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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
May 8, 1996 Commission File Number 33-128
SYNERGY MEDIA, INC.
(formerly named Sierra Solids, Inc.)
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(Exact name of registrant as specified in its charter)
Nevada 87-0443269
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
260 Regency Parkway, Suite 220, Omaha, Nebraska 68114
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(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code:
(402) 343-0191
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The Registrant, Registrant's wholly-owned subsidiary, Communications
Systems Group, Inc., an Arizona corporation ("Group"), and CSG Wireless,
Inc., an Arizona corporation ("CSG"), concluded an agreement and plan of
reorganization on April 25, 1996 (the "Closing Date"), pursuant to which
Group merged with and into CSG (the "Merger"). The Merger will become
effective when articles of merger are filed with the Secretary of State of
the State of Arizona (the "Effective Time"). At the Effective Time, CSG shall
become the surviving corporation and Group shall cease to exist. As
consideration for the Merger, the shareholders of Group shall receive, as of
the Effective Time, 350 shares of Registrant's common stock for each share of
Group's common stock issued and outstanding. The total number of shares
issued in connection with the Merger shall be 700,000 shares of Registrant's
common stock. In addition, the shareholders of Group shall receive cash
consideration in the aggregate amount of $204,000 of which $100,000 is
payable on the Closing Date and the balance payable on October 25, 1996 (as
evidenced by a note therefor). Such note bears interest at a rate 8.25% per
annum and is secured by all of the tangible and intangible assets of CSG.
ITEM 5. OTHER EVENTS.
The Registrant has changed its name to Synergy Media, Inc. The
effective date of such change of name is April 22, 1996.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
It is impracticable as of the date of this report to provide any of the
required financial statements for the acquired business described at Item 2
hereof. The Registrant shall file such financial statements as soon as
practicable, but in no event later than June 24, 1996.
(b) PRO FORMA FINANCIAL INFORMATION.
It is impracticable as of the date of this report to provide any of the
required pro forma financial information for the acquired business described
at Item 2 hereof. The Registrant shall file such financial information
concurrent with the filing of the financial statements referred to in Item
7(a) hereof.
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(C) EXHIBITS.
Exhibit
Number Description
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2.01 Agreement and Plan of Reorganization between Sierra Solids, Inc.,
n/k/a Synergy Media, Inc., CSG Wireless, Inc. and Communications
Systems Group, Inc., dated as of April 25, 1996
10.01 Employment Agreement by and between Kenneth McLeod and CSG Wireless,
Inc., dated April 25, 1996 (appearing as Exhibit 5.3(g) to Exhibit
2.01 of this Current Report)
SIGNATURE
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.
SYNERGY MEDIA, INC.
By: /s/ Edward J. Jarzobski
-----------------------------
Edward J. Jarzobski
Vice President
Date: May 8, 1996
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INDEX TO EXHIBITS
Exhibit
Number Description Page
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2.01 Agreement and Plan of Reorganization between Sierra
Solids, Inc., n/k/a Synergy Media, Inc., CSG Wireless, Inc. and
Communications Systems Group, Inc., dated as of April 25, 1996 5
10.01 Employment Agreement by and between Kenneth McLeod and CSG
Wireless, Inc., dated April 25, 1996 *
*Appearing as Exhibit 5.3(g) to Exhibit 2.01 of this Current Report
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AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
SIERRA SOLIDS, INC., N/K/A SYNERGY MEDIA, INC.
CSG WIRELESS, INC.
AND
COMMUNICATIONS SYSTEMS GROUP, INC.
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TABLE OF CONTENTS
ARTICLE 1 DESCRIPTION OF PLAN OF REORGANIZATION . . . . . . . . . . . . . . . 1
1.1 THE PLAN OF REORGANIZATION . . . . . . . . . . . . . . . . . . . . . 1
1.2 CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 ARTICLES AND BYLAWS. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 MERGER CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 CONVERSION OF GROUP COMMON STOCK . . . . . . . . . . . . . . . . . . 2
1.7 CAPITAL STOCK OF SIERRA. . . . . . . . . . . . . . . . . . . . . . . 2
1.8 EXCHANGE OF SHARE CERTIFICATES . . . . . . . . . . . . . . . . . . . 2
1.9 ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF GROUP . . . . . . . . . . . . . . 4
2.1 CORPORATE ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 CAPITAL STOCK OF GROUP . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 EXECUTION AND DELIVERY OF AGREEMENT. . . . . . . . . . . . . . . . . 4
2.4 GROUP FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 5
2.5 PENDING LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 GOOD TITLE TO PROPERTIES . . . . . . . . . . . . . . . . . . . . . . 5
2.7 NO EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . . . 6
2.8 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.9 NO ENVIRONMENTAL CONTAMINATION . . . . . . . . . . . . . . . . . . . 6
2.10 MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.11 TAX RETURNS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.12 GOVERNMENTAL APPROVALS . . . . . . . . . . . . . . . . . . . . . . . 7
2.13 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.14 CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . 7
2.15 BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.16 LABOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.17 ACCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SIERRA . . . . . . . . . . . . . . 8
3.1 CORPORATE ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 ACCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.4 CAPITAL STOCK OF SIERRA AND CSG. . . . . . . . . . . . . . . . . . . 9
3.5 NO VIOLATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
3.6 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . .10
3.7 COMPLIANCE WITH LAWS AND AGREEMENTS. . . . . . . . . . . . . . . . .10
3.8 NO LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.9 GOOD TITLE TO PROPERTIES . . . . . . . . . . . . . . . . . . . . . .11
3.10 FILING OF REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . .11
3.11 TAX RETURNS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.12 GOVERNMENTAL APPROVALS . . . . . . . . . . . . . . . . . . . . . . .11
3.13 DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
3.14 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
3.15 REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . .12
3.16 CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . .12
3.17 BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . .12
3.18 SIERRA INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . .13
3.19 NO EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . . .13
3.20 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
3.21 NO ENVIRONMENTAL CONTAMINATION . . . . . . . . . . . . . . . . . . .13
3.22 MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . .13
3.23 LABOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
ARTICLE 4 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
4.1 COVENANTS OF GROUP . . . . . . . . . . . . . . . . . . . . . . . . .14
4.2 COVENANTS OF SIERRA AND CSG. . . . . . . . . . . . . . . . . . . . .15
4.3 INVESTMENT REPRESENTATION AGREEMENTS.. . . . . . . . . . . . . . . .16
4.4 DELIVERY OF SHAREHOLDER LIST . . . . . . . . . . . . . . . . . . . .16
ARTICLE 5 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
5.1 CONDITIONS TO THE OBLIGATIONS OF ALL THE PARTIES . . . . . . . . . .16
5.2 CONDITIONS TO THE OBLIGATIONS OF SIERRA. . . . . . . . . . . . . . .17
5.3 CONDITIONS TO THE OBLIGATIONS OF GROUP . . . . . . . . . . . . . . .18
ARTICLE 6 TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . 19
6.1 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
6.2 EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . . .19
6.3 AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
6.4 WAIVER; EXTENSION. . . . . . . . . . . . . . . . . . . . . . . . . .19
ARTICLE 7 POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . .20
ARTICLE 8 REGISTRATION RIGHTS 8.1 REGISTRATION PROCEDURES . . . . . . . . .23
ARTICLE 9 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . .23
9.1 SHAREHOLDERS' REPRESENTATIVES. . . . . . . . . . . . . . . . . . . .23
9.2 SURVIVAL.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
9.3 BROKERS AND FEES . . . . . . . . . . . . . . . . . . . . . . . . . .23
9.4 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
9.5 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . .24
9.6 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
9.7 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . .24
9.8 BINDING AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . .25
9.9 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
9.10 ADDITIONAL AGREEMENTS; REASONABLE EFFORTS . . . . . . . . . . . . .25
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AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as of
April 25, 1996, between SIERRA SOLIDS, INC. N/K/A SYNERGY MEDIA, INC., a Nevada
corporation ("Sierra"); CSG WIRELESS, INC., an Arizona corporation ("CSG"); and
COMMUNICATIONS SYSTEMS GROUP, INC., an Arizona corporation ("Group").
WHEREAS, the boards of directors of the respective corporations deem it
desirable and in the best interests of their respective corporations and
shareholders that Group merge with and into Sierra (the "Merger") upon the terms
and subject to the conditions set forth in this Agreement; and
WHEREAS, such merger shall be accomplished through CSG, a wholly owned
subsidiary of Sierra; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, undertakings and agreements set forth
below, the parties agree as follows:
ARTICLE 1
DESCRIPTION OF PLAN OF REORGANIZATION
1.1 THE PLAN OF REORGANIZATION. Subject to the terms and conditions of
this Agreement, at a date and time at which the Merger becomes effective as
provided in Section 1.3 hereof (the "Effective Time"), Group shall be merged
with and into CSG in accordance with Section 10-076 of the Arizona Business
Corporation Act (the "ABCA") with CSG being the surviving corporation, and the
separate existence of Group shall cease. CSG shall possess all the rights,
privileges, immunities and franchises of Group pursuant to Section 10-076 of the
ABCA and shall by operation of law be responsible and liable for all the
liabilities and obligations of Group pursuant to Section 10-076 of the ABCA.
1.2 CLOSING. Unless this Agreement shall have been terminated and the
Merger shall have been abandoned, the closing of the transactions contemplated
herein (the "Closing") will take place at 10:00 a.m. at the offices of Sierra
Solids, Inc. 260 Regency Parkway, Suite 220, Omaha, Nebraska on April 25, 1996
(the "Closing Date"), unless another place and/or time is agreed upon in writing
by the parties.
1.3 EFFECTIVE TIME. The Merger shall become effective when properly
executed Articles of Merger (together with any other documents required by law
to effectuate the Merger) shall be filed and recorded by Group and CSG in the
office of the Secretary of State of Arizona, which filings and recordings shall
be made as soon as possible after the Closing of the transactions contemplated
in this Agreement. The day on which such filings are made and accepted is
referred to herein as the "Effective Date of the Merger." The term "Effective
Time" shall mean 11:59 p.m., Omaha, Nebraska, time on the Effective Date of the
Merger.
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1.4 ARTICLES AND BYLAWS. The Articles of Incorporation and the Bylaws of
CSG in effect immediately prior to the Effective Time shall be the Articles of
Incorporation and Bylaws of CSG after the Effective Time until thereafter
amended in accordance with applicable law.
1.5 MERGER CONSIDERATION. The aggregate consideration issuable in the
Merger (the "Merger Consideration") shall be:
(a) 700,000 shares of common stock of Sierra, par value $.001 per share
(the "Sierra Common Stock") payable at Closing. Sierra shall instruct its
transfer agent to deliver the Sierra Common Stock to the Group shareholders in
the amounts and to the addresses set forth in Schedule 2.2; and
(b) $204,000 in cash payable: (i) $100,000 payable at closing and (ii)
$104,000 payable on October 25, 1996 , which is six (6) months after the
Closing Date. Such monies to be payable in the amounts and to the Group
Shareholders set forth in Schedule 2.2. Sierra shall execute a promissory note
(the "Note") to the benefit of the Group Shareholders evidencing the deferred
payment provided for in subsection b(ii) herein in substantially similar form as
shown in Exhibit 1.5. The Note shall be secured by a security interest in all
of the assets of CSG and CSG shall execute to the benefit of the Group
Shareholders a standard UCC financing statement and security agreement to filed
with the appropriate authorities.
1.6 CONVERSION OF GROUP COMMON STOCK.
(a) As of the Effective Time, by virtue of the Merger without any action
on the part of the holders thereof, each share of common stock, par value $0.01
per share, of Group (the "Group Common Stock") that is held by a Group
Shareholder and issued and outstanding immediately prior to the Effective Time
shall thereupon and without any further action be converted into 350 shares of
fully paid and nonassessable shares of Sierra Common Stock.
(b) The holders of certificates representing shares of Group Common Stock
(the "Group Shareholders") shall cease to have any rights as shareholders of
Group, and their sole right shall be the right to receive the number of whole
shares of Sierra Common Stock into which their shares of Group Common Stock
shall have been converted in the Merger as provided in subsection 1.6(a).
1.7 CAPITAL STOCK OF SIERRA. Each share of Sierra Common Stock issued and
outstanding or held in treasury immediately prior to the Effective Time shall
continue at and after the Effective Time without change therein by reason of the
Merger as a share of Sierra Common Stock. Options outstanding immediately prior
to the Effective Time to purchase shares of Sierra Common Stock shall continue
at and after the Effective Time without any change therein by reason of the
Merger and relate to the same number of shares of Sierra Common Stock
immediately after the Effective Time as they related to Sierra Common Stock
immediately prior to the Effective Time.
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1.8 EXCHANGE OF SHARE CERTIFICATES.
(a) As soon as practicable after the Effective Time, Sierra shall deliver
to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of Group Common Stock
(the "Certificates"), against delivery of such Certificates duly executed for
transfer in form satisfactory to Sierra, certificates representing that number
of whole shares of Sierra Common Stock into which the shares of Group Common
Stock theretofore represented by the Certificates so surrendered shall have been
converted pursuant to the provisions of this Article 1. The Certificates so
surrendered shall forthwith be canceled. Prior to the Effective Time, holders
of Group Common Stock shall have no rights as shareholders of Sierra Common
Stock, including, without limitation, voting and dividend rights. The
certificates of Sierra Common Stock delivered hereunder will be in substantially
similar form as the certificate attached hereto as Exhibit 1.8.
(b) No dividends or other distributions with respect to the Sierra Common
Stock issuable to former holders of Group Common Stock pursuant to the Merger
and payable to the holders thereof after the Effective Time shall be paid to any
such holder unless and until such holder shall have surrendered such holder's
Certificates and received in exchange therefor certificates representing shares
of Sierra Common Stock. Subject to the effect, if any, of applicable escheat
laws, after the surrender and exchange of the Certificates, the holder of
certificates for shares of Sierra Common Stock into which the shares of Group
Common Stock shall have been converted shall be entitled to receive any
dividends or other distributions, without any interest thereon, which
theretofore became payable by Sierra based on a record date after the Effective
Time with respect to the shares of Group Common Stock represented by the
Certificate.
(c) In the case of any lost, stolen or destroyed Certificate, Sierra will
issue any new certificates representing shares of Sierra Common Stock provided
(i) Sierra receives evidence of ownership of Group Common Stock for which the
Certificates have been lost, stolen or destroyed, and (ii) Sierra has no actual
notice that the shares represented by such lost, stolen or destroyed
Certificates have been acquired by a bona fide purchaser.
(d) If any certificate representing shares of Sierra Common Stock or a
check for the cash due a holder of Group Common Stock is to be issued in a name
other than that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of the issuance thereof that the
Certificates so surrendered shall be properly endorsed and that the signatures
thereon properly guaranteed and otherwise in proper form for transfer and that
the person requesting such exchange shall pay to Sierra any transfer or other
taxes required by reason of the issuance of a certificate representing shares of
Sierra Common Stock in any name other than that of the registered holder of the
Certificate surrendered, or any amounts otherwise required to be paid, or shall
establish to the satisfaction of Sierra that such tax has been paid or is not
payable.
(e) After the Effective Time, there shall be no further registration of
transfers on the stock transfer books of Sierra of the shares Group Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to Sierra for
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registration of transfer, they shall be canceled and exchanged for certificates
representing shares of Sierra Common Stock and cash as provided in this
Article 1.
