W. W. CAPITAL CORPORATION
Notice of Annual Meeting
and
Proxy Statement
Marriott Hotel
350 East Horsetooth Road
Fort Collins, Colorado 80525
Annual Meeting of Shareholders
January 5, 2001
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W. W. CAPITAL CORPORATION
3500 JFK Parkway, Suite 202
Fort Collins, Colorado 80525
December 5, 2000
Fellow W. W. Shareholders:
It is my pleasure to invite you to this year's Annual Meeting of
shareholders, which will be held on Friday, January 5, 2001.
The meeting will start at 10:00 a.m., Mountain Standard Time, at the
Marriott Hotel, 350 East Horsetooth Road, Fort Collins, Colorado 80525.
I appreciate your continued confidence in the Company and look forward
to seeing you on January 5.
Sincerely,
/s/ Steve Zamzow
President and Chief Executive Officer
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W. W. CAPITAL CORPORATION
3500 JFK Parkway, Suite 202
Fort Collins, Colorado 80525
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date: January 5, 2001
Time: 10:00 a.m., Mountain Standard Time
Place: The Marriott Hotel
350 East Horsetooth Road
Fort Collins, Colorado 80525
Purpose of the meeting:
o To vote on a proposal to split-off the Company's wholly-owned
subsidiary, Titan Industries, Inc., to certain existing
shareholders of the Company;
o To elect up to five members of the Board of Directors;
o To vote on a proposal to ratify the appointment of the
independent auditors; and
o To consider any other appropriate
matters brought before the meeting.
Who may attend the meeting:
Only shareholders and persons holding proxies from shareholders may
attend the meeting.
What to bring:
If your shares are held in the name of a broker, trust, bank, or other
nominee, you will need to bring a proxy or letter from that broker, trust, bank,
or nominee that confirms that you are the beneficial owner of those shares.
Record Date:
October 11, 2000 is the record date for the meeting. This means that
owners of W.W. Capital Corporation common stock at the close of business on that
date are entitled to:
o receive notice of the meeting; and
o vote at the meeting and any adjournments or postponements of the
meeting.
Annual Report:
We have included with this statement a copy of our Annual Report on
Form 10-K for the fiscal year that ended June 30, 2000.
Proxy Voting:
Your vote is important. Please vote your proxy promptly so your shares
can be represented, even if you plan to attend the Annual Meeting. You can vote
by using the proxy card that is enclosed. Please see your proxy card for
specific instructions on how to vote.
Our proxy tabulator, Computer Share Investor Services, must receive any
proxy that will not be delivered to the Annual Meeting by 9:00 a.m. on Friday,
January 5, 2001.
By order of the Board of Directors,
James Alexander, Secretary
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Table of Contents
WHERE YOU CAN FIND MORE INFORMATION.........................................1
FORWARD-LOOKING STATEMENTS..................................................2
SUMMARY.....................................................................3
THE W. W. CAPITAL CORPORATION ANNUAL MEETING................................11
Matters to be Considered...............................................11
Voting Information.....................................................11
PROPOSAL TO SPLIT-0FF THE COMPANY'S WHOLLY-
OWNED SUBSIDIARY, TITAN INDUSTRIES, INC., TO
CERTAIN EXISTING SHAREHOLDERS OF THE COMPANY................................14
The Proposed Split-Off......................................................14
Terms of the Agreement......................................................14
Summary................................................................14
Contribution to Capital of Titan.......................................14
The Exchange...........................................................14
Inter-Company Receivable...............................................15
Titan Stock Options....................................................15
Restrictions on Transfer of Shares Following the Closing...............15
Exchanging Shareholder Representative..................................16
Other Agreements............................................................16
West-OK Investment, LLC Loan Agreement.................................16
McDonald & Fredrickson, P.C. Release Agreement.........................17
Tax Sharing Agreement..................................................18
Significant Shareholder Consent and Release Agreement..................18
Company Lock-Up Agreement..............................................18
Titan Lock-Up Agreement................................................19
Exchanging Shareholder Lock-Up Agreements..............................19
Consideration to be Received by the Company.................................19
Shareholder Approval........................................................20
Closing ...................................................................20
Representations and Warranties; Covenants...................................20
Conditions..................................................................21
Accuracy of Representations and Warranties; Compliance with Covenants..21
Corporate Approvals....................................................21
Other Consents and Approvals...........................................21
Qualification Under Section 355 of the Code - No State or Local Taxes..21
Shareholder Approval...................................................21
Significant Shareholder Consent and Release............................21
Additional Conditions Precedent to the Obligations of the Company......22
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Termination.................................................................22
Waiver and Amendment........................................................22
Expenses....................................................................22
Background and Reasons for the Split-Off....................................23
ecommendation of the Board of Directors.....................................24
Opinion of the Financial Advisor............................................25
Conflict of Interest; Interest of Certain Persons in Matters
to be Acted Upon....................................................28
Governmental and Regulatory Approvals.......................................29
Federal Income Tax Consequences.............................................29
Qualification of the Proposed Split-Off Under Section 355 of the Code...30
Remaining Shareholders..................................................31
The Company.............................................................31
Accounting Treatment........................................................31
Absence of Dissenters' Rights of Appraisal..................................31
Business of the Company After the Split-Off.................................31
Unaudited Pro-Forma Financial Statements....................................32
PRICE RANGE OF COMMON STOCK AND RELATED MATTERS.............................33
Market Information.....................................................33
Dividends..............................................................33
ELECTION OF DIRECTORS.......................................................34
EXECUTIVE COMPENSATION......................................................37
Incentive Stock Option Plan............................................38
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS......................39
TRANSACTIONS WITH MANAGEMENT AND OTHERS.....................................40
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS..............41
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT...........................43
OTHER MATTERS...............................................................43
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WHERE YOU CAN FIND MORE INFORMATION
W. W. Capital Corporation files annual, quarterly and current reports,
proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements or other information
that the Company files at the Commission's public reference room in Washington,
D.C. at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the
Commission at 1-800-SEC-0330 for further information on the public reference
rooms.
