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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 14, 2000
Commission File Number 0-12597
PENN-AKRON CORPORATION
(Exact name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
NEVADA 88-0443120
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
1355 TERRELL MILL ROAD, BUILDING #1466
MARIETTA, GEORGIA 30067
(Address of principal executive offices)
(801) 269-9500
(Registrant's telephone number)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
(a) Pursuant to a Merger Agreement (the "Merger Agreement") dated as of
March 23, 2000, between Spherus Technologies, Inc. ("Spherus"), a Georgia
corporation, and Penn-Akron Corporation ("PENN"), a Nevada corporation, all of
the outstanding shares of common stock of Spherus were converted on April 14,
2000 into the right to receive consideration of 12,319,461 shares of common
stock of PENN in a transaction in which PENN continued as the surviving
corporation and the separate corporate existence of Spherus ceased. PENN is now
doing business under the name globalseer.com. The 12,319,461 shares of PENN
common stock offered to the Spherus Shareholders represents approximately
forty-two percent (42%) of the outstanding common stock of PENN following the
transaction.
Prior to the effectiveness of the Merger, PENN had an aggregate of
17,181,081 shares of common stock $0.01 par value, outstanding. Upon
effectiveness of the merger on April 14, 2000, PENN had an aggregate of
29,500,542 shares of common stock outstanding.
Pursuant to the Merger Agreement, the former directors of PENN resigned
after appointing a new board of directors. Pursuant to the Merger Agreement,
three (3) seats (or three/fifths of available seats if there are more than 5
seats) on the initial Board of Directors of globalseer.com were selected by the
Spherus Board of Directors. The officers of Spherus are now the officers of
globalseer.com and PENN's current officers have resigned from their positions.
See "Management" below.
(b) The following table contains information regarding the
shareholdings of PENN's current directors and executive officers and those
persons or entities who beneficially own more than 5% of its common stock
(giving effect to the exercise of the warrants held by each such person or
entity):
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<TABLE>
<CAPTION>
AMOUNT OF % OF
COMMON STOCK COMMON STOCK
NAME BENEFICIALLY OWNED(1) BENEFICIALLY OWNED
- ---- --------------------- ------------------
<S> <C> <C>
Kenneth M. Herman(2) 1,892,340 6.4%
President, Secretary and
Director
Christopher J.S. Baker 1,500,000 5.1%
Chief Financial Officer,
Director
Michael K. Molen 0 *
Director
Patricia P. Harris 0 *
Director
Frank Pitts 0 *
Director
John Julian(2) 2,981,780 10.1%
Tampa Bay Financial, Inc.(3) 5,846,791 19.8%
Catalyst Communications, Inc.(4) 4,500,000 15.3%
ASFT, Inc.(5) 1,570,331 5.3%
All directors and executive 3,392,340 11.5%
officers as a group (5
persons)(6)
</TABLE>
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* Less than one percent (1%)
(1) Based upon 29,500,542 outstanding shares of common stock (subsequent to
the effectiveness of the merger).
(2) There is a dispute between Mr. Herman and Mr. Julian as to the ownership
of an additional 1,098,550 shares of common stock. The disputed shares are
being held in escrow until such dispute is resolved by the parties.
(3) Tampa Bay Financial, Inc. is located at 355 Interstate Boulevard,
Sarasota, Florida 34240.
(4) Catalyst Communications, Inc. is located at 355 Interstate Boulevard,
Sarasota, Florida 34240. These shares were issued subsequent to February
28, 2000.
(5) ASFT, Inc. is located at 7701 Iguana Drive, Sarasota, Florida 34241.
(6) This total does not include the 1,098,550 shares of common stock that are
the subject of a dispute between Mr. Herman, a director and executive
officer, and Mr. Julian.
A copy of the Merger Agreement and Certificates of Merger for Georgia
and Nevada are filed as Exhibits to this Form 8-K and are incorporated in their
entirety herein.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The consideration exchanged pursuant to the Merger Agreement was
negotiated between
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Spherus and PENN as evidenced in the Merger Agreement dated March 23, 2000 and
attached to this Form 8-K as Exhibit 2.1. As a result of the Merger Agreement,
on April 14, 2000 Spherus merged into PENN and ceases to exist. Spherus
shareholders received the right to convert each share of Spherus common stock
held at the time of the merger into 15,693.581 shares of PENN common stock.
Pursuant to the Merger Agreement, Tampa Bay Financial, Inc. ("Tampa") shall
deliver $750,000 to PENN. Additionally, Tampa is required to provide $500,000
in post-closing promotional expenses incurred by PENN. Tampa was issued
1,000,000 shares of PENN for consulting services provided in connection with
the Merger.
THE COMPANY
HISTORY
Penn-Akron Corporation ("PENN"), is now doing business as
globalseer.com, a publicly traded (OTCBB:PNAK) company providing single-source,
media-technology and curriculum-enhancement solutions to schools. Globalseer.com
is a technology driven company that specializes in delivering educational
content to school classrooms. Globalseer.com provides media-technology and
curriculum enhancement solutions to kindergarten through twelfth grade public
and private schools. Additionally, globalseer.com is positioning itself to
provide new and expanded sources of educational content and other learning
services to both higher education and corporate training environments.
The original concept for globalseer.com was established in 1998 under
the name Spherus Technologies, Inc. (hereinafter "globalseer.com") in response
to a request from the Metro Regional Educational Services Agency ("MRESA") in
Atlanta (a division of the Georgia Department of Education) for specialized
video curriculum enhancement for their schools. The resulting comprehensive
suite of products and services provided "on-demand" video and was referred to
as the MRESAnet 2000 project. In 1999, the MRESAnet project was awarded
approximately $22 million dollars from the Federal Government. In 1999,
globalseer.com recorded $20,097,000 in gross revenues resulting from its work
for the MRESAnet project.
The pilot project was implemented in 192 schools within MRESA's
jurisdiction. Stage 1 of the project was completed in 1999 with Stages 2 and 3
anticipated to be completed over the next several years. Although
globalseer.com will maintain responsibility for continuity and contract
fulfillment for the MRESAnet project we have contracted with Lynxus, Inc. to
coordinate, manage and administer performance of the installation of the
network components to the MRESA schools. Our primary focus is to replicate the
model we developed for the MRESAnet project for use in additional school
systems in Georgia and different parts of the United States. The system model
created for the project is capable of providing direct to-the-classroom lesson
planning tools, with an accompanying library of supplemental
curriculum-enhancement content.
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GLOBALSEER.COM
Globalseer.com plans to become a comprehensive educational technology
integrator, providing single-source, media-technology and curriculum-enhancement
solutions to educators, students, government agencies, and businesses. Our
resources include a variety of learning enhancement tools, educational
materials, video libraries, programs and multimedia resources. We can provide
turnkey systems including equipment, networks, training and support; delivering
curriculum-enhancing multimedia content and lesson planning tools directly to
the classroom.
We believe that industry leaders must partner with educators and school
officials at all levels in order to bring new and improved learning capabilities
to the classroom. Teachers must be free to teach without burdensome
technological encumbrances and students must have ready access to effective
learning resources to be prepared for the 21st century marketplace.
Additionally, school administrators must be able to optimize budget dollars to
improve the quality of education everywhere. We can provide schools with
extraordinary learning content, cutting edge technology, and point-and-click
simplicity through the model project we developed for MRESAnet. We plan to
eventually package and develop our own Internet content in conjunction with
other media providers. We plan on providing a "virtual library" of educational
material and training tools to our customers, available at the click of a mouse.
We represent an innovative approach to comprehensive educational
communications requirements through our consortium of associated technology
providers. It is our goal to provide full-spectrum, leading-edge, multi-user
Internet working solutions to the educational community. In addition to the
obvious technological proficiencies, the unique offering that we bring to the
marketplace also includes:
- Collective Marketing
- Single Point-of-Sale
- Needs Survey and Analysis
- Integrated Component Supply
- Turn-key Project Implementation
- Technical and End-user Training
- Consolidated Billing
- Single-point Customer Support
APPLICATIONS/FUNCTIONS
We utilize the collective capabilities of major communications-related
companies, and provide a single point of contact for analysis, planning,
coordination, implementation and support of our services. Some of the combined
Internet working products and solutions, which we provide and/or facilitate,
are:
- Virtual Global Libraries
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- Streaming Audio and Video
- Lesson Planning Tools/Applications
- Tutorial Planning Tools/Applications
- Video Conferencing
- Virtual Classrooms and Distance Learning
- Interactive Training
- News Feeds - Multimedia
- Electronic Management/Administration
SERVICES/PRODUCTS
We also currently provide and/or facilitate, or plan to provide and/or
facilitate, the following services and products as part of our turnkey
video-on-demand educational network:
- Needs Analysis and Evaluation
- Consulting and Design
- Customer/Technical Support
- Communications Access and Transport
- Website Location and Functionality
- Fiber optic/Conventional Infrastructure Cabling
- Wireless Data-nets
- Global Satellite Links
- Multimedia Servers
GROWTH STRATEGY
Our present growth strategy for the globalseer.com network is:
- growth through innovative outsourcing of the primary sales
functions through regionalized or localized independent
contractors, who can enhance and further our business goals
- growth through direct sales in cases where specific learning
sales opportunities are evident
- growth through relational channels resulting from established
relationships with various industry connections
- growth through opportunistic strategic alliances, joint ventures
and/or mergers with industry related companies who can augment,
enhance and/or further our business goals
- eventually expanding our network beyond the education arena into
business and commercial environments
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OUTSOURCING
We rely on a number of subcontractors and vendors in connection with
the delivery of our service. In addition to proprietary methodology, we bundle
the products and services of vendors to satisfy our customers' needs.
PROPERTY
We maintain our headquarters in leased office space at 1355 Terrell
Mill Road, Building 1466, Marietta, GA 30067. Our phone number is (770)
541-0030.
Our other property consists of general office equipment, telephone
equipment, computer hardware and software systems and office furniture. Such
other property is periodically updated, replaced or repaired.
LITIGATION
As of late 1999, Spherus had a contract with Metropolitan Regional
Educational Services Agency ("MRESA") for the installation of Internet and
satellite based multimedia equipment and systems in public schools in three
annual phases. By late 1999 all the work to be done under the MRESA contract was
subcontracted by Spherus to Lynxus, Inc. ("Lynxus") pursuant to a contract
between Spherus and Lynxus. Phase I was completed but Lynxus was not fully paid.
In late 1999, a dispute arose over the continuation of Spherus' participation
under its contract with MRESA. MRESA low level management decided to transfer
the remaining Phase II and Phase III work directly to Lynxus and to end MRESA's
contract with Spherus. Although this decision was published on MRESA's Website
no action to terminate the Spherus/MRESA contract was taken as provided in that
contract.
In January 2000 Lynxus sued Spherus in the State Court of Fulton County
for debt in the approximate amount of $1,050,000. Spherus counter-claimed for
tortious interference with contract. At approximately the same time, Spherus
demanded mediation of its claims against MRESA for breach of contract and for
debt. The Spherus/MRESA contract provided that disputes were subject to
arbitration and that mediation was a condition precedent to such arbitration.
On April 25, 2000, agreements were signed by counsel for Spherus,
Lynxus and MRESA reinstating both contracts and providing for interpretations to
govern future implementation of the MRESA contract and certain modifications to
Lynxus' contract. It was also provided that Lynxus would be paid the claimed
debt (already reduced by voluntary partial payment by Spherus in the amount of
$250,000) with funds due to Spherus from MRESA. Phases II and III are now set to
go forward to completion. The demand for mediation of Spherus against MRESA has
been withdrawn and the suit in the State Court of Fulton County will be mutually
dismissed without prejudice.
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MARKET FOR PNAK SECURITIES
During the past several years there has been no established trading
market for our common stock. Our common stock will now be listed and traded on
the OTC Bulletin Board operated by NASDAQ under the symbol PNAK. We have not
filed a registration statement with the Securities and Exchange Commission for
our common stock.
MANAGEMENT
Our executive officers, directors, key employees and advisors are as
follows:
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<CAPTION>
NAME TITLE AGE
<S> <C> <C>
Kenneth M. Herman President, Secretary and Director 34
Christopher J.S. Baker Chief Financial Officer and Director 35
Patty P. Harris Director 44
Michael K. Molen Director 43
Frank Pitts Director 49
</TABLE>
Biographical Information
Biographical information concerning all of the directors and executive
officers is set forth below:
KENNETH HERMAN
PRESIDENT, SECRETARY AND DIRECTOR
Kenneth Herman serves as our President and a member of the Board of Directors.
