SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 29, 2000
OTC America, Inc.
------------------
(Exact Name of Registrant as Specified in its Charter)
Colorado 0-15992 84-1031311
- ----------------------------- ------------- -------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
600 17th Street, Suite 950 South
Denver, Colorado 80202
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (303) 260-6482
<PAGE>
Item 2. Acquisition or Disposition of Assets
On February 25, 2000, OTC America, Inc., a Colorado corporation,
Xtelegent Web Solutions, Inc., a Delaware corporation, Colorado EMS Foundation,
Robert W. Dixon, and David T. Dixon (collectively the "Shareholders") entered
into an agreement, pursuant to which, among other things, OTC America acquired
one hundred percent of the outstanding common stock of Xtelegent from the
Sharesholders. Xtelegent owns and operates an Internet Service Provider business
based in central New York serving 11,600 subscribers. The total consideration
for the acquisition of the common stock of Xtelegent is 325,000 shares of OTC
America common stock and for OTC America to assume all debt obligations which
includes the approximate $1.5 million advanced to Xtelegent by OTC America. The
transaction closed effective February 29, 2000.
Xtelegent is a private company which prior to the foregoing transaction
was owned solely by Colorado EMS Foundation, Robert Dixon and David Dixon.
Robert and David T. Dixon are members of the Dixon family, who are the sole
owners of the Series A Preferred stock of OTC America. While the transaction
will be treated as a related party transaction, the terms of the exchange
resulted from negotiations among the parties.
The press release announcing this transaction is filed as Exhibit 99.1
hereto.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired. The required financial
statements are not currently available. Pursuant to paragraph (a) (4) of Item 7,
the required financial statements will be filed as soon as practicable, but not
later than sixty days after the date this Form 8-K is required to be filed.
(b) Pro Forma Financial Information. The required pro forma financial
information is not currently available. Pursuant to paragraph (b) (2) of Item 7,
the required pro forma financial information will be filed as soon as
practicable, but not later than sixty days after the date this Form 8-K is
required to be filed.
(c) Exhibits.
10.1 Stock Purchase Agreement by and between OTC America and the
Shareholders of Xtelegent Web Solutions, Inc. dated February 25, 2000
99.1 Press Release of the OTC America dated March 1, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 14, 2000 OTC America Corp.
By: /s/ Randy Phillips
-----------------------------
Randy Phillips, President
Exhibit 99.1
On March 1, 2000 OTC America Inc., issued the following press release:
OTC America Inc., Completes Acquisition of Regional Internet Service Provider
Serving 11,600 Subscribers
March 1, 2000 09:02 AM DENVER, March 1 /PRNewswire/ -- OTC America Inc., OTCA a
development stage company announced today that is has completed the previously
announced acquisition of XTELEGENT WEB SOLUTIONS INC., a regional Internet
Service Provider (ISP) based in central New York serving 11,600 subscribers.
XTELEGENT WEB SOLUTIONS INC., should create positive cash flow for OTC America
Inc., based on present subscribers management expects to generate $2.0 million
in revenue. "We are particularly excited about this acquisition not only because
of the revenue it is expected to generate, but because of the number of initial
subscribers XTELEGENT WEB SOLUTIONS INC., adds to that area of our business,"
said OTC America's CEO and President Randy Phillips.
Financial terms of the agreement, OTC America will issue 325,000 shares of
restricted common stock and assume all debt obligations which includes the
approximate $1.5 million advance to XTELEGENT WEB SOLUTIONS INC., by OTC America
Inc., (see OTC America's 10Q filed 2.25.00). An 8-k will be filed with the
Securities and Exchange Commission with in two (2) weeks.
The addition of Xiaolin Zhang as Executive Vice President and Chief Technology
Officer (CTO) and Terri Cole, Assistant Vice-President, Charles Kastler, General
Manager, and Ken McKitrick, Senior Network Engineer, will allow OTC America, to
execute its plan of consolidating ISP's in niche markets.
"SAFE HARBOR" for Forward-Looking Statements:
Except for historical information contained herein, the statements in this
release are forward- looking statements that are made pursuant to the safe
harbor provision of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties,
which may cause the company's actual results in the future periods to differ
materially from the results expressed or implied by forward-looking statements.
These risks and uncertainties include, among other things, product demand, our
ability to hire and retain technical staff, market competition, the company's
ability to acquire businesses at fair prices, its ability to fund future
operations and its ability to operate at a profit.
STOCK PURCHASE AGREEMENT
relating to the business known as
A-Znet.com!
Syracuse, New York, U.S.A.
among
THE SHAREHOLDERS
OF AND
XTELEGENT WEB SOLUTIONS INC.
and
OTC AMERICA, INC.
600 17th St. Ste. 950 South
Denver, Colorado 80202-5402
U.S.A.
<PAGE>
CONTENTS
Paragraph/
Exhibit No. Heading Page No.
1 DEFINITIONS................................................1
2 AGREEMENT..................................................3
2.1 Documents Included.........................................3
2.2 Incomplete and Changed Exhibits............................3
2.3 Conflicting Terms..........................................3
2.4 Complete Agreement.........................................4
3 PURCHASE AND SALE..........................................4
3.1 Sale of Acquired Shares....................................4
3.2 Consideration (Purchase Price) for Acquired Shares.........4
3.3 Transfer of Acquired and Registered Shares.................4
4 OBLIGATIONS REGARDING REGISTERED SHARES....................4
4.1 Buyer's Obligation to Register Registered Shares...........4
4.2 Selling Shareholders' Obligation To Furnish Information....5
5 SELLING SHAREHOLDERS' AND COMPANY'S REPRESENTATIONS
AND WARRANTIES.............................................5
5.1 Organization and Good Standing.............................5
5.2 Capital Stock..............................................6
5.3 Subsidiaries...............................................6
5.4 Authority..................................................6
5.5 Minute Book................................................7
5.6 Share Records..............................................7
5.7 Financial Statements.......................................7
5.8 ERISA......................................................8
5.9 Insurance..................................................8
5.10 Litigation.................................................8
5.11 Taxes......................................................9
5.12 Material Contracts and Arrangements........................9
5.13 Property, Title and Condition.............................10
5.14 Compliance with Laws and Governmental Consent.............10
5.15 Broker or Finder's Fees...................................10
5.16 Investment Representation.................................11
5.17 Accuracy of Disclosure....................................11
<PAGE>
6 BUYER'S REPRESENTATIONS AND WARRANTIES....................11
6.1 Organization and Good Standing............................11
6.2 Capital Stock.............................................11
6.3 Subsidiaries..............................................12
6.4 Authority.................................................12
6.5 Financial Statements......................................12
6.6 ERISA.....................................................13
6.7 Insurance.................................................14
6.8 Litigation................................................14
6.9 Taxes.....................................................14
6.10 Material Contracts and Arrangements.......................14
6.11 Property, Title and Condition.............................15
6.12 Compliance with Laws and Governmental Consent.............15
6.13 Broker or Finder's Fees...................................16
6.14 Accuracy of Disclosure....................................16
7 CONDUCT OF BUSINESS PENDING CLOSING.......................16
7.1 Negative Covenants........................................16
7.2 Affirmative Covenants.....................................17
8 CONDITIONS PRECEDENT TO CLOSING...........................17
8.1 Generally.................................................17
8.2 Other Conditions Precedent to Selling Shareholders'
Obligation to Close.......................................17
8.3 Other Conditions Precedent to Buyer's Obligation to
Close.....................................................18
9 THE CLOSING...............................................19
9.1 Time and Place............................................19
9.2 Further Assurances........................................19
9.3 Expenses..................................................19
10 TERMINATION...............................................19
10.1 Reasons for Termination...................................19
10.2 Consequences of Termination...............................20
10.3 Survival..................................................20
11 INDEMNIFICATION...........................................20
11.1 Company's and Selling Shareholders' Obligations...........20
11.2 Buyer's Obligation........................................20
11.3 Additional Provisions.....................................21
12 GENERAL PROVISIONS........................................21
12.1 Assignment................................................21
12.2 No Filing; Confidentiality; Publicity.....................22
12.3 Notices...................................................23
12.4 Applicable Law and Dispute Resolution.....................24
12.5 Amendment or Modification.................................24
12.6 Third Party Benefits......................................25
12.7 Counterparts; Delivery; Language..........................25
12.8 Other Matters of Construction.............................25
<PAGE>
Exhibit A Schedule of Shareholders, Acquired Shares and
Registered Shares........................................A:1
Exhibit B Selling Shareholders' and Company's Additional
Disclosures..............................................B:1
Schedule 5.2 Capital Stock..................................B:1
Schedule 5.7 Financial Statements...........................B:3
Schedule 5.10 Litigation....................................B:5
Schedule 5.11 Taxes.........................................B:7
Schedule 5.12 Material Contracts and Arrangements...........B:9
Exhibit C Buyer's Additional Disclosures...........................C:1
Schedule 6.2 Capital Stock..................................C:1
Schedule 6.5 Financial Statements...........................C:3
Schedule 6.8 Litigation.....................................C:5
Schedule 6.9 Taxes..........................................C:7
Schedule 6.10 Material Contracts and Arrangements...........C:9
<PAGE>
THIS STOCK PURCHASE AGREEMENT,
dated and effective as of 25 February 2000 (the "Effective Date");
AMONG: COLORADO EMS FOUNDATION, a private foundation
(Individually, a "Selling Shareholder");
AND: ROBERT W. DIXON
(Individually, a "Selling Shareholder");
AND: David T. Dixon
(Individually, a "Selling Shareholder");
AND: XTELEGENT WEB SOLUTIONS INC., f/k/a NGP HOLDINGS LTD.,
d/b/a A-ZNET.COM!, a Delaware corporation
(the "Company");
AND: OTC AMERICA, INC., a Colorado corporation
(the "Buyer");
WHEREAS:
A. The Selling Shareholders are the owners of one hundred percent (100.0%) of
the outstanding capital stock of the Company.