The Company's public filings are also available to the public from
commercial document retrieval services and at the Internet World Wide Website
maintained by the Commission at "http://www.sec.gov."
The Company's common stock is traded on the over-the-counter market under
the symbol "WWCL." Documents filed by the Company can also be inspected at the
offices of the National Association of Securities Dealers, Inc., 1735 K Street,
N.W., Washington, D.C. 20006.
The Commission allows the Company to "incorporate by reference" information
into this document, which means that the Company can disclose important
information to you by referring you to another document filed separately with
the Commission. The information incorporated by reference is deemed to be part
of this document, except for any information superseded by information contained
directly in the document. This document incorporates by reference other
documents which are listed below that the Company has previously filed with the
Commission. The documents contain important information about the Company's
business and financial condition that is not included in or delivered with this
document.
Company Filings (File No. 0-17757):
o The Company's Annual Report on Form 10-K for the fiscal year ended June
30, 2000.
The Company incorporates by reference additional documents that it might
file with the Commission between the date of this document and the date of the
Annual Meeting. These include periodic reports, such as Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Copies of any of the documents incorporated by reference by the Company
(excluding exhibits unless specifically incorporated therein) are available
without charge, upon written or oral request, from Steve Zamzow at 3500 JFK
Parkway, Suite 202, Ft. Collins, CO 80525 (telephone no. 1-(800) 255-8999).
You should rely only on the information contained or incorporated by
reference in this document in determining how to vote your shares at the Annual
Meeting. The Company has not authorized anyone to provide you with information
that is different from what is contained in this document. This document is
dated December 5, 2000. You should not assume that the information contained in
this document is accurate as of any date other than that date, and the mailing
of this document to shareholders shall not create any implication to the
contrary.
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FORWARD-LOOKING STATEMENTS
Certain statements contained in this Proxy Statement are not statements of
historical fact and constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act (the "Act"), including, without
limitation, statements specifically identified as forward-looking statements
within this document. In addition, certain statements in future filings by the
Company with the Commission, in press releases, and in oral and written
statements made by or with the approval of the Company which are not statements
of historical fact constitute forward-looking statements within the meaning of
the Act. Examples of forward-looking statements include, without limitation: (i)
projections of revenues, income or loss, earnings or loss per share, the payment
or non- payment of dividends, capital structure, and other financial items, (ii)
statements of plans and objectives of the Company, its management or Board of
Directors, including those relating to products or services, (iii) statements of
future economic performance and (iv) statements of assumptions underlying such
statements. Words such as "believes", "anticipates", "expects", "intends",
"targeted", "may", "will", and similar expressions are intended to identify
forward- looking statements but are not the exclusive means of identifying such
statements.
Forward-looking statements involve risks and uncertainties which may cause
actual results to differ materially from those in such statements. Factors that
could cause actual results to differ from those discussed in the forward-looking
statements include, without limitation: (i) the strength of the U.S. economy in
general and the strength of local economies in which operations are conducted;
(ii) the effects of and changes in trade, agricultural, livestock and in
particular cattle policies and laws; (iii) inflation, interest rates and
fluctuations and volatility in the cattle markets and the price of beef and
other livestock; (iv) the timely development of and acceptance of new products
and services and perceived overall value of these products and services by
existing and potential customers; (v) acquisitions; (vi) the dependency of the
Company on its President and CEO; (vii) the ability to control expenses; (viii)
the effect of changes in laws and regulations with which the Company and its
subsidiaries must comply (ix) the costs and effects of future litigation and of
unexpected or adverse outcomes in such litigation; and (x) the success of the
Company at managing the risks involved in the foregoing.