1.9 ADJUSTMENTS. If, between the date of this Agreement and the Effective
Time, the outstanding shares of Sierra Common Stock shall have been changed to a
different number of shares by reason of any reclassification, recapitalization,
split up, combination or readjustment, or a stock dividend thereon shall have
been declared with a record date within such period, the number of shares of
Sierra Common Stock and the amount of cash for fractional shares to be issued
and delivered in the Merger in exchange for each outstanding share of Group
Common Stock as provided in this Agreement shall be appropriately and
proportionately adjusted so that the number of such shares of Sierra Common
Stock into which a share of Group Common Stock shall be converted will equal the
number of shares of Sierra Common Stock which holders of shares of Group Common
Stock would have received pursuant to such reclassification, recapitalization,
split-up, combination or readjustment or stock dividend had the record date
therefor been immediately following the Effective Time of the Merger.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF GROUP
As an inducement to Sierra to enter into this Agreement and the Merger,
Group makes the following representations and warranties to Sierra which shall
be true and accurate as of the Closing Date and the Effective Time and which
representations and warranties shall be deemed material and to have been relied
upon by Sierra, notwithstanding any investigation by or on behalf of Sierra.
2.1 CORPORATE ORGANIZATION. Group is a corporation which is duly
organized, validly existing and in good standing under the laws of the State of
Arizona and has all requisite corporate power and authority to own, operate and
lease its respective properties and to carry on its business as it is now being
conducted.
2.2 CAPITAL STOCK OF GROUP. The authorized capital stock of Group
consists of 10,000 shares of Group Common Stock. As of the date of this
Agreement, 2,000 shares of Group Common Stock are issued and outstanding and no
shares of Group Common Stock are held in the treasury of Group. All such
outstanding shares of Group Common Stock are duly authorized, validly issued,
fully paid and nonassessable and none are issued in violation of the preemptive
rights of any shareholder. There are no outstanding subscriptions, options,
calls, conversion rights, warrants or other agreements or commitments of any
nature whatsoever, either firm or conditional, obligating Group to issue,
deliver, sell or otherwise encumber, or cause to be issued, delivered, sold or
otherwise encumbered, any additional shares of Group Common Stock or any
securities convertible into or exchangeable for shares of Group Common Stock or
obligating Group to grant, extend or enter into any such agreement or
commitment. Attached hereto as Schedule 2.2 is a true and correct list of the
names and stock holdings of all Group shareholders as of Closing
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2.3 EXECUTION AND DELIVERY OF AGREEMENT.
(a) Group has all requisite corporate power to enter into this Agreement
and, subject to requisite shareholder approval, to consummate the transactions
contemplated herein. The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have been duly authorized
by the board of directors of Group and all other necessary corporate action on
the part of Group, subject only to the approval of the Merger by the
shareholders of Group. This Agreement has been duly executed and delivered by
Group and, when duly approved by the affirmative vote of the holders of at least
two-thirds of the outstanding Group Common Stock, shall constitute the valid,
binding and enforceable obligation of Group.
(b) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under or the creation of a
lien, pledge, security interest or other encumbrance or assets pursuant to, any
provision of the Articles of Incorporation, or Bylaws of Group, or any loan or
credit agreement, note, mortgage, indenture, lease, covenant, agreement or other
instrument, permit, concession, grant, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Group, or
their respective properties. No consent, approval, order or authorization of,
or registration, declaration or filing with, any federal, state or local
governmental authority is required to be made or obtained by Group in connection
with the execution and delivery of this Agreement by Group or the consummation
by Group of the transactions contemplated hereby, except for the filing of
appropriate Articles of Merger with respect to the Merger with the Secretary of
State of Arizona.
2.4 GROUP FINANCIAL STATEMENTS.
(a) (i) The unaudited consolidated balance sheet, statements of income,
cash flows and stockholder's equity as of December 31, 1995, and its unaudited
consolidated balance sheet, statements of income, cash flows and stockholder's
equity as of March 31, 1996 (the "Group Financial Statements"), copies of which
have been furnished by Group to Sierra; have been prepared in accordance with
generally accepted accounting principles and practices as utilized in the Group
Financial Statements applied on a consistent basis and present fairly the
consolidated financial position of Group at the dates, and the consolidated
results of operations, changes in stockholders' equity and cash flows of Group
as of the dates and the for the periods indicated.
(b) Since December 31, 1995, Group has conducted its respective businesses
only in the ordinary and usual course, and Group has not undergone or suffered
any change in its condition (financial or otherwise), properties, assets,
liabilities, business operations or prospects which has been, in any case or in
the aggregate, materially adverse to Group. At the time of Closing, the total
existing incurred debt liability of Group shall not exceed $110,000.
2.5 PENDING LITIGATION. There is no litigation, action, suit,
investigation or proceeding pending or, to the best of the knowledge after due
inquiry of Group and its executive officers
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threatened, against or affecting Group or involving any of its respective
properties or assets, at law or in equity, before any federal, state, municipal,
local or other governmental authority, which is reasonably likely to be resolved
adversely to the interest of Group and, if so resolved, would have a material
adverse effect on the financial condition or results of operations of Group, or
materially impair the ability of Group to perform under this Agreement.
2.6 GOOD TITLE TO PROPERTIES. Group has good and marketable title to all
of its respective properties and assets which are on their respective books as
assets, real and personal, subject to no special assessment, mortgage, pledge,
lien, security interest, conditional sale agreement, contract, encumbrance, or
charge, except as reflected as liabilities on the Group Financial Statements.
Group does not have any license or lease on premises or equipment with an
aggregate annual cost of more than $25,000.
2.7 NO EMPLOYEE BENEFIT PLANS. Group has not established any pension plan
or profit sharing plan or stock option plan or any bonus or extra compensation
plan for directors, officers, employees or retired employees. Group does not
have any employment contract or other written contract with any present or
former officer, director, employee, customer or supplier of goods or services,
or any oral contract with any present or former officer, director, employee,
customer or supplier of goods or services, for employment, for retirement
benefits or for any other matter, except for service contracts entered into in
the normal and customary course of business, which are reasonable in amount.
2.8 INSURANCE. Group is insured and since incorporation has been insured
for reasonable amounts against such risks as companies engaged in a similar
business would, in accordance with good business practice, customarily be
insured. The policies of fire, theft, liability and other insurance maintained
with respect to the assets or business of Group provide adequate coverage
against loss.
2.9 NO ENVIRONMENTAL CONTAMINATION. There is no environmental
contamination of any kind, nor has any third party made any allegation with
respect to the existence of any environmental contamination or related matter,
at or about any of the properties owned or leased by Group, including other real
estate owned. Without limiting the generality of the foregoing, Group has not
received any notice from any federal, state or local agency of any violation of
any statute, rule or regulation dealing with noxious, toxic or otherwise
objectionable substances or the disposal of same or the contamination of such
properties by same, or otherwise dealing with the protection of the environment.
2.10 MATERIAL CONTRACTS. Group does not have any material contracts or
commitments outstanding not shown on Group Financial Statements which would have
a material adverse effect upon the future earnings or equity capital of Group.
CSG may assume, as Group's successor in interest in all material contracts
between Group and any third party, copies of which have been delivered to CSG,
and such contracts shall be a valid, legally enforceable and binding obligations
of CSG.
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2.11 TAX RETURNS. Group has filed all federal and state income tax returns
and all other returns with respect to taxes, either federal or state, which are
required to be filed, and has paid all taxes shown as due on such returns.
Reserves for current and deferred income taxes as reflected on the Group
Financial Statements or to be recorded prior to the Closing Date has been and
will be, as the case may be, adequate to provide for all income tax liabilities
(including any additional liabilities that may be collectible by federal or
state authorities upon examination of any tax returns) and have been and will be
recorded in accordance with generally accepted accounting principles as
historically applied by Group. Taxes to be recorded as of the Closing Date
shall be determined by taking into account the net income or loss of Group
through the close of business on the Closing Date. There are no other taxes of
any kind or character which are past due or delinquent.
2.12 GOVERNMENTAL APPROVALS. No consent, approval, order or authorization
of, or registration, declaration or filing with, any federal, state or local
governmental authority is required to be made or obtained by Group in connection
with the execution and delivery of this Agreement or the consummation by Group
of the transactions contemplated hereby. Any authorization, consent or approval
of, or registration or filing with, any governmental authority that is required
to be obtained or made by Group on or before the Closing Date in connection with
the execution, delivery or performance of this Agreement will be obtained or
made.
2.13 SUBSIDIARIES. Group does not control, directly or indirectly, any
other corporation, association, limited liability company, partnership or other
business entity or own any shares of capital stock or other securities of any
other entity or any interest in a general or limited partnership, limited
liability company or other business entity; nor has Group entered into any
contract, agreement, commitment or arrangement to acquire any such securities or
interests.
2.14 CERTAIN TRANSACTIONS. Group is not indebted, either directly or
indirectly, to any of the officers, directors or shareholders of Group, or to
any member of their respective immediate families, in any amount whatsoever,
other than for payments of salary for services rendered and for reimbursement of
reasonable expenses, which expenses do not exceed $5,000 in the aggregate. None
of said officers, directors or shareholders, or any member of their immediate
families, are indebted to Group or have any direct or indirect ownership
interest in (other than ownership of less than five percent (5%) of the
outstanding voting securities of a company whose securities are publicly
traded), or any contractual relationship with, any firm, corporation or other
person or entity with which Group is affiliated or with which Group has a
business relationship, or any firm, corporation or other person or entity which
competes with Group. No such officer, director or shareholder, or any member of
their immediate families, is, directly or indirectly, a party to or otherwise an
interested party with respect to any contract with Group.
2.15 BOOKS AND RECORDS. The respective minute book, stock record book,
books, records and accounts of each of Group are complete and correct, and Group
has recorded all material transactions required to be recorded under any
federal, state or governmental agency law or regulation.
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2.16 LABOR. No work stoppage involving Group is pending or threatened.
Group is not involved in, threatened with or affected by any labor dispute,
arbitration, lawsuit or administrative proceeding which might reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), assets or prospects of Group. Employees of Group are not
represented by any labor union, and no labor union is attempting to organize
such employees.
2.17 ACCESS. Group and its agents have been given access to and the right
to review and inspect all of the assets, books, records and contracts of Sierra
and CSG without limitation (subject to any confidentiality obligations
referenced herein) as requested by Group, have been given the opportunity to
meet with all officers, directors and other representatives of Sierra and CSG
for the purpose of investigating, obtaining information, making inquiries and
asking questions regarding Sierra's and CSG's business, and all such inquiries
and questions have been addressed and satisfied.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SIERRA
As an inducement to Group to enter into this Agreement, Sierra and CSG make
the following representations and warranties to Group which are true and
accurate as of the Closing Date and the Effective Time and which representations
and warranties shall be deemed material and to have been relied upon by Group,
notwithstanding any investigation by or on behalf of Group:
3.1 CORPORATE ORGANIZATION. Sierra is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
has all necessary corporate power to perform its obligations under this
Agreement. Sierra is qualified to do business and is in good standing in each
state or other jurisdiction in which its business operations required it to be
so qualified. CSG is a corporation duly organized, validly existing and in good
standing under the laws of the State of Arizona and has all necessary corporate
power to perform its obligations under this Agreement. CSG is qualified to do
business and is in good standing in each state or other jurisdiction in which
its business operations required it to be so qualified.
3.2 ACCESS. Sierra, CSG and their agents have been given access to and
the right to review and inspect all of the assets, books, records and contracts
of Group without limitation (subject to any confidentiality obligations
referenced herein) as requested by Sierra and/or CSG, have been given the
opportunity to meet with all officers, directors and other representatives of
Group for the purpose of investigating, obtaining information, making inquiries
and asking questions regarding Group's business, and all such inquiries and
questions have been addressed and satisfied.
3.3 AUTHORITY.
(a) Sierra and CSG have the corporate power and authority to enter into
this Agreement and to carry out the terms of this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action required on
the part of Sierra and CSG. The Agreement constitutes the valid and
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legally binding obligation of Sierra and CSG and is enforceable against Sierra
and CSG in accordance with its terms.
(b) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under or the creation of a
lien, pledge, security interest or other encumbrance or assets pursuant to, any
provision of the Articles of Incorporation, or Bylaws of Sierra or CSG, or any
loan or credit agreement, note, mortgage, indenture, lease, covenant, agreement
or other instrument, permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Sierra
or CSG, or their respective properties. No consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state or local governmental authority is required to be made or obtained by
Sierra or CSG in connection with the execution and delivery of this Agreement by
Sierra or CSG or the consummation by Sierra or CSG of the transactions
contemplated hereby, except for the filing of appropriate Articles of Merger
with respect to the Merger with the Secretary of State of Arizona.
3.4 CAPITAL STOCK OF SIERRA AND CSG.
(a) The authorized capital stock of Sierra consists of 50,000,000 shares
of Sierra Common Stock. As of the date of this Agreement, 5,222,975 shares
of Sierra Common Stock are issued and outstanding, and no shares of Sierra
Common Stock are held in the treasury of Sierra. All outstanding shares of
Sierra Common Stock are duly authorized, validly issued, fully paid and
nonassessable. Except as set forth on Schedule 3.4 attached hereto, there
are no outstanding subscriptions, options, calls, conversion rights, warrants
or other agreements or commitments of any nature whatsoever, either firm or
conditional, obligating Sierra to issue, deliver, sell or otherwise encumber,
or cause to be issued, delivered, sold or otherwise encumbered, any
additional shares of Sierra Common Stock or any securities convertible into
or exchangeable for shares of Sierra Common Stock or obligating Sierra to
grant, extend or enter into any such agreement or commitment. Sierra
represents and warrants that upon each issuance of Sierra Common Stock
hereunder, the shares of Sierra Common Stock issued shall be free and clear
of all liens, security interests and encumbrances of any kind whatsoever and
shall be duly authorized and validly issued, fully paid and nonassessable.
Notwithstanding the foregoing, Sierra has full right and authority and this
Agreement does not limit such right and authority for Sierra to issue
additional Sierra Common Stock or other securities after the Effective Date.
(b) The authorized capital stock of CSG consists of 1,000 shares of common
stock, $1.00 par value ("CSG Common Stock"). As of the date of this Agreement,
100 shares of CSG Common Stock are issued and outstanding, and no shares of CSG
Common Stock are held in the treasury of CSG. All of the issued and outstanding
CSG Common Stock is held and owned solely by Sierra. All outstanding shares of
CSG Common Stock are duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding subscriptions, options, calls,
conversion rights, warrants or other agreements or commitments of any nature
whatsoever, either firm or conditional, obligating
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CSG to issue, deliver, sell or otherwise encumber, or cause to be issued,
delivered, sold or otherwise encumbered, any additional shares of CSG Common
Stock or any securities convertible into or exchangeable for shares of CSG
Common Stock or obligating CSG or Sierra to grant, extend or enter into any such
agreement or commitment. CSG represents and warrants that upon each issuance of
Sierra Common Stock hereunder, the shares of Sierra Common Stock issued shall be
free and clear of all liens, security interests and encumbrances of any kind
whatsoever and shall be duly authorized and validly issued, fully paid and
nonassessable.
3.5 NO VIOLATIONS. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with, or
result in any violation of, or default or loss of a benefit under, or permit the
acceleration of any obligation under, any provision of the Articles of
Incorporation or Bylaws of Sierra or CSG, or any mortgage, indenture, lease,
covenant, agreement or other instrument, permit, concession, grant, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Sierra or CSG or their respective properties.
3.6 FINANCIAL STATEMENTS.
(a) Prior to the execution of this Agreement, Sierra has delivered to
Group true and correct copies of audited consolidated financial statements of
Sierra as of and for the fiscal years ended December 31, 1994, and unaudited
consolidated financial statements for the periods ending March 31, 1995, June
30, 1995 and September 30, 1995, and an unaudited balance sheet dated April 3,
1996 and unaudited statements of income dated from October 1, 1995 through
December 31, 1995 and January 1, 1996 through April 3, 1996 and an unaudited
statement of cash flows from January 1, 1996 through April 3, 1996
(collectively, "Financial Statements"). As of their respective date, such
Financial Statements present fairly the financial position of Sierra as of the
dates thereof and the results of its operations for the periods then ended and
include such disclosures as are necessary to make such Financial Statements not
misleading.