B. The Company, doing business under the trade name A-Znet.com!, owns and
operates an Internet service provider ("ISP") business (the " ISP
Business") located in Syracuse, New York, U.S.A.
C. The Selling Shareholders desires to sell all of the outstanding capital
stock of the Company to the Buyer, and the Buyer desires to purchase the
same, both on the terms and conditions of this Agreement, and both so that
the Buyer may continue the operations of the Company and the ISP Business
as a going concern.
NOW, THEREFORE, in consideration of the premises and their mutual promises, the
parties agree as follows:
1 DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
specified:
1.1 "Affiliate" shall mean any person, entity or enterprise which directly or
indirectly controls, --------- is controlled by, or is under common control
with a party at the time or times relevant to this Agreement. For purposes
of this definition, "control" means possession, directly or indirectly of
the power to direct or cause the direction of management, operations or
policies through ownership of voting securities, voting trust, contract or
otherwise.
<PAGE>
1.2 "Agreement" shall mean this Stock Purchase Agreement as more particularly
defined in paragraph 2.1, together with all written amendments to
it.
1.3 "Acquired Shares" shall have the meaning specified in paragraph 3.1.
1.4 "Buyer" shall have the meaning specified in the preamble to this Agreement.
1.5 "Close" or "Closed" shall mean to consummate all the transactions
contemplated by this Agreement.
1.6 "Closing" shall mean the process pursuant to which the transactions
contemplated by this Agreement are Closed.
1.7 "Closing Date" shall mean the date when Closing occurs or is to occur as
more particularly defined in paragraph 9.1.
1.8 "Commission" shall mean the United States of America Securities and
Exchange Commission and any successor to said Commission.
1.9 "Company" shall have the meaning specified in the preamble to this
Agreement.
1.10 "Effective Date" shall mean the date specified in the preamble to this
Agreement.
1.11 "Employee Plans" shall mean all employee benefit plans as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA"), as amended, all other material fringe or employee benefit plans,
programs, agreements or arrangements and all material compensation plans,
programs, agreements or arrangements, written or otherwise, for the benefit
of or relating to any employee or former employee of the Company or the
Buyer.
1.12 "ISP Business" shall have the meaning specified in the recitals to this
Agreement.
1.13 "NASD" shall mean the National Association of Securities Dealers within the
United States of America and any successor to said Association.
1.14 "Registration Statement" shall have the meaning specified in paragraph 4.1.
1.15 "Securities Act" shall mean the Securities Act of 1933 or any successor
law, and the regulations and rules issued pursuant to the said Act or any
successor law.
1.16 "Selling Shareholder" shall have the meaning specified in the preamble to
this Agreement. Two or more Selling Shareholders may be collectively
referred to as the "Selling Shareholders."
1.17 "Tax" means any federal, state, local or foreign net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits,
service, service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, customs, duties or other type of
fiscal levy and all other taxes, governmental fees, assessments or charges
of any kind whatsoever, together with any fines, interest, penalties,
additions to tax or additional amounts imposed or assessed with respect to
the foregoing.
<PAGE>
1.18 "Undisclosed Buyer Liability" shall have the meaning specified in paragraph
6.5.3.
1.19 "Undisclosed Company Liability" shall have the meaning specified in
paragraph 5.7.3.
2 AGREEMENT
2.1 Documents Included
This Agreement consists of these twenty-seven (27) total pages of contractual
terms and conditions, and the following exhibits and schedules, which, subject
to paragraph 2.2, are incorporated by reference:
Exhibit A Schedule of Shareholders, Acquired Shares and Registered Shares
Exhibit B Selling Shareholders' and Company's Additional Disclosures
Schedule 5.2 Capital Stock
Schedule 5.7 Financial Statements
Schedule 5.10 Litigation
Schedule 5.11 Taxes
Schedule 5.12 Material Contracts and Arrangements
Exhibit C Buyer's Additional Disclosures
Schedule 6.2 Capital Stock
Schedule 6.5 Financial Statements
Schedule 6.8 Litigation
Schedule 6.9 Taxes
Schedule 6.10 Material Contracts and Arrangements
2.2 Incomplete and Changed Exhibits
If any exhibit or schedule is not complete or in final form on the Effective
Date, such exhibit or schedule shall become a part of this Agreement at the time
it is executed by the applicable party(ies). The absence, incomplete status or
un-agreed upon nature of any such exhibit or schedule shall not affect the
otherwise binding nature of this Agreement.
2.3 Conflicting Terms
In the event of any conflict between these contractual terms and conditions, and
the terms of any exhibit or schedule, these contractual terms and conditions
shall control. In the event of any conflict between the terms of any exhibit or
schedule, the terms of the exhibit or schedule of the latest date shall control.
<PAGE>
2.4 Complete Agreement
This Agreement expresses the full and complete understanding of the parties with
respect to its subject matter as of the Effective Date, and, except as otherwise
provided by this Agreement, supersedes any and all understandings, agreements
and representations with respect to its subject matter made or dated prior to
the Effective Date, including, without limitation, a certain "Letter of Intent"
among the Selling Shareholders and the Buyer dated and effective 01 February
2000.
3 PURCHASE AND SALE
3.1 Sale of Acquired Shares
On the terms and subject to the conditions of this Agreement, upon Closing, the
Selling Shareholders shall sell, transfer and deliver to the Buyer, and the
Buyer shall purchase, free and clear of all liens and encumbrances, all of the
outstanding capital stock of the Company (collectively, the "Acquired Shares"),
as listed in Exhibit A.
3.2 Consideration (Purchase Price) for Acquired Shares
On the terms and subject to the conditions of this Agreement, and in
consideration of the sale of the Acquired Shares, upon Closing, the Buyer shall
issue and deliver to each Selling Shareholder, free and clear of all liens and
encumbrances, the number of shares of the authorized (but previously un-issued)
capital stock of the Buyer (collectively, the "Registered Shares"), as listed in
Exhibit A, in the form of restricted stock of the Securities Act, which shares
the Buyer has agreed to register with Commission in accordance with and subject
to the terms and conditions of paragraph 4.1. For all purposes under or pursuant
to this Agreement, or as may relate to any Tax or any other legal, financial or
accounting requirement or matter, the value of the Registered Shares shall be
determined by reference to the "Bid Price" of the publicly traded Common Stock
of the Buyer at the close of trading of the NASDAQ market on 17 February 2000.
3.3 Transfer of Acquired and Registered Shares
The transfer and delivery of the Acquired Shares by the Selling Shareholders to
the Buyer, and the transfer and delivery of the Registered Shares by the Buyer
to the Selling Shareholders, shall be effected by the exchange, at Closing, of
certificates representing the Acquired Shares and the Registered Shares, duly
endorsed or accompanied by duly executed stock powers, with all signatures
guaranteed in a manner reasonably satisfactory to legal counsel for the Buyer
and the Selling Shareholders.
4 OBLIGATIONS REGARDING REGISTERED SHARES
4.1 Buyer's Obligation to Register Registered Shares
The Buyer shall file with the Commission, no later than ninety (90) days
following the Closing Date, a registration statement under the Securities Act
(the "Registration Statement") registering the Registered Shares for resale. The
Buyer shall use its reasonable best efforts to cause the Registration Statement
to be declared effective as soon as possible after it is filed. The Buyer shall
provide the Selling Shareholders written notice when the Registered Shares may
be sold pursuant to the Registration Statement within ten (10) business days
following the effective date of the Registration Statement. The Buyer shall
maintain the effectiveness of the Registration for a minimum of one (1) year
following the effective date of the Registration Statement. The Selling
Shareholders acknowledge and agree that the Buyer's obligation to register the
Registered Shares for resale pursuant to this paragraph is a "one-time only"
obligation, and thereafter their right to resell the Registered Shares will be
subject to Rule 144 promulgated pursuant to the Securities Act.