Mr. Herman is an original founder of Spherus Technologies. Mr. Herman has been
responsible for business development, vendor relationships, technology
implementations, planning, capital procurement, sales and marketing segments,
and pertinent day-to-day operations. Prior to Spherus Technologies, Mr. Herman
founded and served as a key executive of World Telecom, Inc., one of the first
international callback companies in the world that exceeded $40 million of
annual revenue within 12 months of operations beginning. Additionally, Mr.
Herman has been a technical director for venture capital consortiums both in
the United States and Europe, specializing in the high-tech market. Mr.
Herman's duties included assessing financial and technical materials/products,
developing marketing and management strategies, and coordinating capital
investment. He holds a Bachelor of Science, Industrial Management, from the
University of Maryland.
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CHRISTOPHER J.S. BAKER
CHIEF FINANCIAL OFFICER AND DIRECTOR
Christopher Baker joined us in 1999 and serves as our Chief Financial Officer
and a member of our Board of Directors. Mr. Baker is responsible for our
day-to-day financial affairs and reports directly to the Board of Directors. Mr.
Baker's duties also include asset and cash management and allocation, corporate
finance and reporting activities, financial planning and budgeting, investor
relations, and business development. Prior to joining us, Mr. Baker worked with
Atlin Investments from 1997 through 1999, in an entrepreneurial role, where he
structured deals and obtained financing for companies in the high-tech,
Internet, media and real estate industries. Mr. Baker has worked with
institutions, specialist boutiques, venture capital firms and private investors.
Prior to Atlin Investments, Mr. Baker worked directly within the business empire
of a senior member of the Saudi royal family. Mr. Baker was headquartered in
London, England, and worked with and reported directly to the CEO, and was
responsible for investment management, including equity and real estate
investments, acquisitions, and financial placements in conjunction with large
banks and institutions. Mr. Baker has an MBA from the University of Chicago. He
also holds degrees from The London School of Economics and The University of
York.
PATTY P. HARRIS
DIRECTOR
Patty P. Harris has served as founder and president of Profile America, Inc.
since she founded the company in 1994. Profile America, Inc. is a provider of
content for the sales training and sales support systems at BellAtlantic/GTE,
Ameritech, BellSouth, and U.S. West, and Sprint. Prior to founding Profile
America, Harris founded Atlanta Research Group, Inc. ("ARG") and served as its
President until 1994. ARG specialized in the collection of data for a wide
variety of clientele. In her 20 years of experience conducting research and
analysis, Ms. Harris has worked with Fortune 100 companies as well as
high-technology start-ups. Ms. Harris' research has been instrumental in
setting strategies to introduce new products, penetrate new markets, and expand
market share for existing products.
MICHAEL K. MOLEN
DIRECTOR
Mr. Molen is currently serving as Sanswire.Net's President and CEO and is
directing the company's worldwide rollout of its high-speed, last-mile, wireless
telecommunications products and services. During the first quarter of 2000, Mr.
Molen co-founded Sanswire.Net of Latin America to offer high-speed, wireless
access to the Internet throughout Latin America. Mr. Molen is also the
co-founder and Director of Sanswire Digital Communications, LLC, a developer and
manufacturer of digital compression technology for the wireless cable industry.
In 1999, Mr. Molen initiated the design and construction of The Genesis Network,
one of the worlds largest virtual private networks (VPN) that will accommodate
voice traffic throughout the world. In 1995, Mr. Molen was appointed to the
Board of Advisors of Digital Broadcast Corporation, a wireless cable MSO in the
United States.
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FRANK PITTS
DIRECTOR
Mr. Pitts is the President of Omni Electrical Products, Inc ("Omni") a power
quality consulting firm based in Tennessee. Mr. Pitts has been with Omni since
1995. At Omni, Mr. Pitts advises and consults engineers with the design and
construction of electrical systems. Mr. Pitts is a Certified Public Accountant
and worked for over twenty years in the public accounting and financial
management information systems fields.
CAUTIONARY STATEMENTS AND RISK FACTORS
Except for the historical information and discussions herein, statements
contained in this Form 8-K may constitute "forward looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. These
statements involve a number of risks, uncertainties and other factors that could
cause actual results to differ materially, including the company's failure to
continue to develop and market new and innovative products and services and to
keep pace with technological change; competitive pressures; failure to obtain
intellectual property rights; quarterly fluctuations in revenue and volatility
of stock prices; our ability to attract and retain key personnel; dependence on
certain suppliers and subcontractors; our ability to manage acquisitions and
alliances; legal, political and economic changes and other risks, uncertainties
and factors in our other filings with the Securities and Exchange Commission.
CURRENT TRADING MARKET FOR OUR SECURITIES.
Upon the filing of this Form 8-K, our common stock will be traded on
the OTC Bulletin Board ("OTCBB"), operated by NASDAQ, under the symbol PNAK.
We have not filed a registration statement with the Securities and
Exchange Commission. Our common stock was not actively trading prior to the
filing of this Form 8-K. No assurance can be given that an active trading market
in our securities will develop or be sustained once our common stock begins
actively trading on the OTCBB. Additionally, because of a recent rule change the
SEC may review this filing.
OUR SUCCESS DEPENDS UPON THE SUCCESSFUL DEVELOPMENT OF NEW SERVICES AND FEATURES
IN THE FACE OF RAPIDLY EVOLVING TECHNOLOGY.
Our market is characterized by rapidly changing technologies, frequent
new service introductions and evolving industry standards. The recent growth of
the Internet and intense competition in our industry exacerbate these market
characteristics. Our future success will depend on our ability to adapt to
rapidly changing technologies by continually improving the performance, features
and reliability of our network. We may experience difficulties that could delay
or prevent the successful development, introduction or marketing of new
features, content or network services.
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In addition, our new enhancements must meet the requirements of our current and
prospective users and must achieve significant market acceptance. We could also
incur substantial costs if we need to modify our service or infrastructure to
adapt to these changes.
WE HAVE AN UNPROVEN BUSINESS MODEL AND A LIMITED OPERATING HISTORY.
Because our current operating business, operating under the name
globalseer.com, was established in 1998 and did not commence material operations
until 1999, we have a limited operating history on which investors can base an
evaluation of our business and prospects. Our income potential is unproven and
our business model is unique and will continue to evolve.
An investor in our common stock must carefully consider the risks and
difficulties frequently encountered by companies in an early stage of
development, as well as the risks we face due to our participation in a new and
rapidly evolving market. Our business strategy may not be successful and we may
not successfully overcome these risks.
WE EXPECT OUR QUARTERLY FINANCIAL RESULTS TO FLUCTUATE AND OUR EARLY STAGE OF
DEVELOPMENT LIMITS OUR ABILITY TO PREDICT REVENUES AND EXPENSES PRECISELY.
Our quarterly and annual operating results are likely to fluctuate
significantly in the future due to a variety of factors, many of which are
outside of our control. Factors that might cause quarterly fluctuations in our
operating results include the factors described in the subheadings below. To
respond to these and other factors, we may need to make business decisions that
could impact our quarterly operating results. Most of our expenses, such as
lease payment obligations, employee compensation and rent, are relatively fixed
in the short term. Moreover, our expense levels are based, in part, on our
expectations regarding future revenue levels. As a result, if total revenues for
a particular quarter are below our expectations we could not proportionately
reduce our operating expenses for that quarter. Therefore, this revenue
shortfall would have a disproportionate effect on our expected operating results
for that quarter. Consequently, we believe that period-to-period comparisons of
our operating results are not necessarily meaningful, and should not be viewed
as indicators of our future performance. In addition, during future periods our
quarterly or annual operating results may fail to meet the expectations of
securities analysts or investors. In this case the trading price of our common
stock would likely decrease.
OUR BUSINESS AND FUTURE REVENUE GROWTH WILL SUFFER IF WE FAIL TO RETAIN AND GROW
OUR CUSTOMER BASE.
The success of our business will depend on our ability to add
customers. Our ability to grow our customer base depends largely on our ability
to deploy our network to additional schools. If we are unable to rapidly deploy
our network to a large number of additional schools, we will not be able to grow
our core school user base, and our ability to generate revenue and implement our
strategy will be limited.
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WE ARE DEPENDENT ON THIRD PARTIES TO DEPLOY OUR NETWORK AND SUPPORT IT ONCE
INSTALLED.
We plan to rapidly deploy our network to additional schools across the
country. We have used, and plan to continue to use, third parties such as The
Network Connection, Inc., Extreme Networks, OneWeb Systems and Lynxus, Inc. to
install and support the globalseer.com network in each school. Any changes in
the third parties we contract with to install and support our network could
cause delays in the deployment of the globalseer.com network and any inability
to install schools according to our plan could limit or eliminate revenue
generated from possible sponsorships, e-commerce and network services. Further,
if we do need to hire substitute or additional third-party installers of our
network we cannot assure you that we will be able to do so on terms as favorable
as our current arrangements, or at all, which could result in higher
installation costs to us as well as potential delays in our deployment.
We also rely on third parties to provide the majority of support
necessary to maintain the globalseer.com network once installed. Any inability
to maintain or delays to the maintenance of this equipment could lead to lower
revenue.
REGULATORY AND LEGAL ISSUES SPECIFIC TO THE INTERNET.
The Internet is the subject of an increasing number of laws and
regulations. These laws or regulations may relate to liability for information
retrieved from or transmitted over the Internet, online content regulation, user
privacy, taxation and the quality of products and services. In addition, these
new laws have not yet been interpreted by the courts, and consequently their
applicability and reach are not defined. Moreover, the applicability to the
Internet of existing laws governing issues such as intellectual property is not
clearly defined.
SCHOOLS MAY USE ALTERNATIVE MEANS TO ACQUIRE INTERNET ACCESS, WHICH COULD REDUCE
OUR POTENTIAL CUSTOMER BASE AND MAY LEAD TO LOWER THAN EXPECTED REVENUES.
An immediate attraction of our network is immediate access to media via
the Internet. However, for a variety of reasons, schools may decide to use other
methods to acquire Internet access. If schools decide to use means other than
deployment of our network, it will limit our user base, and consequently we will
have lower than expected revenues.
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL CAPITAL TO FUND OUR OPERATIONS WHEN
NEEDED.
We expect to use existing cash for general corporate purposes,
including expanding our sales and marketing activities, continuing investments
in technology and product development and other capital expenditures, as well as
working capital and other corporate expenses. Our cash requirements are large
and depend on several factors, including cash outflows due to lease obligations,
the rate of expansion of our school base, the availability of equipment leases
on competitive terms, our success in generating revenues, the growth of sales
and marketing, and other factors. If capital requirements
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vary materially from those currently planned, we may require additional
financing sooner than anticipated.
Tampa Bay Financial, Inc., a large shareholder, has provided capital
to us in the last few months. Except as provided in the Merger Agreement, Tampa
Bay Financial, Inc. is not obligated to make additional capital available to
us.
WE ARE DEPENDENT ON THE CONTINUED GROWTH IN USE AND POPULARITY OF OUR NETWORK
AND THE INTERNET BY OUR USERS AND OUR ABILITY TO SUCCESSFULLY ANTICIPATE THE
FREQUENTLY CHANGING TASTES OF OUR USERS.
Our business is unlikely to be successful if the popularity of the
Internet and related media in schools as an educational tool and among students
in general does not continue to increase. Even if the popularity of the Internet
and related media does increase, the success of our network in particular
depends on our ability to anticipate and keep current with the frequently
changing preferences of our users. Any failure on our part to successfully
anticipate, identify or react to changes in styles, trends or preferences of our
users would lead to reduced interest in and use of the globalseer.com network.
Moreover, the globalseer.com brand could be eroded by misjudgments in service
offerings or a failure to keep our content current with the evolving preferences
of our audience.
WE MAY BE SUBJECT TO LIABILITY FOR PUBLISHING OR DISTRIBUTING CONTENT OVER OUR
NETWORK.
We may be subject to claims relating to content that is published on or
downloaded from the globalseer.com network. Such claims might include defamation
or trademark infringement and may involve costs to defend potential claims or to
indemnify us for all liability that may be imposed. In addition, any claims like
this, with or without merit, could require us to change our network in a manner
that could be less attractive to our customers and would result in the diversion
of our financial resources and management personnel.