(b) Sierra has no liabilities of any nature, whether accrued, absolute,
contingent or otherwise and whether due or to become due, that were not
specifically disclosed or provided for in the Financial Statements, except for
unpaid bills of expense for the current month incurred in the ordinary course of
business and except for expenses relating to this Agreement and to the
transactions contemplated herein. CSG has no liabilities of any nature, whether
accrued, absolute, contingent or otherwise and whether due or to become due.
(c) Except as set forth on Schedule 5.3(e) attached hereto, Sierra has
conducted its business since April 3, 1996, only in the ordinary and usual
course, and Sierra has not undergone or suffered any change in its condition
(financial or otherwise), properties, assets, liabilities, business operations
or prospects which have been, in any case or in the aggregate, materially
adverse to Sierra.
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3.7 COMPLIANCE WITH LAWS AND AGREEMENTS.
(a) There is no default, and there has not occurred any event that with
the lapse of time or the giving of notice, or both, would constitute such a
default, by Sierra or CSG under any material charter, license, contract or
franchise, the effect of which would materially and adversely affects its right
to conduct its business as it is presently being conducted.
(b) Sierra and CSG are in material compliance with all laws, regulations,
reporting and licensing requirements and orders applicable to its business or to
its employees conducting its business and with its internal policies and
procedures.
(c) Sierra and CSG have not received any notice or communication from any
agency or department of any federal, state or local government (i) asserting
that it is not in compliance with any of the statutes, regulations or ordinances
of such agency or department, or (ii) threatening to revoke any license,
franchise, permit or governmental authorization of Sierra or CSG.
3.8 NO LITIGATION. There is not pending or, to the knowledge of Sierra
and CSG, threatened or existing, any claim, unsatisfied judgment, litigation,
governmental investigation or proceeding before any court, arbitrator or federal
or state or other governmental commission, board or other agency, by or against
or adversely affecting the operations or financial condition of Sierra or CSG or
their business, property or assets or any business, property or assets with
respect to which Sierra or CSG has an agreement, understanding or arrangement to
acquire.
3.9 GOOD TITLE TO PROPERTIES. Sierra and CSG have good and marketable
title to all of their properties and assets which are on their books as assets,
real and personal, subject to no special assessment, mortgage, pledge, lien,
security interest, conditional sale agreement, contract, encumbrance or charge,
except as reflected as liabilities on the Financial Statements.
3.10 FILING OF REPORTS. Sierra's Common Stock is registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), Sierra has been subject to the reporting requirements of Section 13 of
the Exchange Act for a period of at least 90 days immediately preceding the date
hereof. Since its formation, Group acknowledges Sierra has failed to timely file
all reports required to be filed under the Exchange Act and the Securities Act
of 1933, as amended (the "Securities Act"), and all applicable state securities
laws and regulations (the "Reports"). However, Sierra represents and warrants
the Reports which have been filed with the SEC do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.11 TAX RETURNS. Sierra and CSG have filed all federal and state income
tax returns and all other returns with respect to taxes, either federal or
state, which are required to be filed, and has paid all taxes shown as due on
such returns; except Sierra may be delinquent on its 1995 federal and state
income tax returns. Reserves for current and deferred income taxes as reflected
on the Financial Statements or to be recorded prior to the Closing Date has been
and will be, as the case
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may be, adequate to provide for all income tax liabilities (including any
additional liabilities that may be collectible by federal or state authorities
upon examination of any tax returns) and have been and will be recorded in
accordance with generally accepted accounting principles as historically applied
by Sierra. Taxes to be recorded as of the Closing Date shall be determined by
taking into account the net income or loss of Sierra through the close of
business on the Closing Date. There are no other taxes of any kind or character
which are past due or delinquent.
3.12 GOVERNMENTAL APPROVALS. No consent, approval, order or authorization
of, or registration, declaration or filing with, any federal, state or local
governmental authority is required to be made or obtained by Sierra or CSG in
connection with the execution and delivery of this Agreement or the consummation
by Sierra and CSG of the transactions contemplated hereby. Any authorization,
consent or approval of, or registration or filing with, any governmental
authority that is required to be obtained or made by Sierra or CSG on or before
the Closing Date in connection with the execution, delivery or performance of
this Agreement will be obtained or made.
3.13 DISCLOSURE. Neither this Agreement nor any of the schedules or
exhibits attached hereto or referred to herein or disclosure statements or
documents delivered pursuant hereto or filed with the Securities and Exchange
Commission pursuant to the Exchange Act, the Securities Act or with state
securities regulators or other federal or state regulatory agencies contains any
untrue statement of any material fact or omits to state any material fact
required to be stated herein or therein or necessary in order to make the
statements contained herein or therein not misleading.
3.14 SUBSIDIARIES. Other than CSG and Synergy Communications, Inc., f/k/a
Safe Pay Acquisition Corporation, a Nebraska corporation, Sierra does not
control, directly or indirectly, any other corporation, association, limited
liability company, partnership or other business entity or own any shares of
capital stock or other securities of any other entity or any interest in a
general or limited partnership, limited liability company or other business
entity; nor has Sierra or CSG entered into any contract, agreement, commitment
or arrangement to acquire any such securities or interests. CSG has no
operating history and owns no assets and has no liabilities. CSG is 100% owned
by Sierra. CSG has no employees.
3.15 REGISTRATION RIGHTS. Except as provided in this Agreement and as set
forth on Schedule 3.15, Sierra is not a party to, or otherwise bound by, any
agreement or commitment which obligates Sierra to register under federal
securities laws any of Sierra's presently outstanding securities or any of
Sierra's securities which may hereafter be issued.
3.16 CERTAIN TRANSACTIONS. Sierra or CSG is not indebted, either directly
or indirectly, to any of the officers, directors or shareholders of Sierra or
CSG, or to any member of their respective immediate families, in any amount
whatsoever, other than for payments of salary for services rendered and for
reimbursement of reasonable expenses, which expenses do not exceed $5,000 in the
aggregate. None of said officers, directors or shareholders, or any member of
their immediate families, are indebted to Sierra or CSG or have any direct or
indirect ownership interest in (other than ownership of less than five percent
(5%) of the outstanding voting securities of a company whose securities are
publicly traded), or any contractual relationship with, any firm,
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corporation or other person or entity with which Sierra or CSG is affiliated or
with which Sierra or CSG has a business relationship, or any firm, corporation
or other person or entity which competes with Sierra or CSG. No such officer,
director or shareholder, or any member of their immediate families, is, directly
or indirectly, a party to or otherwise an interested party with respect to any
contract with Sierra or CSG. Provided, however, that Sierra and CSG and any
related parties or entities described herein in this Section 3.16 may be
indebted to each other or have contractual or business relationships between
them which do not to exceed $100,000 on an individual person, entity or
transactional basis.
3.17 BOOKS AND RECORDS. The respective minute book, stock record book,
books, records and accounts of each of Sierra and CSG are complete and correct,
and Sierra and CSG have recorded all material transactions required to be
recorded under any federal, state or governmental agency law or regulation.
3.18 SIERRA INFORMATION. Except as otherwise set forth herein and any
schedule attached hereto, Sierra has not experienced and is not aware of any
material changes in its operations, business or affairs since the filing of
Sierra's Annual Report to Shareholders for fiscal year 1994, including Sierra's
Form 10-K filed with the Securities and Exchange Commission ("SEC") for the
fiscal year ended December 31, 1994.
3.19 NO EMPLOYEE BENEFIT PLANS. Except as provided for in Schedule 3.19
attached hereto, in the Sierra Financial Statements or in the Sierra 1995 Option
Plan for Sierra employees and directors, Sierra does not have any pension plan
or profit sharing plan or stock option plan or any bonus or extra compensation
plan for directors, officers, employees or retired employees or has any written
employment contract or other contract with any present or former officer,
director, employee, customer or supplier of goods or services, or any oral
contract with any present or former officer, director, employee, customer or
supplier of goods or services, for employment, for retirement benefits or for
any other matter, except for service contracts entered into in the normal and
customary course of business, which are reasonable in amount.
3.20 INSURANCE. Sierra and CSG have not been insured since incorporation.
Since incorporation, Sierra and CSG have not maintained any director and officer
liability insurance.
3.21 NO ENVIRONMENTAL CONTAMINATION. There is no environmental
contamination of any kind, nor has any third party made any allegation with
respect to the existence of any environmental contamination or related matter,
at or about any of the properties owned or leased by Sierra or CSG. Without
limiting the generality of the foregoing, Sierra and CSG have not received any
notice from any federal, state or local agency of any violation of any statute,
rule or regulation dealing with noxious, toxic or otherwise objectionable
substances or the disposal of same or the contamination of such properties by
same, or otherwise dealing with the protection of the environment; and there is
no condition at or about such properties which would constitute a violation of
any such statute, rule or regulation by the owner of such properties or
constitute a basis for the issuance of such notice of violation against the
owner of such properties.
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3.22 MATERIAL CONTRACTS. Sierra does not have any material contracts or
commitments outstanding not shown on the Sierra Financial Statements which would
have a material adverse effect upon the future earnings or equity capital of
Sierra.
3.23 LABOR. No work stoppage involving Sierra or CSG is pending or
threatened. Neither Sierra nor CSG is involved in, threatened with or affected
by any labor dispute, arbitration, lawsuit or administrative proceeding which
might reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), assets or prospects of Sierra or CSG. No employees of
Sierra or CSG are represented by any labor union, and no labor union is
attempting to organize such employees.
3.24 INDEMNIFICATION. Since its incorporation, Sierra and/or CSG have not
advanced expenses to or indemnified any of its present or former officers or
directors in connection with any actual or threatened claim, investigation, suit
or demand against such persons.
3.25 INVESTMENT PORTFOLIO. Sierra and CSG do not directly or indirectly
or beneficially own or control the securities or equity interest of any other
corporation, partnership or company, is not a party to any joint venture and is
not negotiating, investigating or evaluating the potential acquisition of or
investment in any other corporation, partnership company or business.
ARTICLE 4
COVENANTS
4.1 COVENANTS OF GROUP. During the period from the date hereof to the
Effective Time (or to the date of termination of this Agreement), except as
otherwise consented to in writing by Sierra, Group will:
(a) Carry on its business in, and only in, the ordinary course in
substantially the same manner as conducted prior to the date hereof and use all
reasonable efforts to preserve intact its present business organization, keep
available the services of its present officers and employees, and preserve its
relationships with customers and others having business dealings with it.
(b) Promptly advise Sierra in writing of any change in its condition
(financial or otherwise), properties, assets, liabilities, business operations
or prospects, which is or may reasonably be expected to be materially adverse to
Group.
(c) Make available to Sierra and its representatives access to all books
and records of Group and, except as may be prohibited by applicable law, give to
Sierra and its representatives full access, during reasonable business hours
subject to reasonable notice, to all of their respective properties, books,
contracts, accounts, commitments, notes, records and files, and shall furnish to
Sierra and any of its representatives all such information concerning their
respective affairs as Sierra or its representatives may reasonably request. All
information furnished by Group to Sierra or its representatives in connection
with this Agreement and the transactions contemplated hereby which is regarded
by Group as confidential (and is so designated in writing not later than the
time of
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delivery) will be kept confidential by Sierra and its representatives and will
be used only in connection with this Agreement and the transactions contemplated
herein, except to the extent that such information (i) is already known to
Sierra when received, (ii) thereafter becomes lawfully obtainable from other
sources, otherwise than in violation of this subsection or similar duties or
provisions regarding confidentiality, (iii) must be disclosed pursuant to court
order, or (iv) is, in the reasonable opinion of legal counsel for Sierra,
required to be disclosed in any document filed with the Securities and Exchange
Commission, or any other governmental agency or authority. All such designated
confidential information which is in documentary form relating to Group will be
promptly returned to Group upon request if the transactions contemplated by this
Agreement are not consummated.
(d) Not solicit, initiate or encourage inquiries or proposals or
participate in any negotiations leading to any proposal, either directly or
through any representatives or Group shareholders, concerning any acquisition or
purchase of all or any substantial portion of the assets or capital stock of
Group or any merger with a party other than Sierra.
(e) Not (i) make any change in its authorized capital stock; (ii) pay any
stock dividend or make any stock split or reclassification in respect of its
outstanding capital stock; (iii) issue or sell any shares of its capital stock
or securities convertible into or exchangeable for its capital stock or options
or warrants to acquire such capital stock; (iv) enter into any transaction not
in the usual and ordinary course of business.
(f) Sell or transfer, mortgage, encumber or otherwise dispose of no
material assets except in the usual and ordinary course of their businesses.
(g) Enter into no new capital commitments and make no capital expenditures
in excess of $15,000 in any instance or $75,000 in the aggregate.
(h) Other than in the ordinary course of business consistent with past
practices, not (i) incur any indebtedness for borrowed money, or (ii) assume,
guarantee, endorse or otherwise become responsible for the obligations of any
other individual, corporation or other entity.
(i) Not cancel, release or assign any indebtedness owed to them except in
the ordinary course of business consistent with past practice.
4.2 COVENANTS OF SIERRA AND CSG. During the period from the date hereof
to the Effective Time (or to the date of termination of this Agreement), except
as otherwise consented to in writing by Group, Sierra and CSG will each:
(a) Carry on its business, in, and only in, the ordinary course in
substantially the same manner as conducted prior to the date hereof and use all
reasonable efforts to preserve intact its present business organization, keep
available the services of its present officers and employees, and preserve its
relationships with customers and others having business dealings with it.
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(b) Promptly advise Group in writing of any change in its condition
(financial or otherwise), properties, assets, liabilities, business operations
or prospects, which is or may reasonably be expected to be materially adverse to
Sierra or CSG.
(c) Make available to Group and its representatives access to all books
and records of Sierra and CSG, and, except as may be prohibited by applicable
law, give to Group and its representatives full access, during reasonable
business hours subject to reasonable notice, to all of their respective
properties, books, contracts, accounts, commitments, notes, records and files,
and shall furnish to Group and any of its representatives all such information
concerning their respective affairs as Group or its representatives may
reasonably request. All information furnished by Sierra or CSG to Group or its
representatives in connection with this Agreement and the transactions
contemplated hereby which is regarded by Sierra or CSG as confidential (and is
so designated not later than the time of delivery) will be kept confidential by
Group and its representatives and will be used only in connection with this
Agreement and the transactions contemplated herein, except to the extent that
such information (i) is already known to Group when received, (ii) thereafter
becomes lawfully obtainable from other sources, otherwise than in violation of
this subsection or similar duties or provisions regarding confidentiality, (iii)
must be disclosed pursuant to court order, or (iv) is, in the reasonable opinion
of legal counsel for Group, required to be disclosed in any document filed with
any governmental agency or authority. All such information relating to Sierra
or CSG will be promptly returned to Sierra upon request if the transaction
contemplated by this Agreement is not consummated.
(d) Promptly deliver to Group copies of each financial statement and each
report prepared and submitted by Sierra or CSG to its shareholders or applicable
regulatory authorities, to the extent consistent with applicable law. As of
their respective dates, none of such financial statements and reports shall
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(e) Sell, transfer, mortgage, encumber or otherwise dispose of no material
assets except in the usual and ordinary course of their businesses.
(f) Immediately notify Group's Shareholder Representatives of any
regularly or specially held meeting of Sierra's or CSG's shareholders, Boards of
Directors or any committees thereof, and allow such Shareholder Representatives
to attend such meetings for observation and information purposes, and provide
Group with any written notices and minutes relating to such meetings.
4.3 INVESTMENT REPRESENTATION AGREEMENTS. At or prior to Closing, Group
shall use its reasonable efforts to cause each shareholder of Group to deliver
to Sierra an Investment Agreement in the form attached hereto as Exhibit 4.3.
4.4 DELIVERY OF SHAREHOLDER LIST. Group shall deliver to Sierra or its
designee, from time to time prior to the Closing Date, a true and complete list
setting forth the names and addresses
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of the Group shareholders, their holdings of stock as of the latest practicable
date, and such other shareholder information as Sierra may reasonably request.
