--------------------------------------------------------------------------------
Mark Wood
PRESIDENT
iDial Networks, Inc.
16990 Dallas Parkway Suite #106, Dallas TX
(Name and Address of Person Authorized to Receive Notices
and Communications on Behalf of the Person Filing Statement)
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WITH A COPY TO:
KARL E. RODRIGUEZ, ESQ
24843 Del Prado, #318
Dana Point, CA 92629
(949) 248-9561
fax (949) 248-1688
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: August 25, 2000
COMMISSION FILE NUMBER: 33-12029-D
IDIAL NETWORKS, INC.
formerly DESERT SPRINGS ACQUISITION CORP.
formerly BARTEL FINANCIAL GROUP, INC.
(Exact name of Registrant as specified in its charter)
Nevada 75-2863583
(Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
16990 Dallas Parkway Suite #106, Dallas, TX 75248
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 818-1058
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
ITEM 5. OTHER EVENTS
On or about August 9, 2000 in accordance with an Agreement and Plan of
Reorganization, iDial Networks Inc. agreed to acquire Whoofnet.Com, Inc., a
private Corporation, for issuance of 10,000,000 new investment shares of common
stock.
Incidental to the acquisition, CARL BATTIE, Chairman of the Board of
Whoofnet.Com, Inc., will serve as Vice-Chairman of the Board of Directors of
this registrant until the next Annual Meeting of Shareholders or until his
successors are elected and qualified.
Whoofnet.Com, Inc. was organized as a Florida corporation in 2000. Whoofnet
is a next generation, e-commerce Internet Company that utilizes multimedia to
drive sales of consumer products and services by marrying the in-house consumer
marketing power of television with the global reach of web-based e-commerce. The
company markets its products through global channels of distribution, including
direct response television programming, retail outlets and international
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independent representatives and affinity marketing groups. The company monitors
emerging trends in global consumer marketing and the burgeoning electronic
retailing industry and combines television's proven ability to drive product
sales with the global informational and access capabilities of the Internet.
Whoofnet.Com will become the primary sales and marketing arm for the registrants
product lines by utilizing and expanding on, the converging voices of media such
as TV, print and radio through the Internet. Whoofnet.Com will continue to
expand and develop their existing Internet portal that will provide a family of
services including Whoofnet's free e-mail service.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
August 28, 2000
IDIAL NETWORKS, INC.
formerly DESERT SPRINGS ACQUISITION CORP.
formerly BARTEL FINANCIAL GROUP, INC.
by
/s/ Mark Wood
Mark Wood
Authorized Officer
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EXHIBIT
AGREEMENT AND PLAN OF REORGANIZATION
AND
STOCK-FOR-STOCK
ACQUISITION AGREEMENT
--------------------------------------------------------------------------------
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AGREEMENT AND PLAN OF REORGANIZATION
AMONG
IDIAL NETWORKS, INC.
AND
WHOOFNET.COM INC.
August 9, 2000
TABLE OF CONTENTS
1. Definitions 5
2. Basic Transaction 8
(a) The Acquisition 8
(b) The Closing 8
(c) Actions at the Closing 8
(d) Effect of Acquisition 8
(e) Procedure for Transfer 9
3. Representations and Warranties of the Target
9
(a) Organization, Qualification, and Corporate Power 9
(b) Organization, Qualification, and Corporate Power as of the Closing
10
(c) Capitalization on the Closing Date 10
(d) Authorization of Transaction 10
(e) Noncontravention 10
(f) Broker's Fees 11
(g) Title to Tangible Assets 11
(h) Subsidiaries 11
(i) Financial Statements 11
(j) Events Subsequent to Most Recent Fiscal Month End
11
(k) Legal Compliance 11
(l) Tax Matters 11
(m) Real Property 12
(n) Intellectual Property 12
(o) Contracts 12
(p) Powers of Attorney 13
(q) No Undisclosed Liabilities 13
(r) Litigation 13
(s) Employee Benefits 13
(t) Environmental, Health and Safety Matters 14
(u) Target Shares 14
(v) Certain Securities Matters 15
(w) Disclaimer of Other Representations and Warranties
16
4. Representations and Warranties of the Buyer
16
(a) Organization 17
(b) Capitalization 17
(c) Authorization of Transaction 17
(d) Noncontravention 17
(e) Brokers' Fees 17
(f) Filings with the SEC 17
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(g) Financial Statements 18
(h) Events Subsequent to Most Recent Fiscal Quarter End 18
(i) No Undisclosed Liabilities 18
(j) Litigation 18
(k) Compliance with Laws 18
(l) No Default 18
(m) Certain Securities Matters 19
(n) Market Manipulation 19
5. Covenants 19
(a) General 19
(b) Notices and Consents 20
(c) Regulatory Matters and Approvals 20
(d) Listing of Buyer Shares 20
(e) Operation of Business 20
(f) Full Access 21
(g) Notice of Developments 21
(h) Interest from Others 21
(i) Indemnification and Release 22
(j) Employment Agreement with Target's Key Employee 22
(k) Post-Closing Covenants of Buyer 22
6. Conditions to Obligation to Close 22
(a) Conditions to Obligation of the Buyer 22
(b) Conditions to Obligation of the Target 23
7. Termination 24
(a) Termination of Agreement 24
(b) Effect of Termination 25
8. Miscellaneous 25
(a) Survival 25
(b) Press Releases and Public Announcements 25
(c) No Third Party Beneficiaries 25
(d) Entire Agreement 25
(e) Succession and Assignment 25
(f) Counterparts 26
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(g) Headings 26
(h) Notices 26
(i) Governing Law 26
(j) Amendments and Waivers 27
(k) Severability 27
(l) Expenses 27
(m) Construction 27
(n) Incorporation of Exhibits and Schedules 27
(o) Facsimile Signatures 27
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AGREEMENT AND PLAN OF REORGANIZATION
Agreement entered into on August 9, 2000 by and among IDIAL NETWORKS, INC.,
a Nevada corporation (the "Buyer"), and WHOOFNET.COM INC. , a Florida
corporation (the "Target. The Buyer and the Target are referred to collectively
herein as the "Parties."