Such forward-looking statements speak only as of the date on which such
statements are made, and the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statements are made to reflect the occurrence of unanticipated
events.
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SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
Proposed Split-Off fully and for a more complete description of the legal terms
of the Proposed Split-Off, you should read carefully this entire document,
including the Appendices, and the other documents we have referred you to. For
more information about the Company, see "Where You Can find More Information."
The Annual Meeting
When and Where: The Annual Meeting will be held on January 5, 2001 at
10:00 A.M., Mountain Standard Time, at the Marriott Hotel,
350 East Horsetooth Road, Fort Collins, Colorado 80525.
Record Date;
Shares Entitled The record date for shareholders of the Company entitled to
to Vote: vote at the Annual Meeting is October 11, 2000 (the "Record
Date"). On the Record Date, there were 5,420,397 shares of
Company common stock issued and outstanding. Each such share
is entitled to one vote on each matter to be acted upon or
which may properly come before the Annual Meeting.
Business to be
Conducted at the The purposes of the Annual Meeting are to: (i) consider and
Annual Meeting: vote upon a proposal to approve the Proposed Split- Off;
(ii) elect up to five directors for terms expiring at the
Annual Meeting of Company shareholders in 2001 and until
their successors are duly elected and qualified; (iii)
consider and vote upon a proposal to ratify the appointment
of the Company's independent auditors; and (iv) transact
such other business as may properly come before the meeting
or any adjournments or postponements thereof.
Vote Required:
Under Nevada law, any disposition of assets of a Nevada
corporation to or with an interested stockholder, defined as
a stockholder owning 10% or more of the voting power of the
outstanding voting shares of a Nevada corporation, must be
approved by the affirmative vote of the holders of stock
representing a majority of the outstanding voting power not
beneficially owned by the interested stockholder. Because
David L. Patton, an Exchanging Shareholder, currently owns
more than 10% of the
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Company's voting stock, the holders of a majority of the
outstanding shares of Company common stock other than Mr.
Patton must approve the Proposed Split-Off. See "The
Proposed Split-Off - Shareholder Approval." The affirmative
vote of the holders of a plurality of votes cast is required
to elect the nominees for director. An affirmative vote of
the holders of a majority of the outstanding shares of
Company common stock present or represented at the Annual
Meeting is required to ratify the appointment of the
Company's independent auditors. See "The W. W. Capital
Corporation Annual Meeting - Voting Information."
Security Ownership
and Voting of The 1,132,389 shares of Company common stock directly or
Certain Holders: beneficially owned by David L. Patton will not be counted
for purposes of determining whether the shareholders of the
Company have approved the Proposed Split-Off, but will be
counted in determining whether the nominees for director are
elected and the appointment of the Company's independent
auditors is ratified. The balance of 2,258,010 shares of
common stock owned by the Exchanging Shareholders (excluding
Mr. Patton) which represent approximately 41.7% of the total
shares of Company common stock issued and outstanding, will
be counted for purposes of determining whether the
shareholders of the Company have approved the Proposed
Split-Off, and in determining whether the nominees for
director are elected and the appointment of the Company's
independent auditors is ratified. In the event the
Exchanging Shareholders, excluding Mr. Patton, vote in favor
of the Proposed Split-Off , which the Company anticipates
will occur, approval of the Proposed Split-Off will only
require the affirmative vote of an additional 457,609
shares. To this end, certain Directors and executive
officers of the Company have indicated that they intend to
vote in favor of the Proposed Split-Off. Collectively, these
officers and Directors own, directly or beneficially,
256,906 shares, or approximately 4.7%, of the Company's
issued and outstanding shares of common stock. See "The W.
W. Capital Corporation Annual Meeting - Voting Information."
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The Proposed Split-Off
General: Pursuant to the terms of a Stock Transfer and Exchange
Agreement (the "Agreement") by and among the Company, its
wholly-owned subsidiary, Titan Industries, Inc., a Nebraska
corporation ("Titan"), and certain existing shareholders of
the Company (the "Exchanging Shareholders"), 100% of the
issued and outstanding shares of Titan common stock (the
"Titan Shares") will be acquired by the Exchanging
Shareholders in exchange for all of the Exchanging
Shareholders' ownership interests in the Company. The
Exchanging Shareholders' ownership interests in the Company
consist of 3,390,399 shares (the "Exchanging Shareholders'
Shares"), or approximately 61.2% of the common stock of the
Company (after the exercise by one of the Exchanging
Shareholders, David L. Patton, of options to acquire, in the
aggregate, 24,566 shares of Company common stock (the
"Patton Options")), together with options, warrants and
other rights (collectively the "Exchanging Shareholders'
Rights") exercisable to acquire an additional 129,934 shares
of the Company's common stock (after the exercise of the
Patton Options). Pursuant to the terms of the Agreement, to
equalize the value of the consideration being exchanged in
the Split-Off, at or prior to Closing, the Company will
contribute to the capital of Titan the sum of $850,000.