<PAGE>
4.2 Selling Shareholders' Obligation To Furnish Information
The Buyer may require each Selling Shareholder to individually furnish to the
Buyer such information about each of them as may be necessary or appropriate for
the Buyer to comply with the Securities Act, including, without limitation, to
promptly and accurately prepare and file the Registration Statement in
accordance with the Securities Act. Any request for any such information will be
made in writing upon reasonable notice. If any Selling Shareholder does not
furnish any such information requested by the Buyer, or otherwise fails to
cooperate with the Buyer to the extent necessary to enable the Buyer to comply
with its obligations under the Securities Act, the Buyer shall not be obligated
to register that Selling Shareholder's Registered Shares, but shall continue to
be obligated to register the remainder of the Registered Shares. All costs and
expenses of the Buyer's performance of its obligations under this paragraph 4
and compliance with the Securities Act in connection with those obligations,
including, without limitation, all Commission, securities exchange or NASD
registration and filing fees, printing costs, and costs, fees or expenses of
complying with the securities or blue sky laws of any state or territory of the
United States of America, shall be borne exclusively by the Buyer. All costs and
expenses relating to the sale of the Registered Shares by any Selling
Shareholder, including, without limitation, sales or brokerage commissions,
shall be borne exclusively by each such Selling Shareholder.
5 SELLING SHAREHOLDERS' AND COMPANY'S REPRESENTATIONS AND WARRANTIES
As an inducement to the Buyer to enter into this Agreement and to consummate the
transactions contemplated by it, the Selling Shareholders and the Company,
jointly and severally, represent, warrant and covenant that:
5.1 Organization and Good Standing
The Company is a corporation: (.1) duly organized, validly existing and in good
standing under the laws of the State of Delaware, with all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
businesses; (.2) duly qualified as a foreign corporation to do business in all
jurisdictions where the nature of its businesses requires such qualification;
and (.3) duly licensed and authorized as required by any governmental authority
to carry on its businesses. The Company shall have duly filed any and all
certificates and reports required to be filed as of Closing by the laws of the
State of Delaware and any other state where it is qualified to do business.
<PAGE>
5.2 Capital Stock
The authorized capital stock of the Company consists solely of 25,000 shares of
Class A Common Stock, having a par value of US$0.001 per share, of which 25,000
shares are issued and outstanding; all of the shares issued and outstanding are
owned by the Selling Shareholders; all the issued and outstanding shares are
validly issued, fully paid and non-assessable; and there are no outstanding
subscriptions, options, warrants, calls, conversion rights, commitments, or
other rights or agreements obligating the Selling Shareholders or the Company to
sell or issue any additional shares of its capital stock except as listed in
Schedule 5.2.
5.3 Subsidiaries
The Company has no equity interest or investment, direct or indirect, nor is it
subject to any obligation or requirement to make any equity investment (in the
form of a capital contribution or otherwise) in or to any entity.
5.4 Authority
5.4.1 This Agreement, the consummation of the transactions contemplated by it,
and the performance, observance and fulfillment of all the terms and conditions
on its part to be performed, observed and fulfilled, have been duly authorized
in accordance with applicable law by the Company and each and every Selling
Shareholder.
5.4.2 This Agreement has been duly executed and delivered by a duly constituted
and authorized officer or representative of the Company and each and every
Selling Shareholder which is any entity rather than an individual, and it has
been personally executed and delivered by each and every Selling Shareholder who
is an individual rather than an entity, and is a legal, valid and binding
obligation enforceable in accordance with its terms except as such enforcement
may be limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and
general principles of equity.
5.4.3 The Company and each and every Selling Shareholder, have the right, power,
legal capacity and authority to make, enter into and perform their obligations
under this Agreement, and no consent of any third party is necessary with
respect thereto. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by it will conflict with or result
in any violation of or constitute a default under any provision of the Company's
Certificate of Incorporation or By-Laws, or any agreements, arrangements,
commitments, contracts, engagements, licenses, leases, rental agreements,
tenancies, or other obligations of the Company or any Selling Shareholder,
written or otherwise, express or implied, or any judgment, decree, order, permit
or authority of any governmental authority.
<PAGE>
5.5 Minute Book
As of Closing, the Company's minute book will be in good order, and otherwise
complete, accurate and up-to-date in all material respects, and include, without
limiting the foregoing, true copies of the Company's Certificate of
Incorporation and By-Laws as amended, and minutes of all meetings and actions
taken by the directors and shareholders of the Company prior to Closing.
5.6 Share Records
As of Closing, the stock transfer book and stock ledger of the Company will be
in good order, and otherwise complete, accurate and up-to-date in all material
respects, and include, without limiting the foregoing, a record of all stock and
securities issued, transferred or surrendered by the Company. At and as of
Closing, the Company shall be deemed to represent and warrant that no stock or
securities transfer has been made without surrender of the proper certificate to
the Company, duly endorsed, and that the Company has canceled and retained any
such certificate in its stock records.
5.7 Financial Statements
5.7.1 The Company has furnished or made available to the Buyer, the following
financial statements: complete financial statements (i.e., balance sheet, income
statement and statement of changes together with applicable notes) from date of
the Company's inception through 31 December 1999 as audited by Donald W.
Prosser, C.P.A. (collectively, the "Financial Statements").
5.7.2 All the Financial Statements: (.1) are in accordance with the books of
account and related records of the Company; (.2) are true and correct in all
material respects; (.3) completely and accurately reflect all income, costs and
expenses necessary for or relating to the conduct of the Company's businesses
for the periods to which they apply; and (.4) have been prepared in accordance
with generally accepted accounting principles consistently applied.
5.7.3 The balance sheets together with applicable notes present fairly the
financial position of the Company as of the periods to which they apply, and,
except as otherwise provided or disclosed by this Agreement or in Schedule 5.7
or any other exhibit or schedule to this Agreement, as of the Effective Date
there is no liability, whether absolute or contingent, and whether due or to
become due, that should, in accordance with generally accepted accounting
principles, have been reflected or reserved against in any such balance sheet
and that was not so reflected, reserved against or otherwise disclosed
("Undisclosed Company Liability"). The statements of income, retained earnings
and changes together with applicable notes present fairly the results of
operations and changes in financial position of the Company for the periods to
which they apply. The Company maintains proper books of account and related
records for its businesses, and such books of account and related records are
up-to-date and in the possession of Company.
<PAGE>
5.7.4 Except as otherwise provided or disclosed by this Agreement or in Schedule
5.7 or any other exhibit or schedule to this Agreement, the accounts receivable
of the Company as set forth in the Financial Statements, and all accounts
receivable acquired by the Company or arising between 31 December 1999 and the
Effective Date, are collectible in full in the ordinary course of business in
the aggregate reported amounts less any reserves for returns and bad debts
reflected in the Financial Statements.
5.7.5 Except as otherwise provided or disclosed by this Agreement or in Schedule
5.7 or any other exhibit or schedule to this Agreement, between 31 December 1999
and the Effective Date, there has not been (.1) any material adverse change in
the businesses, operations, assets, condition (financial or otherwise), or
results of operations of the Company; (.2) any liability or obligation of any
nature whatsoever (contingent or otherwise) incurred by the Company other than
those incurred in the ordinary course of business consistent with prior
practice; (.3) any damage, destruction or loss affecting the assets of the
Company; (.4) any dividend or other payment or distribution with respect to, or
any split, combination, reclassification or repurchase of shares of the capital
stock of the Company; (.5) other than annual or periodic raises or bonuses
consistent with past practice, any increase in the compensation, direct or
indirect, including employee benefit arrangements, paid or payable to any
shareholder, officer or director of the Company, or any general increase in the
compensation, direct or indirect, including employee benefit arrangements, paid
or payable to any employees or agents of the Company; (.6) any issuance, sale or
grant of any option or other agreement to purchase any shares of the capital
stock of the Company; (.7) any mortgage, pledge or lien, or any other charge or
encumbrance upon any of the assets of the Company; (.8) any loan made to any
shareholders, officers, directors or employees of the Company that has not been
repaid as of the Effective Date; (.9) any issuance of any guarantees by the
Company of obligations of any third parties.
5.8 ERISA
The Company does not sponsor or maintain, nor has it ever sponsored or
maintained, any "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 as originally enacted or as
subsequently amended. From and after the Effective Date, the Company covenants
and agrees not to sponsor or undertake the sponsorship of any such "employee
benefit plan."
5.9 Insurance
The Company maintains insurance covering its operations and assets of a type and
in the amounts ordinarily maintained by businesses of a similar nature. All
insurance contracts or policies affording such coverage are in effect in
accordance with their terms, and the Company is not in default in its
obligations thereunder, including, without limitation, the payment of any
premiums due, and there are no notices of any pending or threatened terminations
or "refusals to renew upon expiration" with respect to any such insurance
contracts or policies.
<PAGE>
5.10 Litigation
Except as otherwise provided or disclosed by this Agreement or in Schedule 5.10
or any other exhibit or schedule to this Agreement, there are no material suits,
actions, claims, or, to the best of the knowledge of the Company and the Selling
Shareholders, investigations, inquiries or proceedings pending or threatened
against any of them that might reasonably be expected to result in any
materially adverse change in the businesses, prospects or condition (financial
or otherwise) of the Company or any of them. With respect to any such items
identified in Schedule 5.10 or any other exhibit or schedule to this Agreement,
the Company and any affected Selling Shareholder has furnished or made available
to the Buyer copies of all citations, complaints, pleadings or allegations, and
copies of all opinions of legal counsel evaluating or discussing the probability
of recovery or amount of any alleged claim or liability relating to any such
suit, action, claim, investigation, inquiry or proceeding.