This Agreement contemplates a stock-for-stock tax-free acquisitive
reorganization of the Target by the Buyer pursuant to Code 368(a)(1) (B) and
(C). The Target Stockholders will receive common capital stock in the Buyer in
exchange for all of their common capital stock in the Target. The Parties expect
that the acquisition will further certain of their business objectives
(including, without limitation, significantly expanded markets for both
Parties).
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Acquisition" means the stock-for-stock, tax-free acquisitive
reorganization of the Target by the Buyer and a contemporaneous transfer of
assets comprising the business of Reliant from Reliant to the Target pursuant to
Code 368(a)(1) (B) and (C) as described in 2(a) below.
"Buyer" has the meaning set forth in the preface above.
"Buyer Exchange Shares" have the meaning set forth in 2(a) below.
"Buyer Share" means any share of the Common Stock, $0.001 par value per
share, of the Buyer.
"Closing" has the meaning set forth in 2(b) below.
"Closing Date" has the meaning set forth in 2(b) below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of ERISA
and Code 4980B.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the businesses
and affairs of the Target and its Subsidiaries that is not already generally
available to the public.
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"Conversion Ratio" has the meaning set forth in 2(d)(ii) below.
"Disclosure Schedule" has the meaning set forth in 3 below.
"Effective Time" has the meaning set forth in 2(d)(i) below.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee Welfare Benefit
Plan or material fringe benefit or other retirement, bonus, or incentive plan
or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA 3(1).
"Environmental, Health, and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, and ordinances concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, as such requirements are enacted and in effect on or prior to the
Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity that is treated as a single employer
with Seller for purposes of Code 414.
"Exchange Agent" has the meaning set forth in 2(e) below.
"Financial Statement" has the meaning set forth in 3(i) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
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"IRS" means the Internal Revenue Service.
"Knowledge" means actual knowledge without independent investigation.
"Most Recent Financial Statements" has the meaning set forth in 3(i)
below.
"Most Recent Fiscal Month End" has the meaning set forth in 3(i) below.
"Most Recent Fiscal Quarter End" has the meaning set forth in 3(i) below.
"Multiemployer Plan" has the meaning set forth in ERISA 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency), however in no event shall any transaction of Target that involves
the payment of or liability for any sum in excess of $50,000 is not considered
in the Ordinary Course of Business.
"Party" has the meaning set forth in the preface on page 1 above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Public Report" has the meaning set forth in 5(f) below.
"Registration Statement" has the meaning set forth in 6(l) below.
"Reportable Event" has the meaning set forth in ERISA 4043.
"Requisite Target Stockholder Approval" means the affirmative vote of the
holders of a majority of the Target Shares (voting and nonvoting) in favor of
this Agreement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for taxes not yet due and payable or for taxes that the
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taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Subsidiary" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors.
"Target" has the meaning set forth in the preface on page 1 above.
"Target's Key Employee" means Carl Battie.
"Target Share" means any share of the Common Stock of Target.
"Target Shares" means the total number of issued and outstanding shares,
all of which are to be acquired by the Buyer pursuant to this Agreement.
"Target Stockholders" means all of the shareholders of Target as shown on
the attached Target Shareholder's list, which shareholders collectively own all
of the issued and outstanding Target Shares.
2. Basic Transaction.
(a) The Reorganization and Acquisition. Subject to the terms and
conditions of this Agreement, at the Effective Time, the Target Stockholders
shall surrender to the Buyer all of the Target Shares representing 100% of the
ownership interest in the Target in exchange for 10,000,000 Buyer Shares (the
"Buyer Exchange Shares") at the Effective Time in a stock-for-stock, tax-free
acquisitive reorganization of the Target by the Buyer pursuant to Code
368(a)(1)(B) and (C).
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of the Target in Ft.
Lauderdale, Florida, commencing at 10:00 a.m. local time on the second business
day following the satisfaction or waiver of all conditions to the obligations of
the Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date and/or time as the Parties may mutually
determine (the "Closing Date").
(c) Actions at the Closing. At the Closing, (i) the Target will deliver to
the Buyer the various certificates, instruments, and documents referred to in
7(a) below, (ii) the Buyer will deliver to the Target the various certificates,
instruments, and documents referred to in 7(b) below, and (iii) the Buyer will
deliver to the Exchange Agent in the manner provided below in this 2 the
certificate evidencing the Buyer Exchange Shares.
(d) Effect of Acquisition.
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(i) General. The Acquisition shall become effective at the time (the
"Effective Time") that the Target Stockholders deliver to the Buyer all of the
Target Shares, properly endorsed to effectively assign said shares to the Buyer,
and the Buyer delivers to the Target Stockholders the Buyer Exchange Shares,
properly endorsed to effectively assign said shares to the Target Stockholders.
(ii) Conversion of Target Shares. At and as of the Effective Time and
assuming that the total number of issued and outstanding Target Shares on a
fully diluted basis at such time is 10,000,000, each Target Share shall be
exchanged for one (1) Buyer Shares (the ratio of one (1) Buyer Shares to one
Target Share is referred to herein as the "Conversion Ratio"). The Conversion
Ratio shall also be subject to equitable adjustment in the event of any stock
split, stock dividend, reverse stock split, or other change in the number of
Target Shares outstanding. Immediately after the Closing, no Target Share shall
be deemed to be outstanding or to have any rights other than those set forth
above in this 2(d)(ii) after the Effective Time.