In connection with the Proposed Split-Off, West-OK
Investment LLC ("West-OK") has agreed to make a $1 million
loan to the Company, $850,000 of which will be transferred
to Titan as part of the Proposed Split-Off. The loan will be
secured by 2,448,000 of the Exchanging Shareholders' Shares
received by the Company upon consummation of the Proposed
Split-Off and other assets of the Company. As a condition to
its loan, if the Proposed Split-Off is consummated, two
nominees of West-OK will become directors of the Company.
See "The Proposed Split-Off - Terms of the Agreement -
Contribution to Capital," "The Proposed Split-Off - Other
Agreements," "The Proposed Split-Off - Conflicts of
Interest; Interest of Certain Persons in Matters To Be Acted
Upon," and "Election of Directors."
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Shareholder
Approval: Under Nevada law, the Proposed Split-Off must be approved by
the affirmative vote of the holders of stock representing a
majority of the outstanding voting power not beneficially
owned by "interested shareholders." David L. Patton is an
"interested shareholder" under Nevada law and, as such, is
prohibited from voting to approve the Proposed Split-Off.
See "The Proposed Split-Off - Shareholder Approval."
Closing:
If approved by the shareholders at the Annual Meeting, and
provided that all conditions to Closing have been satisfied
or waived, the Closing of the Proposed Split-Off will occur
immediately following the Annual Meeting.
Conditions to the
Proposed Split-Off: The consummation of the Proposed Split-Off is subject to a
number of conditions which, if not fulfilled or waived,
permit termination of the Agreement. Among such conditions
are: (i) the approval of the Proposed Split-Off by the
affirmative vote of the holders of a majority of the
outstanding common stock, other than shares held by David L.
Patton; and (ii) the determination by the Company, Titan and
the Exchanging Shareholders, and their advisors, that the
Proposed Split-Off will qualify as a tax-free distribution
of stock of a controlled corporation under Section 355 of
the Internal Revenue Code of 1986, as amended (the "Code").
See "The Proposed Split-Off - Terms of the Agreement -
Conditions."
Termination of
the Agreement: The Agreement may be terminated in certain circumstances,
including by mutual consent of the Company and the
Exchanging Shareholders, or by either of the Company or the
Exchanging Shareholders if the Proposed Split-Off has not
been consummated on or before January 31, 2001 (unless the
failure to consummate the Proposed Split-Off is due to the
act or failure to act of the party seeking to terminate).
See "The Proposed Split-Off - Terms of the Agreement -
Termination."
Governmental and
Regulatory The Company is not aware of any material federal or state
Approvals: regulatory approvals required for consummation of the
Proposed Split-Off. See "The Proposed Split-Off -
Governmental and Regulatory Approvals."
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Federal Income Tax
Consequences: The Proposed Split-Off has been structured as a distribution
of stock of a controlled corporation under Section 355 of
the Code. The Proposed Split-Off will not result in the
recognition of taxable gain or loss to the shareholders of
the Company remaining after consummation of the Proposed
Split-Off. If the transaction qualifies under Section 355 of
the Code, neither the Company nor the Exchanging
Shareholders should recognize any gain or loss for federal
income tax purposes as a result of the exchange of
Exchanging Shareholders' Shares and Exchanging Shareholders'
Rights for Titan Shares. However, a split-off transaction
under Section 355 of the Code is complicated and controlled
by numerous factual tests and statutory requirements, the
satisfaction of which may be subject to challenge by the
Internal Revenue Service. No ruling from the Internal
Revenue Service will be sought in connection with the
transaction, nor is the Company obtaining an opinion of
counsel. Therefore, there can be no assurance that the
Proposed Split-Off will not give rise to a taxable event to
the Company, Titan or the Exchanging Shareholders. For a
more complete discussion of the federal income tax
consequences of the Proposed Split-Off to the Company and
the Shareholders of the Company remaining after the Proposed
Split-Off, see "The Proposed Split-Off - Federal Income Tax
Consequences."
Accounting
Treatment: The Proposed Split-Off will be accounted for as a treasury
stock transaction. Following the Closing, the business
operations of Titan will be accounted for as discontinued
operations for the current and prior periods. No gain or
loss will be recognized in connection with the Proposed
Split-Off. See "The Proposed Split-Off - Accounting
Treatment."
No Dissenters'
Rights: Under Nevada law, shareholders of the Company are not
entitled to dissenters' rights of appraisal in connection
with the proposed Split-Off. See "The Proposed Split-Off -
Absence of Dissenters' Rights of Appraisal."