ARTICLE 5
CONDITIONS
5.1 CONDITIONS TO THE OBLIGATIONS OF ALL THE PARTIES. The obligations of
the parties to effect the Merger shall be subject to the fulfillment, at or
prior to the Effective Time, of the following conditions unless waived in
writing by Sierra and Group:
(a) No order of any court or administrative agency shall be in effect
which restrains or prohibits the Merger; and no suit, action, proceeding or
investigation by any governmental body or entity shall be pending or, to the
best knowledge of Sierra, CSG and Group, threatened against Sierra, CSG or
Group, which challenges the validity or legality, or seeks to restrain the
consummation, of the transactions contemplated hereby, or to recover any damages
or obtain other relief as a result of the Merger.
5.2 CONDITIONS TO THE OBLIGATIONS OF SIERRA. The obligations of Sierra to
effect the Merger shall be subject to the fulfillment, at or prior to Effective
Time, of the following conditions unless waived by Sierra in writing:
(a) The representations and warranties of Group contained in this
Agreement shall be in all material respects true and accurate as of the date of
this Agreement and, except for changes expressly contemplated by this Agreement,
at and as of the Effective Time as though made at and as of the Effective Time.
(b) Group shall have performed and complied in all material respects with
each covenant, agreement and condition required to be performed or complied with
by it prior to or at the Effective Time.
(c) Holders of one hundred percent (100%) of the shares of Group Common
Stock shall have approved the Merger and this Agreement.
(d) Group shall have obtained and delivered to Sierra the written consent
or approval of each person whose consent or approval shall be required in order
to permit the succession by Sierra pursuant to the Merger to any obligation,
right or interest of Group under any loan or credit agreement, note, mortgage,
indenture, lease or other agreement or instrument, except for those for which
failure to obtain such consents or approval would not, individually or in the
aggregate, have a material adverse effect on Group, whether prior to or
following the consummation of the transactions contemplated hereby.
(e) Certificates representing all outstanding shares of Group Common Stock
shall have been delivered to Sierra duly endorsed for transfer.
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(f) All parties to any buy-sell agreement or stock agreement restricting
the transfer of shares of stock of Group shall have executed a written waiver of
any and all restrictions on transferability of such shares, which waiver shall
expressly permit the transactions contemplated by this Agreement.
(g) Each Shareholder shall have executed and delivered to Sierra an
Investment Agreement in the form of Exhibit 4.3.
(h) Group shall have delivered to Sierra an opinion of counsel for Group
substantially in the form attached hereto as Exhibit 5.2(h).
(i) Group shall have furnished Sierra and CSG with an officers
certificate, substantially in the form attached hereto as Exhibit 5.2(i), of its
president and secretary to the effect set forth in Section 5.2(a), (b), and (j)
of this Agreement, and to such other matters arising after the date hereof as
may reasonably be requested by Sierra, and such other documents and further
assurances as may reasonably be requested by Sierra.
(j) There shall have been no material adverse change in the financial
condition or results of operations of Group as reflected in the Group Financial
Statements of Group as of December 31, 1995.
(k) Kenneth McLeod and Carol Ann McLeod shall have executed a covenant not
to compete in the substantially similar form as Exhibit 5.2(k) attached hereto.
5.3 CONDITIONS TO THE OBLIGATIONS OF GROUP. The obligations of Group to
effect the Merger shall be subject to the fulfillment, at or prior to the
Effective Time, of the following conditions, unless waived by Group in writing.
(a) The representations and warranties of Sierra and CSG contained in this
Agreement shall be in all material respects true and accurate as of the date of
this Agreement and, except for changes expressly contemplated by this Agreement,
at and as of the Effective Time as though made at and as of the Effective Time.
(b) Sierra and CSG shall have performed and complied in all material
respects with each covenant, agreement, and condition required to be performed
or complied with by it prior to or at the Effective Time.
(c) Sierra and CSG shall have delivered to Group an opinion of counsel for
Sierra substantially in the form attached hereto as Exhibit 5.3(c).
(d) Sierra and CSG shall have furnished Group with an officers
certificate, substantially in the form attached hereto as Exhibit 5.3(d), of its
presidents and secretaries to the effect set forth in Sections 5.3(a), 5.3(b)
and 5.3(e) of this Agreement, and to such other matters arising after the
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date hereof as may reasonably be requested by Group, and such other documents
and further assurances as may reasonably be requested by Group.
(e) Except as set forth on Schedule 5.3(e) attached hereto, there shall
have been no material adverse change in the financial condition or results of
operations of Sierra as reflected in the Sierra Financial Statements of Sierra
as of April 3, 1996.
(f) Sierra and CSG shall have each obtained any requisite approval of its
directors and shareholders necessary to enter into this Agreement and any
transactions contemplated herein.
(g) CSG shall have executed an employment agreement employing Kenneth
McLeod for a term not less than three (3) years and such shall be further
subject to the terms and conditions which are substantially similar to those set
forth in the employment agreement attached hereto as Exhibit 5.3(g), which
Sierra shall execute at or prior to the Effective Time.
(h) Sierra and CSG shall take such necessary action as may be required to
lawfully elect or appoint to Sierra's and CSG's Board of Directors Kenneth
McLeod, or such other person as may be designated by Kenneth McLeod in his place
as a result of the death, incapacity or resignation of Kenneth McLeod. Sierra
and CSG each agree such person shall serve as a full voting member on Sierra's
and CSG's Board of Directors. Sierra's Board of Directors shall consist of no
more than nine (9) directors, and Kenneth McLeod shall serve on the Board until
the next annual shareholder meeting, at which time the Sierra Board of Directors
agrees to nominate Kenneth McLeod or his representative for a seat on the Board
of Directors to be voted on by the Sierra shareholders. Sierra's Board of
Directors shall continue to nominate Kenneth McLeod or his representative to a
seat on the Board of Directors of Sierra for each of the annual shareholders
meetings to be held in the years 1997 and 1998. CSG's Board of Directors shall
consist of no more than five (5) directors, and Kenneth McLeod shall serve on
the Board until the annual meeting of CSG shareholders, at which time the CSG
Board of Directors agrees to nominate Kenneth McLeod or his representative for a
seat on the Board of Directors to be voted on by the CSG shareholders. CSG's
Board of Directors shall continue to nominate Kenneth McLeod or his
representative to a seat on the Board of Directors of CSG for each of the annual
shareholders meetings to be held in the years 1997 and 1998. Group and Kenneth
McLeod acknowledges the current Sierra Board of Directors has seven (7) members
and Sierra has the right and authority to appoint two (2) additional directors
to such board at any time.
ARTICLE 6
TERMINATION, AMENDMENT AND WAIVER
6.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Date, whether before or after approval of the Merger by the Group
shareholders:
(a) By mutual consent of the boards of directors of Sierra and Group.
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(b) By Sierra if any event shall have occurred which renders any of the
conditions set forth in Section 5.1 or Section 5.2 of this Agreement incapable
of fulfillment (other than by reason of the action or inaction of Sierra) and
such condition is not waived by Sierra.
(c) By Group if any event shall have occurred which renders any of the
conditions set forth in Section 5.1 or Section 5.3 incapable of fulfillment
(other than by reason of the action or inaction of Group) and such condition is
not waived by Group.
(d) By Sierra if there has been a breach in any material respect of any
representation, warranty, covenant or agreement on the part of Group set forth
in this Agreement, which breach is not cured after 30 calendar days' written
notice thereof is given to Group by Sierra.
(e) By Group if there has been a breach in any material respect of any
representation, warranty, covenant or agreement on the part of Sierra or CSG set
forth in this Agreement, which breach is not cured after 30 calendar days'
written notice thereof is given to Sierra or CSG by Group.
(f) By either Sierra or Group if the Closing shall not have occurred by
April 26, 1996.
6.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either party as provided in Section 6.1 above, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
or its officers or directors, except for (i) the confidentiality obligations of
the parties pursuant to subsection 4.1(c) and subsection 4.2(c) of this
Agreement, which shall survive, and (ii) for liability arising from a willful
material breach of this Agreement.
6.3 AMENDMENT. This Agreement, including any exhibit hereto, may be
amended by the parties hereto by action taken by their respective boards of
directors, at any time before or after approval of the Merger by the Group
shareholders, but after any such approval, no amendment shall be made which
changes the consideration to be received in the Merger by the Group shareholders
without the further approval of the Group shareholders as required by law, Group
and Sierra. This Agreement or any exhibit hereto may not be amended except by
an instrument in writing signed on behalf of the parties hereto.
6.4 WAIVER; EXTENSION. At any time prior to the Effective Time, Sierra or
Group may, to the extent legally allowed, (i) extend the time for performance of
any of the obligations or other acts of the other party hereto, (ii) waive any
inaccuracy in the representations and warranties of the other party contained
herein or in any document delivered by the other party pursuant hereto, and
(iii) waive compliance by the other party with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. 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 act prior or subsequent to
such occurrence.
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ARTICLE 7
POST-CLOSING COVENANTS
As an inducement to Group to enter into this Agreement and the Merger,
Sierra and CSG agree that after the execution of this Agreement, Sierra and/or
CSG, as the case may be, shall fulfill the obligations set forth below in this
Article 7. Sierra acknowledges the following covenants set forth in this
Article 7 shall be deemed material and to have been relied upon by Group,
notwithstanding any investigation by or on behalf of Group.
7.1 INDEMNIFICATION. Sierra and CSG shall observe any indemnification
provisions now existing in the Articles of Incorporation or Bylaws of Group for
the benefit of any individual who served as a director or officer of Group at
any time prior to the Effective Time and shall exercise its power to indemnify
any such persons pursuant to such provisions. Furthermore, Sierra and CSG shall
indemnify each individual who served as a director or officer of Group at any
time prior to the Effective Time from and against any and all actions, suits,
proceedings, hearing, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts in paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses and fees, including without limitation all court costs,
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, which were a result of Sierra's or CSG's action(s) or
omission(s). Group shall indemnify and hold Sierra and CSG harmless from any
damage or loss arising from any undisclosed liability or claim which occurred
prior to Closing. Sierra and CSG shall indemnify and hold Group harmless from
any damage or loss arising from any undisclosed liability or claim which
occurred prior to Closing.
7.2 CONTINUITY OF BUSINESS ENTERPRISE. Subsequent to the Effective Time,
Sierra shall continue the significant historic business line of Group and use
Group's historic business assets in Sierra's business, in each case within the
meaning of the Treas. Reg. Section 1.368-1(d).
7.3 FILING OF 8-K. Sierra shall file a report with the Securities and
Exchange Commission on Form 8-K as promptly as possible describing the terms of
the Merger and shall promptly provide Group with a complete copy of such report
and any attachments thereto.
7.4 EMPLOYMENT AGREEMENTS. CSG shall fulfill and comply with the terms
and provisions of an employment agreement substantially similar to the one
attached hereto as Exhibit 5.3(g).
7.5 RIGHT OF FIRST REFUSAL. For a period of three (3) years from the
Effective Date of the Merger, Sierra shall grant to Kenneth McLeod and Carol Ann
McLeod (the "Holders") a right of first refusal (the "Right") to purchase a pro
rata share of newly issued Sierra Common Stock which Sierra may, from time to
time, propose to sell and issue, provided, however, such new shares of Sierra
Common Stock is intended to be sold for less than $1.00 per share. The pro rata
share, for purposes of this Right, is the ratio of the number of shares of
Sierra Common Stock acquired by the
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Holders pursuant to this Agreement, to the total number of shares of Sierra
Common Stock outstanding prior to the issuance of any new shares of Sierra
Common Stock, assuming full conversion of shares issued or to be issued pursuant
to all outstanding rights, options and warrants to acuire Sierra Common Stock.
The Right shall not be applicable to any issuance of Sierra Common Stock
pursuant to any option, warrant or other similar right. In the event Sierra
shall propose to undertake an issuance of new shares for a price less than $1.00
per share, it shall give written notice to the Holders. The Holders shall have
ten (10) days after such notice is mailed, according to Section 9.4, to give
written notice to Sierra of its agreement to purchase their pro rata share of
Sierra Common Stock under the same terms and conditions as those established by
Sierra in its sale of Sierra Common Stock. In the event the Holders elect to
purchase their pro rata share of Sierra Common Stock, they shall deliver readily
available cash to Sierra within ten (10) days of their written notice electing
to purchase the Sierra Common Stock. The Holders' Right may not be assigned or
transferred except with prior written approval of Sierra.
ARTICLE 8
REGISTRATION RIGHTS
8.1 COMPANY REGISTRATION.
Whenever Sierra proposes to register any of the Sierra Common Stock under
the Securities Act for a public offering for cash, whether as a primary or
secondary offering (or pursuant to registration rights granted to holders of
other securities of Sierra), Sierra shall, each such time, give each of the
Holders written notice of its intent to do so. Upon the written request of any
Holder given within thirty (30) days after receipt of any such notice, Sierra
shall use its best efforts to cause to be included in such registration all of
the Sierra Common Stock which the Holders requested to be registered; provided
(i) at least ten percent (10%) of the Sierra Common Stock held by such Holder is
included in each such Holder's request, (ii) the Holder agrees to sell the
Sierra Common Stock in the same manner and on the same terms and conditions as
the other Sierra Common Stock which Sierra proposes to register, and (iii) if
the registration is to include Sierra Common Stock to be sold for the account of
Sierra, the proposed managing underwriter does not advise Sierra that in its
opinion the inclusion of the Holder's Sierra Common Stock is likely to affect
adversely the success of the offering by Sierra or the price it would receive in
which case the rights of the Holder shall be as provided in Section 8.5 hereof.
8.2 OBLIGATIONS OF THE COMPANY.
Whenever required under Section 8.1 to use its best efforts to effect the
registration of any of the Sierra Common Stock, Sierra shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a Registration Statement with respect to
such Sierra Common Stock and use its best efforts to cause such Registration
Statement to become and remain effective; provided, however, that in connection
with any proposed registration intended to permit an offering of any securities
from time to time ( I.e., a so called "shelf registration"), Sierra shall in
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no event be obligated to cause any such registration to remain effective for
more than one hundred and eighty (180) days.
(b) Prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary to permit the disposition of all securities covered by such
Registration Statement.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Sierra Common Stock owned by them.
(d) Notify each Holder of any stop order issued or threatened by the SEC
and take all reasonable actions required to prevent the entry of such stop order
or to remove it if entered.
(e) Use its best efforts to register and qualify the securities covered by
such Registration Statement under such other securities or Blue Sky laws of such
jurisdictions (not exceeding ten unless otherwise agreed upon by Sierra) as
shall be reasonably appropriate for the distribution of the securities covered
by the Registration Statement, provided that Sierra shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions, and further provided that (anything herein to the contrary
notwithstanding with respect to the bearing of expenses) if any jurisdiction in
which the securities shall be qualified shall require that expenses incurred in
connection with the qualification therein of the securities be borne by selling
shareholders, then such expenses shall be payable by selling shareholders pro
rata, to the extent required by such jurisdiction.
8.3 FURNISH INFORMATION.
It shall be a condition precedent to the obligations of Sierra to take any
action pursuant to this Article 8 that the Holders shall furnish to Sierra such
information regarding them, the Sierra Common Stock held by them, and the
intended method of disposition thereof as Sierra shall reasonably request and as
shall be required in connection with the action to be taken by Sierra.
8.4 EXPENSES OF REGISTRATION.
All expenses incurred in connection with the registrations pursuant to
Section 8.1, including without limitation all registration and qualification
fees, printing and accounting fees, fees and disbursements of counsel for
Sierra, and fees and disbursements of one special counsel for the Holders (if
different from counsel for Sierra) but excluding underwriting discounts and
commissions (the "Registration Expenses") shall be borne by Sierra. Each selling
shareholder shall bear the fees and costs of its own counsel (if different from
counsel for Sierra or the one special counsel for the Holders referred to
above).
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8.5 UNDERWRITING REQUIREMENTS.