(iii) Buyer Shares. Each Buyer Share issued and outstanding at and as
of the Effective Time will remain issued and outstanding.
(e) Procedure for Transfer.
(i) The transfer and exchange of the Target Shares for the Buyer
Exchange Shares may be effected through an Exchange Agent upon the mutual
consent of the Parties and pursuant to an agreement with such Exchange Agent and
the Parties.
(ii) The Target shall pay all charges and expenses of the Exchange
Agent.
3. Representations and Warranties of the Target and the Target
Stockholders. The Target and the Target Stockholders represent and warrant to
the Buyer that the statements contained in this 3 are correct and complete as
of the date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this 3), except as set forth in the
disclosure schedule accompanying this Agreement and initialed by the Parties
(the "Disclosure Schedule"). The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this 3. For purposes of this 3, the representations and warranties regarding
the Target shall be deemed to apply equally to Reliant as the predecessor in
interest to the business of the Target.
(a) Organization, Qualification, and Corporate Power. The Target is a
privately-held, corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida.. The Target is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required, except where the lack of such
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qualification would not have a material adverse effect on the financial
condition of the Target taken as a whole. The Target has corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. 3(a) of the Disclosure Schedule lists the
stockholders, directors and officers of the Target. By signing this Agreement,
Buyer acknowledges receipt of a copy of Target's Articles of Incorporation,
bylaws, and minutes, certified by Target's secretary to be a true copy of
Target's Articles of Incorporation, bylaws, and minutes.
(b) Organization, Qualification, and Corporate Power as of the Closing. As
of the Closing: (i) the Target shall be a corporation duly organized, validly
existing, and in good standing under the laws of the State Florida ; (ii) the
Target shall be duly authorized to conduct business and shall be in good
standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification would not have a material
adverse effect on the financial condition of the Target taken as a whole; (iii)
the Target shall have full corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it; and (iv) 3(b) of the Disclosure Schedule shall be amended to list
the directors and officers of each of the Target.
(c) Capitalization on the Closing Date. As of the Closing, the entire
authorized capital stock of the Target shall consist of 100,000,000 Target
Shares of no par stock of which 10,000,000 Target Shares shall be issued and
outstanding and no Target Shares shall be held in treasury. All of the issued
and outstanding Target Shares shall have been duly authorized, validly issued,
fully paid, and nonassessable, and shall be held of record by the respective
Target Stockholders as set forth in 3(b) of the Disclosure Schedule. There
shall be no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Target to issue, sell, or otherwise cause to
become outstanding any of its capital stock. There shall be no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to the Target.
(d) Authorization of Transaction. The Target has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of the Target, enforceable in
accordance with its terms and conditions.
(e) Noncontravention. To the Knowledge of any of the Target Stockholders,
neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which any of the
Target and its Subsidiaries is subject or any provision of the charter or bylaws
of any of the Target and its Subsidiaries. To the Knowledge of any of the
Target Stockholders, none of the Target and its Subsidiaries needs to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement, except where the
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failure to give notice, to file, or to obtain any authorization, consent, or
approval would not have a material adverse effect on the financial condition of
the Target and its Subsidiaries taken as a whole or on the ability of the
Parties to consummate the transactions contemplated by this Agreement. To the
Knowledge of any of the Target Stockholders, except as set forth in 3(e) of the
Disclosure Schedule, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
cancel, or require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which the Target is a party or by which it is
bound or to which any of its assets is subject.
(f) Brokers' Fees. None of the Target nor the Target Stockholders have any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
(g) Title to Tangible Assets. The Target has good title to, or a valid
leasehold interest in, the material tangible assets they use regularly in the
conduct of their businesses.
(h) Subsidiaries. 3(h) of the Disclosure Schedule sets forth for each
Subsidiary of the Target (i) its name and jurisdiction of incorporation, (ii)
the number of shares of authorized capital stock of each class of its capital
stock, (iii) the number of issued and outstanding shares of each class of its
capital stock, the names of the holders thereof, and the number of shares held
by each such holder, and (iv) the number of shares of its capital stock held in
treasury. All of the issued and outstanding shares of capital stock of each
Subsidiary of the Target have been duly authorized and are validly issued, fully
paid, and nonassessable.
(i) Financial Statements. Attached hereto as Exhibit B are the following
financial statements (collectively the "Financial Statements"): (i) audited
consolidated balance sheets and statements of income, changes in stockholders'
equity, and cash flow for the period from inception through July 30, 2000 (the
"Most Recent Financial Statements") for the Target. The Financial Statements
(including the notes thereto) have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby and present fairly
the financial condition of the Target as of such dates and the results of
operations of the Target for such periods; provided, however, that the Most
Recent Financial Statements are subject to normal year-end adjustments and lack
footnotes and other presentation items.
(j) Events Subsequent to Most Recent Financial Statements . Since the Most
Recent Financial Statements there has not been any material adverse change in
the financial condition of the Target taken as a whole. Without limiting the
generality of the foregoing, since that date the Target has not engaged in any
practice, taken any action, or entered into any transaction outside the Ordinary
Course of Business the primary purpose or effect of which has been to generate
or preserve Cash.
(k) Legal Compliance. To the Knowledge of any of the Sellers, the Target
has complied with all applicable laws (including rules, regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder)
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of federal, state, local, and foreign governments (and all agencies thereof),
except where the failure to comply would not have a material adverse effect upon
the financial condition of the Target taken as a whole.
(l) Tax Matters.
(i) The Target has filed all Income Tax Returns that it was required
to file, and has paid all Income Taxes shown thereon as owing, except where the
failure to file Income Tax Returns or to pay Income Taxes would not have a
material adverse effect on the financial condition of the Target taken as a
whole.
