereby represents and warrants to Silverthorne that the following statements are
true and correct as of the date hereof and will be true and correct through the
Closing as if made on the Closing Date. These representations and warranties may
be relied upon fully by Silverthorne and/or any assigns.
a. The Aquila Shareholders are acquiring the Silverthorne Shares for
their own account and not with a view to their distribution within the
meaning of Section 2(11) of the Securities Act.
b. The Aquila Shareholders have had full information pertaining to
Silverthorne made available to them and understand that all documents,
records and books pertaining to the Silverthorne Shares have been made
available for inspection by the Aquila Shareholders, their attorneys and/or
accountants.
c. The Aquila Shareholders and their advisor(s) have had a reasonable
opportunity to ask questions of and receive answers from a person or
persons acting on behalf of Silverthorne concerning the Silverthorne Shares
and all such questions have been answered to the full satisfaction of the
Aquila Shareholders.
d. The Aquila Shareholders have, or together with their advisor(s)
have, such knowledge and experience in financial, tax and business matters
so as to enable each of them to utilize the information made available to
the Aquila Shareholders in connection with the acquisition by the Aquila
Shareholders of the Silverthorne Shares in order to evaluate the merits and
risks of an investment in such shares and to make an informed investment
decision with respect thereto.
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e. The Aquila Shareholders have adequate means of providing for their
current needs and personal contingencies, are able to bear the substantial
economic risks of an investment in the Silverthorne Shares for an
indefinite period of time, have no need for liquidity in such investment
and, at the present time, can afford a complete loss of such investment.
f. The Aquila Shareholders understand that sales or transfers of the
Silverthorne Shares may be restricted by certain federal or state
securities laws.
g. The Aquila Shareholders recognize that the acquisition of the
Silverthorne Shares involves certain risks.
h. The Aquila Shareholders understand that the Silverthorne Shares
that are being acquired by the Aquila Shareholders have not been registered
under the Securities Act. Further, the Aquila Shareholders understand that
the transaction by which the Aquila Shareholders are acquiring the
Silverthorne Shares is being made in reliance upon exemptions from various
registration requirements.
i. The Aquila Shareholders understand and agree that the Aquila
Shareholders cannot sell the Silverthorne Shares that the Aquila
Shareholders are acquiring unless they are registered under the Securities
Act and any applicable state securities laws or unless exemptions from such
registration requirements are available.
j. The Aquila Shareholders understand and agree that the certificates
evidencing the Silverthorne Shares will contain a legend restricting their
transfer except pursuant to an effective registration statement under the
Securities Act, or pursuant to an opinion of counsel for Silverthorne that
registration is not required under the Securities Act.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF SILVERTHORNE
5.1. Silverthorne's Representations and Warranties. Silverthorne hereby
represents and warrants to the Aquila Shareholders that the statements contained
in this Article 5 are true and correct as of the date of this Agreement and will
be true and correct through the Closing:
a. Silverthorne is a corporation duly organized, validly existing and
in good standing under the laws of the State of Colorado; is duly qualified
to transact business as a foreign corporation and is in good standing in
such states in which the conduct of its business or ownership or use of
property requires such qualification except where the failure to be so
qualified would not have a material adverse effect on the financial
condition of Silverthorne; and has all corporate power necessary to engage
in the business in which it is presently engaged. Silverthorne has no
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subsidiary corporations or affiliated entities except for entities that
beneficially own over 10% of Silverthorne's outstanding common stock.
Silverthorne has delivered to the Aquila Shareholders copies of the
Articles of Incorporation and Bylaws of Silverthorne currently in effect as
of the date of this Agreement.
b. This Agreement constitutes the legal, valid and binding obligation
of Silverthorne, enforceable against it in accordance with its terms.
Silverthorne has absolute and unrestricted right, power, capacity and
authority to execute and deliver this Agreement and Silverthorne's closing
documents, and to perform its obligations hereunder. Except for obtaining
the FCC Consent and, if required, the Shareholder Consent, no other
corporate action is necessary to authorize its officers to effectuate this
Agreement and the transactions contemplated hereunder.
c. Silverthorne has evaluated the risk of investing in the Aquila
Shares and has such knowledge and experience in financial and business
matters in general and in particular with respect to this type of
investment, that it is capable of evaluating the merits and risks of an
investment in the Aquila Shares.
d. Silverthorne is acquiring the Aquila Shares for its own account and
not with a view to their distribution within the meaning of Section 2(11)
of the Securities Act.
e. Neither the execution and delivery of this Agreement nor the
consummation of the transactions herein contemplated (i) contravene,
conflict with, cancel, terminate, modify, result in the breach of or
accelerate the performance required by, any terms of any contract or other
agreement, (ii) result in the creation of any lien, charge or encumbrance
upon any of the properties or assets of Silverthorne under the terms of any
such agreement, or (iii) give any federal, state or local government or
other political subdivision or agency the right to revoke, withdraw,
suspend, cancel, terminate or modify any authorization that is held by
Silverthorne or that otherwise relates to the business of, or any of the
assets owned or used by, Silverthorne.
f. Silverthorne does not have any knowledge of any actual, pending or
threatened claim, litigation or any other action against it that
challenges, prevents, delays, makes illegal or otherwise affects its
ability to perform its obligations under this Agreement.
g. The outstanding equity securities of Silverthorne as of the date of
this Agreement consist of those issued and outstanding shares of common
stock as set forth on Exhibit I. All of the Silverthorne shares of common
stock set forth on Exhibit I have been duly authorized and validly issued,
are fully paid and nonassessable, and are in all respects in proper form
and valid. Except as contemplated by this Agreement and as set forth on
Exhibit I, there are no commitments, options, subscription agreements,
warrants, contracts or any other undertaking by Silverthorne to issue, sell
or transfer any equity interests or other securities in Silverthorne to any
party. The Silverthorne Shares to be issued in the transactions provided in
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<PAGE>
this Agreement will not be issued in violation of the Securities Act, or
any other applicable law. The options and warrants that are outstanding
were issued at a time when Silverthorne did not have a sufficient number of
shares authorized to issue upon exercise of such options and warrants.