In connection with any offering involving an underwriting of shares being
issued by Sierra, Sierra shall not be required under Section 8.1 to include any
of the Holders' securities therein unless they accept and agree to the terms of
the underwriting as agreed upon between Sierra and the underwriters selected by
it, and then only in such quantity as will not, in the opinion of the
underwriters, jeopardize the success of the offering by Sierra. If the total
number of shares of stock which all such selling shareholders of Sierra request
to be included in any offering exceeds the number of such shares which the
underwriters reasonably believe compatible with the success of the offering,
Sierra shall only be required to include in the offering so many of the shares
of stock of the selling shareholders as the underwriters believe will not
jeopardize the success of the offering (the shares so included to be apportioned
pro rata among the selling shareholders according to the total number of shares
of Sierra Common Stock requested to be included in such offering by said selling
shareholders, or in such other proportions as shall mutually be agreed to by
such selling shareholders), provided that no such reduction shall be made with
respect to any securities offered by Sierra for its own account.
8.6 DELAY OF REGISTRATION.
So long as Sierra has given any notice required by Section 8.1 hereof, no
Holder shall have any right to take any action to restrain, enjoin or otherwise
delay any registration as the result of any controversy which might arise with
respect to the interpretation or implementation of this Article 8.
8.7 INDEMNIFICATION.
In the event any of the Shares are included in a Registration Statement
under this Article
8.
(a) To the extent permitted by law, Sierra will indemnify and hold
harmless each Holder against any losses, claims, damages or liabilities, joint
or several, to which they may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities or actions in
respect thereof arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein, or allegedly necessary to make
the statements therein not misleading; and will reimburse each such Holder, such
underwriter or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection 8.7(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of Sierra nor shall Sierra be liable
in any such case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in connection with such
registration statement preliminary
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prospectus, final prospectus, or amendments or supplements thereto, in reliance
upon and in conformity with written information furnished expressly for use in
connection with such registration by any such Holder, such underwriter or
controlling person.
(b) To the extent permitted by law, each such Holder will indemnify and
hold harmless Sierra, each of its directors, each of its officers who have
signed such registration statement, each person, if any, who controls Sierra
within the meaning of the Securities Act, and any underwriter for Sierra (within
the meaning of the Securities Act) against any losses, claims, damages, or
liabilities to which Sierra or any such director, officer, controlling person,
or underwriter may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any untrue or alleged untrue statement
of any material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or allegedly necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary prospectus, or amendments or supplements
thereto, in reliance upon and in conformity with written information furnished
by such Holder expressly for use in connection with such registration; and each
such Holder will reimburse any legal or other expenses reasonably incurred by
Sierra or any such director, officer, controlling person or underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action if it is judicially determined that there were material
misstatements or omissions in such written information.
(c) Promptly after receipt by an indemnified party under this Section 8.7
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 8.7, notify the indemnifying party in writing of the commencement
thereof and the indemnifying party shall have the right to participate in and to
assume the defense thereof with counsel mutually satisfactory to the parties.
The failure to notify an indemnifying party promptly of the commencement of any
such action, if prejudicial to the ability to defend such action, shall relieve
such indemnifying party under this Section 8.7, but the omission so to notify
the indemnifying party will not relieve such party of any liability which such
party may have to any indemnified party otherwise other than under this Section
8.7.
(d) If recovery is not available under the foregoing indemnification
provisions of this paragraph, for any reason other than as specified therein,
the parties entitled to indemnification by the terms thereof shall be entitled
to contribution to liabilities and expenses, except to the extent that
contribution is not permitted under Section 11(f) of the Securities Act. In
determining the amount of contribution to which the respective parties are
entitled, there shall be considered the relative benefits received by each party
from the offering of the securities (taking into account the portion of the
proceeds of the offering realized by each), the parties' relative knowledge and
access to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement of omission, and
any other equitable considerations appropriate
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under the circumstances; provided that in no event will any Investor be required
to contribute an amount in excess of the original cost that Investor of its
Sierra Common Stock included in that offering. Sierra and the Underwriters
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation.
8.8 NO-ACTION LETTER OR OPINION OF COUNSEL IN LIEU OF REGISTRATION.
If Sierra shall have obtained from the SEC a "no-action" letter in which
the SEC had indicated that it will take no action if, without registration under
the Act, the Holders dispose of the Sierra Common Stock covered by any request
made under Section 8.1 hereof in the manner in which they propose to dispose of
the Sierra Common Stock included in such request, or if in the opinion of
counsel for Sierra concurred in by counsel for such Holders, no registration
under the Act is required in connection with such disposition, Sierra need not
comply with such request; provided, however, that Sierra shall not be so
relieved of its obligations under this Article 8 unless the aforementioned
"no-action" letter or opinion of counsel for Sierra shall have been mailed by
Sierra to such Holders within forty-five (45) days after Sierra's receipt of
their request.
8.9 REPORTS UNDER THE SECURITIES EXCHANGE ACT OF 1934.
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act, Sierra agrees to use its best efforts (i)
to file with the SEC in a timely manner all reports and other documents required
to be filed by an issuer of securities registered under the Securities Act or
the Exchange Act, as amended, (ii) to maintain in effect the registration of
Sierra's Common Stock under Section 12 of the Exchange Act, as amended, and
(iii) so long as any Holder owns any of Sierra Common Stock, to furnish in
writing upon such Holder's request the following information: (A) Sierra's
name, address and telephone number, (B) Sierra's Internal Revenue Service
identification number, (C) Sierra's SEC file number, (D) the number of shares of
Sierra Common Stock outstanding as shown by the most recent report or statement
published by the Company, (E) the average weekly volume of trading in such
shares reported on all national securities exchanges during the four calendar
weeks preceding the date of receipt of request by the Holder, and (F) whether
Sierra has filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the preceding twelve months. With respect to a rule or
regulation of the SEC (other than Rule 144) which may at any time permit a
Holder to sell Sierra Common Stock to the public without registration, Sierra
agrees to take such action as is reasonable to enable utilization of such rule.
8.10 DEFINITION.
The term "Holders" means the Group Shareholders and any transferee, as
specified in Section 8.11, if such persons then hold any Sierra Common Stock.
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8.11 TRANSFER OF REGISTRATION RIGHTS.
Incident to the transfer of Sierra Common Stock under this Agreement, any
transferee of Sierra Common Stock who holds immediately following the transfer
at least ten thousand (10,000) shares of Sierra Common Stock (which amount will
be appropriately adjusted for stock dividends, splits and combinations) will be
entitled to registration rights under this Article 8 as a Holder.
ARTICLE 9
GENERAL PROVISIONS
9.1 SHAREHOLDERS' REPRESENTATIVES. The Group Shareholders hereby
irrevocably designate and appoint Kenneth McLeod, as their agent and attorney in
fact ("Shareholders' Representative") with full power and authority until and
through the Closing to execute, deliver and receive on their behalf all notices,
requests or other communications hereunder; to fix and alter on their behalf the
date, time and place of the Closing; to waive, amend or modify any provision of
this Agreement, including a decision to terminate under Article 6 above, except
as otherwise provided in Sections 6.3 and 6.4 of this Agreement; and to take
such other action on their behalf in connection with this Agreement and the
Closing of the transactions contemplated hereby as the Shareholders'
Representative deem appropriate. This designation is intended to constitute a
durable power of attorney and shall not be affected by the subsequent
disability, death or incapacity of any Shareholder of Group.
9.2 SURVIVAL. The representations and warranties of the parties set forth
in Articles 2 and 3 of this Agreement shall survive the Effective Time for a
period of two years. The covenants and provisions set forth in Articles 7 and 8
shall survive the Effective Time for a period of three (3) years or such longer
period of time as may be referenced or required by any particular provision.
Neither party will make any claim or bring a cause of action against the other
party for breach of a representation, warranty or covenant to the extent such a
claim or cause of action is fully satisfied by fidelity bond, insurance or other
guaranty or indemnity.
9.3 BROKERS AND FEES. Each party represents and warrants to the other
party to this Agreement that such party has not incurred any brokerage, finders,
agents or investment bankers fees or commission in connection with the Merger or
this Agreement.
9.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent by
prepaid first-class mail, as follows:
To Group: Communications Systems Group, Inc.
1309 West Marlboro Drive
Chandler, AZ 85224
Attention: President
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with a copy to: Quinn Williams, Esq.
Snell & Wilmer, L.L.P.
One Arizona Center
Phoenix, Arizona 85004-0001
To Sierra: Sierra Solids, Inc. n/k/a Synergy Media, Inc.
260 Regency Parkway, Suite 220
Omaha, Nebraska 68114
Attention: James R. Saker
with a copy to: William T. Foley, Esq.
Erickson & Sederstrom, P.C.
Regency Westpointe, Suite 100
10330 Regency Parkway Drive
Omaha, Nebraska 68114
To CSG: CSG Wireless, Inc.
260 Regency Parkway, Suite 220
Omaha, Nebraska 68114
Attention: Edward Jarzobski
with a copy to: William T. Foley, Esq.
Erickson & Sederstrom, P.C.
Regency Westpointe, Suite 100
10330 Regency Parkway Drive
Omaha, Nebraska 68114
Either party may send any notice, request, demand, claim or other
communication to the intended recipient at the address set forth above using any
other means (including without limitation telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed as been duly given unless and until it is actually
received by the intended recipient. Either party may change the address to
which notices, requests, demands, claims, and other communications are to be
delivered under this Agreement by giving the other party notice in the manner
set forth herein.
9.5 ENTIRE AGREEMENT. This Agreement, together with all Schedules,
Exhibits and attachments referred to herein or attached hereto, all of which are
incorporated herein by this reference (a) constitutes the entire agreement
between the parties and supersedes and cancels any other agreements,
representations or communications whether oral or written between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof; and (b) is not intended to, and shall not be deemed to, confer upon any
person other than the parties hereto any rights or remedies hereunder.
28
<PAGE>
9.6 HEADINGS. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.7 GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Arizona without giving
effect to any choice or conflict of law provisions, or rule (whether of the
State of Arizona or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Arizona.
9.8 BINDING AGREEMENT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their heirs, beneficiaries, personal
representatives and successors and permitted assigns. Neither party may assign
either this Agreement or any of its rights, interests or obligations hereunder
without the prior written approval of the other party.
9.9 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which will be deemed an original, but all of which
together shall constitute one and the same instrument.
9.10 ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, subject to the required vote of the Group shareholders,
including cooperating fully with the other party. In case at any time after the
Effective Time any further action is reasonably necessary or desirable to carry
out the purposes of this Agreement or to vest in Sierra full title to all
properties, assets, rights, approvals, immunities and franchises of Group, the
proper officers and directors of each party to this Agreement shall take all
such necessary action.
9.11 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Neither 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, in the case of Sierra, by any
listing or trading agreement or applicable federal or state securities laws
concerning its publicly traded securities (in which case the disclosing party
shall use its best efforts to advise the other party prior to making the
disclosure).
9.12 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than Sierra and Group and their
respective successors and permitted assigns; provided, however, (i) the
provisions in Article 1 concerning the issuance of the Sierra Common Stock, the
provision in Section 7.2 concerning certain requirements for a tax-free
reorganization and the registration rights set forth in Article 8 are intended
for the benefit of the Group shareholders; (ii) the provisions in Sections
5.3(g) and 7.1 are intended for the benefit of the individuals specified or
referred to therein and their legal representatives.
29
<PAGE>
9.13 EXPENSES. Each of the parties shall bear its own costs and expenses
and shall indemnify and hold the other party harmless from any such costs or
expenses (including without limitation attorneys' fees and expenses) incurred in
connection this Agreement and the transactions contemplated hereby.
9.14 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 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.
9.15 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.
IN WITNESS WHEREOF, Sierra, CSG and Group have each caused this
Agreement to be signed by their respective duly authorized officers as of the
date set forth above.
SIERRA SOLIDS, INC.
n/k/a SYNERGY MEDIA, INC., a Nevada corporation
ATTEST:
/s/ Lois Meridith By: /s/ Michael Luther
- --------------------------- ------------------------------------------
Lois Meridith, Secretary Michael Luther, Chairman of the Board
COMMUNICATIONS SYSTEMS GROUP, INC.,
an Arizona corporation
ATTEST:
/s/ Carol Ann McLeod By: /s/ Kenneth McLeod
- --------------------------- ------------------------------------------
Carol Ann McLeod, Secretary Kenneth McLeod, President
CSG WIRELESS, INC.,
a Arizona corporation
ATTEST:
/s/ Lois Meridith By: /s/ Eddie Jarzobski Pres.
- --------------------------- ------------------------------------------
Lois Meridith, Secretary Eddie Jarzobski, President
30
<PAGE>
CONSENT OF GROUP SHAREHOLDERS
The undersigned, comprising all of the existing shareholders of
Communications Systems Group, Inc. hereby consent to and approve of the terms of
the Agreement and Plan of Reorganization between Sierra Solids, Inc., CSG
Wireless, Inc. and Communications Systems Group, Inc. set forth above, and by
their signature below, become parties thereto and agree to be bound by such
terms, conditions and obligations of the Agreement as if acting on behalf of
Communications Systems Group. In addition, in connection with such approval,
waive any and all notice, consent or approval requirements, or other
restrictions, set forth in any stock restriction agreement by and among the
shareholders of Group and Group which would otherwise restrict the transfer of
shares of Group common stock acquired by such Agreement and Plan of
Reorganization.
Dated effective this 25 day of April, 1996.
SHAREHOLDERS OF COMMUNICATIONS
SYSTEMS GROUP, INC.,
/s/ Kenneth McLeod
-------------------------------------
Kenneth McLeod
/s/ Carol Ann McLeod
-------------------------------------
Carol Ann McLeod
31
<PAGE>
PROMISSORY NOTE EXHIBIT 1.5
$104,000.00 APRIL 25, 1996
DUE OCTOBER 25, 1996 OMAHA, NEBRASKA
1. AGREEMENT TO PAY. FOR VALUE RECEIVED, the receipt of which is hereby
acknowledged, the undersigned, SIERRA SOLIDS, INC. N/K/A SYNERGY MEDIA, INC., a
Nevada corporation and CSG WIRELESS, INC., an Arizona corporation (collectively
hereinafter referred to as the "Maker"), promises to pay to the order of KENNETH
MCLEOD AND CAROL ANN MCLEOD (collectively hereinafter referred to as the
"Payee", and Payee and each successive owner and holder of this Note being
hereinafter generally referred to as the "Holder") in the manner provided for
herein of the principal sum of
ONE HUNDRED FOUR THOUSAND DOLLARS AND NO CENTS
($104,000.00)
together with interest on the outstanding principal balance hereof remaining
from time to time unpaid at the rates provided in Sections 2 and 3 hereof.
2. INTEREST RATE PRIOR TO DEFAULT. The outstanding principal balance
hereof prior to default shall bear interest at the rate of eight and one
quarter percent (8 1/4%) per annum (the "Regular Rate"), computed daily on
the basis of a 360 day year consisting of twelve 30-day months for each day
all or any part of the principal balance hereof shall remain outstanding.
3. DEFAULT RATE. In the event that there shall occur:
a. Any default (after the expiration of all applicable cure
periods, if any) specified in Section 7 hereof; or
b. Maturity of the indebtedness evidenced hereby, whether by
passage of time, acceleration, declaration or otherwise;
then and in any such event, the entire principal balance hereof shall thereafter
bear interest at the Regular Rate plus two percent (2%) per annum.
4. PAYMENTS. Principal and accrued interest thereon is due and payable on
October 25, 1996. All payments to be made by Maker to the Payee hereunder shall
be made to the Payee at 1309 West Marlboro Drive, Chandler, AZ 85224 or to such
other address as Payee may from time to time designate not later than 12:00 noon
Central Time on the date when due in lawful money of the United States and
immediately available funds.
5. SECURITY. The Maker shall grant to the Payee, and this Note shall be
secured by, a security interest in all of the CSG Wireless, Inc.'s assets,
whether tangible or intangible. The Maker shall execute to the benefit of the
Payee a standard UCC Financing Statement and Security Agreement to be filed with
the appropriate authorities.