5.11 Taxes
Except as otherwise provided or disclosed by this Agreement or in Schedule 5.11
or any other exhibit or schedule to this Agreement, all tax returns and reports
of the Company and each every Selling Shareholder required to be filed have been
filed, and all Taxes shown to be due and payable on such returns and reports or
any assessments made against any of them have been paid (other than those being
contested in good faith by appropriate proceedings). No tax liens have been
filed against the Company or any Selling Shareholder. To the best of the
knowledge of the Company, there is no pending audit of any tax return or report
with respect to the operation of its businesses.
5.12 Material Contracts and Arrangements
Except as otherwise provided or disclosed by this Agreement, or in Schedule 5.12
or any other exhibit or schedule to this Agreement, all material agreements,
arrangements, commitments, contracts, engagements, licenses, leases, rental
agreements, tenancies, and other obligations, written or otherwise, express or
implied, in which the Company has an interest or other legally enforceable right
or benefit, including, without limitation, contracts and arrangements of the
nature identified in paragraphs 5.12.1.1 through 5.12.1.7, are valid,
subsisting, in full force and effect, and enforceable in accordance with their
terms, and neither the Company nor any other party to any such material contract
or arrangement is in default thereunder. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated by it will
accelerate the maturity of any indebtedness of the Company, nor be an event that
by itself, or lapse of time, giving of notice or otherwise would constitute a
breach of or default under, or cause the expiration or termination of any
material contract or arrangement.
5.12.1.1 Notes or other debt instruments, indentures, mortgages, pledges,
security agreements, and any other agreements or instruments relating to the
borrowing of money or the extension of credit, or pursuant to which any of the
assets of the Company are pledged as security.
5.12.1.2 Employment, consulting agreements, and other agreements or arrangements
(.1) with any officer, director or shareholder of the Company, or with any
member of the immediate families of any of them, (.2) providing for insurance
for any officer, director or shareholder of the Company, or for any member of
the immediate families of any of them, (.3) with any other employee that is not
terminable at will without penalty or liability on the part of the Company, (.4)
with any labor union, (.5) providing for bonuses, pensions, deferred
compensation, retirement payments, profit sharing, incentive pay, severance pay,
hospitalization, medical expenses, death benefits, disability benefits or other
employee benefits.
<PAGE>
5.12.1.3 Franchise and license agreements, and any other agreements or
instruments regarding or relating to the intellectual property and goodwill of
the Company.
5.12.1.4 Leases and rental agreements regarding or relating to the assets of the
Company.
5.12.1.5 So called "Notes Receivable."
5.12.1.6 So called "Service Agreements," and any similar agreements or
arrangements, relating to the repair or maintenance of the assets of the
Company.
5.12.1.7 Shareholder, voting trust or any similar agreements or arrangements
between the Company and any of its shareholders or between or among any
shareholders with respect to any shares of capital stock of the Company.
5.13 Property, Title and Condition
Except as otherwise provided or disclosed by this Agreement or in any exhibit or
schedule to this Agreement, the Company has good and marketable title to and, if
applicable, possession, of all of its tangible and intangible real and personal
property and interests therein whether owned, leased, rented used or otherwise
possessed by it, free and clear of all charges, liens, encumbrances or interests
of others of any kind, and all of its tangible personal property is in good
operating condition and repair.
5.14 Compliance with Laws and Governmental Consent
Except as otherwise provided or disclosed by this Agreement or in any exhibit or
schedule to this Agreement, the Company is in compliance with all laws, rules or
regulations, or judgments, decrees, orders or permits applicable to its
businesses, and no consent, approval, authorization, permit, designation,
declaration or filing by or with any governmental authority on the part of the
Company is required in connection with the execution of this Agreement or the
consummation of the transactions contemplated by it.
5.15 Broker or Finder's Fees
Neither the Company nor any Selling Shareholder has engaged or dealt with any
broker, finder or other person who could be entitled to any brokerage fee or
commission with respect to the execution of this Agreement or the consummation
of the transactions contemplated by it, and all negotiations relating to the
same have been carried out in such a manner as to avoid giving rise to any valid
claim for a finder's fee, advisory fee, brokerage commission, or similar fee or
compensation.
<PAGE>
5.16 Investment Representation
The Registered Shares are being acquired by the Selling Shareholders or are
intended to be acquired by the Selling Shareholders for their own account, for
investment purposes only, and not with a view to the distribution, resale,
subdivision or fractionalization thereof. Each and every Selling Shareholder
acknowledges that the Registered Shares will be issued as "restricted
securities" as that term is defined in Rule 144 promulgated pursuant to the
Securities Act, and that each and every Selling Shareholder's right to resell
the Registered Shares is subject to Rule 144.
5.17 Accuracy of Disclosure
Neither the Company nor any Selling Shareholder has knowingly made any untrue
statement of a material fact in connection with the execution of this Agreement
or the consummation of the transactions contemplated by it, including, without
limitation, the sale/exchange of the Acquired Shares, or knowingly failed to
state a material fact necessary in order to make any statement made, in light of
the circumstances under which it was made, not misleading.
All of the representations and warranties contained in this paragraph 5 are made
as of the Effective Date, are continuing, and will be deemed to have been
reiterated at and as of the date(s) when each exhibit or schedule is executed
and at and as of Closing.
6 BUYER'S REPRESENTATIONS AND WARRANTIES
As an inducement to the Company and the Selling Shareholders to enter into this
Agreement and to consummate the transactions contemplated by it, the Buyer
represents, warrants and covenants that:
6.1 Organization and Good Standing
The Buyer is a corporation: (.1) duly organized, validly existing and in good
standing under the laws of the State of Colorado, with all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business; (.2) duly qualified as a foreign corporation to do business in all
jurisdictions where the nature of its business requires such qualification; and
(.3) duly licensed and authorized as required by any governmental authority to
carry on its businesses. The Buyer shall have duly filed any and all
certificates and reports required to be filed as of Closing by the laws of the
State of Colorado and any other state where it is qualified to do business.
<PAGE>
6.2 Capital Stock
6.2.1 The authorized capital stock of the Buyer consists of the following: (.1)
150,000,000 shares of Common Stock, having a par value of US$0.0001 per share,
of which 2,400,024 shares are issued and outstanding; (.2) 17,500,000 shares of
Preferred Stock, having no par value, of which -0- shares are issued and
outstanding; and (.3) 2,500,000 shares of Series A Preferred Stock, having a par
value of US$1.00 per share, of which 2,500,000 shares are issued and
outstanding.
6.2.2 All outstanding shares of the Buyer identified in paragraph 6.2.1 are
validly issued, fully paid and non-assessable; and there are no outstanding
subscriptions, options, warrants, calls, conversion rights, commitments, or
other rights or agreements obligating the Buyer to sell or issue any additional
shares of its capital stock except as listed in Schedule 6.2.
6.3 Subsidiaries
The Buyer has no equity interest or investment, direct or indirect, nor is it
subject to any obligation or requirement to make any equity investment (in the
form of a capital contribution or otherwise) in or to any entity.
6.4 Authority
6.4.1 This Agreement, the consummation of the transactions contemplated by it,
and the performance, observance and fulfillment of all the terms and conditions
on its part to be performed, observed and fulfilled, have been duly authorized
in accordance with applicable law by the Buyer.
6.4.2 This Agreement has been duly executed and delivered by a duly constituted
and authorized officer of the Buyer, and is a legal, valid and binding
obligation enforceable in accordance with its terms except as such enforcement
may be limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and
general principles of equity.
6.4.3 The Buyer has the right, power, legal capacity and authority to make,
enter into and perform its obligations under this Agreement, and no consent of
any third party is necessary with respect thereto. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
by it will conflict with or result in any violation of or constitute a default
under any provision of the Buyer's Articles of Incorporation or By-Laws, or any
agreements, arrangements, commitments, contracts, engagements, licenses, leases,
rental agreements, tenancies, and other obligations of the Buyer, written or
otherwise, express or implied, or any judgment, decree, order, permit or
authority of any governmental authority.
<PAGE>
6.5 Financial Statements
6.5.1 The Buyer has furnished or made available to the Selling Shareholders, the
following financial statements: complete financial statements (i.e., balance
sheet, income statement and statement of changes together with applicable notes)
for the fiscal year ending 30 June 1999 as audited by Cordavano & Harvey,
C.P.A.'s; and complete financial statements (i.e., balance sheet, income
statement and statement of changes together with applicable notes) for the
quarterly reporting period(s) ending 30 September 1999 as reviewed by Cordavano
& Harvey, C.P.A.'s; all of which are collectively referred to as the "Financial
Statements."