Our Reasons for
the Split-Off: Following the Company's acquisition of Titan in 1991,
various differences of opinion as to the Company's and
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Titan's operations, future plans and course of development
have arisen between Titan and the Company. This disharmony
has had an adverse effect on the ongoing operations of the
Company's and Titan's respective businesses. The Company's
Board of Directors believes that the Proposed Split-Off will
allow the Company to focus its efforts and resources towards
improving the Company's livestock handling operations,
without the distractions that necessarily accompany the
continuing disagreements between Titan and the Company. See
"The Proposed Split-Off - Background and Reasons for the
Split-Off."
Opinion of
Financial Advisor: The Company has retained Due Diligence, Inc. as its
financial advisor in connection with the Proposed Split-Off
to evaluate the financial terms of the Agreement and
Proposed Split-Off. Due Diligence, Inc. delivered its
opinion to the Company's Board of Directors that, as of the
effective date of the opinion, and subject to the
considerations set forth in the opinion, the Proposed Split-
Off is fair, from a financial point of view, to the
shareholders of the Company who will remain following
consummation of the Proposed Split-Off and that the
consideration to be received by the Company in the Split-
Off is fair from a financial point of view. A copy of Due
Diligence, Inc.'s written opinion, which sets forth certain
of the assumptions made, matters considered, the scope and
limitations of the review undertaken and the procedures
followed by Due Diligence, Inc., is attached to this
document as Appendix II and is incorporated by this
reference in this Proxy Statement. See "The Proposed
Split-Off - Opinion of Financial Advisor."
Market Prices of
the Company The Company's common stock is traded on the over-the-
Common Stock: counter market on a limited and very sporadic basis and
quoted on the Bulleting Board under the symbol "WWCL." On
November 29, 2000, the reported bid and asked prices of the
Company common stock were $.07 and $.3125, respectively.
See "Price Range of Common Stock and Related Matters."
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Historical and
Pro Forma Per The following table presents selected historical per share
Share Data: data for the Company and pro forma per share data after
giving effect to the Proposed Split-Off, assuming the
Proposed Split-Off had been effective at the dates or during
the periods presented. The pro forma data is based on the
number of shares of common stock expected to be outstanding
following the Proposed Split-Off. This data should be read
in conjunction with the financial statements and other
financial and pro forma financial information included
elsewhere in this Proxy Statement. The Company has not paid
any cash dividends with respect to its common stock during
any of the periods presented.
Pro
Historical(1) Forma(1)
------------- --------
Book value per share of
common stock at
June 30, 2000: $.53 $(.11)
Earnings per share of
common stock for the
Year ended June 30, 2000: $.06 $ .04
(1) The historical book value and earnings per share of
Common stock are based on 5,540,661 shares being
outstanding, including 120,264 shares currently held by
the Company as treasury stock; and the pro forma book
value and earnings per share of common stock are
based on 2,150,262 shares being outstanding, which is
the number of shares of common stock expected to be
outstanding following the Proposed Split-Off.
Our Recommendation:
The Company's Board of Directors believes the terms of the
Proposed Split-Off are fair and in your best interest and
has unanimously approved the Agreement and the Proposed
Split-Off. The Company's Board of Directors unanimously
recommends that you vote FOR the Agreement and the Proposed
Split-Off. See "The Proposed Split-Off - Background and
Reasons for the Split-Off."
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Election of
Directors: You are being asked to consider and vote upon the elections
of up to five directors for terms expiring at the Annual
Meeting of Company shareholders in 2001 and after their
successors are duly elected and qualified. The election of
Harold Gleason and A. Randall Kourt, both of whom were
nominated by West-OK Investment, LLC pursuant to the terms
of the West-OK Investment, LLC Loan Agreement, is contingent
upon obtaining shareholder approval of the Proposed
Split-Off. In the event the Proposed Split-Off is not
approved by the Company's shareholders at the meeting, the
nominations of Messrs. Gleason and Kourt will be deemed to
have been withdrawn, and you will elect, instead, three
directors for terms expiring at the Annual Meeting of
Company shareholders in 2001 and after their successors are
duly elected and qualified. Likewise, failure to elect
Messrs. Gleason and Kourt, as the nominees designated by
West- OK Investment, LLC, may result in the Company's
inability or unwillingness to consummate the Proposed
Split-Off, even if a majority of the Company's disinterested
shareholders have approved the transaction. See "ELECTION OF
DIRECTORS."
Proposal to Ratify
Appointment of The Board of Directors has appointed the firm of Brock and
Independent Company CPAs as the Company's independent auditors for
Auditors: fiscal year 2000-01. Although action by the shareholders in
the matter is not required, the Board believes that it is
appropriate to seek shareholder ratification of this
appointment in light of the critical role played by
independent auditors in maintaining the integrity of Company
financial controls and reporting.