1 EXHIBT 1.5
Page 37 of 66 Pages
<PAGE>
6. NEGOTIABILITY; OFFSETS, DEFENSES OR COUNTERCLAIMS. Subject to Section
11 and applicable law, this Note is freely negotiable. No defenses, setoffs or
counterclaims shall be asserted or brought by the Maker or any other party at
any time liable hereunder in any suit or action for the collection of any sum
due hereunder.
7. WAIVER. Maker hereby waives demand, presentment, protest and notice of
demand, presentment, protest and nonpayment. The Maker consents, whether for a
lesser or greater time period than the original term of this Note, to single or
multiple renewals, extensions, and modifications which may be granted by Holder
at any time in the future.
8. EVENT OF DEFAULT. An event of default shall mean the occurrence or
existence of any one or more of the following events:
a. The Maker should fail to pay the principal of, or interest on,
this Note as and when due and payable, which failure shall
continue for a period of ten (10) days;
b. The Maker shall fail to perform or observe any term, covenant,
or agreement contained herein, which failure shall continue for
a period of ten (10) days after Payee gives Maker notice of such
failure;
c. Commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation
law or statute of any jurisdiction, whether now or hereafter in
effect;
d. Generally not pay, or shall be unable to pay, or shall admit in
writing its inability to pay its debts as such debts become due;
e. Make an assignment for the benefit of creditors, or petition or
apply to any tribunal for the appointment of a custodian,
receiver, or trustee for it or a substantial part of its assets;
or,
f. Take any action indicating its consent to, approval of, or
acquiescence in any such petition, application, proceeding or
order for relief of the appointment of a custodian, receiver, or
trustee for all or any substantial part of its properties.
9. NOTICES. Any request, demand, authorization, direction, notice,
consent, waiver, or other document provided or permitted by this Note to be made
upon, given or furnished to, or filed with the Maker shall be sufficient for
every purpose hereunder if in writing and mailed, registered or certified mail,
postage prepaid, to the Maker, addressed to it at 260 Regency Parkway, Suite
220, Omaha, Nebraska 68114 (or such other address as Maker may from time to time
direct). Any notice to Payee shall be sufficiently given if in writing and
mailed, registered or certified mail, postage prepaid, to the address set forth
in Section 4 hereof (or such other address as Payee may from time to time
direct). Any notice to a Holder (other than Payee) shall be sufficiently given
if in writing and mailed, registered or certified mail, postage prepaid, to such
address as Holder shall from time to time direct.
2 EXHIBT 1.5
Page 38 of 66 Pages
<PAGE>
10. GOVERNING LAW. THIS NOTE SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF
NEBRASKA. WHENEVER POSSIBLE EACH PROVISION OF THIS NOTE SHALL BE INTERPRETED IN
SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY
PROVISION OF THIS NOTE SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW,
SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR
INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE
REMAINING PROVISIONS OF THIS NOTE. WHENEVER IN THIS NOTE REFERENCE IS MADE TO
THE HOLDER OR THE MAKER, SUCH REFERENCE SHALL BE DEEMED TO INCLUDE, AS
APPLICABLE, A REFERENCE TO THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. THE
PROVISIONS OF THIS NOTE SHALL BE BINDING UPON AND SHALL INURE TO THE BENEFIT OF
SUCH SUCCESSOR AND ASSIGNS. THE MAKER'S SUCCESSORS AND ASSIGNS SHALL INCLUDE,
WITHOUT LIMITATION, A RECEIVER, TRUSTEE OR DEBTOR IN POSSESSION FOR THE MAKER.
11. SECURITIES LAWS. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE. THIS NOTE
THEREFORE MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR OTHERWISE
DISTRIBUTED FOR VALUE IN THE ABSENCE OF (i) AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE MAKER THAT SUCH SALE, TRANSFER, ASSIGNMENT, PLEDGE OR OTHER
DISTRIBUTION IS EXEMPT FROM (OR NOT OTHERWISE SUBJECT TO) THE REGISTRATION (OR
QUALIFICATION) AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT OR LAWS, OR (ii)
SUCH REGISTRATION OR QUALIFICATION.
IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed
and delivered on the date first above written.
SIERRA SOLIDS, INC. n/k/a SYNERGY MEDIA, INC.
By:
---------------------------------------
Name:
---------------------------------
Its:
---------------------------------
CSG WIRELESS, INC.
By:
---------------------------------------
Name:
---------------------------------
Its:
---------------------------------
3 EXHIBT 1.5
Page 39 of 66 Pages
<PAGE>
SIERRA CUSIP NO. 826491 30 0
SOLIDS, INC.
SIERRA SOLIDS, INC.
THIS CERTIFIES THAT IS THE
-------------------------------------------------------
REGISTERED HOLDER OF SHARES
------------------------------------------------------
SIERRA SOLIDS, INC.
TRANSFERABLE ONLY ON THE BOOKS OF THE CORPORATION BY THE HOLDER HEREOF IN PERSON
OR BY ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED.
IN WITNESS WHEREOF, THE SAID CORPORATION HAS CAUSED THIS CERTIFICATE TO BE
SIGNED BY ITS DULY AUTHORIZED OFFICERS AND ITS CORPORATE SEAL TO BE HEREUNTO
AFFIXED
THIS 12TH DAY OF MARCH A.D. 1996
------ ------- --
/s/ [LOGO] /s/
SECRETARY PRESIDENT
Countersigned
FIDELITY TRANSFER COMPANY
Salt Lake City, Utah
Registrar and Transfer Agent
By /s/
--------------------------------
<PAGE>
EXHIBIT 4.3
INVESTMENT AGREEMENT
The undersigned, the owner(s) of 1,000 shares of voting common stock of
Communications Systems Group, Inc. ("Group"), hereby represents and warrants to
Sierra Solids, Inc. n/k/a Synergy Media, Inc. ("Sierra"), that:
(a) The undersigned has been provided with a copy of the Agreement and
Plan of Reorganization between Sierra, CSG Wireless, Inc., an Arizona
corporation ("CSG") and Group (the "Agreement").
(b) The undersigned has carefully reviewed the Agreement and has relied on
the information contained therein.
(c) The undersigned understands that the Sierra Shares have not been
registered under the Securities Act of 1933, as amended (the "Act"), in reliance
upon an exemption therefrom for nonpublic offerings. The undersigned
understands that the Sierra Shares must be held indefinitely unless the sale
thereof is subsequently registered under the Act or an exemption from such
registration is available.
(d) The undersigned is acquiring Sierra Shares solely for the
undersigned's own account for investment and not for the account of any other
person and not for distribution, assignment or resale to others, and no other
person has a direct or indirect beneficial interest in the common stock of
Sierra to be issued to the undersigned pursuant to the Agreement.
(e) The undersigned hereby agrees that an appropriate legend may be placed
on the certificates evidencing the Sierra Shares to be issued pursuant to the
Agreement indicating the restrictions on transfer and that Sierra may place a
stop-transfer order or otherwise make appropriate notations in Sierra's records
or take appropriate actions to enforce such restrictions.
I affirm the designation and appointment of Kenneth McLeod as my
Shareholder Representative, as stated in the Agreement, and, upon request, I
will immediately tender certificates representing all of my shares of Group
common stock to them, and the Shareholder Representatives are authorized to
exchange those shares at Closing for the consideration set forth in the
Agreement.
This Agreement shall be binding on and inure to the benefit of the
undersigned and the undersigned's heirs, beneficiaries, personal
representatives, successors and permitted assigns.
If shares are held jointly, all joint owners must execute. If shares are
held in a representative capacity, such capacity must be noted.
Date: April 25, 1996. _________________________________
Page 41 of 66 Pages
1
<PAGE>
In consideration of the foregoing, Sierra shall, as promptly as possible
upon receipt of the written request of any holder of a certificate bearing the
legend referred to in paragraph (e) above and receipt of such certificate duly
endorsed for transfer, issue a new certificate without such legend if (i) the
securities evidenced by such certificate shall have been effectively registered
under the Act and sold by the holder thereof in accordance with such
registration or sold by the holder thereof pursuant to Securities and Exchange
Commission Rule 144, or (ii) such restrictions set forth above are no longer
required by applicable law or regulation and such holder shall have delivered to
Sierra, if reasonably requested, a written opinion of counsel acceptable to
Sierra to such effect. By way of illustration only, assuming that Rule 144 as
presently in effect remains unchanged, Sierra would reissue such certificate
without the restrictive legend to the holder after the third anniversary of the
issuance of the Sierra Shares in the merger contemplated by the Agreement
provided that such holder is not then, and shall not have been within the prior
three months, an "affiliate" of Sierra within the meaning of such Rule.
Date: April 25, 1996
SIERRA SOLIDS, INC. n/k/a Synergy Media, Inc.,
a Nevada Corporation
By: _______________________________
Name: _________________________
Its: _________________________
Page 42 of 66 Pages
2
<PAGE>
[Group's Counsel's Letterhead]
April 25, 1996
Sierra Solids, Inc. n/k/a Synergy Media, Inc.
260 Regency Parkway, Suite 220
Omaha, Nebraska 68114
Attn: James R. Saker
CSG Wireless, Inc.
260 Regency Parkway, Suite 220
Omaha, Nebraska 68114
Attn: Edward Jarzobski
RE:Agreement and Plan of Reorganization
Gentlemen:
We have acted as special counsel to Communications Systems Group, Inc., an
Arizona corporation ("Company"), in connection with the preparation, execution
and delivery of the Agreement and Plan of Reorganization dated as of April 25,
1996 (the "Merger Agreement"), between the Company, Sierra Solids, Inc. n/k/a
Synergy Media, Inc., a Nevada corporation ("Sierra"), and CSG Wireless, Inc., an
Arizona corporation ("CSG"), (Sierra and CSG collectively referred to herein as
the "Synergy") relating to the merger (the "Merger") of the Company with and
into CSG, with CSG as the continuing and surviving corporation.
In connection with this opinion, we have examined copies of the Merger
Agreement and such corporate governing documents as well as such certificates of
public officials, company agents, members and officers of the Company as we have
deemed necessary and appropriate as a basis for the opinions expressed herein.
For the purposes of this opinion, we have assumed that you know of no
agreements, understandings or negotiations between the parties to the Merger
Agreement that have not been set forth in the Merger Agreement that would modify
the terms or rights and obligations of the parties to the Merger Agreement.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is duly organized and validly existing as a corporation
under the laws of the State of Arizona. The Company has all requisite corporate
power and authority to own, operate and lease its properties and carry on its
business as now being conducted.
EXHIBIT 5.2 (h)
Page 43 of 66 Pages
<PAGE>
Sierra Solids, Inc. n/k/a Synergy Media, Inc.
CSG Wireless, Inc.
April 25, 1996
Page 2
2. The Company has the requisite corporate power to enter into the Merger
Agreement and to consummate the transactions contemplated therein. The
execution and delivery of the Merger Agreement and the consummation of the
transactions contemplated therein have been duly authorized by all necessary
corporate action on the part of the Company. The Merger Agreement has been duly
executed and delivered by the Company, and assuming the Merger Agreement has
been duly authorized, executed and delivered by Synergy, the Merger Agreement
constitutes a valid, binding and enforceable obligation of the Company.
3. The execution and delivery by the Company of the Merger Agreement and
the consummation of the transactions contemplated therein will not conflict with
or constitute on the part of the Company a violation of or default or loss of
benefit under or permit the acceleration of any obligation under, any provisions
of the Company's Articles of Incorporation or Bylaws or do not or will not, to
the best of our knowledge, without any independent investigation be a violation
of, breach of or default under any applicable law, statute or ordinance.
Additionally, nothing has come to our attention to indicate to us that the
execution, delivery and performance by the Company of the Merger Agreement,
the compliance by the Company with the respective terms thereof or the
consummation of the transactions contemplated thereby does or will conflict with
or constitute on the part of the Company a material violation of any mortgage,
indenture, lease, covenant, agreement or other instrument, permit, concession,
grant, franchise, license, judgment, order or decree known to us to which the
Company is a party or by which the Company is bound.
4. To the best of our knowledge, without any independent investigation,
there is not pending any threatened or existing claim, unsatisfied judgment,
litigation, governmental investigation or proceeding before any court,
arbitrator or federal, state or other governmental commission, board or other
agency, by or against or materially adversely affecting the operations or
financial condition of the Company, its business or businesses, property or
assets.
The law covered by the opinions expressed herein is limited only to the
federal law of the United States and the laws of the State of Arizona. We
express no opinion as to the laws of any other state or foreign jurisdiction.
The opinion expressed in Paragraph 2 above concerning the enforceability of
the Merger Agreement is subject to (i) the effect of bankruptcy, insolvency,
reorganization, arrangement, receivership, conservatorship, moratorium,
fraudulent conveyance, reinstatement, or other similar laws relating to or
affecting the rights of creditors generally, (ii) limitations imposed by general
principles of equity [regardless of whether enforcement of the Merger Agreement
is considered as a proceeding in equity or at law], and no opinion is being
expressed regarding the rules governing the availability of specific
performance, injunctive relief or other equitable remedies, and (iii) no opinion
is being expressed regarding the validity or enforceability of any provisions
requiring arbitration of the parties
EXHIBIT 5.2(h)
Page 44 of 66 Pages
<PAGE>
Sierra Solids, Inc. n/k/a Synergy Media, Inc.
CSG Wireless, Inc.
April 25, 1996
Page 3
disputes or the validity or enforceability of any provisions requiring a party
to pay attorney fees of an adverse party.
This opinion has been furnished to you at your request pursuant to the
Merger Agreement and may not be furnished, reproduced, distributed or disclosed
to or relied upon by any other person or entity without our prior written
consent. We express no opinion as to any matter not expressly set forth herein,
and no opinion as to any such matter is to be, or may be, inferred or implied
herefrom.
This opinion is rendered as of the date hereof and we undertake no
obligation to advise you of any events which occur after the date hereof which
may affect any matter or opinion set forth herein.
Very truly yours,
EXHIBIT 5.2 (h)
Page 45 of 66 Pages
<PAGE>
OFFICERS' CERTIFICATE
OF
COMMUNICATIONS SYSTEMS GROUP, INC.
This Certificate is executed pursuant to Section 5.2(i) of that Agreement
and Plan of Reorganization dated April 25, 1996 (the "Merger Agreement"),
between Sierra Solids, Inc. n/k/a Synergy Media, Inc., a Nevada corporation,
("Sierra"), CSG Wireless, Inc., an Arizona corporation ("CSG") and
Communications Systems Group, Inc., an Arizona corporation, ("Group").
Capitalized terms used herein which are not otherwise defined herein shall have
the respective meanings given such terms in the Merger Agreement. The
undersigned officers of Group hereby certify that:
(a) The representations and warranties of Group contained in the Merger
Agreement are in all material respects true and accurate as of the
date of the Merger Agreement and, except for changes expressly
contemplated by the Merger Agreement, as of the Effective Time as
though made at and as of the Effective Time;
(b) Group has confirmed and complied in all material respects with each
covenant, agreement and condition required to be conformed or complied
with by it prior to or at the Effective Time;
(c) There has been no material adverse change in the financial condition
or results of operations of Group as reflected in the Group Financial
Statements as of December 31, 1995.
IN WITNESS WHEREOF, the undersigned have executed this Certificate as of
April 25, 1996.
COMMUNICATIONS SYSTEMS GROUP, INC.
By:
-----------------------------------
Kenneth McLeod, President
By:
-----------------------------------
Carol Ann McLeod, Secretary
EXHIBIT 5.2 (i)
Page 46 of 66 Pages
<PAGE>
COVENANT NOT TO COMPETE AGREEMENT
THIS COVENANT NOT TO COMPETE AGREEMENT (the "Agreement") is entered
into this 25th day of April, 1996, by and between Kenneth McLeod and Carol Ann
McLeod (the "Sellers") and CSG Wireless, Inc., an Arizona corporation (the
"Buyer").