WE MAY NOT BE ABLE TO DELIVER VARIOUS SERVICES IF THIRD PARTIES FAIL TO PROVIDE
RELIABLE SOFTWARE, SYSTEMS AND RELATED SERVICES TO US.
We are dependent on various third parties for software, systems and
related services. Several of the third parties that provide software and
services to us have a limited operating history, have relatively immature
technology and are themselves dependent on reliable delivery of services from
others. As a result, our ability to deliver various services to our users may
suffer due to the failure of these third parties to provide reliable software,
systems and related services to us. Additionally, we make seek to contract with
alternative third parties to the ones we have formerly used, which may or may
not have a negative effect on our operations.
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FAILURE TO MANAGE THE GROWTH OF OUR OPERATIONS COULD HARM OUR BUSINESS AND
STRAIN OUR MANAGERIAL, OPERATIONAL AND FINANCIAL RESOURCES.
We plan to expand our operations. We anticipate that further
significant expansion will be required to grow our customer base if we are to be
successful in implementing our business strategy. We may not be able to
implement management information and control systems in an efficient and timely
manner, and our current or planned personnel, systems, procedures and controls
may not be adequate to support our future operations. If we are unable to manage
growth effectively, our business would suffer.
THE LOSS OF KEY PERSONNEL MAY HURT OUR ABILITY TO OPERATE OUR BUSINESS
EFFECTIVELY.
Our success depends to a significant degree upon the continued
contributions of the principal members of our sales and management departments,
many of whom perform important management functions and would be difficult to
replace. The loss of the services of any key personnel, particularly senior
management, could seriously harm our business.
IF WE ARE UNABLE TO RETAIN AND HIRE ADDITIONAL QUALIFIED PERSONNEL AS NECESSARY,
WE MAY NOT BE ABLE TO SUCCESSFULLY ACHIEVE OUR OBJECTIVES.
We may not be able to attract and retain the necessary personnel to
accomplish our business objectives, and we may experience constraints that will
adversely affect our ability to deploy the globalseer.com network in a timely
fashion or to support our users and operations. Recruiting qualified personnel
is an intensely competitive and time-consuming process.
ITEM 7. FINANCIAL STATEMENTS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The audited financial statements of the acquired business,
Spherus Technologies, Inc., currently doing business as
globalseer.com, together with the audit report of Windham
Brannon, P.C. is included below. Spherus Technologies, Inc.
did not commence material operations until fiscal year 1999.
Consequently, financial statements for the fiscal year ended
December 31, 1998 are not included.
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SPHERUS TECHNOLOGIES, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1999
CONTENTS
INDEPENDENT AUDITOR'S REPORT
FINANCIAL STATEMENTS:
Balance Sheet
Statement of Income
Statement of Changes in Stockholders' Equity
Statement of Cash Flows
Notes to Financial Statements
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INDEPENDENT AUDITOR'S REPORT
To The Board of Directors
Spherus Technologies, Inc.
We have audited the balance sheet of SPHERUS TECHNOLOGIES, INC. as of
December 31, 1999, and the related statements of income, changes in
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
Except as discussed in the following paragraph, we conducted our audit
in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
We were unable to obtain a confirmation for the receivable balance of
$2,972,772 from MRESA; nor were we able to satisfy ourselves as to the carrying
value of the receivable by other auditing procedures.
In our opinion, except for the effects of such adjustments, if any, as
might have been determined to be necessary had we been able to examine evidence
regarding the receivable, the financial statements referred to in the first
paragraph above present fairly, in all material respects, the financial
position of Spherus Technologies, Inc. as of December 31, 1999, and the results
of its operations and its cash flows for the year then ended, in conformity
with generally accepted accounting principles.
As discussed in Note 4 to the financial statements, the Company has a
contingent liability arising from the termination of a contract. The ultimate
outcome of this contingency cannot presently be determined. Accordingly, no
provision for any liability that may result from conclusion of this matter has
been made in the accompanying financial statements.
/s/ Windham Brannon, P.C.
--------------------------------------------
Certified Public Accountants
January 25, 1999
-15-
<PAGE> 17
SPHERUS TECHNOLOGIES, INC.
BALANCE SHEET
DECEMBER 31, 1999
ASSETS
<TABLE>
<CAPTION>
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 100
Accounts receivable 3,981,395
Other receivables 22,808
Employee advances 2,000
Refundable deposits 4,380
PrinVest Corp. escrow for OneWeb 205,000
Prepaid maintenance and training costs 224,000
Deferred financing costs 45,833
-----------
Total Current Assets 4,485,516
-----------
EQUIPMENT, less accumulated depreciation of $1,065 4,258
-----------
OTHER ASSETS:
Other assets 5,116
Prepaid maintenance and training costs - long-term 415,997
-----------
Total Other Assets 421,113
-----------
Total Assets $ 4,910,887
===========
</TABLE>
-16-
<PAGE> 18
SPHERUS TECHNOLOGIES, INC.
BALANCE SHEET
DECEMBER 31, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C>
CURRENT LIABILITIES:
Accounts payable $ 3,858,406
Employee accounts payable 1,328
Accrued compensation 665,032
Deferred maintenance and training revenue 224,000
-----------
Total Current Liabilities 4,748,766
-----------
DEFERRED MAINTENANCE AND TRAINING REVENUE -
LONG-TERM 415,997
-----------
STOCKHOLDERS' EQUITY:
Common stock, 1,000 shares no par value authorized, 500 shares 400
issued and outstanding
Retained earnings (deficit) (254,276)
-----------
Total Stockholders' Equity (253,876)
-----------
Total Liabilities and Stockholders' Equity $ 4,910,887
===========
</TABLE>
-17-
<PAGE> 19
SPHERUS TECHNOLOGIES, INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
REVENUES:
Local school installations $19,532,867
Network operations center 529,064
Lan project 5,008
T-1 Telecom access 26,012
Interest income 5,018
-----------
Total Revenues 20,097,969
-----------
DIRECT COSTS:
Local school installations 17,606,527
Network operations center 452,792
Lan project 2,745
T-1 Telecom access 27,660
Other 1,814
-----------
Total Cost of Sales 18,091,538
-----------
GROSS PROFIT 2,006,431
-----------
EXPENSES:
Amortization of financing costs 229,167
Assignment fees 129,075
Interest and other bank fees 186,335
Legal and accounting 60,158
Meals expense 5,802
Other subcontractors 18,297
Printing 8,408
Rent - equipment 8,701
Rent - office 40,800
Salaries 1,424,860
</TABLE>
(Continued)
The accompanying notes are an integral part of this financial statement.
-18-
<PAGE> 20
SPHERUS TECHNOLOGIES, INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
Taxes - payroll 41,867
Telephone 63,030
Travel 9,442
Other expenses 30,560
-----------
Total Expenses 2,256,502
-----------
LOSS BEFORE PROVISION FOR INCOME TAXES (250,071)
PROVISION FOR INCOME TAXES --
-----------
NET LOSS $ (250,071)
===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
-19-
<PAGE> 21
SPHERUS TECHNOLOGIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Common Stock Retained
------------ Earnings
Shares Amount (Deficit)
------ -------- ---------
<S> <C> <C> <C>
BALANCE at January 1, 1999 500 $ 400 $ (4,205)
Net loss -- -- (250,071)
---- -------- ---------
BALANCE at December 31, 1999 500 $ 400 $(254,276)
==== ======== =========
</TABLE>
The accompanying notes are an integral part of this financial statement.
-20-
<PAGE> 22
SPHERUS TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from contracts $16,121,978
Cash paid to subcontractors, vendors and employees (15,579,056)
Interest received 5,018
Interest paid (69,335)
--------
Net Cash Provided By Operating Activities 478,605
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment (5,323)
--------
Net Cash Used In Investing Activities (5,323)
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash held in escrow (205,000)
Deferred financing costs paid (275,000)
--------
Net Cash Used In Financing Activities (480,000)
--------
DECREASE IN CASH AND CASH EQUIVALENTS (6,718)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,818
--------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 100
========
</TABLE>
(Continued)
The accompanying notes are an integral part of this financial statement.
-21-
<PAGE> 23
SPHERUS TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
<TABLE>
<CAPTION>
<S> <C>
Net loss $ (250,071)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Amortization of deferred financing costs 229,167
Depreciation 1,065
Increase in accounts receivable (3,970,973)
Increase in prepaid maintenance costs (639,997)
Increase in other assets (24,188)
Increase in accounts payable 3,828,481
Increase in accrued expenses 665,124
Increase in deferred maintenance and training revenues 639,997
-----------
Net Cash Provided By Operating Activities $ 478,605
===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
-22-
<PAGE> 24
SPHERUS TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company provides turnkey installations of an Internet-based video
distribution and multimedia network to school districts primarily in
metropolitan Atlanta, Savannah and Brunswick, Georgia.
A summary of the significant accounting policies applied in the
preparation of the accompanying financial statements are as follows:
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Significant estimates subject to change in the near term relate to the
contingencies with Teacher Universe, Inc. (discussed in Note 4), and Lynxus,
Inc. (discussed in Note 3), and to the estimation of gross profit on the
deferred maintenance and training revenue (discussed in Note 1).
Revenue for the installation at each participating school is recorded
when the installation is complete. The contract calls for initial training, and
maintenance and support of each school for 36-months from installation. The
revenue and expense related to the training, maintenance and support have been
deferred and will be amortized over the 36-month period. The Company has
estimated that no gross profit needs to be deferred related to the training and
maintenance agreements.
Accounts receivable is stated at estimated net realizable value. An
allowance for doubtful accounts has not been established because management is
of the opinion that all accounts are collectible.
Deferred financing costs resulted from a line of credit and are
amortized over the term of the line of credit utilizing the straight-line
method.
Equipment is stated at original cost. Depreciation is provided using
an accelerated method over the estimated useful lives of five years.
-23-
<PAGE> 25
SPHERUS TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
There are no temporary differences in the recognition of assets and
liabilities for financial statement and income tax purposes at December 31,
1999, hence no provision for deferred taxes has been recorded. The Company has
a net operating loss carryforward of approximately $85,000 and has provided a
100% valuation reserve.
For purposes of the statement of cash flows, the Company considers all
short-term liquid investments which have maturities of less than three months
to be cash equivalents.
2. CONTRACT WITH METROPOLITAN REGIONAL EDUCATIONAL SERVICE AGENCY
The Company receives funding from the Schools and Library Division
(SLD) of the Universal Service Administrative Company, through a contract with
Metropolitan Regional Educational Service Agency (MRESA). This program requires
a 10 - 30% matching commitment for each school from private or local funds.
Through December 31, 1999, the Company and its subcontractors have completed
the installations at 192 schools under the first year funding under the
contract. Funds representing 88% of revenues were from the SLD.
The Company has received notification from the SLD that the year 2
funding for schools has been awarded subject to the schools agreeing to
participate and finding the matching private/local funds.
The contract with MRESA covers a three-year term which coincides with
the SLD award of grant money to certain schools in the 14 districts covered by
MRESA. The fee for each school is $105,067 under the contract. SLD pays for
70%-90% of the fee based on certain criteria. The schools and MRESA are
responsible for finding the matching money through private or local funds.
MRESA pays 10-30% of the fee based on what the SLD pays. The Company
has a receivable from MRESA of $2,972,772 which is being held as retainage
until MRESA signs off on final acceptance of the project.
The contract with MRESA automatically renews for 2 subsequent annual
phases of the project to the extent that SLD funding or other alternative
funding remains available. The contract may be terminated by Spherus or MRESA
under certain circumstances, including if less than 50% of the schools join the
project.
-24-
<PAGE> 26
SPHERUS TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
3. CONTRACT WITH LYNXUS, INC.
The Company has subcontracted with Lynxus, Inc. to coordinate and
manage the delivery, installation and testing requirements relating to the
MRESA contract for all schools in 11 out of the 14 school districts. This
contract is for a period of three years but can be terminated under certain
circumstances. During 1999, installations at 152 schools were completed.
However, certain disputes concerning performance have arisen between Lynxus and
the Company, and consequently the Company is withholding full payment until
those disputes are resolved. Management believes that all amounts to be paid to
Lynxus under the contract have been accrued.
If the amount paid to Lynxus and other subcontractors for the
installations under the contract are less than 95% of the amounts received from
the SLD, the difference is to be paid to Lynxus. This contract also covers the
36-month maintenance and training requirements for all 192 schools under the
first year funding.