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W. W. CAPITAL CORPORATION ANNUAL MEETING
This proxy statement and the accompanying proxy card are being mailed
to W.W. Capital Corporation shareholders beginning December 5, 2000. We are
soliciting your proxy to vote your shares at the 2000 annual meeting of
shareholders to be held on January 5, 2001 at the time and place set forth in
the accompanying notice and at any adjournments thereof (the "Annual Meeting").
We solicit proxies to give all shareholders of record an opportunity to vote on
matters that will be presented at the Annual Meeting. In the following pages of
this proxy statement, you will find information on these matters. This
information is provided to assist you in voting your shares.
Matters to be Considered
At the Annual Meeting you will be asked to consider and vote upon a
proposal to approve and adopt the Agreement and to approve the Proposed
Split-Off. The Company's Board has unanimously approved the Agreement and the
transactions contemplated thereby and recommends that holders of Company common
stock vote FOR the Agreement and the Proposed Split-Off. You will also be asked
to consider and vote upon proposals to elect up to five Directors to the Board
of Directors and to ratify the appointment of the Company's independent
auditors, and to consider any other appropriate matters brought before the
meeting.
Voting Information
Who can vote?
You can vote if, as of the close of business on October 11, 2000, you
were a shareholder of record of the Company's common stock. Each share of
Company common stock has one vote, subject to certain restrictions. See "The
Proposed Split-Off - Shareholder Approval." On October 11, 2000 there were
issued and outstanding 5,420,397 shares of common stock.
How do I vote by proxy?
You can vote by mail by using the enclosed proxy card. Please see your
proxy card or the information your bank, broker, or other holder of record
provided you for more information.
If you vote by proxy, your shares will be voted in the manner you
indicate at the Annual Meeting. If you sign your proxy card but do not specify
how you want your shares to be voted, they will be voted as the Board of
Directors recommends.
Can I change my vote after I return my proxy card?
Yes. You can change or revoke your proxy by mail at any time before
the Annual Meeting.
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Can I vote in person at the Annual Meeting instead of voting by proxy?
Yes. However, we encourage you to complete and return the enclosed
proxy card to ensure that your shares are represented and voted.
How many affirmative votes are required to approve the proposals to be voted
upon at the Annual Meeting?
In order to approve the proposals to be voted upon at the Annual
Meeting, a quorum of the Company's shareholders must be present, in person or by
proxy, at the Annual Meeting. Under Nevada law, the presence in person or by
proxy of a majority of the outstanding shares of Company common stock is
necessary to constitute a quorum at the Annual Meeting. If less than a majority
of the outstanding shares of Company common stock is represented at the Annual
Meeting, a majority of the shares so represented may adjourn the Annual Meeting
from time-to-time without further notice. Pursuant to Nevada law, the approval
of the Proposed Split-Off requires an affirmative vote of the holders of a
majority of the outstanding shares of Company common stock, other than the
shares of Company common stock held by David L. Patton. To be elected, a nominee
for director must receive a plurality of the votes cast by holders of shares of
Company common stock present or represented at the Annual Meeting. Ratification
of Brock and Company CPAs as the Company's independent auditors requires the
affirmative vote of a majority of the outstanding shares of Company common stock
present or represented at the Annual Meeting.
Under Nevada law and the Company's Articles of Incorporation and
By-laws, an abstention from voting on a matter by a shareholder present in
person or represented by proxy at the Annual Meeting has the same legal effect
as a vote "against" the matter, even though the shareholder or interested
parties analyzing the results of the voting may interpret such a vote
differently.
The 1,132,389 shares of common stock directly or beneficially owned by
David L. Patton, who is an Exchanging Shareholder, will not be counted for
purposes of determining whether the shareholders of the Company have approved
the Proposed Split-Off, but will be counted in determining whether the nominees
for director are elected and the appointment of the Company's independent
auditors is ratified. The balance of 2,258,010 shares of common stock owned by
the Exchanging Shareholders (excluding Mr. Patton) which represent approximately
41.7% of the total shares of Company common stock issued and outstanding, will
be counted for purposes of determining whether the shareholders of the Company
have approved the Proposed Split-Off, and in determining whether the nominees
for director are elected and the appointment of the Company's independent
auditors is ratified. Certain Directors and executive officers of the Company
have indicated that they intend to vote in favor of the Proposed Split-Off.
Collectively, these officers and Directors own, directly or beneficially,
256,906 shares, or approximately 4.7%, of the Company's issued and outstanding
shares of common stock. In the event the Exchanging Shareholders, excluding Mr.
Patton, vote in favor of the Proposed Split-Off , which the Company anticipates
will occur, the affirmative vote of the holders of only 200,703 additional
shares of Company common
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<PAGE>
stock (representing approximately 3.7% of the outstanding shares of Company
common stock) will be required to approve the Proposed Split-Off.