h. Silverthorne has furnished to the Aquila Shareholders copies of the
(i) audited balance sheets of Silverthorne as of June 30, 1999, 1998 and
1997 (including the notes thereto), and the related statements of
operations, cash flows and shareholders' equity (deficit) for each of the
years then ended, and (ii) unaudited balance sheets of Silverthorne as of
December 31, 1999 and 1998 (including any notes thereto), and the related
statements of operations, cash flows and shareholders' equity (deficit) for
each of the periods then ended (collectively, the "Silverthorne Financial
Statements"). The Silverthorne Financial Statements fairly present the
financial condition and the results of operations, changes in stockholders'
equity and cash flows of Silverthorne at the respective dates of and for
the periods referred to in the Silverthorne Financial Statements, which
were prepared in conformity with GAAP, consistently applied.
i. Silverthorne's Financial Statements have been prepared in
accordance with Regulation S-X or S-B, as applicable, adopted under the
Securities Exchange Act of 1934, as amended, for the periods specified.
j. Silverthorne has good and marketable title to all the properties
and assets (whether real, personal or mixed and whether tangible or
intangible) it purports to own that are reflected in the Silverthorne
Financial Statements, and such properties and assets are subject to no
mortgage, security interest, pledge, lien or other encumbrance except as
disclosed in the Silverthorne Financial Statements and notes thereto.
k. All accounts receivable of Silverthorne that are reflected in the
Silverthorne Financial Statements or accounting records as of the Closing
Date represent or will represent valid obligations arising from sales
actually made or services actually performed in the ordinary course of
business. Unless paid prior to the Closing, the accounts receivable are or
will be as of the Closing current and collectible net of the respective
reserves shown on the Silverthorne Financial Statements, which reserves are
adequate and calculated consistent with past practice and GAAP. There is no
contest, claim or right of set-off, other than returns in the ordinary
course of business, under any contract with any obligor of an account
receivable relating to the amount or validity of such account receivable.
l. Except as set forth on Exhibit J, Silverthorne is not a defendant,
nor plaintiff against whom a counterclaim has been asserted, in any
litigation, pending or, to the best of its knowledge and belief,
threatened, nor has any material claim been made, asserted or pending
against Silverthorne, nor to the best of its knowledge and belief,
threatened before any federal, state or municipal government, or any
governmental, quasi-governmental or private department, board, body or
agency thereof, involving Silverthorne or that relates to or would
otherwise affect the business of or any assets owned by or used by
Silverthorne. Silverthorne is not subject to a judgment, order or other
legal proceeding relating to the business of, or any assets owned or used
by, Silverthorne.
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m. Except for Silverthorne's failure to set aside a sufficient number
of shares of common stock to be issued upon exercise of the options and
warrants set forth on Exhibit I, Silverthorne is not in material default
under any agreement, contract, lease, debt, guarantee, written commitment,
loan, license, permit or other material agreement to which it is a party
nor is it in material default in the payment of any material obligations.
Silverthorne has not received any notices alleging any material default in
the performance of its obligations under any agreement, contract, lease,
debt, guarantee, written commitment, loan, license, permit or other
material agreement. Silverthorne has not commenced or engaged in any
unlawful activities or course of conduct at or upon the property or
facilities of Silverthorne or, except to the extent Silverthorne has been
late in making required filings under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), have violated any federal, state, local,
municipal, foreign, international, multinational or other administrative
order, constitution, law, ordinance, principle of common law, rule,
regulation, statute or treaty.
n. Silverthorne has not infringed, and is not now infringing upon, any
trademark, trade name, service mark, patent or copyright belonging to any
other third person, firm or corporation. Silverthorne is not a party to any
license agreement or other agreement with respect to any trademarks,
service marks, trade names or applications for same or any patents or
copyrights. Silverthorne does not own or hold licenses or other rights to
use any trademarks, trade names, service marks, patents, copyrights or
other intellectual property of any kind.
o. Between the date of the Silverthorne Financial Statements and the
Closing Date, Silverthorne, without the Aquila Shareholders' prior written
consent, will not have paid or declared any dividends on or made any
distributions in respect of or purchased or redeemed, any of the authorized
or outstanding shares of Silverthorne's capital stock or made or authorized
any amendments to its Articles of Incorporation except those as are
approved by the Silverthorne shareholders.
p. No officer or employee of Silverthorne, or any spouse, child or
other relative of any of these persons, will own or have any interest,
directly or indirectly, in any of the real or personal property own by,
leased or utilized by Silverthorne or any copyrights, patents, trademarks,
trade names or trade secrets licensed to or utilized by Silverthorne.
q. Silverthorne has no liabilities or obligations whatsoever, either
accrued, absolute, contingent or otherwise, whether direct or indirect,
determined or determinable, except to the extent reflected or reserved
against on Silverthorne Financial Statements or notes thereto or as set
forth in Exhibit J hereto; those incurred in or as a result of the ordinary
course of business since the most recent date of the Silverthorne Financial
Statements that are similar in nature and magnitude to obligations and
liabilities customarily incurred by Silverthorne; and any obligations
arising under Silverthorne's leases. There is no basis for any material
claim against Silverthorne which involves an amount in excess of $5,000
except as specified herein or in Exhibit J hereto.
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r. All Taxes which are due and payable by Silverthorne directly or as
a transferee have been duly reported, fully paid and discharged, and there
are no unpaid Taxes which are or could become a lien on the property or
assets of, or require payment by, any of the foregoing, except for current
and deferred Taxes not yet due and payable. All federal, state, local and
municipal tax returns filed by Silverthorne are true and complete and have
been correctly prepared in accordance with all laws and regulations
pertaining thereto. All such current Taxes not yet due and payable have
nevertheless been properly accrued on the Silverthorne Financial
Statements, in adequate amount as determined pursuant to GAAP. Silverthorne
has not incurred any liabilities for penalties, assessments or interest
under federal, state, local or foreign tax laws. No unexpired waiver
executed by or on behalf of Silverthorne or with respect to any of the
foregoing is in effect.
s. Except as set forth in Section 5.1(m) hereof, Silverthorne is not
in violation of any terms of its Articles of Incorporation, its Bylaws, any
resolution adopted by its board of directors or shareholders, any mortgage,
indenture, contract, license, permit, agreement or instrument to which it
is a party, or judgment, decree, order, statute, rule or regulation which
violation might have an adverse effect on the business of Silverthorne, and
the execution, delivery and performance of and compliance with this
Agreement will not contravene, conflict with or result in any such
violation by Silverthorne or be in conflict with or constitute a default
under any of the foregoing. No employee is in violation of any term of any
employment contract, patent, nondisclosure agreement or any other contract
or agreement relating to the right of any such employee to be employed by
Silverthorne or for any other reason and the continued employment by
Silverthorne of their present employees will not result in any such
violations. Silverthorne is not or will not be required to give any notice
to or obtain any consent, approval, waiver or authorization from any person
or entity, including any governmental entity, in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated herein, except for FCC Consent and the Securities
Compliance.