4. CONTRACT WITH TEACHER UNIVERSE, INC.
The Company terminated a contract with Teacher Universe, Inc. Teacher
Universe was to provide Internet and curriculum integration training to
teachers in schools participating in the SLD contract. The Company believes
termination was proper, hence no accrual is made for this contingent liability,
which is approximately $600,000.
5. EMPLOYMENT AGREEMENTS
There are employment agreements which provide for performance bonuses
to 3 employees/stockholders in the amount of the greater of $140,000 or 3% of
earnings before interest, taxes, depreciation and amortization (EBITDA) to be
paid by the end of calendar year 1999. In addition, the Company agreed to pay
another employee/stockholder a bonus of $220,000. The Company has accrued
$640,000 in the financial statements.
6. COMMITMENTS
The Company leases an office facility under an operating lease. This
lease is for a three-year term and calls for annual rental charges of $40,800.
Future minimum rental payments required under operating leases that have an
initial or remaining non-cancelable lease terms in excess of one year are as
follows:
-25-
<PAGE> 27
SPHERUS TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
Year Amount
---- --------
2000 $ 42,000
2001 43,200
--------
$ 85,200
========
The Company has a contract with MCI to furnish 1.54 Mbps of bandwidth
by means of leasing two T1s. The monthly minimum volume is $3,000 and expires
in January 2001 with certain cancellation provisions.
7. LINE OF CREDIT
The Company has an $11,000,000 line of credit through March 2000 with
PrinVest Corp. The agreement has covenants the Company must meet on a monthly
basis. The Company's cash, accounts receivable, equipment, contract rights, and
all other assets are used to secure the agreement. Interest is payable at Prime
plus 5.75% per annum calculated on a per diem basis, on the net outstanding
balance of monies advanced to, or on behalf of the Company. Loan origination
fees of $275,000 were capitalized and are being amortized over the life of the
agreement. There was no amount outstanding on this line of credit at December
31, 1999.
The Company has deposited $205,000 in escrow with PrinVest Corp. to be
paid to OneWeb, a software vendor, upon release of retainage from MRESA of the
project. OneWeb's remaining obligation relates to maintenance and upgrades
only.
8. SUBSEQUENT EVENT
The Company and its stockholders are in the process of selling the
Company's stock to Tampa Bay Financial Corporation (the purchaser). In this
connection, three stockholders have agreed to exchange their common stock,
representing 43% of the total outstanding shares of common stock of the
Company, for stock of the purchaser subsequent to December 31, 1999. These
agreements are contingent upon the purchaser obtaining 100% of the common stock
of the Company. In connection with these transactions, the Company received a
loan of $500,000 from the purchaser.
-26-
<PAGE> 28
(b) PRO FORMA FINANCIAL INFORMATION
Introduction
On April 14, 2000, Spherus Technologies, Inc., currently d/b/a
globalseer.com, merged with and into PENN. Pursuant to the
transaction, all outstanding shares of Spherus were converted
into the right to receive consideration of 12,319,461 shares
of common stock of PENN.
The pro forma condensed consolidated financial statements give
effect to the merger.
The pro forma condensed balance sheet presents the financial
position of PENN and Spherus as of December 31, 1999 giving
effect to the merger as if it has occurred on such date. In
addition, a pro forma condensed consolidated statement of
income presents income (loss) from operations for the year
ended December 31, 1999 giving effect to the merger as if it
occurred at the beginning of the period.
The pro forma financial information is presented for
information purposes only and is not necessarily indicative of
the financial position and results of operations that would
have been achieved had the merger been completed as of the
dates indicated and is not necessarily indicative of Spherus's
future financial position or results of operation.
The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the historical
financial statements of Spherus, including the notes thereto.
PENN-AKRON CORPORATION
Pro Forma Condensed Consolidated Balance Sheet (unaudited)
December 31, 1999
(all amounts in thousands)
<TABLE>
<CAPTION>
Pro Forma
Penn- Spherus Pro Forma Financial
Assets Akron Technologies Adjustments Statements
------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Accounts receivable -- 3,981 3,981
Other receivables -- 25 25
Prepaid maintenance and training costs -- 640 640
Other assets -- 265 265
------ ------- -------
Total Assets $ -- $ 4,911 $ 4,911
====== ======= =======
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable 1 3,860 3,861
Accrued liabilities -- 665 665
Deferred maintenance and training revenue -- 640 640
------ ------- -------
Total liabilities 1 5,165 5,166
------ ------- -------
Stockholders' Equity:
Common stock 60 -- 97 157
Paid in capital 882 -- (97) 785
Retained earnings (943) (254) (1,197)
------ ------- -------
Total stockholders' equity (1) (254) (255)
------ ------- -------
Total Liabilities and Stockholders' Equity $ -- $ 4,911 $ 4,911
====== ======= =======
</TABLE>
See selected information to Pro Forma Condensed Consolidated Financial
Statements.
-27-
<PAGE> 29
PENN-AKRON CORPORATION
Pro Forma Condensed Consolidated Statement of Income (unaudited)
For The Year Ended December 31, 1999
(all amounts in thousands)
<TABLE>
<CAPTION>
Pro Forma
Penn- Spherus Pro Forma Financial
Akron Technologies Adjustments Statements
--------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Revenues -- 20,098 20,098
Direct costs -- 18,092 18,092
--------- -------- ---------
Gross Profit -- 2,006 2,006
Other Expenses (5) 2,256 2,251
Loss Before Provision for Income Taxes 5 (250) (245)
--------- -------- ---------
Provision for Income Taxes -- -- --
--------- -------- ---------
Net Income $ 5 $ (250) $ (245)
========= ======== =========
</TABLE>
See selected information to Pro Forma Condensed Consolidated Financial
Statements
-28-
<PAGE> 30
PENN-AKRON CORPORATION
Selected Information to Pro Forma Condensed Consolidated Financial Statements
(unaudited)
December 31, 1999
The accompanying pro forma condensed consolidated financials statements have
been prepared as if the operations of Penn-Akron Corporation and Spherus
Technologies, Inc. had been combined for the year ended December 31, 1999. Pro
forma adjustments have been recorded to combine the capital accounts of the two
companies based on the capital structure of Penn-Akron Corporation. This
recognizes the issuance of 15,693,581 shares of Penn-Akron Corporation $.01 par
value common stock in exchange for all of the outstanding common stock of
Spherus Technologies, Inc.
The financial statements of Penn-Akron Corporation are as of February 29, 2000
and the year then ended.
-29-
<PAGE> 31
EXHIBITS.
<TABLE>
<S> <C>
2.1 Merger Agreement between Spherus Technologies, Inc. and
Penn-Akron Corporation.
2.2 Nevada Certificate of Merger between Spherus Technologies,
Inc. and Penn-Akron Corporation
2.3 Georgia Certificate of Merger between Spherus Technologies,
Inc. and Penn-Akron Corporation.
23.1 Consent of Windham Brannon, P.C.
</TABLE>
-30-
<PAGE> 32
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
PENN-AKRON CORPORATION
By: /s/ Kenneth M. Herman
----------------------------------------
Kenneth M. Herman,
President, Secretary and Director
Date: April 28, 2000
-31-
<PAGE> 1
EXHIBIT 2.1
MERGER AGREEMENT
DATED AS OF MARCH 23, 2000
BETWEEN
PENN-AKRON CORPORATION
AND
SPHERUS TECHNOLOGIES, INC.
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<S> <C>
1. The Merger .................................................................................... 1
2. Conversion of Shares .......................................................................... 2
3. Meetings of the Company's and PENN's Shareholders ............................................. 2
4. Dissenting Shares ............................................................................. 2
5. Consideration for Merger; Earn Out; Tampa's Fee ............................................... 3
6. Miscellaneous Provisions Relating to Delivery of PENN's Common Stock .......................... 5
7. Access to Books and Records ................................................................... 5
8. Post Merger Operations ........................................................................ 5
9. Closing ....................................................................................... 5
10. Representations and Warranties of the Company ................................................. 5
11. Representations and Warranties of PENN ........................................................ 7
12. Conditions and Obligations of PENN ............................................................ 8
13. Conditions and Obligations of the Company ..................................................... 9
14. Certain Covenants Prior to Closing ............................................................ 11
15. Survival of Representations and Warranties; Indemnification ................................... 12
16. Post Closing Covenants ........................................................................ 13
17. Post Closing Covenant - PENN .................................................................. 18
18. Investment Representation ..................................................................... 19
19. Further Assurances ............................................................................ 20
20. No Reverse Split .............................................................................. 20
21. Expenses ...................................................................................... 20
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
22. Employees of the Company ...................................................................... 20
23. Directors ..................................................................................... 20
24. Other Matters ................................................................................. 21
</TABLE>
<PAGE> 4
MERGER AGREEMENT
MERGER AGREEMENT (the "Plan of Merger"), dated as of March 23, 2000,
between Penn-Akron Corporation, a Nevada corporation ("PENN") and Spherus
Technologies Inc., a Georgia corporation (the "Company") and Tampa Bay Financial
("Tampa").
WITNESSED:
WHEREAS, the respective Board of Directors of the Company and PENN have
determined that the merger of the Company with and into PENN (the "Merger"),
with PENN continuing as the surviving corporation of the Merger, would be
advantageous and beneficial to their respective Corporations and shareholders.
WHEREAS, the Company desires to merge with PENN and PENN desires to
effect such merger, all on the terms and conditions hereinafter set forth in
such a manner that the exchange will constitute a tax-free reorganization
pursuant to the provisions of Section 368(1)(A) of the Internal Revenue Code of
1986, as amended.
NOW THEREFORE, in consideration of the premises and the mutual
agreements and undertakings hereinafter set forth, the parties do hereby adopt
said Plan of Merger, and, in order to consummate said plan, do hereby agree as
follows:
1. The Merger.
a. Subject to the terms and conditions hereof, and in accordance
with the Georgia Business Corporation Code of the State of Georgia (the
"Georgia Code") and the Nevada Private Corporation Act in the Nevada
Revised Statutes ("Nevada Statutes") , the Company will be merged with
and into PENN. The Company and PENN agree to merge and execute the
Articles of Merger and any and all documents necessary to complete the
Merger. Following the Merger, PENN shall continue as the surviving
corporation (the "Surviving Corporation") and the separate corporate
existence of the Company shall cease.
b. The Merger shall have the effects set forth in Section
14-2-1106 of the Georgia Code.
c. The Merger shall be consummated by filing with the Secretary
of State of the States of Georgia and Nevada a certificate of merger in
such form as is required by, and executed in accordance with, the
relevant provisions of the Georgia Code and the Nevada Statutes (the
time of such filing, or the time otherwise specified in such
certificate, being the "Effective Time").
d. The Certificate of Incorporation of PENN as in effect at the
Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended in accordance with the
provisions thereof and applicable law; provided, however, that in the
<PAGE> 5
event any further amendment or amendments to the Certificate of
Incorporation of the Surviving Corporation shall be necessary or
appropriate in the sole discretion of Company, which shall not be
inconsistent with the terms of this Plan of Merger, the parties hereto
agree to execute an appropriate amendment to this Plan of Merger to
provide for such amendment or amendments to be made to the Certificate
of Incorporation of the Surviving Corporation as of the Effective Time.
The By-Laws of the Company as in effect at the Effective Time shall be
the By-Laws of the Surviving Corporation until thereafter amended in
accordance with the provisions thereof and applicable law.
2. Conversion of Shares. Each share of common stock, of the Company
issued and outstanding immediately prior to the Effective Time (other than
Shares held by shareholders who properly exercise any dissenters' rights
available under the Georgia Code) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to receive
consideration of 15,693.581 shares of PENN Common Stock.
3. Meetings of the Company's and PENNs Shareholders. The Company and PENN
will each take all action necessary in accordance with the Georgia Code, Nevada
Statutes, federal securities laws and any other applicable law, and with their
respective Articles of Incorporation, as amended, and By-Laws, to convene as
promptly as practicable a meeting of their respective shareholders to consider
and vote upon the Merger. Each of the Company and PENN shall recommend that
their respective shareholders approve the Merger and shall use its reasonable
best efforts to obtain such approval, including but not limited to affirmative
support by the Company and PENN of the Merger. PENN and Tampa Bay Financial
shall, at all such meetings of holders of Shares convened for the purpose of
considering and voting upon the Merger, vote all Shares, if any, owned by it, or
over which it holds a proxy or a right to vote.
4. Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, Shares which are issued and outstanding immediately prior to the
Effective Time and which are held by stockholders who have not voted such Shares
in favor of the Merger and who have properly exercised rights of appraisal for
such Shares in the manner provided in the Corporation Code (the "Dissenting
Shares") shall not be converted into the right to receive the merger
consideration as provided in Paragraph 2 of this Agreement (the "Merger
Consideration"), unless and until such holder shall have failed to perfect or
shall have effectively withdrawn or lost his right to appraisal and payment
under the Georgia Code, as the case may be. If such holder shall have so failed
to perfect or shall have effectively withdrawn or lost such right, his Shares
shall thereupon be deemed to have been converted into and to have become
exchangeable for, at the Effective Time, the right to receive PENN Common Stock.
PENN shall not compromise or settle any demands for appraisal without the
consent of the Company, which consent shall not be unreasonably withheld or
delayed.
5. Consideration for Merger; Earn Out; Tampa's Fee.
a. Upon the terms and subject to the conditions set forth in this
Agreement, PENN
-2-
<PAGE> 6
agrees to convert each share of Company Stock into PENN common stock as
described in Paragraph 2. In addition, Tampa Bay Financial, Inc. shall
fund via capital contribution one million dollars ($1,000,000) in cash
to Company. Tampa has previously lent the Company $500,000 under a
promissory note, $250,000 of which has been converted into 500 shares
of the Company. Upon the Closing of this Agreement, the remaining
$250,000 balance of the Note shall be canceled (leaving Tampa with an
obligation to contribute $750,000 ("Tampa Contribution Obligation")
thirty days after Closing). Shares of the Company with respect to which
there is a dispute known to the Company shall be held in escrow by PENN
pending resolution of such dispute, satisfactory to the Company.
b. PENN promises to pay and issue additional shares ("Earn Out")
to the Shareholders (as listed on Exhibit A or who have signed this
Agreement, except for PENN who shall not participate in the Earn Out)
of Spherus upon the accomplishment of certain earn out goals. Under
this Earn Out, PENN shall issue up to Thirty-Two Million Two Hundred
Eighty-Seven Thousand One Hundred Sixty-Two (32,287,162) common shares
to the Shareholders, on a pro rata basis according to how many shares
of Spherus each Shareholder owned before the merger with PENN.
The term of this Earn Out shall be for five (5) fiscal years beginning
January 1, 2000.
This Earn Out provides that PENN shall issue four (4) additional shares
for every dollar of annual Income (as defined below) for each such
fiscal year (there being no carryover from year to year) achieved by
PENN in excess of the amount necessary to meet a $0.15 annual Income
per share for PENN in the year. Shares, if earned, shall be issued
promptly after the publication of the PENN's audited financial results
for the year. Proper adjustments shall be made in the event of a stock
split, stock dividend, reverse split or stock combination or
recapitalization or reorganization so as to preserve the economic and
financial benefit intended hereby (e.g. adjusting the $0.15 annual
Income, dollar of annual Income, number of shares to be issued). No
adjustment shall be made for mergers, acquisitions, sale of assets,
consolidations and share exchanges that the Board of Directors
concludes in good faith, after reasonable investigation, is not likely
to be dilutive to the income of PENN; otherwise an adjustment shall be
made to preserve the benefit of this Earn Out.
"Income" for a fiscal year shall mean the net income of PENN on a
consolidated basis determined under generally accepted accounting
principles set out in audited financial statements of PENN, increased
by non-recurring expenses, extraordinary expenses and charges and
merger and acquisition related expenses. Annual Income per share for a
fiscal year shall be determined by dividing Income by the number of
shares outstanding on the last day of such fiscal year.
c. Catalyst Communications, Inc. has, prior to the date hereof,
in exchange for the commitment to issue 4,500,000 shares of PENN
restricted common stock, sold certain
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<PAGE> 7
contract rights to PENN, so that PENN could acquire a sixteen and
one-half (16 1/2) acre parcel of land in Apex, North Carolina and other
rights to the resale of such property which will realize net cash
proceeds (after the payment of mortgages) of two million dollars
($2,000,000). Proceeds from the sale of said property shall be advanced
to the Company after Closing, not more than 30 days after the Closing
Date. If the Company does not receive the proceeds from the sale of
such property within thirty (30) days after Closing, the Company shall
have the opportunity to resell said property. If the Company elects not
to resell said property, Tampa shall be obligated to purchase said
property from the Company sixty (60) days after Closing at a net
purchase price of two million dollars ($2,000,000).
d. Tampa Bay Financial, Inc. and/or its assigns shall be issued
1,000,000 shares of Common Stock of PENN for consulting services in
connection with this transaction (such shares to be issued upon the
latter of (i) the payment of the Tampa Contribution Obligation by Tampa
within thirty days of the Closing Date, or (ii) the realization of the
proceeds of the aforementioned real property).
e. Tampa shall provide for $500,000 in post-closing promotional
expenses (including a public/investor relations firm) incurred by PENN
or, with the consent of PENN, spent on behalf of PENN; if after three
(3) years any unspent balance of the $500,000 provided for in
post-closing promotional costs remains, Tampa shall pay such remaining
unspent balance to PENN.
f. Buy-Back. For a period of thirty (30) business days after
Closing, each Shareholder of the Company on the date hereof who is a
party hereto, except for PENN as a Shareholder, shall be entitled to
purchase (pro rata based on the number of shares of the Company owned
by the Shareholder) the shares of PENN received by Tampa upon the
conversion of the 500 shares of the Company owned by Tampa. This right
may be exercised by sending Tampa written notice with payment.
6. Miscellaneous Provisions Relating to Delivery of PENN's Common Stock.
No fractional shares of Common Stock of PENN will be delivered and the number of
shares to be issued to any of the Company's Shareholders will be rounded up to
the nearest whole share if the Shareholder is entitled to receive one-half or
more of a share and rounded down to the nearest whole share if the Shareholder
is entitled to receive less than one-half of a share.
7. Access to Books and Records. Except as hereinafter provided, PENN and
its officers, employees and agents, shall have full access at all reasonable
times from and after the date hereof to the plants, facilities, books and
records of the Company and the Company shall cooperate fully with PENN to the
end that it may become familiar with the properties and business of the Company.
PENN agrees to treat any information which is disclosed to PENN by the Company
and is proprietary or confidential to the Company, as confidential information,
and in the event the Closing does not take place, all documents will be returned
to the Company and PENN will not make or
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<PAGE> 8
retain copies of any documents or make use of any confidential information
disclosed to it in the conduct of its business.
8. Post-Merger Operations. After giving effect to the transaction
contemplated hereby, the Company will merge with and into PENN with PENN being
the surviving corporation and such corporation will continue in existence,
operating under the name Spherus Technologies, Inc., or such other names
selected by the Board of Directors of the Company.
9. Closing. The Closing of the merger provided for herein will take place
at the office of Smith, Gambrell & Russell, 1230 Peachtree Street, NE, Suite
3100, Atlanta, Georgia 30309 on March 23, 2000, such date being herein referred
to as the "Closing Date". Prior to Closing, the Company and PENN shall deliver
to counsel for the Company to be held in escrow, all certificates, assignments,
and other instruments which may be necessary, desirable, or appropriate in order
to effect the merger of the Company into PENN, all in form and substance
reasonably satisfactory to counsel for PENN. Prior to Closing, PENN shall
deliver to counsel for the Company certificates evidencing the shares of Common
Stock of PENN to be delivered to the Shareholders pursuant to Paragraph 5
hereof, together with such other instruments which may be necessary, desirable,
or appropriate to accomplish such issuance all in form and substance
satisfactory to counsel for the Shareholders, to be held in escrow by such
counsel.
10. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with PENN as follows:
a. Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Georgia, with full corporate power to carry on its business as
now being conducted and to own and operate the property and assets now
owned and operated by it, and is duly qualified to transact business
and in good standing in each jurisdiction where the ownership of its
properties or the conduct of its business requires it to be licensed or
qualified to do business. The Company also delivered to PENN a copy of
its Articles of Incorporation and all amendments thereto, certified by
the Secretary of State of the State of Georgia, and a copy of its
By-Laws as amended, certified by its Secretary, which documents are
complete and correct as of the date of this Agreement.
b. Subsidiaries, Etc. The Company has no subsidiaries and is not
party to any partnership, joint venture of similar agreement.
c. Capital Stock. The authorized capital stock of the Company
consists of one thousand (1,000) shares of Common Stock, of which one
thousand (1,000) shares are issued and outstanding. All of said
outstanding shares of the Company have been duly authorized and validly
issued, are fully paid and non-assessable. There are no options,
warrants or other agreements or commitments which are now or may in the
future obligate the Company to issue or purchase any shares of its
capital stock or other securities.
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<PAGE> 9
d. Financial Statements. The Company supplementally has delivered
to PENN a balance sheet (the "Balance Sheet") of the Company as of
December 31, 1999 (the "Balance Sheet Date") and an income statement
and statement of retained earnings for the year then ended. Such
statements have been audited by an independent certified public
accounting firm, initialed by officers of the Company and PENN for
identification. All of such financial statements are complete and
fairly present the financial position of the Company on the indicated
dates and the results of its present financial position of the Company
on the indicated dates and the results of its operations for the
indicated periods. All of such statements have been prepared on the tax
basis of accounting consistently applied. The Company, to the best of
its knowledge, has no liabilities, whether absolute, accrued,
contingent or otherwise, other than (i) liabilities disclosed or (ii)
incurred in "arms-length" transactions in the ordinary course of
business since the Balance Sheet Date.
e. Breaches of Contracts, Etc. Neither the execution nor the
delivery of this Agreement by the Company, nor the performance of any
of its obligations hereunder, will result in a breach or violation of
any term or provision of or constitute a default under any indenture,
mortgage or other agreement or instrument to which the Company is a
party.
f. Conflict of Interests. Neither the Company nor any of its
affiliates (as this term is defined in the Securities Act of 1933 [the
"1933 Act"] and in the rules and regulations promulgated by the
Securities and Exchange Commission ["SEC"] thereunder) has, either
directly or indirectly, (i) an interest in any corporation,
partnership, proprietorship, association or other person or entity
which produces or sells those products and services which are produced
or sold by the Company, or (ii) a beneficial interest in any contract
or agreement to which the Company is a party or by which the Company
may be bound (except for commissions payable under the Company's
commission fee arrangement with its employees). For the purpose of this
subparagraph, there shall be disregarded any interest which arises
solely from the ownership of less than a five percent (5%) equity
interest in a corporation which has a class of securities regularly
traded on any securities exchange or in the over-the-counter market, or
quoted on any inter dealer quotation system.
g. Disclosure. No representations or warranties by the Company in
this Agreement and no statement contained in any document (including,
without limitation, financial statements, the schedules), certificate,
or other writing furnished or to be furnished to PENN or any of its
representatives pursuant to the provisions hereof or in connection with
the contemplated transactions, contains or will contain any untrue
statement of material fact. Documents delivered or to be delivered to
PENN pursuant to this Agreement are or will be true and complete copies
of what they purport to be.