Who pays for this proxy solicitation?
We are bearing all costs of soliciting proxies, and expressly reserve
the right to solicit proxies otherwise than by mail. Additionally, the
solicitation of proxies by mail may be followed by telephone, telegraph or other
personal solicitations of certain shareholders and brokers by one or more of our
Directors, officers or employees. We will reimburse their expenses for doing
this.
We will also reimburse brokers, fiduciaries, and custodians for their
costs in forwarding proxy materials to beneficial owners of Company common
stock. We may also request banks and brokers or other similar agents or
fiduciaries for the voting instructions of beneficial owners and reimburse the
expenses incurred by these agents or fiduciaries in obtaining these
instructions. As of the date of this mailing, however, we have not made any
contracts or arrangements for these solicitations, and therefore cannot identify
any parties or estimate the cost of these solicitation. Other proxy solicitation
expenses that we will pay include those for preparation, mailing, returning and
tabulating the proxies.
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<PAGE>
PROPOSAL TO SPLIT-OFF THE COMPANY'S WHOLLY-OWNED SUBSIDIARY,
TITAN INDUSTRIES, INC., TO CERTAIN EXISTING SHAREHOLDERS OF THE COMPANY.
The Proposed Split-Off
The following information relating to the Proposed Split-Off is not
intended to be a complete description of all information relating to the
Split-Off and is qualified in its entirety by reference to more detailed
information contained elsewhere in this document, including the Appendices
hereto and the documents referred to herein or incorporated herein by reference.
A copy of the Agreement is included as Appendix I, and is incorporated herein by
reference. All shareholders are urged to read the Agreement in its entirety.
Terms of the Agreement
Summary.
--------
Pursuant to the terms of the Agreement, Titan will be acquired by the
Exchanging Shareholders in exchange for all of the Exchanging Shareholders'
ownership interests in the Company. The Exchanging Shareholders' ownership
interests in the Company consist of 3,390,399 shares, or approximately 61.2% of
the common stock of the Company (after the exercise of the Patton Options),
together with options, warrants and other rights exercisable to acquire an
additional 129,934 shares of the Company's common stock (after the exercise of
the Patton Options).
Contribution to Capital of Titan.
---------------------------------
In connection with the Proposed Split-Off, West-OK Investment, LLC
("West-OK") has agreed to make a $1 million loan to the Company, $850,000 of
which will be transferred to Titan as part of the Proposed Split-Off and to
equalize the value of the consideration being exchanged in the Split-Off. The
Loan Agreement with West-OK and related Exhibits are attached hereto as Appendix
IV. The loan will be secured by 2,448,000 of the Exchanging Shareholders' Shares
to be received by the Company upon consummation of the Proposed Split-Off, and
certain other assets of the Company. As a condition to its loan, if the Proposed
Split-Off is consummated, West-OK will have the right to name two nominees to
become directors of the Company. See "The Proposed Split-Off - Other Agreements"
and "Election of Directors."
The Exchange.
-------------
Pursuant to the terms of the Agreement, prior to Closing, Titan will
undertake and complete an amendment of Titan's Articles of Incorporation
increasing the number of authorized shares of common stock from 10,000 to
5,000,000, and, thereafter, will complete a forward stock split increasing the
number of issued and outstanding shares of Titan common stock from 7,500 to
3,390,399. The purpose of the forward stock split is to facilitate a one-for-one
exchange of Titan Shares for Exchanging Shareholders' Shares as part of the
Split-Off. At the Closing, the Company
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will transfer, assign, surrender and deliver to the Exchanging Shareholders, on
a pro-rata basis, the Titan Shares which constitute 100% of the shares of Titan
capital stock issued and outstanding at Closing, in exchange for the transfer,
assignment, surrender and delivery by the Exchanging Shareholders, to the
Company, of the Exchanging Shareholders' Shares and Exchanging Shareholders'
Rights.
Inter-Company Receivable.
-------------------------
At Closing, the Company will deliver to Titan certified funds totaling
$88,880, together with its promissory note in the amount of $200,000, which,
together, represent the Company's obligation to repay Titan an existing
inter-company receivable incurred in the ordinary course of business between the
two corporations. The promissory note will obligate the Company to pay Titan
$200,000, in twelve quarterly installments of principal and interest, with
interest at the prime-lending rate of Wells Fargo Business Credit, plus 2%.
Interest will accrue commencing September 1, 2000. However, if the entire amount
of the loan is paid in full on or before the earlier of (i) five business days
following the date the Company has obtained permanent financing on its new plant
facilities in Thomas, Oklahoma, or (ii) January 31, 2001, the Company will only
be obligated to pay interest on the principal balance for the period from the
date of the promissory note through the loan payment date. The promissory note
will be secured by a letter of credit in an amount equal to the amount of the
promissory note. The Company will have the right to prepay the promissory note
at any time without penalty.