t. Silverthorne is, and at all times has been, in full compliance
with, and has not been and is not in violation of or liable under,
Environmental Laws. Silverthorne has no basis to expect, nor has
Silverthorne or any other person for whose conduct it is or may be held to
be responsible received, any actual or threatened order, notice or other
communication from (i) any governmental or quasi-governmental body or
private citizen acting in the public interest, or (ii) the current or prior
owner or operator of Silverthorne's properties, of any actual, potential or
alleged violation or failure to comply with any Environmental Laws, or of
any actual, potential, alleged or threatened obligation to undertake or
bear the cost of any environmental, health or safety liability with respect
to any of the facilities, properties or assets (whether real, personal or
mixed), in which Silverthorne has had an interest, or at which any
hazardous materials or substances (as defined under any Environmental Laws)
were generated, manufactured, refined, transferred, imported, used or
processed by Silverthorne or any other person for whose conduct it is or
may be held responsible, or from which hazardous materials or substances
have been transported, treated, stored, handled, transferred, disposed,
recycled or received. All hazardous materials or substances present on, in
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the environment at, or released from any of the Silverthorne facilities,
properties or assets (whether real, personal or mixed), or at any
geologically or hydrologically adjoining property, including any hazardous
materials or substances contained in barrels, above or underground storage
tanks, landfills, land deposits, dumps, equipment or other containers, and
deposited or located in land, water, sumps or any other part of the
facilities, properties or such adjoining properties, or incorporated into
any structure therein or thereon, have been and are currently in full
compliance with all applicable Environmental Laws.
u. The books of account, minute books, stock record books and other
records of Silverthorne are complete and correct and have been maintained
in accordance with sound business practices and the requirements of Section
13(b)(2) of the Exchange Act (regardless of whether or not Silverthorne is
subject to that Section), including the maintenance of an adequate system
of internal controls. The minute books of Silverthorne contain accurate and
complete records of all meetings held of, and corporate action taken by,
the shareholders, the board of directors or committees thereof, and no
meeting of any such shareholders, board of directors or committee has been
held for which minutes have not been prepared and are not contained in such
minute books. At the Closing, all of those books and records will be in the
possession of Silverthorne.
v. Silverthorne has provided the Aquila Shareholders with full and
complete access to all material aspects of, and information with respect
to, Silverthorne. All written information which has been communicated by
Silverthorne to the Aquila Shareholders with respect to the assets,
liabilities, business, operations, financial condition and business
prospects of Silverthorne is true, correct and complete to the best of its
knowledge and belief.
w. All of the reports, registration statements, definitive proxy
statements or information statements filed by Silverthorne subsequent to
June 30, 1997 under the Exchange Act or the Securities Act (i) complied or
will comply in all material respects as to form with the applicable
requirements under the Exchange Act or the Securities Act, as the case may
be, and (ii) did not or have been amended so they do not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
Silverthorne is current in connection with all required filings under the
Exchange Act.
x. No representation nor warranty by Silverthorne and no statement in
the Exhibits attached hereto contains any untrue statement or omits to
state a material fact necessary to make the statements herein, in light of
the circumstances in which they were made, not misleading.
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ARTICLE 6.
CONDITIONS TO OBLIGATIONS OF THE PARTIES
6.1. Conditions Precedent to Obligations of Silverthorne. The obligations
of Silverthorne under this Agreement are subject to the fulfillment, prior to
the Closing, of the following conditions precedent (in addition to other
conditions and terms of this Agreement), unless specifically waived in writing
by Silverthorne at or prior to the Closing:
a. Representations and Warranties. The representations and warranties
of the Aquila Shareholders shall be in all material respects true, correct
and complete at the Closing as if made at such date and time.
b. Compliance. The Aquila Shareholders shall have performed all
covenants and agreements, satisfied all conditions and complied with all
other terms and provisions of this Agreement to be performed, satisfied or
complied with by the Aquila Shareholders as of the Closing.
c. No Error or Misrepresentation. Silverthorne shall not have
discovered any material error, misstatement or omission in or failure of
any representation or warranty made by any of the Aquila Shareholders.
d. Financial Statements. Aquila shall have provided Silverthorne with
financial statements prepared in accordance with Regulation S-X or S-B, as
applicable, for the periods specified therein that Silverthorne may need to
file to timely comply with its proxy statement and reporting requirements
under the Exchange Act.
e. No Material Change. Between the date of this Agreement and the
Closing, Aquila (i) shall not have incurred any liabilities or obligations,
direct or contingent, or entered into any transactions, except those which
are in the usual and ordinary course of business or previously agreed to in
writing by Silverthorne, (ii) shall have no material undisclosed
liabilities, (iii) shall not have done any act or engaged in any course of
conduct prohibited by this Agreement without the necessary written consent
of Silverthorne, and (iv) no person connected with Aquila shall have made
or caused to be made any changes in the financial condition of Aquila.
f. Deliveries. The Aquila Shareholders shall have on or before the
Closing delivered to Silverthorne or its authorized representatives the
documents or other items to be delivered as specified under Section 3.1
above.
g. Employment Agreements. Effective on the Closing, Silverthorne shall
have entered into employment agreements with each of the Representing
Shareholders containing such terms and conditions as are acceptable to
Silverthorne and to the respective Representing Shareholders.
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h. Termination of Representing Shareholder Notes. The Subordinated
Notes and Agreements of Subordination each dated January 21, 1999, from
Aquila to the respective Representing Shareholders shall be cancelled and
returned to Aquila and no longer be deemed to be a liability from Aquila to
the Representing Shareholders. The Subordinated Notes do not include a
promissory note in the amount of $25,900 that is from Aquila to Jimmy L.
Boswell.
i. Legal Matters. All legal matters in connection with this Agreement
and the consummation of all transactions herein contemplated, and all
documents and instructions delivered to Silverthorne in connection
herewith, shall be reasonably satisfactory in form to Silverthorne, its
authorized representatives and its counsel.