WHEREAS, Sellers and their wholly owned company, Communications Systems
Group, Inc. ("Group"), an Arizona corporation, have entered into an Agreement
and Plan of Reorganization, dated April 25, 1996, by and among Buyer, Sierra
Solids, Inc. ("Sierra"), a Nevada corporation, Group and Sellers (the "Merger
Agreement"), wherein Sellers will exchange all of their Group common stock for
Sierra common stock (the "Merger");
WHEREAS, Buyer desires to prevent Sellers from competing with Buyer after
the Merger; and
WHEREAS, Sellers, as additional consideration to induce Buyer to Merger
with Group, to receive the common shares of Sierra and pursuant to the Merger
Agreement, agree to become subject to a covenant not to compete.
NOW, THEREFORE, the parties in consideration of the premises set forth
above and such other consideration, the sufficiency and receipt of is hereby
acknowledged, do hereby agree as follows.
1. NON-COMPETITION. The Sellers acknowledges that they have gained and will
gain extensive and valuable experience and knowledge in the business
conducted by the Group and Buyer and have had and will have extensive
contacts with customers of the Group and Buyer. Accordingly, provided
Buyer and Sierra are not in material breach of the Merger Agreement, the
Sellers, jointly and severally, covenant and agree with the Buyer that they
shall not compete directly or indirectly with the Buyer during the term
starting with the effective date of the Merger and ending four (4) years
thereafter (the "Agreement Term") and shall not during such period make
public statements in derogation of the Buyer. For the purposes of this
Section 1 and Sections 2, 3, 4, and 5, the term the Buyer shall be deemed
to include subsidiaries, parents and affiliates of the Buyer. Competing
directly or indirectly with the Buyer shall mean engaging or having a
material interest, directly or indirectly, as owner, employee, officer,
director, partner, venturer, stockholder, capital investor, consultant,
agent, principal, advisor or otherwise, either alone or in association with
others, in the operation of any entity engaged in the business or
businesses of the Buyer within 100 miles of where Buyer conducts it
business. Competing directly or indirectly with the Buyer, as used in this
Agreement, shall be deemed not to include an ownership interest as an
inactive investor, which for purposes of this Agreement shall mean the
beneficial ownership of less than one percent of the outstanding shares of
any series or class of securities of any competitor of the Buyer, which
shares are publicly traded in the securities markets.
EXHIBIT 5.2 (k)
Page 47 of 66 Pages
<PAGE>
2. NON-RAID. The Sellers acknowledge that they have had and will have
extensive contacts with employees and customers of the Buyer. Accordingly,
the Sellers covenant and agree that during the Agreement Term they will not
(i) solicit any of the employees of the Buyer who were employed by the
Buyer during the time when the Sellers were employed by the Buyer or owners
of Group to leave the Buyer, (ii) interfere with the relationship of the
Buyer with any such employees or (iii) personally target or solicit
customers of the Buyer.
3. BLUE PENCIL PROVISION. The Sellers acknowledge that the periods and
geographic area of restriction imposed by Section 1 and Section 2 are fair
and reasonable and are reasonably required for the protection of the Buyer.
If any part or parts of Section 1 or Section 2 shall be held to be
unenforceable or invalid, the remaining parts thereof shall nevertheless
continue to be valid and enforceable as though the invalid portion or
portions were not a part hereof. If any of the provisions of Section 1 or
Section 2 relating to the periods or geographic area of restriction shall
be deemed to exceed the maximum periods of time or area which a court of
competent jurisdiction would deem enforceable, the times and area shall,
for the purposes of Section 1 and Section 2, be deemed to be the maximum
time periods and area which a court of competent jurisdiction would deem
valid and enforceable in any state in which such court of competent
jurisdiction shall be convened.
4. CONFIDENTIALITY. The Sellers acknowledge that they have had and will have
access to certain information related to the business, operations, future
plans and customers of the Buyer, the disclosure or use of which could
cause the Buyer substantial losses and damages. Accordingly, the Sellers,
jointly and severally, covenant that during the Agreement Term they will
keep confidential all information and documents furnished to they by or on
behalf of the Buyer and not use the same to their advantage, except to the
extent such information or documents are or thereafter become lawfully
obtainable from other sources or are in the public domain through no fault
on his part or is consented to in writing by the Buyer.
5. RIGHT TO INJUNCTIVE RELIEF. The Sellers agree and acknowledge that a
violation of the covenants contained in Sections 1, 2 and 4 of this
Agreement will cause irreparable damage to the Buyer, and that it is and
will be impossible to estimate or determine the damage that will be
suffered by the Buyer in the event of a breach by the Sellers of any such
covenant. Therefore, the Sellers further agree that in the event of any
violation or threatened violation of such covenants, the Buyer shall be
entitled as a matter of course to an injunction out of any court of
competent jurisdiction restraining such violation or threatened violation
by the Sellers, such right to an injunction to be cumulative and in
addition to whatever other remedies the Buyer may have.
6. REPRESENTATION BY THE SELLERS. The Sellers, jointly and severally, hereby
represent and warrant that the execution of this Agreement and the
performance of their duties and obligations hereunder will not breach or be
in conflict with any other agreement to which they are a party or by which
they are bound, and that they are not now subject to any
2 EXHIBIT 5.2(k)
Page 48 of 66 Pages
<PAGE>
covenant against competition or similar covenant which would affect the
performance of their duties hereunder.
7. SURVIVING TERMS. Upon termination of this Agreement, all rights and
obligations of Buyer and the Sellers (including any personal or legal
representative or successor interest of Sellers, deceased or under legal
disability) shall terminate and cease except as each party shall have such
additional rights and remedies as are provided for elsewhere in this
Agreement exercised either prior to or subsequent to the termination of
this Agreement in the event of any breach by the other party of any
material provision of this Agreement.
8. NOTICES. All notices pursuant to this Agreement must be in writing. All
notices to Buyer shall be addressed to CSG Wireless, Inc., 260 Regency
Parkway, Suite 220, Omaha, Nebraska 68114, Attention: James R. Saker, or
at such other address as Buyer may hereafter designate by written notice to
the Sellers in accordance with the provisions set forth herein. All
notices to Sellers shall be addressed to the Sellers at the address
provided for in the Merger Agreement, or at such other address as the
Seller may hereafter designate by written notice to Buyer. All notices
shall be considered effective when delivered personally to Buyer or the
Sellers, or three (3) calendar days after deposit of said notice in the
United States mail, via registered mail, postage prepaid, return receipt
requested.
9. MISCELLANEOUS.
A. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter addressed herein. All of the terms
and conditions of this Agreement take precedence over any and all
prior agreements made by and between Buyer and Sellers, and the
execution of this Agreement shall constitute the termination of any
and all such prior agreements.
B. Each of the terms and provisions of this Agreement is and is to be
deemed severable in whole or in party and if any term or provision, or
the application thereof to circumstances other than those as to which
it is held invalid, illegal, or unenforceable, shall not be affected
thereby, and shall remain in full force and effect.
C. The captions contained herein are solely for the convenience of the
parties, and shall not be deemed to govern the meaning or intent of
any of the provisions of this Agreement.
D. The rights and obligations of Buyer hereunder shall inure to the
benefit of and be binding upon any successor or assign of Buyer. This
Agreement is personal to Sellers and shall not be assigned by him to
any other party.
E. This Agreement shall be construed in accordance with the laws of the
state of Arizona, without regard to its conflict of law rules.
3 EXHIBIT 5.2(k)
Page 49 of 66 Pages
<PAGE>
F. This Agreement, unless stated otherwise herein, may only be amended by
a signed, written mutual agreement of both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
CSG WIRELESS, INC., ("Buyer")
By:
------------------------------
Edward Jarzobski, President
SELLERS:
------------------------------------------
Kenneth McLeod
------------------------------------------
Carol Ann McLeod
4 EXHIBIT 5.2(k)
Page 50 of 66 Pages
<PAGE>
[Sierra's and CSG's Counsel's Letterhead]
April 25, 1996
Communications Systems Group, Inc.
1309 West Marlboro Drive
Chandler, AZ 85224
Attn: Kenneth McLeod
RE: Agreement and Plan of Reorganization
Gentlemen:
We have acted as special counsel to Sierra Solids, Inc. n/k/a Synergy
Media, Inc., a Nevada corporation ("Sierra") and CSG Wireless, Inc., an Arizona
corporation ("CSG") (Sierra and CSG collectively referred to herein as the
"Companies") in connection with the preparation, execution and delivery of the
Agreement and Plan of Reorganization dated as of April 25, 1996 (the "Merger
Agreement"), between Communications Systems Group, Inc., an Arizona corporation
("Group"), and the Companies relating to the merger (the "Merger") of Group
with and into CSG, with CSG as the continuing and surviving corporation.
In connection with this opinion, we have examined copies of the Merger
Agreement and such corporate governing documents as well as such certificates of
public officials, company agents, members and officers of the Companies as we
have deemed necessary and appropriate as a basis for the opinions expressed
herein. For the purposes of this opinion, we have assumed that you know of no
agreements, understandings or negotiations between the parties to the Merger
Agreement that have not been set forth in the Merger Agreement that would modify
the terms or rights and obligations of the parties to the Merger Agreement.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Companies are duly organized and validly existing as corporations
under the laws of the state in which they were organized (as set forth above).
The Companies have all requisite corporate power and authority to own, operate
and lease their properties and carry on their business as now being conducted.
2. The Companies have the requisite corporate power to enter into the
Merger Agreement and to consummate the transactions contemplated therein. The
execution and delivery of the Merger Agreement and the consummation of the
transactions contemplated therein have been duly authorized
EXHIBIT 5.3(c)
Page 51 of 66 Pages
<PAGE>
Communications Systems Group, Inc.
April 25, 1996
Page 2
by all necessary corporate action on the part of the Companies. The Merger
Agreement has been duly executed and delivered by the Companies, and assuming
the Merger Agreement has been duly authorized, executed and delivered by Group,
the Merger Agreement constitutes a valid, binding and enforceable obligation of
the Companies.
3. The execution and delivery by the Companies of the Merger Agreement
and the consummation of the transactions contemplated therein will not conflict
with or constitute on the part of the Companies a violation of or default or
loss of benefit under or permit the acceleration of any obligation under, any
provisions of the respective Companies' Articles of Incorporation or Bylaws or
do not or will not, to the best of our knowledge, without any independent
investigation be a violation of, breach of or default under any applicable law,
statute or ordinance. Additionally, nothing has come to our attention to
indicate to us that the execution, delivery and performance by the Companies of
the Merger Agreement, the compliance by the Companies with the respective terms
thereof or the consummation of the transactions contemplated thereby does or
will conflict with or constitute on the part of the Companies a material
violation of any mortgage, indenture, lease, covenant, agreement or other
instrument, permit, concession, grant, franchise, license, judgment, order or
decree known to us to which the Companies are a party or by which the Companies
are bound.
4. To the best of our knowledge, without any independent investigation,
there is not pending any threatened or existing claim, unsatisfied judgment,
litigation, governmental investigation or proceeding before any court,
arbitrator or federal, state or other governmental commission, board or other
agency, by or against or materially adversely affecting the operations or
financial condition of the Companies, its business or businesses, property or
assets.
The law covered by the opinions expressed herein is limited only to the
federal law of the United States, the laws of the State of Nebraska, and the
corporate laws of the States of Arizona and Nevada. We express no opinion as to
the laws of any other state or foreign jurisdiction.
The opinion expressed in Paragraph 2 above concerning the enforceability of
the Merger Agreement is subject to (i) the effect of bankruptcy, insolvency,
reorganization, arrangement, receivership, conservatorship, moratorium,
fraudulent conveyance, reinstatement, or other similar laws relating to or
affecting the rights of creditors generally, (ii) limitations imposed by general
principles of equity [regardless of whether enforcement of the Merger Agreement
is considered as a proceeding in equity or at law], and no opinion is being
expressed regarding the rules governing the availability of specific
performance, injunctive relief or other equitable remedies, and (iii) no opinion
is being expressed regarding the validity or enforceability of any provisions
requiring arbitration of the parties disputes or the validity or enforceability
of any provisions requiring a party to pay attorney fees of an adverse party.
EXHIBIT 5.3(c)
Page 52 of 66 Pages
<PAGE>
Communications Systems Group, Inc.
April 25, 1996
Page 3
This opinion has been furnished to you at your request pursuant to the
Merger Agreement and may not be furnished, reproduced, distributed or disclosed
to or relied upon by any other person or entity without our prior written
consent. We express no opinion as to any matter not expressly set forth herein,
and no opinion as to any such matter is to be, or may be, inferred or implied
herefrom.
This opinion is rendered as of the date hereof and we undertake no
obligation to advise you of any events which occur after the date hereof which
may affect any matter or opinion set forth herein.
Very truly yours,
Erickson & Sederstrom, P.C.
By:
-----------------------
For the Firm
EXHIBIT 5.3(c)
Page 53 of 66 Pages
<PAGE>
JOINT OFFICERS' CERTIFICATE
OF
SIERRA SOLIDS, INC. n/k/a SYNERGY MEDIA, INC.
AND
CSG WIRELESS, INC.
This Certificate is executed pursuant to Section 5.3(d) of that
Agreement and Plan of Reorganization dated April 25, 1996 (the "Merger
Agreement"), between Sierra Solids, Inc. n/k/a Synergy Media, Inc., a Nevada
corporation, ("Sierra"), CSG Wireless, Inc., an Arizona corporation ("CSG") and
Communications Systems Group, Inc., an Arizona corporation, ("Group").
Capitalized terms used herein which are not otherwise defined herein shall have
the respective meanings given such terms in the Merger Agreement. The
undersigned officers of Sierra and CSG hereby certify that:
(a) The representations and warranties of Sierra and CSG contained
in the Merger Agreement are in all material respects true and
accurate as of the date of the Merger Agreement and, except for
changes expressly contemplated by the Merger Agreement, as of
the Effective Time as though made at and as of the Effective
Time;
(b) Sierra and CSG have confirmed and complied in all material
respects with each covenant, agreement and condition required to
be conformed or complied with by it prior to or at the Effective
Time;
(c) Except as set forth on the schedule attached hereto, there has
been no material adverse change in the financial condition or
results of operations of Sierra as reflected in the Sierra
Financial Statements as of April 3, 1996.
IN WITNESS WHEREOF, the undersigned have executed this Certificate as of
April 25, 1996.
SIERRA SOLIDS, INC.
N/K/A SYNERGY MEDIA, INC.
By:
---------------------------------
James R. Saker, President
By: /s/ Lois Meridith
---------------------------------
Lois Meridith, Secretary
CSG WIRELESS, INC.
By: /s/ Edward Jarzobski
---------------------------------
Edward Jarzobski, President
By: /s/ Lois Meridith
---------------------------------
Lois Meridith, Secretary
EXHIBIT 5.3(d)
Page 54 of 66 Pages
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into this
25th day of April 1996, by and between Kenneth McLeod (the "Employee") and CSG
Wireless, Inc., an Arizona corporation (the "Employer").
1. TERM. Subject to the termination and extension provisions set forth in
Section 4 below, the term of this Agreement shall be for a three (3)
year period commencing on May 1, 1996, and ending the 31 day of May,
1999.
2. EMPLOYMENT. Employer shall employ Employee as President and Chief
Executive Officer of Employer and Employee accepts employment and such
continued employment with Employer as such, subject to all the terms and
conditions hereinafter set forth and such consideration as herein set
forth, all of which Employee acknowledges as being sufficient and which
has been received. Notwithstanding any other policy, practice, or
agreement to the contrary, Employee agrees to perform all reasonable job
assignments and responsibilities to the best of his ability so long as
such job assignments and responsibilities are consistent with those held
by Employee at Communications Systems Group, Inc. ("Group") immediately
prior to the execution of this Agreement by Employee; provided Employee
shall have the power to exercise such authority as may be specifically
reserved to the President and Chief Executive Officer in Employee's
Articles of Incorporation and Bylaws, as amended, and as may be
typically granted to such offices. Employee shall devote his full time
and efforts to such position with Employer.