6.5.2 All the Financial Statements: (.1) are in accordance with the books of
account and related records of the Buyer; (.2) are true and correct in all
material respects; (.3) completely and accurately reflect all income, costs and
expenses necessary for or relating to the conduct of the business of the Company
for the periods to which they apply; and (.4) have been prepared in accordance
with generally accepted accounting principles consistently applied.
6.5.3 The balance sheets together with applicable notes present fairly the
financial position of the Buyer as of the periods to which they apply, and,
except as otherwise provided or disclosed by this Agreement or in Schedule 6.5
or any other exhibit or schedule to this Agreement, as of the Effective Date
there is no liability, whether absolute or contingent, and whether due or to
become due, that should, in accordance with generally accepted accounting
principles, have been reflected or reserved against in any such balance sheet
and that was not so reflected, reserved against or otherwise disclosed
("Undisclosed Buyer Liability"). The statements of income, retained earnings and
changes in financial position together with applicable notes present fairly the
results of operations and changes in financial position of the Buyer for the
periods to which they apply. The Buyer maintains proper books of account and
related records for its business, and such books of account and related records
are up-to-date and in the possession of Buyer.
6.5.4 Except as otherwise provided or disclosed by this Agreement or in Schedule
6.5 or any other exhibit or schedule to this Agreement, between 30 September
1999 and the Effective Date, there has not been (.1) any material adverse change
in the businesses, operations, assets, condition (financial or otherwise), or
results of operations of the Buyer; (.2) any liability or obligation of any
nature whatsoever (contingent or otherwise) incurred by the Buyer other than
those incurred in the ordinary course of business consistent with prior
practice; (.3) any damage, destruction or loss affecting the assets of the
Buyer; (.4) any dividend or other payment or distribution with respect to, or
any split, combination, reclassification or repurchase of shares of the capital
stock of the Buyer; (.5) other than annual or periodic raises or bonuses
consistent with past practice, any increase in the compensation, direct or
indirect, including employee benefit arrangements, paid or payable to any
shareholder, officer or director of the Buyer, or any general increase in the
compensation, direct or indirect, including employee benefit arrangements, paid
or payable to any employees or agents of the Buyer; (.6) any issuance, sale or
grant of any option or other agreement to purchase any shares of the capital
stock of the Buyer; (.7) any mortgage, pledge or lien, or any other charge or
encumbrance upon any of the assets of the Buyer; (.8) any loan made to any
shareholders, officers, directors or employees of the Buyer that has not been
repaid as of the Effective Date; (.9) any issuance of any guarantees by the
Buyer of obligations of any third parties.
<PAGE>
6.6 ERISA
The Buyer does not sponsor or maintain, nor has it ever sponsored or maintained,
any "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 as originally enacted or as subsequently
amended.
6.7 Insurance
The Buyer maintains insurance covering its operations and assets of a type and
in the amounts ordinarily maintained by businesses of a similar nature. All
insurance contracts or policies affording such coverage are in effect in
accordance with their terms, and the Buyer is not in default in its obligations
thereunder, including, without limitation, the payment of any premiums due, and
there are no notices of any pending or threatened terminations or "refusals to
renew upon expiration" with respect to any such insurance contracts or policies.
6.8 Litigation
Except as otherwise provided or disclosed by this Agreement or in Schedule 6.8
or any other exhibit or schedule to this Agreement, there are no material suits,
actions, claims, or, to the best of the knowledge of the Buyer, investigations,
inquiries or proceedings pending or threatened against it that might reasonably
be expected to result in any materially adverse change in the businesses,
prospects or condition (financial or otherwise) of the Buyer. With respect to
any items identified in Schedule 6.8 or any other exhibit or schedule to this
Agreement, the Buyer has furnished or made available to the Selling Shareholders
copies of all citations, complaints, pleadings or allegations, and copies of all
opinions of legal counsel evaluating or discussing the probability of recovery
or amount of any alleged claim or liability relating to any such suit, action,
claim, investigation, inquiry or proceeding.
6.9 Taxes
Except as otherwise provided or disclosed by this Agreement or in Schedule 6.9
or any other exhibit or schedule to this Agreement, all tax returns and reports
of the Buyer required to be filed have been filed, and all Taxes shown to be due
and payable on such returns and reports or any assessments made against it have
been paid (other than those being contested in good faith by appropriate
proceedings). No tax liens have been filed against the Buyer. To the best of the
knowledge of the Buyer, there is no pending audit of any tax return or report
with respect to the operation of its business.
6.10 Material Contracts and Arrangements
Except as otherwise provided or disclosed by this Agreement, or in Schedule 6.10
or any other exhibit or schedule to this Agreement, all material agreements,
arrangements, commitments, contracts, engagements, licenses, leases, rental
agreements, tenancies, and other obligations, written or otherwise, express or
implied, of the nature identified in paragraphs 6.10.1.1 through 6.10.1.7, in
which the Buyer has an interest or other legally enforceable right are valid,
subsisting, in full force and effect, and enforceable in accordance with their
terms, and neither the Buyer nor any other party to any such material contract
or arrangement, is in default thereunder. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated by it will
accelerate the maturity of any indebtedness of the Buyer, nor be an event that
by itself, or lapse of time, giving of notice or otherwise would constitute a
breach of or default under, or cause the expiration or termination of any
material contract or arrangement.
<PAGE>
6.10.1.1 Notes or other debt instruments, indentures, mortgages, pledges,
security agreements, and any other agreements or instruments relating to the
borrowing of money or the extension of credit, or pursuant to which any of the
assets of the Buyer are pledged as security.
6.10.1.2 Employment, consulting agreements, and other agreements or arrangements
(.1) with any officer, director or shareholder of the Buyer, or with any member
of the immediate families of any of them, (.2) providing for insurance for any
officer, director or shareholder of the Buyer, or for any member of the
immediate families of any of them, (.3) with any other employee that is not
terminable at will without penalty or liability on the part of the Buyer, (.4)
with any labor union, (.5) providing for bonuses, pensions, deferred
compensation, retirement payments, profit sharing, incentive pay, severance pay,
hospitalization, medical expenses, death benefits, disability benefits or other
employee benefits.
6.10.1.3 Franchise and license agreements, and any other agreements or
instruments regarding or relating to the intellectual property and goodwill of
the Buyer.
6.10.1.4 Leases and rental agreements regarding or relating to the assets of the
Buyer.
6.10.1.5 So called "Notes Receivable."
6.10.1.6 So called "Service Agreements," and any similar agreements or
arrangements, relating to the repair or maintenance of the assets of the Buyer.
6.10.1.7 Shareholder, voting trust or any similar agreements or arrangements
between the Buyer and any of its shareholders or between or among any
shareholders with respect to their shares in the Buyer.
6.11 Property, Title and Condition
Except as otherwise provided or disclosed by this Agreement or in any exhibit or
schedule to this Agreement, the Buyer has good and marketable title to and, if
applicable, possession, of all of its tangible and intangible real and personal
property and interests therein whether owned, leased, rented used or otherwise
possessed by it, free and clear of all charges, liens, encumbrances or interests
of others of any kind, and all of its tangible personal property is in good
operating condition and repair.
<PAGE>
6.12 Compliance with Laws and Governmental Consent
Except as otherwise provided or disclosed by this Agreement or in any exhibit or
schedule to this Agreement, the Buyer is in compliance with all laws, rules or
regulations, or judgments, decrees, orders or permits applicable to its
business, and no consent, approval, authorization, permit, designation,
declaration or filing by or with any governmental authority on the part of the
Buyer is required in connection with the execution of this Agreement or the
consummation of the transactions contemplated by it.
6.13 Broker or Finder's Fees
The Buyer has not engaged or dealt with any broker, finder or other person who
could be entitled to any brokerage fee or commission with respect to the
execution of this Agreement or the consummation of the transactions contemplated
by it, and all negotiations relating to the same have been carried out in such a
manner as to avoid giving rise to any valid claim for a finder's fee, advisory
fee, brokerage commission, or similar fee or compensation.
6.14 Accuracy of Disclosure
The Buyer has not knowingly made any untrue statement of a material fact in
connection with the execution of this Agreement or the consummation of the
transactions contemplated by it, including, without limitation, the
sale/exchange of the Registered Shares, or knowingly failed to state a material
fact necessary in order to make any statement made, in light of the
circumstances under which it was made, not misleading.
All of the representations and warranties contained in this paragraph 6 are made
as of the Effective Date, are continuing, and will be deemed to have been
reiterated at and as of the date(s) when each exhibit or schedule is executed
and at and as of Closing.
7 CONDUCT OF BUSINESS PENDING CLOSING
7.1 Negative Covenants
From and after the Effective Date through the Closing Date, and unless
authorized by the Chief Executive Officer of the Buyer in writing, neither the
Company nor any Selling Shareholder, shall authorize or cause:
7.1.1 Any material contract or arrangement, insurance policy or any intellectual
property or goodwill of the Company, to be sold, assigned, transferred,
surrendered, canceled or otherwise disposed of, or materially and adversely
modified, or any account receivable or other debt or claim owed to the Company
to be canceled or forgiven, other than in the ordinary course of business.