6.2. Conditions Precedent to Obligations of the Aquila Shareholders. The
obligations of the Aquila Shareholders under this Agreement to sell, transfer,
assign, convey and deliver the Aquila Shares to Silverthorne are subject to the
fulfillment, prior to or simultaneous with the Closing, of the following
conditions precedent (in addition to other conditions and terms of this
Agreement), unless specifically waived in writing by all of the Aquila
Shareholders at or prior to the Closing:
a. Representations and Warranties. The representations and warranties
of Silverthorne contained in this Agreement shall be in all material
respects true, correct and complete at the Closing as if made at such date
and time.
b. Compliance. Silverthorne shall have performed all covenants and
agreements, satisfied all conditions and complied with all other terms and
provisions of this Agreement to be performed, satisfied or complied with by
it as of the Closing.
c. No Error or Misrepresentation. The Aquila Shareholders shall not
have discovered any material error, misstatement or omissions in or failure
of any representation or warranty made by Silverthorne.
d. Deliveries. Silverthorne shall have on or before the Closing
delivered to the Aquila Shareholders or its authorized representatives the
documents or other items to be delivered as specified under Section 3.2
above.
e. Sufficient Authorized Common Stock. If necessary, Silverthorne
shall have increased the number of its authorized but unissued shares of
Silverthorne Common Stock so that it has a sufficient number of authorized
but unissued shares of common stock to issue the Silverthorne Shares to the
Aquila Shareholders at the Closing, as specified under Sections 1.2 and 1.3
above.
f. Legal Matters. All legal matters in connection with this Agreement
and the consummation of all transactions herein contemplated, and all
documents and instructions delivered to the Aquila Shareholders in
connection herewith, shall be reasonably satisfactory in form to the Aquila
Shareholders, their authorized representatives and their counsel.
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g. Shareholder Agreement. The Stock Restriction Agreement, dated as of
May 5, 1998 among the initial Aquila Shareholders shall have been
terminated prior to Closing without any of the rights or obligations
contained therein having been exercised.
h. Tax Opinion. The Aquila Shareholders shall have received a tax
opinion from Rosenman & Colin LLP to the effect that:
1. No gain or loss will be recognized by a shareholder of Aquila on
the receipt solely of Silverthorne Shares in exchange for its
Aquila Shares;
2. The holding period of Silverthorne Shares to be received in the
exchange by a Aquila Shareholder will include the holding period
of the Aquila Shares exchanged therefor, provided that the Aquila
Shares are held as capital assets at the effective time of the
exchange; and
3. The tax the basis of Silverthorne Shares to be received in the
exchange by Aquila Shareholders will be the same as the basis of
the Aquila Shares surrendered in exchange therefor.
j. Regulatory Approvals. The Securities Compliance, the FCC Consent
and any other required regulatory approval will not contain or result in
the imposition of any condition or restriction which the Aquila
Shareholders reasonably believe will materially impact the value of their
investment in the Silverthorne Shares (including any imposition of a
restriction on transfer except as required to establish an exemption from
the registration requirements of the Securities Act) or will have a
material adverse effect on the business or prospects of Aquila or
Silverthorne.
ARTICLE 7.
COVENANTS OF THE PARTIES
The Parties agree that, prior to the Closing:
7.1. Execution of this Agreement. The Parties hereto will use their best
efforts to cause this Agreement and all related agreements to become effective,
and all transactions herein and therein contemplated to be consummated, in
accordance with its and their terms, to obtain all required consents, waivers
and authorizations of governmental entities and other third parties, to make all
filings and give all notices to those regulatory authorities or other third
parties which may be necessary or reasonably required in order to effect the
transactions contemplated in this Agreement, and to comply with all federal,
state, local and municipal laws, rules and regulations as may be applicable to
the contemplated transactions.
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7.2. Restrictive Action. The Parties each agree that the Parties will not
do any thing or act prohibited by this Agreement or any related agreement, or
fail to do any thing or act which the Parties have undertaken or promised to do
in this Agreement or any related agreement.
7.3. Operation of the Business of Aquila. The Aquila Shareholders
acknowledge that the past and future operating performance of Aquila is a
material inducement to Silverthorne to execute this Agreement. As such, between
the date of this Agreement and the Closing Date, and unless the Representing
Shareholders obtain the prior written consent of Silverthorne, the Representing
Shareholders shall, and shall cause Aquila to:
a. conduct the business of Aquila consistent with past practice,
consistent with the business practices revealed to Silverthorne and its
management and in compliance with applicable laws;
b. not take any action except in the ordinary course of business;
c. not engage in any material transaction that would have a material
adverse effect on the business, operations, assets, financial condition or
prospects of Aquila;
d. not amend or terminate any material contracts to which Aquila is a
party without prior notification to Silverthorne; and
e. use their and its reasonable best efforts to (i) preserve
substantially intact the business organization of Aquila, (ii) keep
available the services of the current management and employees of Aquila,
(iii) maintain the relations with suppliers, vendors, customers, landlords,
licenses, distributors and other persons or entities having significant
business relationships with Aquila, (iv) maintain comparable rates of
growth in sales and achieve growth in income consistent with past practice;
and (v) pay all accounts payable of Aquila in the ordinary course of
business consistent with past payment practices.
7.4. No Negotiation. Until such time, if ever, as this Agreement is
terminated pursuant to Article 9, the Aquila Shareholders and their
representatives shall not, and shall cause Aquila and its officers, directors,
employees or agents to not, directly or indirectly:
a. take any action to solicit, initiate or encourage any Acquisition
Proposal (as hereinafter defined); or
b. continue, initiate or engage in negotiations with or disclose any
non-public information relating to Aquila, or afford access to the
properties, books or records of Silverthorne or Aquila to any corporation,
partnership, person or other entity that is considering or has made an
Acquisition Proposal.
The term "Acquisition Proposal" as used herein means any offer or proposal for a
merger, consolidation or other business combination involving any equity
interest in, or a substantial portion of the assets of Aquila or the acquisition
of more than 15% of the capital stock of Aquila, other than with respect to the
Acquisition Proposal with Silverthorne as contemplated herein.
21
<PAGE>
7.5. Regulatory Approvals. Silverthorne shall have promptly (i) obtained
all necessary state securities law or "Blue Sky" permits and approvals (or
perfected exemptions from the requirements to obtain all such permits and
approvals, including the making of all necessary filings for such exemptions)
and perfected an exemption from the registration provisions of the Securities
Act (including the making of all necessary filings for such exemption) in
connection with the sale of the Silverthorne Shares as contemplated by this
Agreement (collectively the "Securities Compliance"), (ii) obtained all
necessary approvals from the Federal Communications Commission to transfer any
licenses held by Aquila (the "FCC Consent") and (iii) obtained all other
approvals required from any regulatory agency to carry out the transactions
contemplated by this Agreement. The costs and expenses related to obtaining the
Securities Compliance, the FCC Consent and all other required regulatory
approvals shall be borne by Silverthorne. Silverthorne shall file all necessary
applications or filings in connection with the Securities Compliance, the FCC
Consent and all other required regulatory approvals within 14 days of the
execution of this Agreement. Prior to their filing, the Aquila Shareholders
shall be given a reasonable period of time to review and comment upon any
applications or other filings to be made in connection with the Securities
Compliance and all other required regulatory approvals other than the FCC
Consent.