(ii) 3(l) of the Disclosure Schedule lists all Income Tax Returns
filed with respect to the Target .
(iii) The Target has not waived any statute of limitations in respect
of Income Taxes or agreed to any extension of time with respect to an Income Tax
assessment or deficiency.
(iv) The Target is not a party to any Income Tax allocation or sharing
agreement.
(v) To the Knowledge of any of the Sellers, the Target has not been a
member of an Affiliated Group filing a consolidated federal Income Tax Return
(other than a group the common parent of which was the Target).
(m) Real Property.
(i) 3(m)(i) of the Disclosure Schedule lists all real property that
the Target owns, which is none.
(ii) 3(m)(ii) of the Disclosure Schedule lists all real property
leased or subleased to the Target. The Sellers have delivered to the Buyer
correct and complete copies of the leases and subleases listed in 3(m)(ii) of
the Disclosure Schedule (as amended to date). To the Knowledge of any of the
Sellers, each lease and sublease listed in 3(m)(ii) of the Disclosure Schedule
is legal, valid, binding, enforceable, and in full force and effect, except
where the illegality, invalidity, nonbonding nature, unenforceability, or
ineffectiveness would not have a material adverse effect on the financial
condition of the Target taken as a whole.
(n) Intellectual Property. 3(n) of the Disclosure Schedule identifies each
patent or trademark registration which has been issued to any of the Target with
respect to any of its intellectual property, identifies each pending patent
application or application for registration which the Target has made with
respect to any of its intellectual property, and identifies each license,
agreement, or other permission which any of the Target has granted to any third
party with respect to any of its intellectual property.
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(o) Contracts. 3(o) of the Disclosure Schedule lists all written contracts
and other written agreements to which the Target is a party, the performance of
which will involve consideration in excess of $10,000. The Sellers have
delivered to the Buyer a correct and complete copy of each contract or other
agreement listed in 3(o) of the Disclosure Schedule (as amended to date).
(p) Powers of Attorney. To the Knowledge of any of the Target Stockholders,
there are no outstanding powers of attorney executed on behalf of the Target.
(q) No Undisclosed Liabilities. Except (i) to the extent disclosed in the
Disclosure Schedule and (ii) for liabilities and obligations incurred in the
ordinary course of business consistent with past practice, the Target has not
incurred any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, that have, or would be reasonably likely to have,
individually or in the aggregate, a material adverse effect on the Target.
(r) Litigation. 3(r)(1) of the Disclosure Schedule sets forth each
instance in which any of the Target (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction, except where the injunction, judgment, order, decree,
ruling, action, suit, proceeding, hearing, or investigation would not have a
material adverse effect on the financial condition of the Target taken as a
whole.
(s) Employee Benefits.
(i) 3(s) of the Disclosure Schedule lists each Employee Benefit Plan
that the Target maintains or to which the Target contributes.
(A) To the Knowledge of any of the Parties , each such Employee
Benefit Plan (and each related trust, insurance contract, or fund), if any,
complies in form and in operation in all respects with the applicable
requirements of ERISA and the Code, except where the failure to comply would not
have a material adverse effect on the financial condition of the Target taken as
a whole.
(B) All contributions (including all employer contributions and
employee salary reduction contributions), if any, which are due have been paid
to each such Employee Benefit Plan, if any, that is an Employee Pension Benefit
Plan.
(C) Each such Employee Benefit Plan that is an Employee Pension
Benefit Plan, if any, has received a determination letter from the Internal
Revenue Service to the effect that it meets the requirements of Code 401(a).
(D) As of the last day of the most recent prior plan year, the
market value of assets under each such Employee Benefit Plan which is an
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Employee Pension Benefit Plan (other than any Multiemployer Plan), if any,
equaled or exceeded the present value of liabilities thereunder (determined in
accordance with then current funding assumptions).
(E) With respect to each Employee Benefit Plan that is an
Employee Pension Benefit Plan, if any, the Target has delivered to the Buyer
correct and complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the Internal Revenue Service,
the most recent Form 5500 Annual Report, and all related trust agreements,
insurance contracts, and other funding agreements which implement each such
Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the Target or
any ERISA Affiliate, if any, maintains or has maintained during the prior six
years or to which any of them contributes, or has been required to contribute
during the prior six years:
(A) No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets of any such
Employee Benefit Plan (other than routine claims for benefits) is pending,
except where the action, suit, proceeding, hearing, or investigation would not
have a material adverse effect on the financial condition of the Target taken as
a whole.
(B) The Target has not incurred any liability to the PBGC (other
than PBGC premium payments) or otherwise under Title IV of ERISA (including any
withdrawal liability) with respect to any such Employee Benefit Plan which is an
Employee Pension Benefit Plan.
(t) Environmental, Health, and Safety Matters.
(i) To the Knowledge of any of the Target Stockholders, the Target is
in compliance with Environmental, Health, and Safety Requirements, except for
such noncompliance as would not have a material adverse effect on the financial
condition of the Target taken as a whole.
(ii) To the Knowledge of any of the Target Stockholders, the Target
has not received any written notice, report or other information regarding any
actual or alleged material violation of Environmental, Health, and Safety
Requirements, or any material liabilities or potential material liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise), including
any investigatory, remedial or corrective obligations, relating to the Target or
its Subsidiaries or their facilities arising under Environmental, Health, and
Safety Requirements, the subject of which would have a material adverse effect
on the financial condition of the Target taken as a whole.
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(iii) This Section 3(t) contains the sole and exclusive
representations and warranties of the Target Stockholders with respect to any
environmental, health, or safety matters, including without limitation any
arising under any Environmental, Health, and Safety Requirements.