7.1.2 Any other asset of the Company, to be sold, assigned, transferred or
otherwise disposed of, or materially and adversely altered, other than in the
ordinary course of business. Any inventory acquired will be of a quality and
quantity usable or saleable in the ordinary course of business.
<PAGE>
7.1.3 Any moneys due or to become due on account of the operation of the
Company's businesses to be used, paid, deposited or otherwise applied other than
for the use and account of the Company or as authorized in writing by the Chief
Executive Officer of the Buyer.
7.1.4 Any extraordinary capital expenditure to be made or incurred by the
Company, or any material lease obligation to be undertaken by the Company.
7.1.5 Any loan to be made or agreed to be made by the Company, or any material
indebtedness, obligation or other liability to be incurred by the Company.
7.1.6 Any damage, destruction or loss, whether or not covered by insurance, to
materially and adversely affect the assets of the Company.
7.1.7 Any labor dispute to materially and adversely affect the businesses or
prospects of the Company.
7.1.8 Any dispute with any significant supplier or customer to materially and
adversely affect the businesses or prospects of the Company.
7.1.9 Any other change (financial or otherwise) in the condition of the Company
to materially and adversely affect the businesses and prospects of the Company.
7.2 Affirmative Covenants
From and after the Effective Date through the Closing Date, the Company shall:
7.2.1 Use all reasonable efforts to preserve intact the business relationships
and prospects of the Company.
7.2.2 Timely file all tax returns required to be filed in connection with the
operation of the Company and pay or make adequate provision for the payment of
all Taxes.
7.2.3 Make available to the Buyer, at any reasonable time following reasonable
notice, access to all the books and records of the Company, and shall furnish
during such period all information concerning the affairs, condition and
operation of the Company as the Buyer may reasonably request.
<PAGE>
8 CONDITIONS PRECEDENT TO CLOSING
8.1 Generally
The obligation to Close on the part of any party and all parties is subject to
the following conditions precedent: this Agreement has not been terminated in
accordance with or pursuant to paragraph 10.1.
8.2 Other Conditions Precedent to Selling Shareholders' Obligation to Close
In addition to the conditions specified in paragraph 8.1, and unless waived in
writing at or as of Closing, each Selling Shareholder's obligation to Close is
subject to the following conditions precedent:
8.2.1 The representations, warranties and covenants of the Buyer shall be true
and correct in all material respects as of the date or dates when made and as of
Closing. With respect to any representation, warranty or covenant made as of
Closing, the Selling Shareholders shall be entitled to such certifications or
other evidence of compliance as may be reasonably requested by their legal
counsel.
8.2.2 The Buyer shall have delivered to the Selling Shareholders the stock
certificates or stock powers in the in the form and manner required by paragraph
3.3, and as otherwise required to vest in the Selling Shareholders good and
marketable title to the Registered Shares, free and clear of all charges, liens,
encumbrances or interests in any others.
8.2.3 The Buyer shall have performed, discharged or otherwise complied with all
other terms and conditions of this Agreement required to be performed,
discharged or complied with by it at or before Closing.
8.3 Other Conditions Precedent to Buyer's Obligation to Close
In addition to the condition specified in paragraph 8.1, and unless waived in
writing at or as of Closing, the Buyer's obligation to Close is subject to the
following conditions precedent:
8.3.1 The representations, warranties and covenants of the Company and the
Selling Shareholders shall be true and correct in all material respects as of
the date or dates when made and as of Closing. With respect to any
representation, warranty or covenant made as of Closing, the Buyer shall be
entitled to such certifications or other evidence of compliance as may be
reasonably requested by its legal counsel.
8.3.2 The Company and/or the Selling Shareholders shall have delivered to the
Buyer all of the books and records of the Company, including, without
limitation, its minute book, stock transfer records and stock ledger.
8.3.3 The Company and/or the Selling Shareholders shall have delivered to the
Buyer a list of: (.1) all officers and directors of the Company; (.2) all bank
accounts of the Company, and the person(s) authorized to draw on each such
account; (.3) all safe deposit boxes of the Company and the person(s) entitled
to have access to them; (.4) all person(s) authorized to borrow money or furnish
security for the same or to transfer any securities owned by the Company; and
(.5) each power of attorney granted by the Company to any person(s) for any
purpose.
<PAGE>
8.3.4 To the extent applicable, the Selling Shareholders shall have delivered to
the Buyer their signed resignations as directors and officers of the Company,
effective as of Closing.
8.3.5 The Selling Shareholders shall have delivered to the Buyer the stock
certificates or stock powers in the form and manner required by paragraph 3.3,
and as otherwise required to vest in the Buyer good and marketable title to the
Acquired Shares, free and clear of all charges, liens, encumbrances or interests
in any others.
8.3.6 The Company and the Selling Shareholders shall have performed, discharged
or otherwise complied with all other terms and conditions of this Agreement
required to be performed, discharged or complied with by either of them at or
before Closing.
9 THE CLOSING
9.1 Time and Place
Unless this Agreement has been earlier terminated pursuant to paragraph 10.1,
the Closing of the transactions contemplated by this Agreement shall take place,
if at all, at 10:00 a.m. (local time) on such date as the parties mutually agree
or 29 February 2000, whichever is earlier, at the offices of legal counsel for
the Buyer or such other place as they mutually agree.
9.2 Further Assurances
The parties shall cooperate with each other with respect to any action required
to be taken as part of their good faith obligation to effect Closing. The
Selling Shareholders, individually, or in their capacity as previous directors
or officers of the Company, and the Buyer, will at any time or from time to time
after Closing execute whatever minutes of meetings, documents or other
instruments, or take whatever other action any party may deem necessary (and
that a party may lawfully do) to carry out the intent and purposes of this
Agreement.
9.3 Expenses
All fees, costs and expenses in any way connected with the making of and
consummation of the transactions contemplated by this Agreement shall be borne
and paid by the Selling Shareholders and the Buyer as such expenses are
ordinarily and customarily allocated between "buyers" and "sellers" of shares of
closely-held corporations and, in the case of each Selling Shareholder, ratably
in accordance with his or her proportionate interest. Without in any way
limiting the foregoing, each party shall be responsible for its own attorney's
fees, costs and expenses.
<PAGE>
10 TERMINATION
10.1 Reasons for Termination
10.1.1 This Agreement may be terminated by the mutual consent of all the parties
in writing.
10.1.2 Should the Buyer commit a substantial breach of this Agreement, and
thereafter fail to commence proceedings in good faith to remedy the same within
ten (10) days after written demand by any of the Selling Shareholders, and
thereafter to proceed diligently in remedying the same, any one of the Selling
Shareholders may but shall not be obligated to terminate this Agreement.
10.1.3 Should Closing not occur on before 29 February 2000, or should any of the
Selling Shareholders become insolvent or bankrupt, or should either of them
commit a substantial breach of this Agreement, and thereafter fail to commence
proceedings in good faith to remedy the same within ten (10) days after written
demand by the Buyer, and thereafter to proceed diligently in remedying the same,
the Buyer may but shall not be obligated to terminate this Agreement.
10.2 Consequences of Termination
10.2.1 If this Agreement is terminated for any of the reasons specified in
paragraphs 10.1.1 or 10.1.2, then such termination will be without liability to
any of the parties, and all of the parties will be forever released and
discharged of all their obligations and liabilities under this Agreement.
10.2.2 If this Agreement is terminated for any of the reasons specified in
paragraph 10.1.3, then the Buyer shall be entitled to all rights and remedies to
which it may be entitled at law or in equity, except that none of the provisions
of paragraph 11 shall apply.
10.3 Survival
Anything in this paragraph 10 or any other provision of this Agreement to the
contrary notwithstanding, this Agreement shall determine the resolution of all
matters within its subject matter until all the unperformed obligations or
un-discharged liabilities of the all the parties have been fully performed or
discharged, or until all disputes arising out of, relating to or in any way
connected with this Agreement have been fully settled or resolved, whichever is
later. Without in any way limiting the foregoing, the representations,
warranties, covenants, waivers and other agreements of the parties contained in
paragraphs 5, 6, 7 and 12, and the indemnification obligations of the parties
contained in paragraph 11, shall survive Closing if it occurs, and not be merged
or extinguished thereby.
<PAGE>
11 INDEMNIFICATION
11.1 Company's and Selling Shareholders' Obligations
The Company and the Selling Shareholders, jointly and severally, shall
indemnify, defend and hold the Buyer and its Affiliates (including, if
applicable, its or their officers, directors and employees) harmless from,
against and with respect to any liability, obligation or claim, or any demand,
action, suit, proceeding, cause of action or damage, of whatever kind or nature
whatsoever, arising out of, relating to or resulting from: (.1) any claim by a
third party based on any Undisclosed Company Liability; (.2) any claim by a
third party based on a liability, obligation, act or omission of the Company
which relates to the conduct of the Company's businesses and which arose or
occurred after the Effective Date, but was not authorized in writing by the
Buyer's Chief Executive Officer of the Buyer; (.3) any claim by a third party
based on a liability, obligation, act or omission of the Company or any of the
Selling Shareholders which does not relate to the conduct of the Company's
businesses regardless when it arose or occurred; (.4) the breach of any
representation, warranty or covenant of the Company or any Selling Shareholder
under this Agreement; or (.5) any other breach of the duties or obligations of
the Company or any Selling Shareholder under this Agreement.