ARTICLE 8.
INDEMNIFICATION PROVISIONS
8.1. Survival. All representations and warranties in this Agreement, or in
any instrument or document furnished in connection with this Agreement or the
transactions contemplated hereby shall survive the Closing for a period of one
(1) year. All such representations and warranties shall expire on the first
anniversary of the Closing Date, except that claims, if any, asserted in writing
prior to such first anniversary identified as a claim for indemnification
pursuant to this Article 8 shall survive until finally resolved and satisfied in
full. All covenants and agreements contained herein shall survive until fully
performed in accordance with their terms and any recoveries from third parties.
8.2. Indemnification Provisions - Representing Shareholders'
Representations, Warranties and Covenants. The Representing Shareholders agree
to indemnify Silverthorne, its directors and officers from and against the
entirety of any charges, complaints, actions, suits, damages, claims, costs,
amounts paid in settlement, taxes, liens, expenses or fees, including all
attorneys' fees and costs, which Silverthorne may suffer resulting from, arising
out of, relating to or caused by the breach of any of the Representing
Shareholders' representations, warranties and covenants contained in this
Agreement, including without limitation any liability which the indemnified
persons may suffer resulting from, arising out of, relating to or caused by any
product offered or sold by, or any services provided by, Aquila prior to the
Closing Date, or any stock certificates issued by Aquila prior to the Closing
that were not delivered to Silverthorne at the Closing.
22
<PAGE>
8.3. Indemnification Provisions--Ladia. Ladia hereby agrees to indemnify
and hold harmless Silverthorne from and against any and all costs, losses,
liabilities, damages, deficiencies and expenses, including, but not limited to,
reasonable attorneys' fees and expenses actually incurred by Silverthorne
("Damages") arising directly out of any breach or failure to fully perform or
observe of any representation, warranty, covenant, or agreement of Ladia
contained in this Agreement, provided, however, that (i) any claim for
indemnification hereunder shall be asserted in writing prior to the expiration
of the survival period set forth in Section 8.1, including reasonably detailed
facts and circumstances pertaining thereto, (ii) Ladia shall have no liability
hereunder unless, until and to the extent that the aggregate of such Damages
exceeds $25,000 calculated on a cumulative, and not a per item, basis (the
"Basket"), (iii) Ladia's aggregate liability for Damages hereunder shall not in
any event exceed the value of the consideration received at Closing (the
"Liability Cap"), (iv) in no event shall Ladia be liable for consequential
damages asserted by Silverthorne, (v) after the Closing, the rights of
Silverthorne under this Section 8.3 shall be the sole remedy of Silverthorne for
any breach of this Agreement; and (vi) the maximum amount to be recovered
Silverthorne hereunder shall be the aggregate net loss after taking into account
insurance recoveries and the present value of tax benefits.
8.4. Indemnification Provisions - Silverthorne's Representations,
Warranties and Covenants. Silverthorne agrees to indemnify the Aquila
Shareholders from and against the entirety of any charges, complaints, actions,
suits, damages, claims, costs, amounts paid in settlement, taxes, liens,
expenses or fees, including all attorneys' fees and costs, which the Aquila
Shareholders may suffer resulting from, arising out of, relating to or caused by
the breach of any of Silverthorne's representations, warranties and covenants
contained in this Agreement.
8.5. Claims for Indemnification. In the event of the occurrence of any
event which any party asserts is an indemnifiable event pursuant to this Article
8, the party claiming indemnification (the "Indemnified Party") shall provide
prompt notice to the party required to provide indemnification (the
"Indemnifying Party"), specifying in detail the facts and circumstances with
respect to such claim and the basis for which indemnification is available
hereunder. If such event involves the claim of any third party, the Indemnifying
Party shall have the right to control the defense of settlement of such claim;
provided, however, that (a) the Indemnified Party shall be entitled to
participate in the defense of such claim at its own expense, (b) the
Indemnifying Party shall obtain the prior written approval of the Indemnified
Party (which approval shall not be unreasonably withheld or delayed) before
entering into any settlement of such claim if, pursuant to or as a result of
such settlement, injunctive or other non-monetary relief would be imposed
against the Indemnified Party, or, with respect to Ladia LLC only, the proposed
settlement is in the excess of the Liability Cap, (c) the Indemnifying Party
shall not be entitled to control (but shall be entitled to participate at its
own expense in the defense of), and the Indemnified Party shall be entitled to
have sole control over, and shall assume all expense with respect to the defense
or settlement of any claim to the extent such claim seeks an order, injunction
or other equitable relief against the Indemnified Party which, if successful,
could materially interfere with the business, operations, assets, condition
(financial or otherwise) or prospects of the Indemnified Party, provided that
the Indemnified Party shall provide written notice to the Indemnifying Party of
its election to assume control over the defense of such claim pursuant to this
Section 8.5 if the Indemnifying Party is entitled but fails to assume control
over the defense of a claim as provided in this Section 8.5, provided that the
23
<PAGE>
Damages associated with such claim are covered by the indemnity provisions of
Section 8.2 or 8.3 the Indemnified Party shall have the right to defend such
claim, provided further that the Indemnified Party shall obtain the prior
written approval of the Indemnifying Party (which approval shall not be
unreasonably withheld or delayed) before entering into any settlement of such
claim if, pursuant to or as a result of such settlement, injunctive or other
non-monetary relief would be imposed against the Indemnifying Party.
In the event that the Indemnifying Party shall be obligated to indemnify
the Indemnified Party pursuant to this Article 8, the Indemnifying Party shall,
upon payment of such indemnity in full, be subrogated to all rights of the
Indemnified Party with respect to the claim to which such indemnification
relates.
8.6. Other Remedies. The foregoing indemnification provisions by
Silverthorne and the Representing Shareholders are in addition to, and not in
derogation of, any statutory or common law remedy Silverthorne or the
Representing Shareholders may have for breach of representation, warranty,
covenant or contract.
ARTICLE 9.