11. Representations and Warranties of PENN. PENN represents and warrants to and
agrees with the Company as follows:
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<PAGE> 10
a. Organization and Standing. PENN is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Nevada, with full corporate power to carry on its business as
now being conducted and to own and operate the property and assets now
owned and operated by it, and is duly qualified to transact business
and in good standing in each jurisdiction where the ownership of its
properties or the conduct of its business requires it to be licensed or
qualified to do business.
b. Capital Stock. The authorized capital stock of PENN consists
of one hundred million (100,000,000) shares of Common Stock, $0.001 par
value, which immediately after closing after giving effect to the
issuance of shares contemplated by Section 5(a), 5(c) and 5(d) shall
consist of approximately thirty-two million two hundred eighty-seven
thousand one hundred sixty-two (32,287,162) shares of Common Stock
issued and outstanding. All of said outstanding shares shall be validly
issued, fully paid and non-assessable.
c. Validity of Shares. The shares of Common Stock to be delivered
by PENN pursuant to this Agreement will, when so delivered, be validly
issued and outstanding, fully paid and non-assessable.
d. Changes, Dividends, Etc. Prior to the Closing hereunder, PENN
will not split, combine or otherwise change or reclassify its
outstanding Common Stock or declare or distribute any cash or stock
dividend upon such Common Stock.
e. Authorization of Agreement. PENN's Board of Directors has duly
authorized the execution, delivery and performance of this Agreement by
PENN has been duly authorized by PENN's Board of Directors, and will
not result in any breach of or violate or constitute a default under
its Articles of Incorporation or By-Laws or any indenture, mortgage or
other agreement or instrument to which it is a party.
f. No Violation of Law, Etc. Neither the execution, nor the
delivery of this Agreement by PENN, nor the performance of any of its
obligations hereunder will result in a breach or violation of any law,
order, rule, regulation, writ, injunction or decree or any governmental
instrumentality or court having jurisdiction over PENN or any of its
assets or rights, or result in the creation or imposition of any lien,
charge or encumbrance of any kind whatever on any of such assets or
rights.
g. Financial Statements. PENN has delivered to the Company its
audited annual reports for the years ended February 28, 1999 and 1998
which contains a consolidated balance sheet as of February 28, 1999 and
1998 and the related statement of consolidated income for the years
ended February 28, 1999 and 1998. PENN has also delivered quarterly
financial statements for May 31, 1999, August 31, 1999 and November 30,
1999. All such financial statements are true, accurate and complete,
have been prepared in accordance with generally accepted accounting
principles consistently applied and fairly present the consolidated
financial position of PENN at such date, and the results of its
operations for the period therein specified. Except as set forth in
such financial statements, PENN has no liabilities
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<PAGE> 11
whether contingent or otherwise, whether or not required, to be
disclosed on the financial statements.
h. No Material Changes. Since November 30, 1999, there has been
no material change in the condition (financial or otherwise), assets,
liabilities, capitalization or business of PENN, which have not been
disclosed to the Company.
12. Conditions and Obligations of PENN. The obligations of PENN under this
Agreement are of the following conditions precedent:
a. All representations and warranties of the Company contained
herein and in any certificate or other investment delivered pursuant to
the provisions hereof, or in connection with the transactions
contemplated hereby, shall be true on the Closing Date with the same
force and effect as though such representations and warranties had been
made on the Closing Date.
b. The Company shall have performed and complied with all of the
terms, covenants and conditions of this Agreement to be performed or
complied with by them, respectively, on or before the Closing Date,
except for those Post Closing Covenants listed in Paragraph 16.
c. The Directors of the Company shall have taken all necessary
action to authorize the execution and performance of this Agreement,
and the Company shall have delivered to PENN true and complete copies,
certified by the Secretary, of Resolutions of its Board of Directors
evidencing such action.
d. The Shares of PENN's Common Stock, $0.001 par value, which are
to be delivered on the Closing Date to the Company in accordance with
the terms hereof shall have been authorized, non-assessable and fully
valid.
e. No action or proceeding by any governmental body or agency
shall have been threatened, asserted or instituted to restrain or
prohibit the carrying out of the transactions contemplated by this
Agreement.
f. The Company owns, or is licensed or otherwise has the right to
use, all patents, trademarks, trade names, copyrights, technology,
know-how, processes, names and likenesses used in or necessary for the
conduct of its business as heretofore conducted.
The conditions contained in this Paragraph 12 are included herein for the
benefit of PENN and, without constituting a waiver of any of its other rights
hereunder, may be waived, in whole or in part, by PENN.
13. Conditions and Obligations of the Company. The Company under this
Agreement is subject
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<PAGE> 12
to the fulfillment, on or before the Closing Date, of the following conditions:
a. All representations and warranties of PENN contained herein
and in any certificate or other instrument delivered pursuant to the
provisions hereof, or in connection with the transactions contemplated
hereby, shall be true on the Closing Date with the same force and
effect as though such representations and warranties had been made on
the Closing Date.
b. PENN shall have performed and complied with all of the terms,
covenants and conditions of this Agreement to be performed or complied
with by it on or before the Closing Date.
c. PENN shall have delivered to the Company a certificate of its
President or a Vice President and its Secretary or an Assistant
Secretary, dated at the Closing Date, certifying in such detail as the
Company may reasonably request to the fulfillment of the conditions
specified in this Agreement.
d. The Board of Directors of PENN shall have taken all necessary
action to authorize the execution and performance of this Agreement,
including the delivery of shares of Common Stock of PENN to the Company
in accordance with this Agreement, and PENN shall have delivered to the
Company true and complete copies certified by its Secretary or
Assistant Secretary, of Resolutions of its Board of Directors
evidencing such action.
e. PENN and Tampa represent to the Company that:
i. PENN is a corporation duly organized, validly existing and
in good standing under the laws of the State of Nevada, with
an authorized capitalization as set forth in subparagraph (b)
of Paragraph 11 of this Agreement, with full corporate power
and authority to enter into and perform its obligations under
this Agreement, to own and hold its properties owned and
leased and to carry on the business in which it is engaged.
ii. The Execution, delivery and performance of this Agreement
by PENN have been duly and validly authorized and approved (as
required by law and by the terms of this Agreement) by PENN's
Board of Directors and this Agreement has been duly executed
and delivered by PENN and constitutes the valid and binding
obligation of PENN in accordance with its terms, except as
limited by bankruptcy, insolvency, and other laws affecting
the enforcement of creditors' rights.
iii. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein
will not result in any breach or violation of any of the terms
or provisions of, or constitute a default under, the Articles
of Incorporation or By-Laws of PENN or, to the knowledge of
Penn's counsel, any statute, law, order, rule or regulation of
any court of governmental agency or body having jurisdiction
over PENN or any of its activities or properties or any term
or provision of any indenture, mortgage, security agreement,
or other
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<PAGE> 13
agreement, instrument, commitment or arrangement, to which
PENN is a party or by which it is bound or to which its
property is subject.
iv. The shares of PENN to be delivered to the Company on the
Closing Date pursuant to Paragraph 3 hereof, have been duly
authorized and upon such delivery will be validly issued,
fully paid and non-assessable.
f. No action or proceeding by any governmental body or agency
shall have been threatened, asserted or instituted to restrain or
prohibit the carrying out of the transactions contemplated by this
Agreement.
g. All corporate and other proceedings and actions taken in
connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned
in this Paragraph 13 or incident to any such transaction shall be
satisfactory in form and substance to the Company and its counsel.
The conditions contained in this Paragraph 13 are included herein for the
benefit of the Company and, without constituting a waiver of any of its rights
hereunder, may be waived, in whole or in part, by the Company.
14. Certain Covenants Prior to Closing.
a. The Company will use commercially reasonable best efforts, and
take such other action as may be necessary, to fulfill all of the
conditions contained in Paragraph 10 and 12 hereof and to authorize and
consummate, and cause its officers to authorize and consummate, all of
the transactions herein contemplated.
b. PENN will use commercially reasonable best efforts, and take
such other action as may be necessary, to fulfill all of the conditions
contained in Paragraph 11 and 13 hereof and to authorize and consummate
all of the transactions herein contemplated.
c. Between the date of this Agreement and the Closing Date, the
Company shall (a) give PENN and its authorized representatives full
access to all offices, warehouses and other facilities and properties
of the Company and to the books and records of the Company (and permit
PENN to make copies thereof), (b) permit PENN to make inspections
thereof, and (c) cause its officers and its advisors (including,
without limitation, its auditors, attorneys, financial advisors and
other consultants, agents and advisors) to furnish PENN with such
financial and operating data and other information with respect to the
business and properties of the Company, and to discuss with PENN and
its authorized representatives the affairs of the Company, all as PENN
may from time to time reasonably request.
d. Between the date of this Agreement and the Closing Date, the
Company shall give notice to PENN promptly upon the Company becoming
aware of (a) any inaccuracy of a representation or warranty set forth
in any schedule or (b) any event or state of facts that, if it had
occurred or existed on or prior to the date of this Agreement, would
have caused any
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<PAGE> 14
such representation and warranty to be inaccurate, any such notice to
describe such inaccuracy, event or state of facts in reasonable detail.
e. Between the date of this Agreement and the Closing Date, the
Company shall cause (a) copies of all reports and other documents given
to the members of the Board of Directors (or any committee thereof) of
the Company to be delivered to PENN at the same time and (b) copies of
the minutes of all meetings of, and actions taken without a meeting by,
the Board of Directors (or any committee thereof) of the Company to be
delivered to PENN promptly after the preparation thereof. Between the
date of this Agreement and the Closing, the Company shall give PENN at
least three (3) days prior notice of any meeting of or action to be
taken without a meeting by, the Board of Directors or committee
thereof, of the Company and shall cause the Company to permit one
individual designated by PENN to attend each such meeting as an
observer.
f. Between the date of this Agreement and the Closing Date, PENN
and the Company shall discuss and coordinate with respect to any public
filing or announcement concerning any of the contemplated transactions.
g. PENN shall cause the Company to, (a) file with applicable
regulatory authorities the applications and related documents required
to be filed by them (and prosecute diligently and related proceedings)
in order to consummate the contemplated transactions and (b) cooperate
with the others as they may reasonably request in connection with the
following.
15. Survival of Representations and Warranties; Indemnification.
a. Except as provided in subparagraph (b)of this Paragraph 15, all
representations, warranties and agreements contained in this Agreement
shall survive the Closing for a period of twelve (12) months,
notwithstanding any investigation conducted with respect thereto;
however, a party shall have no liability with respect to a
representation and warranty, or an agreement to be performed or
complied with prior to the Closing Date, to the extent that the
inaccuracy of such representation and warranty or the failure to
perform and comply with such agreement was not intentional and was
disclosed in a schedule delivered pursuant to this Agreement.
b. The obligations set out in Paragraph 5, Paragraph 15 and Paragraph
17 hereof shall survive closing and the obligations set out in
Paragraph 22 shall survive for two years after the Closing.
c. The Company and Shareholders, jointly and severally, shall indemnify
and hold harmless Tampa and shall reimburse Tampa for any loss,
liability, claim, damage, expense (including, but not limited to, costs
of investigation and defense and reasonable attorneys' fees) or
diminution of value (collectively "Damages") arising in substantial
part from or in connection with, (a) any material inaccuracy in any of
the representations and warranties of the Company or Shareholders in
this Agreement, or any actions, omissions or state of facts
inconsistent with any such representation or warranty, (b) any failure
by the Company or
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<PAGE> 15
Shareholders to perform or comply with any agreement in this Agreement,
(c) any claim by any person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such person with the
Company or any Shareholder (or any person acting on their behalf) in
connection with any of the contemplated transactions, and (d) any
claims by John Julian against PENN and/or Tampa related to this Plan of
Merger, except if the Damages arise out of Tampa's negligent act or
omission. PENN shall indemnify and hold harmless the Shareholders and
shall reimburse the Shareholders for any Damages caused by the breach
of this Agreement by PENN or the failure of PENN to perform as herein
provided.