11.2 Buyer's Obligation
The Buyer shall indemnify, defend and hold the Company and the Selling
Shareholders harmless from, against and with respect to any liability,
obligation or claim, or any demand, action, suit, proceeding, cause of action or
damage, of whatever kind or nature whatsoever, arising out of, relating to or
resulting from: (.1) any claim by a third party based on a liability,
obligation, act or omission of the Company or any of the Selling Shareholders
which relates to the conduct of the Company's businesses and which arose or
occurred after the Effective Date, but was authorized in writing by the Buyer's
Chief Executive Officer; (.2) the breach of any representation, warranty or
covenant of the Buyer under this Agreement; or (.3) any other breach of the
duties or obligations of the Buyer under this Agreement.
11.3 Additional Provisions
11.3.1 The obligations of each party under paragraphs 11.1 and 11.2, and any
other indemnity provision of this Agreement shall include the obligation to
reimburse the indemnified party for any cost or expense incurred in connection
therewith, including bond premiums, and attorney's fees and expenses.
11.3.2 An indemnified party shall promptly notify an indemnifying party of any
claim that has given or could give rise to an indemnity obligation under this
Agreement. If the indemnity obligation relates to a claim asserted by a third
party against an indemnified party, the indemnifying party shall have the right
to defend any such claim. The indemnified party, at its sole cost and expense,
may employ counsel acceptable to the indemnifying party to participate in the
defense of such claim. So long as the indemnifying party is defending any such
claim in good faith, the indemnified party may not settle such claim. If the
indemnifying party does not elect to defend any such claim, the indemnified
party may, but shall have no obligation to do so.
<PAGE>
11.3.3 Subject to the other provisions of this paragraph 11, the indemnified
party shall be entitled to payment from the indemnifying party immediately upon
final determination of any claim for which indemnification is due, whether by
settlement, judgment, arbitrator's decision or other resolution. Any payment not
made by the indemnifying party to the indemnified party within ninety (90) days
after such final determination shall bear interest at a rate equal to the lesser
of eighteen percent (18.0%) per year or the maximum rate permitted by law.
12 GENERAL PROVISIONS
12.1 Assignment
This Agreement shall not be assigned by any party without the prior written
consent of every other party, which consent, in consideration of the personal
nature of the duties and obligations of the parties under this Agreement, and
the value and nature of the "goodwill" of the ISP Business, may be withheld by
any party for any reason or no reason whatsoever. Any assignment in violation of
the provisions of this paragraph shall be null and void ab initio. If this
Agreement is assigned in accordance with this paragraph, such assignment shall
nevertheless not relieve the assigning party of any of its obligations under
this Agreement. In no event shall any assignment of this Agreement be valid
until the duties and obligations of the assignor shall have been assumed by the
assignee. When duly assigned in accordance with the foregoing, this agreement
shall be binding upon and shall inure to the benefit of any assignee, and in any
case shall be binding upon and shall inure to the benefit of the parties, their
heirs, personal representatives and successors.
12.2 No Filing; Confidentiality; Publicity
On account of the proprietary and otherwise confidential business nature of the
Buyer's present and future business plans, and except as may be required by law
or the rules of any stock exchange to which any party may be subject: (.1) this
Agreement shall not be filed with any court or other governmental authority, or
any other public or quasi-public entity or institution; (.2) the parties to this
Agreement shall keep absolutely secret and confidential its terms and
conditions, and the terms and conditions of and any other information related to
any transaction contemplated by it; and (.3) no party to this Agreement shall
issue or cause the publication of any press release or report or any other
public announcement or dissemination of information concerning its terms and
conditions, and the terms and conditions of and any other information related to
any transaction contemplated by it, without the prior written consent of every
other party, which consent my be withheld for any reason or no reason
whatsoever.
<PAGE>
12.3 Notices
All notices or demands permitted or required under this Agreement shall be in
writing, and shall be deemed to have been duly given or made when delivered
personally or dispatched by regular first class mail or recognized domestic
courier, postage or fee prepaid, to the party to be charged to the attention of
and at the address specified below or such other address as any party may
designate from time to time by notice pursuant to this paragraph:
If to any one or more of the Selling Shareholders:
To his or her attention and address as specified in Exhibit A.
If to the Buyer:
Attn.: Randy L. Phillips, President
OTC America, Inc.
600 17th Street
Suite 950 South
Denver, CO 80202-5402
Fax: 303.260.6486
E-Mail: [email protected]
With a copy to:
Roger V. Davidson, Esq.
Ballard Spahr Andrews & Ingersoll, LLP
Seventeenth Street Plaza Building
Suite 2300, 1225 17th Street
Denver, CO 80202-5596
Fax: 303.296.3956
E-Mail: [email protected]
With a copy to:
Richard T. Bruno, Esq.
600 17th Street
Suite 950 South
Denver, CO 80202-5402
Fax: 303.260.6401
E-Mail: [email protected]
Notice or demand by electronically transmitted communication, e.g. telegram,
telex, facsimile, electronic mail, confirmed by telephone, shall be effective
upon confirmation, provided that a paper copy of said notice or demand is sent
by mail or courier as otherwise provided by this paragraph within twenty-four
(24) hours after its electronic transmission.
<PAGE>
12.4 Applicable Law and Dispute Resolution
12.4.1 This Agreement shall be deemed to be a contract made under the laws of
the State of Colorado, and for all purposes shall be governed by and construed
in accordance with the law prevailing in that State without regard to
choice/conflict of laws rules or principles.
12.4.2 Before submitting any controversy or claim to arbitration pursuant to
paragraph 12.4.3, the parties shall enter into good faith, non-binding,
alternative dispute resolution (ADR) in accordance with the Center for Public
Resources Model Procedure for Mediation of Business Disputes. A party shall
initiate ADR by notice to all other parties.
12.4.3 If ADR is unsuccessful, then any controversy or claim arising out of,
relating to or in any way connected with this Agreement, or the interpretation,
breach, or enforcement of any provision of it, shall be submitted to arbitration
in accordance with the then current Commercial Arbitration Rules of the American
Arbitration Association (the "Association") to the extent that such rules do not
conflict with any provisions of this paragraph 12.4.
12.4.4 The arbitration shall be held at the regional office of the Association
located in Denver, Colorado, U.S.A.
12.4.5 Any award, order or judgment by the arbitrator or panel of arbitrators
shall be final, binding and conclusive on the parties for all purposes, and may
be entered and enforced by any state or federal court having competent
jurisdiction. Each party agrees to submit to the jurisdiction of any such court
for the purpose of the enforcement of any such award, order or judgment.
12.4.6 In any arbitration proceeding, the arbitrator or panel of arbitrators may
award reasonable attorney's fees and other arbitration-related costs to the
substantially prevailing party.
12.4.7 Any arbitration proceeding shall be conducted on a confidential basis.
12.4.8 If equitable relief is sought under any provision of this Agreement, it
may be sought preliminarily or pending the final determination by an arbitrator
or panel of arbitrators, but only from a District Court of the State of Colorado
sitting in and for the City and County of Denver, or from the United States
District Court for the District of Colorado. The parties hereby consent in
advance to such exclusive jurisdiction and venue in any such action or
proceeding commenced in such courts.
12.5 Amendment or Modification
This Agreement may not be amended or modified other than by a writing executed
by all of the parties to this Agreement with the same formalities that pertained
to its original execution.
<PAGE>
12.6 Third Party Benefits
Nothing expressed or implied in this Agreement is intended or will be construed
to confer upon or give any person or entity other than the parties to it any
benefits, rights or remedies under, through or by reason of it or any
transaction contemplated by it.
12.7 Counterparts; Delivery; Language
This Agreement may be executed in several counterparts, each of which when so
executed will be deemed to be an original and all of which together will
constitute one and the same agreement. The facsimile exchange of counterparts
shall constitute "delivery" for all purposes under this Agreement.
12.8 Other Matters of Construction
Where the context so permits or requires, terms defined in the singular number
shall mean the plural, the plural, the singular, and in the neuter gender, the
masculine or feminine genders. If a court of competent jurisdiction shall hold
any provision of this Agreement invalid, unlawful or unenforceable by reason of
it being overly broad, the parties agree that a court, arbitrator or panel of
arbitrators shall limit ("reform") the scope or duration of such a provision to
its maximum valid, lawful and enforceable scope or duration. If a court,
arbitrator or panel of arbitrators shall hold any provision in this Agreement
invalid, unlawful or unenforceable for any other reason, such provision shall be
severed, and the validity, lawfulness and enforceability of all remaining
provisions of this Agreement shall not be affected or impaired in any way. Each
party has cooperated in the drafting and preparation of this Agreement, thus it
shall not be construed against any party on the basis that party was its
drafter. No course of dealing between the parties nor any failure to exercise,
nor any delay in exercising, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. Except as otherwise
provided by this Agreement, the rights and remedies provided by it are
cumulative and are in addition to, and not exclusive of any right or remedy
provided at law or in equity. The election of one or more remedies shall not
constitute a waiver of the right to pursue any other remedy. The titles of the
paragraphs in this Agreement are inserted only as a matter of convenience, are
not part of it, and in no way define, limit or affect it or any provision of it.