TERMINATION OF THIS AGREEMENT
9.1. Grounds for Termination. This Agreement shall terminate:
a. By mutual written consent of Silverthorne and the Aquila
Shareholders;
b. By Silverthorne or the Aquila Shareholders, if all the conditions
precedent to its or their respective obligations hereunder have not been
satisfied or waived prior to or at the Closing, as it may be accelerated or
extended;
c. If Silverthorne or the Aquila Shareholders shall have defaulted or
refused to perform in any material respect under this Agreement, or if
Silverthorne or the Aquila Shareholders should have reasonable cause to
believe there has been a material misrepresentation concerning, or failure
or breach of, any representation or warranty by the other, or if it appears
that Silverthorne or the Aquila Shareholders have committed any unlawful
acts affecting the other and such default, refusal, misrepresentation,
failure, breach or unlawful act shall not have been fully cured within 30
days from the date of delivery of written notice specifying the alleged
default, refusal, misrepresentation, failure, breach or unlawful act;
d. If the transactions contemplated in this Agreement and related
agreements have not been consummated by the Closing Date set forth in
Section 2.1;
e. By Silverthorne if any material adverse changes occur in the
business, operations or financial condition of Aquila; or
24
<PAGE>
f. If Silverthorne or the Aquila Shareholders shall reasonably
determine that the transactions contemplated in this Agreement have become
inadvisable by reason of the institution or threat by any federal, state or
municipal government authorities or by any other person of a formal
investigation, or of any action, suit or proceeding of any kind against
either or both Parties which in one Party's reasonable belief is material
in light of the other Party's business, prospects, properties or financial
condition.
9.2. Manner of Termination. Any termination of this Agreement shall be made
in accordance with the above listed grounds and, if the termination is by the
Aquila Shareholders, shall be supported by a written statement signed by each of
the Aquila Shareholders. Each Party's right of termination under Article 9 is in
addition to any other right it may have at law or in equity, whether for damages
or specific performance, and the exercise of a right to termination will not be
deemed an election of remedies. Written notice of termination shall be given to
the other Party as provided in Article 11, and upon receipt of such termination
notice, this Agreement shall terminate and the transactions herein contemplated
shall be abandoned without further action by the Party. On termination, each
Party shall bear their own fees, costs and expenses.
9.3. Survival of Confidentiality Provisions. Upon termination of this
Agreement for any reason:
a. The covenants of the Parties concerning the confidentiality and
proprietary nature of all documents and other information furnished
hereunder shall remain in force except as to information which has
otherwise become public knowledge; and
b. Each Party shall promptly return all documents received from the
other Party in connection with this Agreement.
This Section 9.3 constitutes a mutual covenant of the Parties, and any Party may
judicially enforce it.
ARTICLE 10.
NECESSARY INFORMATION
10.1. Each of the Parties hereto shall furnish to the others all
information concerning such Party (including financial statements and
statistical information) required for inclusion in any application or statement
to be filed or made by the other Party with or to any government agency or other
third Party in connection with the proposed sale of the Aquila Shares.
ARTICLE 11.
NOTICES TO PARTIES
11.1. All notices, demands, consents or requests required or authorized
hereunder, except as otherwise provide herein, shall be given in writing by
registered or certified mail, return receipt requested, or by telefax
transmission, telegram, cable, messenger or overnight courier service providing
documentation of receipt, at the address set forth below or at such other
25
<PAGE>
address as any Party may designate from time to time given in accordance with
this section, and shall be effectively given when deposited in the United States
mails, postage prepaid or when otherwise received, as may be applicable:
If to Silverthorne: Mr. Darrell H. Hughes
7001 Seaview Avenue, NW, Suite 210
Seattle, Washington 98117
Fax No. 206-297-3901
With a copy to: Thomas S. Smith, Esq.
Smith McCullough, P.C.
Regency Plaza One
4643 South Ulster Street, Suite 900
Denver, Colorado 802372866
Fax No. 303-221-6001
If to the Aquila
Shareholders: Mr. Jimmy L. Boswell
3220 South Higuera Street, Suite 304
San Luis Obispo, California 93401
Fax No. 805-786-2644
With a copy to: John F. Stuart, Esq.
Reitner & Stuart
(Special Counsel to Aquila)
1730 K Street, Suite 1100
Washington, D.C. 20006
Fax No. 202-466-3535
ARTICLE 12.
NO FINDERS
12.1. Representations and Indemnification by the Aquila Shareholders. Each
of the Aquila Shareholders represents and warrants to Silverthorne that each has
not employed and does not intend to employ any person on his or its behalf as a
finder in connection with the transactions herein contemplated and the Aquila
Shareholders jointly and severally agree to indemnify Silverthorne against any
liability arising from the claims of any persons claiming to have acted as
finders or brokers and against any other damages suffered as a consequence of
the falsity or breach of this Section 12.1.
12.2. Representations and Indemnification by Silverthorne. Silverthorne
represents and warrants to the Aquila Shareholders that Silverthorne has not
employed and does not intend to employ any person on its behalf as a finder in
connection with the transactions herein contemplated and agrees to indemnify the
26
<PAGE>
Aquila Shareholders against any liability arising from the claims of any persons
claiming to have acted as finders or brokers and against any other damages
suffered as a consequence of the falsity or breach of this Section 12.2.
ARTICLE 13.
FEES AND EXPENSES
13.1. Each Party shall bear its own legal fees and other expenses
associated with this Agreement and the transactions contemplated hereby, and, in
particular, (i) all fees incurred by each of the individual Aquila Shareholders
shall be the sole responsibility of the individual Aquila Shareholder incurring
such costs, (ii) all fees and expenses incurred by Aquila shall be the
responsibility of Aquila (and not the Aquila Shareholders) and (iii) all fees
and expenses incurred in connection with the FCC Consent, the Securities
Compliance and all other required regulatory approvals or consents shall be the
responsibility of Silverthorne.
ARTICLE 14.
CONFIDENTIALITY, DISCLOSURES AND PUBLICITY
14.1. Confidentiality and Disclosures. It is understood and agreed by all
Parties, and each of them, that all nonproprietary information whatsoever,
including oral disclosures, furnished by Silverthorne, Aquila or the Aquila
Shareholders to or for the use or review of the other shall be treated as
proprietary and subject to the confidentiality provisions contained in this
Section 14. Silverthorne and the Aquila Shareholders each agree that it and they
will hold all information received pursuant to and in connection with this
Agreement in confidence and that it and they will not use any such information
obtained for any purpose whatsoever other than assisting in its and their due
diligence inquiry prior to the Closing. Upon request of a Party, another Party
(and upon request, every employee and other representative of such Party who
will or is expected to examine such information) and any other Party who or
which is expected to receive or review any such information shall, prior to
receipt of examination of such information, execute a confidentiality agreement
in form and substance satisfactory to counsel for the Party originating the
confidentiality request. If for any reason the transaction herein contemplated
is not consummated, all materials received by a Party from the other Parties
shall be returned to the Party from whom received.