16. Post Closing Covenants. The Company under this Agreement is subject to the
fulfillment, following the Closing Date, of the following conditions:
a. The Company shall supplementally deliver to PENN post Closing, at
the request of PENN, a schedule, listing all promissory notes payable
by the Company, all agreements of the Company to borrow money from
others, and all commitments by others to lend money to the Company. As
to each note, obligation to borrow and loan commitment, such schedule
will accurately sets forth the interest rate, terms of payment of
principal and interest, identity of security (if any) and any other
material terms of such indebtedness. The Company, to the best of its
knowledge, as of the date of such schedule, will not be in default in
any respect under, and is not otherwise, in violation or contravention
of, any of the terms or provisions of any note, loan agreement,
agreement to borrow money from others or any commitment by others to
lend money.
b. The Company shall supplementally deliver to PENN post Closing, at
the request of PENN, a complete and accurate schedule, listing and
briefly describing all Material Contracts. For this purpose, the term
"Material Contracts" shall be defined to mean (i) all contracts and
commitments out of the ordinary course of business; (ii) all contracts
and commitments involving an obligation which cannot or, in reasonable
probability, will not be performed or terminated within sixty (60) days
from the date hereof; (iii) all bonus, incentive compensation, pension,
group insurance or employee welfare plans of any nature whatsoever;
(iv) all collective bargaining agreements or other contracts or
commitments to or with any labor unions or other employee
representatives or groups of employees; (v) employment contracts and
other contracts, agreements or commitments to or with individual
employees, agents or consultants extending for a period of more than
three (3) months from the date hereof or providing for earlier
termination only upon the payment of a penalty or equivalent thereof;
or (vi) all other contracts or commitments providing for payments based
in any manner upon the sales, purchases or profits of the Company. As
of the date of such schedule, there will not be any material default,
of which the Company is aware, in any obligation to be performed by the
Company under any material contract listed on the said schedule.
c. Except as identified in a complete and accurate schedule to be
supplementally delivered to PENN post Closing, at the request of PENN,
the Company, to the best of its knowledge, as of the date of such
schedule will not be engaged in or threatened with any
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<PAGE> 16
legal action or other proceeding before any court or administrative
agency. The Company, to the best of its knowledge, as of the date of
such schedule, will not have violated any laws, regulations or order
applicable to its business or activities, and the conduct of the
present business of the Company at the present location is in
conformity with all zoning and building code requirements.
d. The Company shall supplementally deliver to PENN post Closing, at
the request of PENN, a complete and accurate schedule listing all
domestic and foreign patents, patent applications, licenses, formulae,
trademarks, trade names and copyrights owned or held by the Company as
of the date of such schedule, and a summary of the terms of all
agreements relating to technology, know-how or processes which the
Company is licensed or authorized to use by others. Except as set forth
in this schedule, as of the date of such schedule, the Company has the
sole and exclusive right to use the patents, trademarks, trade names,
copyright, technology, know-how, processes, names and likenesses
referred to therein, and the consummation of the contemplated
transactions does not alter or impair any such rights as of the date of
such schedule; no claims have been asserted by any person to the use of
any such patents, trademarks, trade names, copyrights, technology,
know-how, processes, names and likenesses or challenging or questioning
the validity or effectiveness of any such licenses or agreements, and
there is no valid basis for any such claim and the use of such patents,
trademarks, trade names, copyrights, technology, know-how, processes,
names and likenesses by the Company does not infringe on the rights of
any person.
e. The Company shall supplementally deliver to PENN post Closing, at
the request of PENN, complete and accurate schedules, listing each
salaried employee of the Company as of the date of such schedule,
together with each employee who is paid on an hourly basis and showing
their respective rates of compensation (including bonuses, if any) and
fringe benefits (including vacation time accrued to the Balance Sheet
Date). As of the date of such schedule, the Company will have paid in
full to its employees all wages, salaries, commissions, bonuses and
other direct compensation for all services employed by them, other than
amounts that have not yet become payable in accordance with the
Company's customary practices. Except as set forth in the schedule, the
Company will not be liable for any severance pay or other payments on
account of termination of any former employees except as listed in this
schedule, will be in material compliance with all applicable laws
respecting employment and employment practices, and terms and
conditions of employment and wages and hours as of the date of such
schedule.
f. Except as identified in a complete and accurate schedule, to be
supplementally delivered to PENN post Closing, at the request of PENN,
the Company does not have, none of its employees are covered by, and
the Company does not have any obligation, as of the date of such
schedule, with respect to, any bonus, deferred compensation, pension,
profit-sharing, retirement, insurance, stock purchase, stock option, or
other fringe benefit plan, arrangement or practice, or any other
employee benefit plan (as defined in subparagraph (1), whether formal
or informal (collectively "Plans")). The schedule contains an accurate
and complete description of, and sets forth the annual amount payable
pursuant to, each of those Plans, and the Balance Sheets (which
hereinafter shall refer to an unaudited balance sheet of
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<PAGE> 17
the Company) reflect in the aggregate an accrual of all amounts accrued
but unpaid under such Plans as of their respective dates. The Company
has performed and complied with all of its obligations under or with
respect to such Plans, as of the date of such schedule, and such Plans
have operated in accordance with their terms. The Company has no
commitment, whether formal or informal and whether legally binding or
not, to create any additional Plans as of the date of such schedule.
g. The Company shall supplementally deliver to PENN post Closing, at
the request of PENN, a schedule of all Plans disclosed or required to
be disclosed in subsection (f) above that are employee benefit plans
and any related trust agreements (collectively, "Target Plans"). The
schedule lists, and the Company shall provide post Closing to PENN, at
the request of PENN, copies of, (a) the most recent Internal Revenue
Service determination letter relating to each of the Target Plans (and
none of the Target Plans has been amended or modified since the date of
the determination letter relating to it and each of the Target Plans
has been operated in accordance with the description contained in such
determination letter), (b) the most recent annual report (Form 5500
Series) and accompanying schedules of each of the Target Plans filed
with the Department of Labor pursuant to ERISA, (c) the most recent
certified financial statements of each of the Target Plans as of the
date thereof, and there have been no material changes in the assets or
liabilities associated with such Target Plans since the date of such
financial statements. The Company shall deliver to PENN copies of, and
the schedule lists, all actuarial reports with respect to the Target
Plans, which reports are complete and accurate. Except as set forth in
the schedule, there are no accrued unpaid contributions to any of the
Target Plans as of the date of such schedule. The Target Plans have
operated in accordance with the applicable requirements of ERISA and
the Code. No reportable event (as defined in section 4043(e) of ERISA),
prohibited transactions (as defined in section 406 of ERISA or section
4975 of the Code), accumulated funding deficiency (as defined in
section 302 of ERISA) or plan termination (as defined in Title IV of
ERISA or section 411(d) of the Code) will have occurred with respect to
any of the Target Plans as of the date of such schedule. Except as set
forth in the schedule, no filing, application or other matters with
respect to any of the Target Plans will be pending with the Internal
Revenue Service, Pension Benefit Guaranty corporation, United States
Department of Labor or other governmental body, none of the Target
Plans will have been terminated, the Pension Benefit Guaranty
Corporation will not have taken any action to terminate any of the
Target Plans and no trustee will have been appointed by any court to
administer any of the Target Plans as of the date of such schedule.
None of the Target Plans will have been amended since the date of the
Balance Sheets or will be amended prior to the date of such schedule.
h. The Company shall supplementally deliver to PENN post Closing, at
the request of PENN, complete and accurate schedules of all accounts
receivable at the time of such schedules. All such accounts receivable
of the Company, whether or not reflected in the Balance Sheets or the
Interim Balance Sheet, except as set forth on such Schedule, will
represent sales actually made in the ordinary course of business, and
are current and
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<PAGE> 18
collectible net of any reserves shown on the Balance Sheets or the
Interim Balance Sheet (which reserves are adequate and were calculated
consistent with past practice). Subject to such reserves, each of the
accounts receivable has been collected in full or will be collected in
full, without any set-off, within ninety (90) days after the day on
which it first becomes due and payable.
i. The Company shall supplementally deliver to PENN post Closing, at
the request of PENN, complete and accurate schedules of all inventory.
All inventory of the Company, whether or not reflected in the Balance
Sheets or the Interim Balance Sheet, will consist of a quality and
quantity usable and salable in the ordinary course of business at the
time of such schedule, except for obsolete items and items of
below-standard quality, all of which have been (or will be) written off
or written down to net realizable value in the Balance Sheets or the
Interim Balance Sheet. All inventories not written off at the time of
such schedule have been recorded at the lower of average cost or
market. The quantities of each type of inventory (whether raw
materials, work-in-process, or finished goods) are not excessive, but
are reasonable and warranted in the circumstances of the Company at the
time of such schedule. All work in process and finished goods inventory
is free from any defect or other deficiency at the time of such
schedule.
j. The Company shall supplementally deliver to PENN post Closing, at
the request of PENN, a list of any purchase commitments entered into by
the Company. No purchase commitment of the Company will be in excess of
normal, ordinary and usual requirements of its business, or will be
made at any price in excess of the then current market price, or will
contain terms and conditions more onerous than those usually and
customary in the industry at the time of such schedule. In the
aggregate, the outstanding bids, sales proposals, contracts or unfilled
orders of the Company at the time of such schedule (i) will not (based
on costs at the time of such schedule and reasonably foreseeable
increases in such costs) require the Company to supply goods or
services at cost to the Company in excess of the revenues to be
received therefrom, and (ii) quote prices which include a mark-up over
reasonably estimated costs consistent with past mark-ups on similar
business.
k. The Company shall supplementally deliver to PENN post Closing, at
the request of PENN, a schedule listing all contracts or commitments
affecting ownership of, title to, use of, or any interest in real
estate. All such leases of real property set forth on such Schedule,
except as therein noted, will be valid, binding, and enforceable in
accordance with their terms, and will be in full force and effect at
the time of such schedule; there will be no existing defaults (or
events which, with notice or lapse of time or both, would constitute a
default) by the Company (except as set forth on such Schedule), and all
lessors under such leases have consented (where such consent is
necessary) to the consummation of the contemplated transactions without
requiring modification in the rights or obligations of the lessee under
such leases and all such consents are listed in the schedule provided
to PENN. The Company shall deliver executed counterpart copies of all
consents referred to in the
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<PAGE> 19
preceding sentence to PENN, post Closing, at the request of PENN.
l. Except as supplementally disclosed post Closing, in a schedule
provided at the request of PENN, at the time of such schedule, there
will be no material adverse change in the condition (financial or
otherwise), physical assets, capitalization or business of the Company,
no dividend or other distribution declared, paid or made on any of the
shares of the Company's capital stock, no direct or indirect
redemption, purchase or other acquisition by the Company of any shares
of its capital stock, no damage, destruction or loss (whether or not
covered by insurance) adversely affecting the properties, business or
prospects of the Company, no increase in the rate of compensation
payable or to become payable to any officer or other employee of the
Company (except as disclosed in the schedule referred to in
subparagraph (e) of this Paragraph 16 or approved in writing by PENN),
no significant labor disturbances, and no other event or condition
which materially and adversely affects the business of the Company
since the Balance Sheet Date. Except as set forth on such Schedule,
since the Balance Sheet Date, the business of the Company has been
conducted diligently and in the ordinary course; the Company has not
sold or transferred any of its property or assets except in the
ordinary course of business, and no contracts have been entered into by
the Company except in the ordinary course of business or with the
written approval of PENN.
m. At the time an applicable schedule is prepared, if requested by
PENN, the Company will have filed on a timely basis all tax returns
that are or were required to be filed pursuant to the laws, regulations
or administrative requirements of each governmental body with taxing
power of it or its assets. The Company shall deliver to PENN post
Closing, at the request of PENN, all such Tax Returns filed since the
Company's inception. At the time of such schedule, the Company will
have paid all Taxes that have or may have become due pursuant to those
Tax Returns or otherwise, or pursuant to any assessment received by the
Company, except such Taxes, if any, as are set forth in a schedule and
are being contested in good faith and as to which adequate reserves
(determined in accordance with the tax basis of accounting consistently
applied) have been provided for in the Balance Sheets and Interim
Balance Sheets or in a supplement thereto.
n. The Company shall supplementally deliver to PENN, post Closing at
the request of PENN, a complete and accurate schedule, containing (i) a
list of all banks and other institutions in which the Company has any
account or safe deposit showing the identifying numbers and names of
the persons authorized to draw thereon or have access thereto at the
time of such schedule, and (iii) a list of all capitalized machinery,
tools, equipment owned, leased or otherwise used by the Company at the
time of such schedule.
o. The Company shall supplementally deliver to PENN, post Closing at
the request of PENN, a complete and accurate schedule, identified by
reference to this subparagraph, listing and briefly describing all
policies of fire, liability, life, workmen's compensation and other
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<PAGE> 20
insurance maintained by the Company at the time of such schedule. The
schedule provided by the Company shall identify all risks that have
been designated as being self insured at the time of such schedule. No
insurance carrier has refused to insure any operations or property
assets of the Company, nor has any insurance carrier, which has
carried, or received any application for, any such insurance limited
the coverage during the last three (3) years up until the time of such
schedule.
The conditions contained in this Paragraph 16 are included herein for the
benefit of PENN and, without constituting a waiver of any of its rights
hereunder, may be waived, in whole or in part, by PENN.
17. Post Closing Covenant-PENN. PENN under this Agreement is subject to
the fulfillment following the Closing Date of the following:
a. PENN shall complete a merger with Sanswire, LLC, a Georgia limited
liability company under such terms specified in an agreement to be
drafted by the parties that contemplate the issuance of not more than
3,374,120 shares of PENN's share at a price per share that is not
dilutive to PENN's earnings or Income. If PENN does not complete a
merger with Sanswire, LLC within 90 days of the Closing Date, under
terms consistent with the foregoing sentence, the former Spherus
Shareholders (not including PENN) shall have issued to them additional
shares of PENN such that immediately after the consummation of the
merger described in Paragraph 1 hereof, after giving effect to the
issuance contemplated by Paragraph 5(a), (c) and (d), so as to give
them, in the aggregate, fifty (50%) percent of the outstanding shares
of PENN.