(u) Target Shares. Target hereby represent and warrant to the Buyer as
follows:
(i) Authorization. Each Target Stockholder has all requisite right,
power and authority and full legal capacity to execute and deliver this
Agreement and to perform his or her obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by such Target Stockholder, and this Agreement
constitutes a legal, valid and binding obligation enforceable against such
Target Stockholder in accordance with its terms, except as may be limited by
bankruptcy, reorganization, insolvency and similar laws of general application
relating to or affecting the enforcement of rights of creditors. The failure of
the spouse of any Target Stockholder to be a party or signatory to this
Agreement shall not (A) prevent any such Target Stockholder from performing his
or her obligations and from consummating the transactions contemplated hereunder
and thereunder or (B) prevent this Agreement from constituting the legal, valid
and binding obligation of any such Target Stockholder enforceable against any
such Target Stockholder in accordance with its terms.
(ii) No Conflict. The execution, delivery and performance of this Agreement
by each of the Target Stockholders does not and will not conflict with or
violate any law or governmental order, applicable to such Target Stockholder, or
conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result in
the creation of any encumbrance on any of the Target Shares or on any of the
assets or properties of such Target Stockholder pursuant to, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument, obligation or arrangement to which such Target
Stockholder is a party or by which any of the Target Shares or any of such
assets or properties is bound or affected.
(iii) Governmental Consents and Approvals. Except as may required by laws
applicable because the Buyer is a public company, the execution, delivery and
performance of this Agreement by each of the Target Stockholders does not and
will not require any consent, approval, authorization or other order of, action
by, filing with or notification to any governmental authority.
(iv) Ownership. Each of the Target Stockholders owns the number of Target
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Shares set forth next to such Target Stockholder's name on the Target
Shareholders List. All of the Target Shares set forth next to each Target
Stockholder's name have been duly authorized, validly issued, and are fully paid
and nonassessable and have been accorded full voting rights. There are no
voting trusts, stockholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any of the
Target Shares, or if there are, all votes and consents necessary to authorize
all of the Target Stockholders to enter into and to perform this Agreement have
been given, and all restrictions encumbering the power and authority of the
Target Stockholders to perform this Agreement have been waived, and upon
delivery of such Target Shares at Closing as contemplated herein, the Buyer will
own the Target Shares free and clear of all encumbrances.
(v) Certain Securities Matters. Target hereby represents and warrants
to the Buyer as follows:
(i) Except for the Target Stockholder's resale rights as set forth
herein and the right of the Target Stockholder to exercise such rights to their
fullest extent, the Target Stockholder: (A) is acquiring the Buyer Shares for
the Target Stockholder's own account and not with a view to, or for offer or
sale in connection with, any distribution thereof, and the Target Stockholder is
not participating and does not have a participation in any such distribution or
the underwriting of any such distribution; (B) the Target Stockholder has
sufficient knowledge and experience in financial and business matters and is
fully capable of evaluating the merits and risks of purchasing the Buyer Shares;
and (C) the Target Stockholder has not been solicited to acquire the Buyer
Shares by means of general advertising or general solicitation.
(ii) The Target Stockholder has been furnished with information about and
allowed access to Buyer's business and has had the opportunity to investigate
Buyer's business and to ask questions of and receive answers from Buyer
sufficient to satisfy the Target Stockholder that Buyer's business is reasonably
as described by Buyer.
(iii) The Target Stockholder understands that at Closing: (A) the Buyer
Shares are not registered under any applicable federal or state securities law
in reliance upon certain exemptions thereunder; (B) the Buyer Shares may not be
sold, transferred or otherwise disposed of without registration under the
Securities Act and compliance with applicable state securities laws or the
availability of an exemption therefrom; and (C) in the absence of registration
under the Securities Act and compliance with applicable state securities laws or
an exemption therefrom, the Buyer Shares must be held indefinitely. The Target
Stockholder acknowledges that the reliance of the Buyer upon such exemption from
registration is predicated upon the foregoing representations.
(w) Disclaimer of other Representations and Warranties. Except as expressly
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set forth in Section 2 and this Section 3, the Target Stockholders make no
representation or warranty, express or implied, at law or in equity, in respect
of the Target, its Subsidiaries, or any of their respective assets, liabilities
or operations, including, without limitation, with respect to merchantability or
fitness for any particular purpose, and any such other representations or
warranties are hereby expressly disclaimed.
4. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Target that the statements contained in this 5 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this 5), except as set
forth in the Disclosure Schedule. The Disclosure Schedule will be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this 5.
(a) Organization. The Buyer is a public corporation that trades on the
over-the-counter market and is duly organized, validly existing, and in good
standing under the laws of the State of Nevada. Each of the Buyer and its
Subsidiaries is duly authorized to conduct its business and is in good standing
under the laws of each jurisdiction where such qualification is required, except
where the lack of such qualification would not have a material adverse effect on
the financial condition of the Buyer and its Subsidiaries taken as a whole.
Each of the Buyer and its Subsidiaries has full corporate power and authority to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it. 5(a) of the Disclosure Schedule lists the directors and
officers of each of the Buyer and its Subsidiaries.
(b) Capitalization. The entire authorized capital stock of the Buyer
consists of 100 million common shares and approximately 18,562,500 common shares
are currently issued and outstanding. All of the Buyer Shares to be issued
pursuant to the Closing of this Agreement will be duly authorized and, upon
Closing, will be validly issued, fully paid, and nonassessable.
(c) Authorization of Transaction. The Buyer has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of the Buyer, enforceable in accordance
with its terms and conditions.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
the charter or bylaws of the Buyer or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument or other arrangement
to which the Buyer is a party or by which it is bound or to which any of its
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assets is subject other than in connection with the provisions of the
Hart-Scott-Rodino Act, the Nevada General Corporation Law, the Securities
Exchange Act, the Securities Act, and the state securities laws, the Buyer does
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement.