Each obligation binding a party that is contained in this Agreement shall be
construed, absent an express contrary provision, as being independent of every
other obligation, and one party's failure to comply with any such obligation
shall not, absent such an express contrary provision, be deemed to excuse any
other party's failure to comply with any or all of its other obligations.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
COLORADO EMS FOUNDATION
/s/ Richard T. Bruno /s/ Robert W. Dixon
--------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Its Director
/s/ Richard T. Bruno /s/ Robert W. Dixon
--------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Individually
/s/ Richard T. Bruno /s/ David T. Dixon
- --------------------------------- By: ------------------------------------
Witness David T. Dixon
Individually
XTELEGENT WEB SOLUTIONS INC.
f/k/a NGP HOLDINGS LTD.
/s/ Richard T. Bruno /s/ Robert W. Dixon
- --------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Its President
OTC AMERICA, INC.
/s/ Richard T. Bruno /s/ Randy L. Phillips
- --------------------------------- By: ------------------------------------
Witness Randy L. Phillips
Its President
<PAGE>
Exhibit A Schedule of Shareholders, Acquired Shares and Registered Shares
The following is a complete list of the names and addresses of the Selling
Shareholders, the number of the Acquired Shares each of them owns and is to sell
and transfer to the Buyer, and the number of Registered Shares each is to
receive in exchange for the Acquired Shares:
<TABLE>
Name, Address, Number of Certificate No(s). of Number of Certificate No(s). of
Tel. No., Fax No. Acquired Shares Acquired Shares Registered Shares Registered Shares
and E-Mail --------------- --------------- ----------------- -----------------
of Selling
Shareholders
<S> <C> <C> <C> <C>
COLORADO EMS FOUNDATION 11,500 1 150,000 TBD
P.O. Box 3771
Grand Junction, CO 81502
Tel. 970.241.5053
Fax 970.241.0735
E-Mail
Robert W. Dixon 7,750 2 100,000 TBD
P.O. Box 3771
Grand Junction, CO 81502
Tel. 970.241.5053
Fax 970.241.0735
E-Mail
David T. Dixon 5,750 3 75,000 TBD
4455 Cobbleskill Dr.
Colorado Springs,
CO 80920
Tel. 719.964.9001
Fax
</TABLE>
This Schedule was executed by each Selling Shareholder and the Buyer as of the
dates set forth opposite their signatures.
COLORADO EMS FOUNDATION
/s/ Richard T. Bruno /s/ Robert W. Dixon
--------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Its Director
/s/ Richard T. Bruno /s/ Robert W. Dixon
--------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Individually
/s/ Richard T. Bruno /s/ David T. Dixon
- --------------------------------- By: ------------------------------------
Witness David T. Dixon
Individually
OTC AMERICA, INC.
/s/ Richard T. Bruno /s/ Randy L. Phillips
--------------------------------- By: ------------------------------------
Witness Randy L. Phillips
Its President
<PAGE>
Exhibit B Selling Shareholders' and Company's Additional Disclosures
Schedule 5.2 Capital Stock
Pursuant to a certain "Asset Purchase Agreement" among A-Z NET. COM, INC.,
Xiaolin Zhang and the Company, dated and effective 31 October 1999, the Company
made a certain "Convertible Promissory Note" to Bernheimer & Blau, P.C., As
Attorneys for Yiliang He, dated and effective 01 November 1999, and the Company
issued a certain "Warrant" to the same, dated and effective the same date,
copies of which were provided to the Buyer during the course of "due diligence."
COLORADO EMS FOUNDATION
/s/ Richard T. Bruno /s/ Robert W. Dixon
- --------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Its Director
/s/ Richard T. Bruno /s/ Robert W. Dixon
--------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Individually
/s/ Richard T. Bruno /s/ David T. Dixon
- --------------------------------- By: ------------------------------------
Witness David T. Dixon
Individually
<PAGE>
XTELEGENT WEB SOLUTIONS INC.
f/k/a NGP HOLDINGS LTD.
/s/ Richard T. Bruno /s/ Robert W. Dixon
- --------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Its President
<PAGE>
Schedule 5.7 Financial Statements
No additional disclosures.
COLORADO EMS FOUNDATION
/s/ Richard T. Bruno /s/ Robert W. Dixon
- --------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Its Director
/s/ Richard T. Bruno /s/ Robert W. Dixon
--------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Individually
/s/ Richard T. Bruno /s/ David T. Dixon
- --------------------------------- By: ------------------------------------
Witness David T. Dixon
Individually
<PAGE>
XTELEGENT WEB SOLUTIONS INC.
f/k/a NGP HOLDINGS LTD.
/s/ Richard T. Bruno /s/ Robert W. Dixon
- --------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Its President
<PAGE>
Schedule 5.10 Litigation
No additional disclosures.
COLORADO EMS FOUNDATION
/s/ Richard T. Bruno /s/ Robert W. Dixon
- --------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Its Director
/s/ Richard T. Bruno /s/ Robert W. Dixon
--------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Individually
/s/ Richard T. Bruno /s/ David T. Dixon
- --------------------------------- By: ------------------------------------
Witness David T. Dixon
Individually
<PAGE>
XTELEGENT WEB SOLUTIONS INC.
f/k/a NGP HOLDINGS LTD.
/s/ Richard T. Bruno /s/ Robert W. Dixon
- --------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Its President
<PAGE>
Schedule 5.11 Taxes
No additional disclosures.
COLORADO EMS FOUNDATION
/s/ Richard T. Bruno /s/ Robert W. Dixon
- --------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Its Director
/s/ Richard T. Bruno /s/ Robert W. Dixon
--------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Individually
/s/ Richard T. Bruno /s/ David T. Dixon
- --------------------------------- By: ------------------------------------
Witness David T. Dixon
Individually
<PAGE>
XTELEGENT WEB SOLUTIONS INC.
f/k/a NGP HOLDINGS LTD.
/s/ Richard T. Bruno /s/ Robert W. Dixon
- --------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Its President
<PAGE>
Schedule 5.12 Material Contracts and Arrangements
No additional disclosures.
COLORADO EMS FOUNDATION
/s/ Richard T. Bruno /s/ Robert W. Dixon
- --------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Its Director
/s/ Richard T. Bruno /s/ Robert W. Dixon
--------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Individually
/s/ Richard T. Bruno /s/ David T. Dixon
- --------------------------------- By: ------------------------------------
Witness David T. Dixon
Individually
<PAGE>
XTELEGENT WEB SOLUTIONS INC.
f/k/a NGP HOLDINGS LTD.
/s/ Richard T. Bruno /s/ Robert W. Dixon
- --------------------------------- By: ------------------------------------
Witness Robert W. Dixon
Its President
<PAGE>
Exhibit C Buyer's Additional Disclosures
Schedule 6.2 Capital Stock
The Buyer intends to authorize and cause a "forward [stock] split" of its Common
Stock subsequent to the execution of this Agreement but prior to Closing. While
this split will operate to change the authorized, issued and outstanding number
of shares of the Buyer's Common Stock, it will not change the number of
Registered Shares each Selling Shareholder is to receive pursuant to this
Agreement. The Selling Shareholders acknowledge and agree that number of
Registered Shares each Selling Shareholder is to receive pursuant to this
Agreement has been calculated in view of this material disclosure.
OTC AMERICA, INC.
/s/ Richard T. Bruno By:/s/ Randy L. Phillips
- ----------------------------------- ------------------------------------
Witness Randy L. Phillips
Its President
<PAGE>
Schedule 6.5 Financial Statements
No additional disclosures.
OTC AMERICA, INC.
/s/ Richard T. Bruno By:/s/ Randy L. Phillips
- ----------------------------------- ------------------------------------
Witness Randy L. Phillips
Its President
<PAGE>
Schedule 6.8 Litigation
No additional disclosures.
OTC AMERICA, INC.
/s/ Richard T. Bruno By:/s/ Randy L. Phillips
- ----------------------------------- ------------------------------------
Witness Randy L. Phillips
Its President
<PAGE>
Schedule 6.9 Taxes
No additional disclosures.
OTC AMERICA, INC.
/s/ Richard T. Bruno By:/s/ Randy L. Phillips
- ----------------------------------- ------------------------------------
Witness Randy L. Phillips
Its President
<PAGE>
Schedule 6.10 Material Contracts and Arrangements
No additional disclosures.
OTC AMERICA, INC.
/s/ Richard T. Bruno By:/s/ Randy L. Phillips
- ----------------------------------- ------------------------------------
Witness Randy L. Phillips
Its President