14.2 Publicity. The Aquila Shareholders shall not, and shall cause Aquila
to not, make any press release or announcement concerning the transactions
herein contemplated without the approval of Silverthorne; provided, however,
that the foregoing shall not prohibit any disclosure by press release, filing or
otherwise that is required by federal securities laws, or to attorneys,
accountants, investment bankers or other agents of Silverthorne assisting
Silverthorne in connection with the transactions contemplated by this Agreement.
The Aquila Shareholders recognize that Silverthorne is a reporting company under
the Securities Exchange Act of 1934, as amended, and therefore agree that,
notwithstanding anything contained herein to the contrary, Silverthorne may
27
<PAGE>
undertake discussions and provide information to third parties and to the public
with respect to Silverthorne and the transaction herein contemplated when
Silverthorne deems it appropriate.
ARTICLE 15.
MISCELLANEOUS PROVISIONS
15.1. Effectiveness. This Agreement shall be effective and binding when
signed by all Parties hereto.
15.2. Amendment. This Agreement maybe amended, modified or supplemented
only by an instrument in writing executed by the Parties hereto.
15.3. Assignment. Neither this Agreement nor any right created hereby or in
any agreement entered into in connection with the transactions contemplated
hereby shall be assignable by any Party hereto without the written consent of
the Party not seeking assignment.
15.4. Parties in Interest; No Third Party Beneficiaries. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the Parties hereto. Neither this
Agreement nor any other agreement contemplated hereby shall be deemed to confer
upon any person not a Party hereto or thereto any rights or remedies herein or
thereunder.
15.5. Entire Agreement. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the Parties regarding the subject
matter hereof and supersede all prior agreements and understandings both written
and oral, among the Parties or any of them, with respect to the subject matter
hereof.
15.6. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provisions shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provisions never comprised a part hereof and the remaining provisions hereof
shall remain in full force and effect. Furthermore, in lieu of such illegal,
invalid or unenforceable provision, there shall be added automatically as a part
of this Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provisions as may be possible and as may be legal, valid and
enforceable.
15.7. Waiver. The failure of any Party to insist upon the strict
performance of any of the provisions of this Agreement shall not be considered
as a waiver of any such subsequent default of the same or similar nature.
15.8. Governing Law and Choice of Forum. This Agreement and the rights and
obligations of any Party hereto shall be governed by and construed and enforced
in accordance with the substantive laws of the State of Colorado. The Parties
28
<PAGE>
agree that the exclusive judicial forums shall be the District Court of the City
and County of Denver in the State of Colorado and the United States District
Court for the District of Colorado.
15.9. Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise effect any of the terms or
provisions hereof.
15.10. Gender and Number. When the context requires, the gender of all
words used herein shall include the masculine, feminine and neuter, and the
number of all words shall include the singular and plural.
15.11. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed a original, and all of which
together shall constitute one and the same instrument. Execution and delivery of
this Agreement by exchange of facsimile copies bearing facsimile signatures of a
Party shall constitute a valid and binding execution and delivery of this
Agreement. Such facsimile copies shall constitute enforceable original
documents.
15.12. Prevailing Party Clause. In the event of any litigation arising as a
result of breach of this Agreement or failure to perform hereunder or failure of
any representation or warranty herein, the Party or Parties prevailing in such
dispute shall be entitled to collect the costs of such dispute, including
reasonable attorneys' fees or costs, from the Party or Parties not prevailing.
15.13. Specific Performance. Each of the Parties acknowledge that, in view
of the uniqueness of their respective businesses and the transactions
contemplated in this Agreement, each Party would not have an adequate remedy at
law for money damages in the event that this Agreement has not been performed in
accordance with its terms, and therefore, Silverthorne and the Aquila
Shareholders respectively agree that the other shall be entitled to specific
performance of the terms hereof in addition to any other remedy to which it may
be entitled at law or in equity.
29
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed the day and the year first above written.
SILVERTHORNE PRODUCTION COMPANY
By:/s/ Darrell H. Hughes
------------------------------------------
Darrell H. Hughes, Chief Executive Officer
AQUILA INTERNATIONAL
TELECOMMUNICATIONS, INC.
SHAREHOLDERS
/s/ Jimmy L. Boswell
---------------------------------------------
Jimmy L. Boswell
/s/ David G. Lucas
---------------------------------------------
David G. Lucas
/s/ Reginald W. Einkauf
---------------------------------------------
Reginald W. Einkauf
/s/ John D. Miller
---------------------------------------------
John D. Miller
LADIA LLC
By: /s/ Frances Lynch
------------------------------------------
Frances Lynch, Chief Executive Officer
30
<PAGE>
EXHIBIT A
TO STOCK FOR STOCK EXCHANGE AGREEMENT
ISSUED AND OUTSTANDING SHARES OF
AQUILA INTERNATIONAL TELECOMMUNICATIONS, INC.
Name of Aquila Shareholders Number of Shares Owned Class of Shares
- --------------------------- ---------------------- ---------------
Jimmy L. Boswell 3,000 Common
David G. Lucas 3,000 Common
Reginald W. Einkauf 3,000 Common
John D. Miller 3,000 Common
Ladia LLC 4,042 Common
------
Total Shares Issued and Outstanding 16,042
31
<PAGE>
EXHIBIT B
TO STOCK FOR STOCK EXCHANGE AGREEMENT
OFFICERS, DIRECTORS AND KEY EMPLOYEES
OF
AQUILA INTERNATIONAL TELECOMMUNICATIONS, INC.