(e) Brokers' Fees. The Buyer does not have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(f) Filings with the SEC. The Buyer has made all filings with the SEC that
it has been required to make under the Securities Act and the Securities
Exchange Act (collectively the "Public Reports"). Each of the Public Reports has
complied with the Securities Act and the Securities Exchange Act in all material
respects. None of the Public Reports, as of their respective dates, contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Buyer has
delivered to the Target a correct and complete copy of each Public Report
(together with all exhibits and schedules thereto and as amended to date).
(g) Financial Statements. The Buyer has filed Quarterly Reports on Form
10-QSB for the fiscal quarter ended June 30, 2000 (the "Most Recent Fiscal
Quarter End"), and an Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999. The financial statements included in or incorporated by
reference into these Public Reports (including the related notes and schedules)
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby and present fairly the financial
condition of the Buyer as of the indicated dates and the results of operations
of the Buyer for the indicated periods.
(h) Events Subsequent to Most Recent Fiscal Quarter End. Since the Most
Recent Fiscal Quarter End, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects material adverse change in the financial condition of the Buyer and
its Subsidiaries taken as a whole.
(i) No Undisclosed Liabilities. Except (i) to the extent disclosed in the
Public Reports and (ii) for liabilities and obligations incurred in the ordinary
course of business consistent with past practice, the Buyer has not incurred any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that have, or would be reasonably likely to have, individually or in
the aggregate, a material adverse effect on the Buyer.
(j) Litigation. Except as disclosed to the contrary in the Public
Reports, there is no suit, claim, action, proceeding, review or investigation
pending or, to the knowledge of the Buyer, threatened against or affecting the
Buyer which, individually or in the aggregate, is reasonably likely to have a
material adverse effect on the Buyer or would, or would be reasonably likely to,
materially impair the ability of the Buyer to consummate the transaction
contemplated by this Agreement.
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(k) Compliance with Laws. Except as disclosed to the contrary in the
Public Reports, the Buyer has complied with all laws, statutes, regulations,
rules, ordinances and judgments, decrees, orders, writs and injunctions, of any
court or governmental entity relating to any of the property owned, leased or
used by them, or applicable to their business, including, but not limited to,
equal employment opportunity, discrimination, occupational safety and health,
environmental, insurance, regulatory, antitrust laws, ERISA and laws relating to
taxes, except to the extent that any such non-compliance would not have a
material adverse effect on the Buyer.
(l) No Default. The business of the Buyer is not being conducted in
default or violation of any term, condition or provision of (i) its certificate
of incorporation or bylaws or similar organizational documents, or (ii)
agreements to which the Buyer is a party, excluding from the foregoing clause
(iii) defaults or violations that would not have a material adverse effect on
the Buyer and would not, or would not be reasonably likely to, materially impair
the ability of the Buyer to consummate transactions contemplated by this
Agreement.
(m) Certain Securities Matters.
(i) The Buyer represents and warrants that (A) the Target Shares are
being acquired by the Buyer for its own account and not with a view to, or for
offer or sale in connection with, any distribution thereof, and it is not
participating and does not have a participation in any such distribution or the
underwriting of any such distribution; (B) the Buyer has sufficient knowledge
and experience in financial and business matters and is fully capable of
evaluating the merits and risks of purchasing the Target Shares; and (C) the
Buyer has not been solicited to acquire the Target Shares by means of general
advertising or general solicitation.
(ii) The Buyer has been furnished with information about and allowed access
to Target's business, books, records, files, and properties and properties and
has had the opportunity to investigate Target's business and assets and to ask
questions of and receive answers from Target sufficient to satisfy the Buyer
that Target's business is reasonably as described by Target.
(iii) Buyer understands that (A) the Target Shares are not registered
under any applicable federal or state securities law in reliance upon certain
exemptions thereunder, (B) the Target Shares may not be sold, transferred or
otherwise disposed of without registration under the Securities Act and
compliance with applicable state securities laws or the availability of an
exemption therefrom; and (C) in the absence of registration under the Securities
Act and compliance with applicable state securities laws or an exemption
therefrom, the Target Shares must be held indefinitely. The Buyer acknowledges
that the reliance of the Target upon such exemption from registration is
predicated upon the foregoing representations.
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(n) Market Manipulation. The Buyer has not, directly or indirectly,
taken any action designed to cause or to result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of its common stock to facilitate the sale or resale
of its common stock, in any case in violation of any federal or state securities
laws.
5. Covenants. The Parties agree as follows with respect to the period from
and after the execution of this Agreement.
(a) General. Each of the Parties will use its reasonable best efforts to
take all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
7 below).
(b) Notices and Consents. The Target will give any notices (and will cause
each of its Subsidiaries to give any notices) to third parties, and will use its
reasonable best efforts to obtain (and will cause each of its Subsidiaries to
use its reasonable best efforts to obtain) any third party consents, that the
Buyer reasonably may request in connection with the matters referred to in 3(d)
above.
(c) Regulatory Matters and Approvals. Each of the Parties will (and the
Target will cause each of its Subsidiaries to) give any notices to, make any
filings with, and use its reasonable best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in 3(d) and 45(d) above.
(d) Public Market for Buyer Shares. The Buyer will use its best efforts to
remain current in its periodic reports required to be filed with the SEC, so
that the Buyer Shares (including without limitation, the Buyer Exchange Shares
and underlying shares with respect to warrants and options to be issued pursuant
to this Agreement) remain eligible for quotation on the National Association of
Securities Dealer's Over the Counter Electronic Bulletin Board (the "OTC-BB").