18. Investment Representation. Each of the Shareholders acknowledges his
understanding that the shares of PENN's Common Stock to be delivered pursuant to
this Agreement will not be registered pursuant to the 1933 Act and each of the
Shareholders further represents to and agrees with PENN as follows:
a. He/She is acquiring the shares of PENN's Common Stock pursuant to
this Agreement for his/her own private personal investment account and
with no present intention of reselling or distributing such shares or
any portion thereof to others.
b. They fully comprehend that in connection with the issuance of shares
of PENN's Common Stock pursuant to this Agreement, PENN is relying to a
material degree on the representations, warranties and covenants
contained herein, and with such realization he/she authorizes PENN to
act as it may see fit in full reliance hereon.
c. He/she agrees that none of such shares will be transferred or
distributed unless (i) they are covered by an effective Registration
Statement prepared in accordance with the 1933 Act and are distributed
in a manner complying with the 1933 Act and with the Rules and
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<PAGE> 21
Regulations promulgated thereunder; or (ii) they may be transferred in
accordance with Rule 144 of the Rules and Regulations pursuant to the
1933 Act (or such similar Rule as may be applicable to such shares at
the time of transfer) so long as such transfer strictly complies with
said Rule 144 and with such procedures as PENN may reasonably establish
in connection therewith; or (iii) there is first delivered to PENN the
written legal opinion of legal counsel in form and substance reasonably
satisfactory to PENN's legal counsel or a "no action letter" from SEC
indicating that any of the provisions of the 1933 Act and the Rules and
Regulations promulgated thereunder. In the event such legal opinion is
based upon the exemption now contained in Section 4(2) of the 1933 Act,
the person acquiring shares or some portion thereof shall execute and
deliver to PENN a letter agreement complying with the 1933 Act and the
Rules and Regulations promulgated thereunder.
d. He/she hereby agrees that the certificate(s) representing such
shares may bear a legend, as set forth below, setting forth the
restrictions upon transfer which are contained in the foregoing
subparagraph (c) and that PENN may deliver to its transfer agents a
"stop transfer order" directing the transfer agents not to effect any
transfer of such shares without having received the permission of PENN
and evidence of compliance with applicable provisions of the 1933 Act
and the terms of this Agreement.
The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") and
are "restricted securities" as that term is defined in Rule
144 under the Act. The shares may not be offered for sale,
sold or otherwise transferred except pursuant to an exemption
from registration under the Act, the availability of which is
to be established to the satisfaction of PENN.
e. He/she hereby agrees to indemnify PENN against and hold it harmless
from all losses, liabilities, costs and expenses (including reasonable
attorneys' fees) which shall arise as a result of a sale or
distribution by him/her of such shares or any portion thereof in
violation of the 1933 Act or the terms of this Agreement.
19. Further Assurances.
a. At the request of PENN, and without further consideration, the
Company and Shareholders will execute and deliver such additional
instruments of transfer and will take such other action as PENN
reasonably may request in order more effectively to transfer to PENN
full ownership and control of the Company.
b. At the request of one or more of the Shareholders, and without
further consideration, each of PENN and Tampa will execute and deliver
such additional instruments and will take such other actions as the
Shareholders may reasonably request in order more effectively to carry
out the transaction contemplated hereby.
-18-
<PAGE> 22
20. No Reverse Split. For a period of twenty-four (24) months from the
Closing Date, PENN will not engage in any reverse split of its issued and
outstanding Common Stock.
21. Expenses. Each party shall bear its own expenses incident to the
preparation, negotiation and delivery of this Agreement and the performance of
its obligations hereunder.
22. Employees of the Company. PENN agrees to maintain the employment of
Christopher J.S. Baker and Kenneth Herman, with the same salary and seniority.
23. Directors. Three (3) seats (or three/fifths of available seats if there
are more than 5 seats) on the initial Board of Directors of PENN will be chosen
by the Company's Board (and for six months thereafter except that in the event
of a subsequent merger, the number of seats chosen by the initial Board of the
Company shall not be increased in the event of an increase in the number of
Board seats). A total of five (5) Board of Directors will make-up the initial
PENN Board of Directors. Tampa and its affiliates will cause their shares and
the shares they control to be voted consistent with the foregoing.
24. Other Matters.
a. No Other Agreements. All terms and conditions of this Agreement are
set forth herein, and there are no warranties, agreements or
understandings, express or implied, except those expressly set forth
herein.
b. Amendment. This Agreement may be amended only by a written
instrument executed on behalf of PENN and the Company.
c. Notices. Any notice or other communication required or permitted to
be given hereunder shall be deemed properly given if personally
delivered or deposited in the United States mail, registered or
certified and postage prepaid, addressed to the Company at 1360 Union
Hill Road, 400 Overlook, Suite 5-F, Alpharetta, Georgia, 30004, or at
such other addresses as may from time to time be designated by the
respective parties in writing.
d. Specific Performance. The parties acknowledge that the subject
matter of this Agreement (i.e., the business and assets of the Company)
is unique and that no adequate remedy of law would be available for
breach of this Agreement. Accordingly, each party agrees that the other
parties will be entitled to an appropriate decree of specific
performance or other equitable remedies to enforce this Agreement
(without any bond or other security being required) and each party
waives the defense in any action or proceeding brought to enforce this
Agreement that there exists an adequate remedy at law.
e. Assignment. Except as specifically permitted by the terms of this
Agreement, neither this Agreement nor any right created hereby shall be
assignable by PENN. The Company without the prior written consent of
all other parties hereto, and any such attempted
-19-
<PAGE> 23
assignment shall be void. Nothing in this agreement, expressed or
implied, is intended to convert upon any person, other than the parties
hereto, any rights or remedies under or by reason of this Agreement.
f. Paragraphs and Other Headings. Paragraphs or other headings
contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
g. Choice of Law. It is the intention of the parties that the laws of
the State of Georgia should govern the validity of this Agreement, the
construction of its terms and the interpretation of the rights and
duties of the parties.
h. No Waiver. The failure of any party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be considered a
waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement. Any
waiver must be in writing.
i. Severability. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid,
illegal or unenforceable, the same shall not affect any other
provisions of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provisions had never been
contained herein.
j. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all shall
constitute one and the same instrument.
k. Third Party Beneficiary. To the extent this Agreement provides a
benefit to be paid to any shareholder(s) of the Company or makes a
representation, warranty or covenant about PENN, such shareholders are
third party beneficiaries hereof and shall be entitled to enforce this
Agreement.
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<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
Penn-Akron Corporation
By: /s/ Curtis Olsen
----------------------
Curtis Olsen, Chairman
Spherus Technologies, Inc.
By: /s/ Kenneth M. Herman
---------------------
Ken Herman, President
Tampa Bay Financial, Inc.
By: /s/ Carl Smith
---------------------
Carl Smith, Chairman
/s/ Kenneth M. Herman
--------------------------
Ken Herman, Shareholder
/s/ John Julian
-------------------------
John Julian, Shareholder
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<PAGE> 25
EXHIBIT A
<TABLE>
<S> <C>
Tampa Bay Financial 500
Penn-Akron Corporation 215
Ken Herman 25 (claims an additional 70 shares)
John Julian 260 (title is disputed with respect to 70 shares)
</TABLE>
-22-
<PAGE> 1
EXHIBIT 2.2
ARTICLES OF MERGER
OF
SPHERUS TECHNOLOGIES, INC.
(A Georgia Corporation)
INTO
PENN-AKRON CORPORATION
(A Nevada Corporation)
Pursuant to Nevada Revised Statutes Section 92A.200, it is hereby
certified, on behalf of each of the constituent corporation herein named as
follows:
I.
The name of the constituent corporation which is to be the surviving
corporation, hereinafter sometimes referred to as the "Surviving Corporation,"
is Penn-Akron Corporation, a Nevada corporation (the "Company").
II.
The name of the constituent corporation which is being merged into the
Surviving Corporation, sometimes hereinafter referred to as the "Merged
Corporation" is Spherus Technologies, Inc., a Georgia corporation. The Company
and the Merged Corporation are hereinafter sometimes referred to collectively
as the "Constituent Corporations."
III.
An Agreement and Plan of Merger, which is hereinafter sometimes
referred to as the "Plan of Merger," setting forth the terms and conditions of
the Merger of the Merged Corporation into the Company (the "Merger") has been
adopted by the Directors and unanimously approved by the Shareholders of both
the Company and the Merged Corporation in accordance with Section 92A.190 of
the Nevada Revised Statutes and Section 14-2-1103 of the Georgia Business
Corporation Code. An executed copy of the Plan of Merger is on file at the
principal place of business of the Surviving Corporation which is located at
1355 Terrell Mill Road, Building 1466, Marietta, Georgia 30067. A copy of the
Plan of Merger will be furnished by the Surviving Corporation, on request and
without cost, to any member of the Constituent Corporations.
IV.
The Articles of Incorporation oft he Company shall continue to be the
Articles of Incorporation of the Surviving Corporation from and after the
Merger.
The undersigned have caused these Articles of Merger to be executed as
of this 23rd day of March, 2000.
PENN-AKRON CORPORATION
By: /s/ Curtis Olsen
----------------------------------
Curtis Olsen, President
By: /s/ Allison Olsen
----------------------------------
Allison Olsen, Secretary/Treasurer
<PAGE> 1
EXHIBIT 2.3
ARTICLES OF MERGER
OF
SPHERUS TECHNOLOGIES, INC.
(A Georgia Corporation)
INTO
PENN-AKRON CORPORATION
(A Nevada Corporation)
Pursuant to Section 14-2-1105 of the Georgia Corporation Code, it is
hereby certified, on behalf of each of the constituent corporations herein
named as follows:
I.
The name of the constituent corporation which is to be the surviving
corporation, hereinafter sometimes referred to as the "Surviving Corporation,"
is Penn-Akron Corporation, a Nevada corporation (the "Company").
II.
The name of the constituent corporation which is being merged into the
Surviving Corporation, sometimes hereinafter referred to as the "Merged
Corporation" is Spherus Technologies, Inc., a Georgia corporation. The Company
and the Merged Corporation are hereinafter sometimes referred to collectively
as the "Constituent Corporations."
III.
An Agreement and Plan of Merger, which is hereinafter sometimes
referred to as the "Plan of Merger," setting forth the terms and conditions of
the merger of the Merged Corporation into the Company (the "Merger") has been
adopted by the Directors and approved by the Shareholders of both the Company
and the Merged Corporation in accordance with Section 92A.190 of the Nevada
Revised Statutes and Section 14-2-1103 of the Georgia Business Corporation Code.
An executed copy of the Plan of Merger is on file at the principal place of
business of the Surviving Corporation which is located at 1355 Terrell Mill
Road, Building 1466, Marietta, Georgia 30067. A copy of the Plan of Merger will
be furnished by the Surviving Corporation, on request and without cost, to any
member of the Constituent Corporations.
IV.
The Articles of Incorporation of the Company shall continue to be the
Articles of Incorporation of the Surviving Corporation from and after the
Merger.
V.
The request for publication of a notice of filing this Certificate of
Merger and payment therefor will be made as required by Section 14-2-1105.1 of
the Georgia Corporation Code.
The undersigned have caused these Articles of Merger to be executed as
of this 14th day of April, 2000.
PENN-AKRON CORPORATION
By: /s/ Curtis Olsen
----------------------------------
Curtis Olsen, President
By: /s/ Allison Olsen
----------------------------------
Allison Olsen, Secretary/Treasurer
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated January 25, 2000 accompanying the financial
statements of Spherus Technologies, Inc. for the year ended December 31, 1999,
which are included in this Current Report on Form 8-K. We consent to the
inclusion of our aforementioned reports in the Form 8-K.
Our report dated January 25, 2000 contains a paragraph that states: "We were
unable to obtain a confirmation for the receivable balance of $2,972,772 from
MRESA; nor were we able to satisfy ourselves as to the carrying value of the
receivable by other auditing procedures". Our report contains an explanatory
paragraph that states: "As discussed in Note 4 to the financial statements, the
Company has a contingent liability arising from the termination of a contract.
The ultimate outcome of this contingency cannot presently be determined.
Accordingly, no provision for any liability that may result from conclusion of
this matter has been made in the accompanying financial statements".
/s/ Windham Brannon, P.C.
Atlanta, Georgia
April 26, 2000