3. COMPENSATION. Employer shall pay Employee as compensation for his
services an annual base salary of $100,000.00 per year. Such salary
shall be payable according to the payroll payment policies established
by the Board of Directors of Employer. The afore-designated salary
shall be considered a minimum and additional compensation and benefits
may be granted to Employee during the term of his employment in
addition to those set out or guaranteed in this Agreement. The
Employee acknowledges that certain payments provided for herein are
subject to withholding and other taxes.
4. TERMINATION. This Agreement shall terminate as provided for below:
A. BY ITS OWN TERMS. Unless sooner terminated as provided below,
this Agreement expires on May 1, 1999; provided, however, after
such date this Agreement shall automatically continue in effect
until either party gives not less than thirty (30) calendar days
prior written notice to the other party that this Agreement
shall be terminated. Any such written notice shall set forth
the effective date of termination, which shall not be less than
thirty (30) calendar days from the date of notice.
B. DEATH OF EMPLOYEE. This Agreement shall terminate effective
immediately upon the death of Employee.
EXHIBIT 5.3(g)
Page 55 of 66 Pages
<PAGE>
C. BY AGREEMENT OF THE PARTIES. This Agreement may earlier
terminate by mutual written agreement signed by Employer and
Employee.
D. RESIGNATION. This Agreement shall terminate effective
immediately upon the signed, written resignation of Employee.
E. FOR CAUSE. The Employer, upon prior written notice to Employee,
may terminate the employment of Employee for "cause." For
purposes of this Agreement, "Cause" for such termination shall
include, but not be limited to, the following:
i. Dishonesty of the Employee with respect to the Employer
or any of its Subsidiaries or related companies;
ii. Willful misfeasance or nonfeasance of duty intended to
injure or having the effect of injuring the reputation,
business or business relationships of the Employer or
any of its Subsidiaries or related companies or any of
their respective officers, directors or employees;
iii. Conviction of the Employee upon a charge of any crime
involving moral turpitude or which could reflect
unfavorably upon the Employer or any of its Subsidiaries
or related companies;
iv. Willful or prolonged absence from work by the Employee
(other than by reason of disability due to physical or
mental illness) or failure, neglect or refusal by the
Employee to perform his duties and responsibilities
without the same being corrected upon ten (10) days
prior written notice; or
v. Breach by the Employee of any of the covenants contained
in this Agreement.
F. DISABILITY. If the Employee, due to physical or mental illness,
shall be disabled to perform substantially all of his duties for
a continuous period of six (6) months, either the Employee or
the Company may by notice terminate the Employee's employment
under this Agreement effective as of the date of such notice.
The Employee's salary while disabled and prior to such
termination shall be reduced by the amount of any disability or
similar benefits to which he is entitled, notwithstanding
anything contained elsewhere in this Agreement to the contrary.
5. NON-COMPETITION. The Employee acknowledges that he has gained and will
gain extensive and valuable experience and knowledge in the business
conducted by the Employer and has had and will have extensive contacts
with customers of the Employer. Accordingly, the Employee covenants and
agrees with the Employer that he shall not compete directly or
2 EXHIBIT 5.3(g)
Page 56 of 66 Pages
<PAGE>
indirectly with the Employer; either during the term of his employment
or during the one (1) year period immediately thereafter and shall not
during such period make public statements in derogation of the Employer.
For the purposes of this Section 5 and Sections 6, 7, 8, and 9, the term
the Employer shall be deemed to include subsidiaries, parents and
affiliates of the Employer. Competing directly or indirectly with the
Employer shall mean engaging or having a material interest, directly or
indirectly, as owner, employee, officer, director, partner, venturer,
stockholder, capital investor, consultant, agent, principal, advisor or
otherwise, either alone or in association with others, in the operation
of any entity engaged in the business or businesses of the Employer
within 100 miles of Employer. Competing directly or indirectly with the
Employer, as used in this Agreement, shall be deemed not to include an
ownership interest as an inactive investor, which for purposes of this
Agreement shall mean the beneficial ownership of less than one percent
of the outstanding shares of any series or class of securities of any
competitor of the Employer, which shares are publicly traded in the
securities markets.
6. NON-RAID. The Employee acknowledges that he has had and will have
extensive contacts with employees and customers of the Employer.
Accordingly, the Employee covenants and agrees that during the term of
his employment and during the one (1) year period immediately thereafter
he will not (i) solicit any of the employees of the Employer who were
employed by the Employer during the time when the Employee was employed
by the Employer to leave the Employer, (ii) interfere with the
relationship of the Employer with any such employees or (iii) personally
target or solicit customers of the Employer.
7. BLUE PENCIL PROVISION. The Employee acknowledges that the periods and
geographic area of restriction imposed by Section 5 and Section 6 are
fair and reasonable and are reasonably required for the protection of
the Employer. If any part or parts of Section 5 or Section 6 shall be
held to be unenforceable or invalid, the remaining parties thereof shall
nevertheless continue to be valid and enforceable as though the invalid
portion or portions were not a part hereof. If any of the provisions of
Section 5 or Section 6 relating to the periods or geographic area of
restriction shall be deemed to exceed the maximum periods of time or
area which a court of competent jurisdiction would deem enforceable, the
times and area shall, for the purposes of Section 5 and Section 6, be
deemed to be the maximum time periods and area which a court of
competent jurisdiction would deem valid and enforceable in any state in
which such court of competent jurisdiction shall be convened.
8. CONFIDENTIALITY. The Employee acknowledges that he has had and will
have access to certain information related to the business, operations,
future plans and customers of the Employer, the disclosure or use of
which could cause the Employer substantial losses and damages.
Accordingly, the Employee covenants that during the term of his
employment with the Employer and thereafter he will keep confidential
all information and documents furnished to him by or on behalf of the
Employer and not use the same to his advantage, except to the extent
such information or documents are or thereafter become lawfully
obtainable from other sources or are in the public domain through no
fault on his part or is consented to in
3 EXHIBIT 5.3(g)
Page 57 of 66 Pages
<PAGE>
writing by the Employer. Upon termination of his employment, the
Employee shall return to the Employer all records, lists, files and
documents which are in his possession and which relate to the Employer.
9. RIGHT TO INJUNCTIVE RELIEF. The Employee agrees and acknowledges that a
violation of the covenants contained in Sections 5, 6 and 8 of this
Agreement will cause irreparable damage to the Employer, and that it is
and will be impossible to estimate or determine the damage that will be
suffered by the Employer in the event of a breach by the Employee of any
such covenant. Therefore, the Employee further agrees that in the event
of any violation or threatened violation of such covenants, the Employer
shall be entitled as a matter of course to an injunction out of any
court of competent jurisdiction restraining such violation or threatened
violation by the Employee, such right to an injunction to be cumulative
and in addition to whatever other remedies the Employer may have.
10. REPRESENTATION BY THE EMPLOYEE. The Employee hereby represents and
warrants that the execution of this Agreement and the performance of his
duties and obligations hereunder will not breach or be in conflict with
any other agreement to which he is a party or by which he is bound, and
that he is not now subject to any covenant against competition or
similar covenant which would affect the performance of his duties
hereunder.
11. SURVIVING TERMS. Upon termination of this Agreement, all rights and
obligations of Employer and Employee (including any personal or legal
representative or successor interest of Employee, deceased or under
legal disability) shall terminate and cease except as provided below.
A. COMPENSATION. Employee shall be entitled to receive any
compensation and/or benefits which Employee has earned and which
have vested with Employee as of the date of the termination.
B. ADDITIONAL RIGHTS. Each party shall have such additional rights
and remedies as are provided for elsewhere in this Agreement
exercised either prior to or subsequent to the termination of
this Agreement in the event of any breach by the other party of
any material provision of this Agreement.
12. BENEFITS. Employee shall be eligible to participate in all current
benefit plans of Employer.
13. EXPENSES. Employer will reimburse Employee for all reasonable expenses
incurred by Employee in connection with the furtherance of the business
of Employer and consistent with written policies established from time
to time by Employer and distributed to Employee.
14. NOTICES. All notices pursuant to this Agreement must be in writing.
All notices to Employer shall be addressed to Sierra Solids, Inc., 260
Regency Parkway, Suite 220, Omaha, Nebraska
4 EXHIBIT 5.3(g)
Page 58 of 66 Pages
<PAGE>
68114, Attention: James R. Saker, or at such other address as Employer
may hereafter designate by written notice to Employee in accordance with
the provisions set forth herein. All notices to Employee shall be
addressed to Employee at his home address as last indicated in the book
and records of the Employer, or at such other address as Employee may
hereafter designate by written notice to Employer. All notices shall be
considered effective when delivered personally to Employer or Employee,
or three (3) calendar days after deposit of said notice in the United
States mail, via registered mail, postage prepaid, return receipt
requested.
15. MISCELLANEOUS.
A. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter addressed herein.
All of the terms and conditions of this Agreement take
precedence over any and all prior agreements made by and between
Employer and Employee, and the execution of this Agreement shall
constitute the termination of any and all such prior agreements.
B. Each of the terms and provisions of this Agreement is and is to
be deemed severable in whole or in part and if any term or
provision, or the application thereof to circumstances other
than those as to which it is held invalid, illegal, or
unenforceable, shall not be affected thereby, and shall remain
in full force and effect.
C. The captions contained herein are solely for the convenience of
the parties, and shall not be deemed to govern the meaning or
intent of any of the provisions of this Agreement.
D. The rights and obligations of Employer hereunder shall inure to
the benefit of and be binding upon any successor or assign of
Employer. This Agreement is personal to Employee and shall not
be assigned by him to any other party.
E. This Agreement shall be construed in accordance with the laws of
the state of Arizona, without regard to its conflict of law
rules.
F. This Agreement, unless stated otherwise herein, may only be
amended by a signed, written mutual agreement of both parties
hereto.
5 EXHIBIT 5.3(g)
Page 59 of 66 Pages
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement on the day and year first written above.
CSG WIRELESS, INC., ("Employer")
By: /s/ Edward Jarzobski
---------------------------------
Edward Jarzobski, President
EMPLOYEE:
/s/ Kenneth McLeod
--------------------------------------
Kenneth McLeod
6 EXHIBIT 5.3(g)
Page 60 of 66 Pages
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
SIERRA SOLIDS, INC. n/k/a SYNERGY MEDIA, INC.,
CSG WIRELESS, INC.
AND
COMMUNICATIONS SYSTEMS GROUP, INC.
DATED APRIL 25, 1996
GROUP SHAREHOLDER
Group Shares Sierra Shares Cash to be Received
Name/Address Owned to Receive Closing Note
- ------------ ------------- ------------- ------- -----
Kenneth McLeod 1,000 350,000 $50,000 $52,000
1309 W Marlboro
Chandler, AZ
85224
Carol Ann McLeod 1,000 350,000 $50,000 $52,000
1309 W Marlboro
Chandler, AZ
85224
SCHEDULE 2.2
/s/ QS
---------------
Sierra Initials
/s/ EJ
---------------
CSG Initials
/s/ KM
---------------
Group Initials
Page 61 of 66 Pages
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
SIERRA SOLIDS, INC. n/k/a SYNERGY MEDIA, INC.,
CSG WIRELESS, INC.
AND
COMMUNICATIONS SYSTEMS GROUP, INC.
DATED APRIL 25, 1996
EXCEPTIONS TO SIERRA AND CSG REPRESENTATION AND WARRANTY 3.4:
Sierra has entered into various options, warrants, subscription, and
other types of share issuance agreements with certain financial investors
and consultants to and officers and directors of Sierra, which provide for
the future issuance of Sierra shares to such parties. In addition, certain
affiliates and shareholders, including the employees of Synergy
Communications, Inc., currently hold options to acquire certain shares of
Sierra under an incentive bonus plan.
The estimated capital structure of Sierra is disclosed on the attached
Schedule 3.4(a). The attached schedule 3.4(a) assumes that all options,
warrants and subscription agreements will be exercised and Sierra shares will
be issued.
SCHEDULE 3.4
/s/ QS
---------------
Sierra Initials
/s/ EJ
---------------
CSG Initials
/s/ KM
---------------
Group Initials
Page 62 of 66 Pages
<PAGE>
Sierra Solids (Synergy Media)
Capital Structure
as of April 19, 1996
(ASSUMES CLOSING OF CSG MERGER)
COMMON STOCK
existing shares 2,360,475
Shares Which are fully paid and yet to be issued 2,862,500
---------
Total Shares 5,222,975
Issued to CSG
Shareholders 700,000
Shares allocated for short term capital needs 750,000
---------
Total outstanding post merger 6,672,975
OPTIONS
Board/Officers 550,000
Consultants/Strategic investors 1,455,000
---------
Total options 2,005,000
Total fully diluted shares outstanding 8,677,975
---------
---------
SCHEDULE 3.4(a)
Page 63 of 66 Pages
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
SIERRA SOLIDS, INC. n/k/a SYNERGY MEDIA, INC.,
CSG WIRELESS, INC.
AND
COMMUNICATIONS SYSTEMS GROUP, INC.
DATED APRIL 25, 1996
EXCEPTIONS TO SIERRA AND CSG REPRESENTATION AND WARRANTY 3.15:
Registration Rights Agreements:
Certain shareholders of Sierra were granted registration rights of the
shares they acquired pursuant to a merger agreement between Sierra's wholly
owned subsidiary Safe Pay Acquisition Corporation n/k/a Synergy
Communications, Inc. and Synergy Communications, Inc. Such registration
rights provide that Sierra shall use its best efforts to include such Sierra
Shares in any registration within twelve (12) months of the effective date of
the merger and shall be registered after such twelve (12) month period.
SCHEDULE 3.15
/s/ QS
---------------
Sierra Initials
/s/ EJ
---------------
CSG Initials
/s/ KM
---------------
Group Initials
Page 64 of 66 Pages
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
SIERRA SOLIDS, INC. n/k/a SYNERGY MEDIA, INC.,
CSG WIRELESS, INC.
AND
COMMUNICATIONS SYSTEMS GROUP, INC.
DATED APRIL 25, 1996
EXCEPTIONS TO SIERRA AND CSG REPRESENTATION AND WARRANTY 3.19:
Synergy Communications, Inc.'s ("Synergy") employees were issued 400,000
shares of Sierra common stock at $0.3636 per share under an incentive bonus
plan. Such shares were sold pursuant to a one (1) year promissory note
between the Synergy employees and Sierra. All shares are currently held in
escrow pending payment of the note.
SCHEDULE 3.19
/s/ QS
---------------
Sierra Initials
/s/ EJ
---------------
CSG Initials
/s/ KM
---------------
Group Initials
Page 65 of 66 Pages
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
SIERRA SOLIDS, INC. n/k/a SYNERGY MEDIA, INC.,
CSG WIRELESS, INC.
AND
COMMUNICATIONS SYSTEMS GROUP, INC.
DATED APRIL 25, 1996
EXCEPTIONS TO SIERRA AND CSG REPRESENTATION AND WARRANTY 3.6(c):
Material Adverse Changes to Sierra's Financial Condition or Results of
Operations since April 3, 1996.
There has not been any material adverse changes to Sierra's financial condition
or results of operations since April 3, 1996. However, the following are
material changes that have occurred since April 3, 1996.
1. On April 4, 1996, Sierra's wholly owned subsidiary Safe Pay Acquisition
Corporation merged with Synergy Communications, Inc. The effective date of
the merger is the date the Certificate of Merger and Plan of Merger are filed
with the Secretary of State of Nebraska. Such filings have been made with
the Secretary of State.
2. Sierra has sold and issued, either by warrants, options or stock
subscription agreements, additional shares of common stock. Such shares are
set forth and are included in Schedule 3.4(a).
SCHEDULE 5.3(e)
/s/ QS
---------------
Sierra Initials
/s/ EJ
---------------
CSG Initials
/s/ KM
---------------
Group Initials
Page 66 of 66 Pages