(e) Operation of Business. The Target will not (and will not cause or
permit any of its Subsidiaries to) engage in any practice, take any action, or
enter into any transaction outside the Ordinary Course of Business without the
prior approval of Buyer. Without limiting the generality of the foregoing:
(i) none of the Target and its Subsidiaries will authorize or effect
any change in its charter or bylaws, except with respect to the conversion of
the Target from a limited liability company to a corporation as provided in
3(b), (c) and (d) above.
(ii) none of the Target and its Subsidiaries will grant any options,
warrants, or other rights to purchase or obtain any of its capital stock or
issue, sell, or otherwise dispose of any of its capital stock (except upon the
conversion or exercise of options, warrants, and other rights currently
outstanding);
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(iii) none of the Target and its Subsidiaries will declare, set aside,
or pay any dividend or distribution with respect to its capital stock (whether
in cash or in kind), or redeem, repurchase, or otherwise acquire any of its
capital stock, in either case outside the Ordinary Course of Business.
(iv) none of the Target and its Subsidiaries will issue any note,
bond, or other debt security or create, incur, assume, or guarantee any
indebtedness for borrowed money or capitalized lease obligation outside the
Ordinary Course of Business;
(v) none of the Target and its Subsidiaries will impose any Security
Interest upon any of its assets outside the Ordinary Course of Business;
(vi) none of the Target and its Subsidiaries will make any capital
investment in, make any loan to, or acquire the securities or assets of any
other Person outside the Ordinary Course of Business; and
(vii) none of the Target and its Subsidiaries will commit to any of
the foregoing.
(f) Full Access. The Target will (and will cause each of its Subsidiaries
to) permit representatives of the Buyer to have full access at all reasonable
times, and in a manner so as not to interfere with the normal business
operations of the Target and its Subsidiaries, to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to each of the Target and its Subsidiaries. The Buyer will treat
and hold as such any Confidential Information it receives from any of the Target
and its Subsidiaries in the course of the reviews contemplated by this 6(f),
will not use any of the Confidential Information except in connection with this
Agreement, and, if this Agreement is terminated for any reason whatsoever,
agrees to return to the Target all tangible embodiments (and all copies) thereof
which are in its possession.
(g) Notice of Developments. Each Party will give prompt written notice to
the other of any material adverse development causing a breach of any of its own
representations and warranties in 3 and 4 above. No disclosure by any Party
pursuant to this 5(g), however, shall be deemed to amend or supplement the
Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
(h) Interest from Others. Prior to the satisfaction by the Buyer of the
conditions to the Target's obligations to close this transaction, the Target,
its Subsidiaries, and their directors and officers will remain free to
participate in any discussions or negotiations regarding any proposal or offer
from any Person relating to the acquisition of all or substantially all of the
capital stock or assets of any of the Target and its Subsidiaries (including any
acquisition structured as a merger, consolidation, or share exchange) and to
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furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any Person to do or seek any of the
foregoing; provided, however, that the Target, its Subsidiaries and the Target
Stockholders shall not enter into any agreement with any Person other than the
Buyer for the acquisition of the Target and/or its Subsidiaries or any part
thereof unless such agreement is clearly designated as a "back-up contract,"
subordinated to this Agreement and to be activated only in the event that this
Agreement is canceled without Closing by one or both Parties for failure to
fulfill the conditions of Closing within the time allowed hereunder.
(i) Indemnification and Release.
(ii) During the term of the Employment Agreements with the Key
Executives of the Target, the Buyer will observe any indemnification provisions
now existing in the certificate of incorporation or bylaws of the Target and/or
its Subsidiaries for the benefit of any Key Executive who served as a member,
director or officer of the Target and/or its Subsidiaries at any time prior to
the Effective Time.
(iii) The Buyer will release and forever discharge each of the Target
Stockholders who served as a director or officer of the Target at any time prior
to the Effective Time from any and all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, taxes, liens, losses, expenses, and
fees, including all court costs and attorneys' fees and expenses, resulting
from, arising out of, relating to, in the nature of, or caused by this Agreement
or any of the transactions contemplated herein, except that the Buyer will not
release any of the foregoing individuals from any of the foregoing to the extent
that same also constitutes a breach of such individual's representations and
warranties under 3.
(j) Employment Agreement with Target's Key Employee. Buyer hereby agrees
to execute an employment agreement with Target's Key Employee on mutually
agreeable terms that include a covenant not to compete.
(k) Post-Closing Covenants of the Buyer.
(i) The Target's Key Employee will be treated fairly relative to the Buyer's
other executives at the comparable level of employment with respect to salaries,
benefits and stock options.
(ii) Upon Closing, the Buyer's board of directors shall appoint Carl Battie to
the Buyer's board of directors.
(iii) The Buyer shall not merge or liquidate or dispose of the Target during
the first 12 months after the Closing.
(iv) Buyer shall not change the board of directors of the Target as it existed
immediately prior to the Closing Date during the first 12 months after the
Closing without the prior written consent of the Target Stockholders.
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(v) Buyer shall not effect a reverse split of Buyer's Shares for the first 12
months after Closing.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) The representations and warranties set forth in 3 above shall be
true and correct in all material respects at and as of the Closing Date;
(ii) The Target shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) There shall not be any judgment, order, decree, stipulation,
injunction, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) The Target and the Target Stockholders shall have delivered to
the Buyer a certificate to the effect that each of the conditions specified
above in 6(a)(i)-(iii) is satisfied in all respects;
(v) The Buyer shall have received from counsel to the Target an
opinion in form and substance reasonably satisfactory to Buyer, addressed to the
Buyer, and Dated as of the Closing Date;
(vi) All actions to be taken by the Target in connection with
consummation of the transactions contemplated in this Agreement and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Buyer; and
(vii) The Buyer shall be reasonably satisfied with the opinion expressed in
the completed audit of Target by the Buyer's auditors at the Buyer's expense,
that the results are not materially adversely at variance with the unaudited
financial information provided to the Buyer by the Target and that the audit
meets the requirements of Regulation S-X of the Securities Act and the
Securities Exchange Act.