Officers: Jimmy L. Boswell President, Chief Executive Officer
and Chairman of the Board
David G. Lucas Vice President, Chief Financial
Officer
Reginald W. Einkauf Vice President, Chief Technology
Officer
John D. Miller Vice President, Chief Information
Officer
Directors: Jimmy L. Boswell
David G. Lucas
Reginald W. Einkauf
John D. Miller
Key Employees: Jimmy L. Boswell
David G. Lucas
Reginald W. Einkauf
John D. Miller
32
<PAGE>
EXHIBIT C
TO STOCK FOR STOCK EXCHANGE AGREEMENT
The following notes and accrued interest are due to the named shareholders
of Aquila:
Jimmy L. Boswell 8%, $100,578.51 as of 12-31-99 due on demand
David G. Lucas 8%, $ 55,907.87 as of 12-31-99 due on demand
Reginald Einkauf 8%, $109,843.51 as of 12-31-99 due on demand
John Miller 8%, $ 94,396.93 as of 12-31-99 due on demand
Jimmy L. Boswell 10%, $ 25,900 plus accrued interest due on demand
Ladia LLC 12%, $350,924.43 plus accrued interest due 2-15-01
33
<PAGE>
EXHIBIT D
TO STOCK FOR STOCK EXCHANGE AGREEMENT
CONTRACTS
1. The notes payable outstanding as listed on Exhibit C.
2. Insurance policies for the following coverage: Lifeguard health
insurance, Principle dental and life, Hartford for general and liability
insurance.
3. Facility lease with Walter Bros. Construction.
4. Equipment leases with Cisco Leasing, Dell Financial, Lucent Technology
and GALCO.
5. Aquila has agreements with a number of large carriers to purchase
minutes from them, but not contracts.
6. Settlement Agreement dated December 24, 1999 with Ladia LLC.
7. Amended and Restated Security Agreement dated as of December 24, 1999,
with Ladia LLC.
8. Secured Promissory Note in the principal amount of $350,924.43 to Ladia
LLC.
34
<PAGE>
EXHIBIT E
TO STOCK FOR STOCK EXCHANGE AGREEMENT
BANK ACCOUNTS AND OTHER ACCOUNTS
Bank of America--Business Checking 00610-08088
Wells Fargo Bank--Business Checking 4435-703343
35
<PAGE>
EXHIBIT F
TO STOCK FOR STOCK EXCHANGE AGREEMENT
REAL PROPERTY
The only property related item is the facility lease with Walter Bros.
Construction that covers the facility in which Aquila is located.
36
<PAGE>
EXHIBIT G
TO STOCK FOR STOCK EXCHANGE AGREEMENT
VENDORS
<TABLE>
<S> <C> <C> <C> <C>
Vendor ID Vendor Contact Telephone 1 Tax Id No.
- --------- ------ ------- ----------- ---------
AMEX American Express 1-800-success
ASAP Mills ASAP Reprographics 805-543-3144
Allbest All The Best Furniture 805-543-2956
Amer Temps American Temps Melanie Mulvaney
Andre, Morris Andre, Morris, & Buttery 805-543-4171
Apex Apex PC Solutions 425-402-9393
B of A Bank of America Rilla Douglas 805-595-5311
CCP Central Coast Processing 781-6820
CDW Computer Discount Warehouse 1-800-980-4239
Caesar Caeser & Seider Insurance Karen DeVore 805-542-0991
Cellular One Cellular One 800-445-6876
Cisco Cisco Systems Capital
Comp Stuff Computer Stuff 805-542-0180
Convert-It Convert-it Tyler Welburn 408-370-0123
Dell Dell Financial Services 1800-955-3355
Dimension Dimension Funding, Inc.
EDD Employment Development Dept
Facilicom Facilicom 202-496-1100
Franchise Tax Board Franchise Tax Board
Frank L. Freitas Frank L. Freitas 805-781-5830
GALCO Great American Leasing Co. Todd Aaron
GMV GM Voices 770-752-4500
GST, Inc. GST, Inc.
GTE GTE 1-800-483-3000
Gray Gray Bar Electric 800-766-7723
Hartford The Hartford 800-447-7649
IRS Internal Revenue Service
Keith Franklin Russell, Mainini & Franklin Keith Franklin 805-544-7094
Lifeguard Lifeguard 408-943-9400
Lucent Lucent Technologies
McGowan Guntermann McGowan Guntermann 805-962-9175
Mission Mission Office Supply 805-544-0460
Morris & Garritano Morris & Garritano
Mustang Mustang Moving & Storage 544-9626
Nextel Nextel 800-639-6111
Office Depot Office Depot
Oracle Oracle
PC Petty Cash
PacBell Centrex Pacific Bell 800-720-2355
PacBell Meas Rate Pacific Bell
PacBell PBX Pacific Bell 800-750-2355
PacBell PLS 2 Pacific Bell 800-750-2355
PacBell PLS T-1 Pacific Bell 800-750-2355
Phone Center Phone Center, The
Poor Richards Poor Richards Press Danal 805-543-6844
Power Power & Environment Int'l, Inc Mike Howard 818-772-6694
Powercom Powercom 800-288-9807
Princ Principal Financial Group 888-239-6435
Qwest Qwest 800-860-1020
37
<PAGE>
Racouillat Richard N. Racouillat 805-547-5990
Reitner & Stewart Reitner & Stewart
Russell, Mainini Russell, Mainini & Franklin Keith Franklin 805-544-7094
SFC&S Smith, Falck,Caesar&Seider Ins Kevin Dye
SLN San Luis News 805-541-2247
SLO City of San Luis Obispo 805-
Sec State Secretary of State 916-657-3537
Sprint Sprint 404-649-5480
Staples Staples Office Supply 800-767-1291
Star Telecom Star Telecom 805-899-1962
Sunmyth Studio Sunmyth Studio Rosi Lusardi
The Telephone Connec The Telephone Connection Sara 310-789-7900
Thoma Thoma Electric, Inc. 805-543-3850
UPS United Parcel Service 800-877-1613
Ultrex Ultrex
Verio Verio
Walter Walter Bros. Const. Don Walters 805-543-5854
Water Crystal Springs Water 805-543-5063
</TABLE>
38
<PAGE>
EXHIBIT H
TO STOCK FOR STOCK EXCHANGE AGREEMENT
INSURANCE POLICIES
Lifeguard health insurance
Principle dental and life insurance
The Hartford general and liability insurance
39
<PAGE>
EXHIBIT I
TO STOCK FOR STOCK EXCHANGE AGREEMENT
ISSUED AND OUTSTANDING SECURITIES OF
SILVERTHORNE PRODUCTION COMPANY
Common Stock 44,825,522 shares
Options to purchase 31,600,000 shares of Common Stock
Warrants to purchase 1,500,000 shares of Common Stock
Option to purchase 800,000 shares of Common Stock which Silverthorne
Production Company takes the position is invalid because of misrepresentation
40
<PAGE>
EXHIBIT J
TO STOCK FOR STOCK EXCHANGE AGREEMENT
LITIGATION
Arbitration claim filed by XPO Group, LLC
41