(viii) The Target shall use its best efforts to raise capital to meet the
needs of Target and the Buyer and to release the officers of Buyer from any
contingent liabilities or guarantees that they may have for the benefit of
Buyer.
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The Buyer may waive any condition specified in this 6(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Target. The obligation of the Target to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in 4 above shall be
true and correct in all material respects at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any judgment, order, decree, stipulation,
injunction, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) The full execution of employment agreements with the Target's Key
Employee acceptable to Target, Buyer and the employee.
(v) the Buyer shall have delivered to the Target and the Target
Stockholders a certificate to the effect that each of the conditions specified
above in 6(b)(i)-(vii) is satisfied in all respects;
(vii) the Target and Target Stockholders shall have received from
counsel to the Buyer an opinion in form and substance reasonably satisfactory to
Target and Target Stockholders, addressed to the Target and Target Stockholders,
and dated as of the Closing Date;
(viii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Target and the Target Stockholders.
The Target may waive any condition specified in this 6(b) if it executes a
writing so stating at or prior to the Closing.
7. Termination.
(a) Termination of Agreement. Either of the Parties may terminate this
Agreement with the prior authorization of its board of directors (whether before
or after stockholder approval) as provided below:
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(i) the Parties may terminate this Agreement by mutual written consent
at any time prior to the Effective Time.
(ii) the Buyer may terminate this Agreement by giving written notice
to the Target at any time prior to the Effective Time (A) in the event the
Target or the Target Stockholders has breached any material representation,
warranty, or covenant contained in this Agreement in any material respect, the
Buyer has notified the Target of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach or (B) if the
Closing shall not have occurred on or before September 30, 2000, by reason of
the failure of any condition precedent under 6(a) hereof (unless the failure
results primarily from the Buyer breaching any representation, warranty, or
covenant contained in this Agreement).
(iii) the Target may terminate this Agreement by giving written notice
to the Buyer at any time prior to the Effective Time (A) in the event the Buyer
has breached any material representation, warranty, or covenant contained in
this Agreement in any material respect, the Target has notified the Buyer of the
breach, and the breach has continued without cure for a period of 30 days after
the notice of breach or (B) if the Closing shall not have occurred on or before
September 30, 2000, by reason of the failure of any condition precedent under
6(b) hereof (unless the failure results primarily from the Target breaching any
representation, warranty, or covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement pursuant
to 7(a) above, all rights and obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (except for any
liability of any Party then in breach); provided, however, that the
confidentiality provisions contained in 5(g) above shall survive any such
termination.
8. Miscellaneous.
(a) Survival. The representations and warranties of the Parties will
survive the Effective Time for a period of two years. The covenants of the
Parties shall survive the Effective Time for two years, unless a longer period
is required by the terms of the particular covenant for it to be fully
performed, in which case the covenant shall survive for such period plus 6
months.
(b) Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making the
disclosure).
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(c) No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and the Target
Stockholders and their respective successors and permitted assigns; provided,
however, that (i) the provisions in 2 above concerning issuance of the Buyer
Shares and certain other provisions concerning certain requirements for a
tax-free reorganization are intended for the benefit of the Target Stockholders
and (ii) the provisions in 5(i) above concerning indemnification and release
are intended for the benefit of the individuals specified therein and their
respective legal representatives.
(d) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and the Target Stockholders and
their respective successors and permitted assigns. No Party may assign either
this Agreement or any of its rights, interests, or obligations hereunder without
the prior written approval of the other Party.
(f) Counterparts. This Agreement may be executed in one or more facsimile
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing and will be effective when
hand-delivered or upon delivery if sent by commercial courier service such as
Federal Express or Airborne or on the day of delivery or first attempted
delivery if sent by first class, postage prepaid, certified United States mail,
return receipt requested (whether or not the return receipt is subsequently
received), and addressed by the sender:
If to the Target: Copy to:
Carl Battie, President
Whoofnet.com Inc.
7771 West Oakland Blvd., Suite 217
Sunrise, FL 33351
If to the Buyer: Copy to:
Mark WoodsChairman Karl E. Rodriguez
IDial Networks, Inc. 34700 Pacific Coast Hwy. Suite 303
16990 Dallas Parkway #106 Dana Point, CA 92624
Dallas, TX 75248
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Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient.
Regardless of the method of delivery, any written notice, request, demand,
claim, or other communication actually received by a party hereto shall be
effective on the date of receipt. Any party hereto, from time to time, may
change his or her or its address to which notice is to be sent pursuant hereto
by sending a notice of such change in conformity with the fore-going
requirements to the other parties to the other parties to this Agreement.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Nevada without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Nevada or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Nevada.
(j) Amendments and Waivers. The Parties may mutually amend any provision of
this Agreement at any time prior to the Effective Time with the prior
authorization of their respective boards of directors; provided, however, that
any amendment effected subsequent to stockholder approval will be subject to the
restrictions contained in the Nevada General Corporation Law. No amendment of
any provision of this Agreement shall be valid unless the same shall be in
writing and signed by both of the Parties. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
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favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(o) Facsimile Signatures. Execution and delivery of this Agreement by
exchange of facsimile copies bearing the facsimile signature of a party hereto
shall constitute a valid and binding execution and delivery of this Agreement by
such party. Such facsimile copies shall constitute enforceable original
documents.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
iDial Networks, Inc.
By:/s/Mark Wood
Mark Wood, Chairman
Whoofnet.com Inc.
By:/s/Carl Battie
Carl Battie, President
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