Titan Stock Options.
--------------------
Following the Closing date, Titan has agreed to make available to the
Exchanging Shareholders options (the "Titan Options") exercisable to purchase an
aggregate of 129,934 shares of Titan common stock to be granted to the
Exchanging Shareholders to replace the Exchanging Shareholders' Rights
surrendered to the Company at Closing. The exercise price of the Titan Options
will be equal to the exercise price of the Exchanging Shareholders' Right
surrendered by the Exchanging Shareholder, adjusted to reflect the forward stock
split to be undertaken by Titan pursuant to the Agreement. The Titan Options
will be exercisable for a period of ninety (90) days following Closing.
Restrictions on Transfer of Shares Following the Closing.
---------------------------------------------------------
No Titan Shares issued to the Exchanging Shareholders may be sold,
transferred, assigned, encumbered or otherwise disposed of, except in accordance
with the Securities Act of 1933, as amended, and in accordance with applicable
state securities laws. Neither the shares of Titan common stock issued to the
Exchanging Shareholders in conjunction with the Split-Off, nor the shares of
Titan common stock issuable upon exercise of the Titan Options, have been
registered under the Securities Act of 1933, as amended, or under any state
securities laws. Additionally, pursuant to the terms of the Agreement, each
Exchanging Shareholder will be required to execute a lock-up agreement pursuant
to which each agrees that they will not sell or exchange, or enter into
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<PAGE>
any agreement to sell or exchange, any of the Titan shares received by them
under the Agreement or upon the exercise of Titan Options for a period of two
years after Closing, without the Company's express written consent, which
consent may be withheld to prevent the adverse effect such proposed sale or
exchange may have on the Company under the provisions of Section 355 of the
Internal Revenue Code. As a result, an Exchanging Shareholder must bear the
economic risk of his investment for an indefinite period of time, and may be
unable to liquidate his or her holdings in the event of an emergency, or to
pledge his or her shares of Titan common stock as collateral for a loan.
Restrictive legends referring to the applicable restrictions on transferability
will be placed on the certificates representing the shares of Titan common
stock.
Exchanging Shareholder Representative.
--------------------------------------
Pursuant to the terms of the Agreement, the Exchanging Shareholders are
being required to engage David L. Patton and Ron Jay, or either of them, as such
shareholders' Exchanging Shareholder Representative in connection with the
Split-Off. The purpose of this engagement is to ensure the Company that the
Split-Off can be undertaken without registration under the Securities Act of
1933, as amended, or under state securities laws, and that the Exchanging
Shareholders are given an opportunity to make an informed decision. In that
regard, the Company is requiring assurance that each shareholder has had the
benefit of the advice of a person with knowledge and experience in business and
financial matters and knowledge concerning the business of Titan, its operations
and financial condition, and that such shareholder has been able to evaluate the
merits and risks of participating in the Split-Off.
Other Agreements
Pursuant to the terms of the Agreement, the Company is required to
enter into certain other agreements, either prior to or simultaneously with, the
Closing of the Split-Off. The following is a brief summary of the material
agreements to be entered into by the Company pursuant to the Agreement:
West - OK Investment, LLC Loan Agreement.
-----------------------------------------
Prior to the Closing of the Split-Off, the Company has agreed to enter
into a loan agreement with West-OK Investment, LLC (the "Loan Agreement").
Pursuant to the terms of the Loan Agreement, West-OK Investment, LLC will loan
to the Company the sum of $1,000,000 (the "Loan Amount"), which Loan Amount will
be evidenced by the Company's promissory note (the "Promissory Note"). The Loan
Amount will accrue interest at the rate of 12% per annum. The Loan Amount will
be payable as follows:
(a) No payments will be due or payable for the period commencing on
the date of the Promissory Note and ending on the first
anniversary date of the Promissory Note (the "Abatement Period").
Interest will continue to accrue on the unpaid portion of the
Loan Amount during the Abatement Period.
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<PAGE>
(b) On the second anniversary date of the Promissory Note, the
Company will pay to West-OK Investment, LLC one payment
consisting exclusively of 12 months accrued interest.
(c) Commencing on the third anniversary date of the Promissory Note,
and continuing on each anniversary date thereafter until the
entire Loan Amount, together with all accrued but unpaid interest
thereon, has been paid in full, the Company will pay to West-OK
Investment, LLC one-eighth (1/8) of the Loan Amount, plus all
accrued interest. If not sooner paid, the final installment,
together with all accrued but unpaid interest, will be due and
payable ten years after the date of the Promissory Note. The
Company will have the right to prepay all or any portion of the
Loan Amount at any time, without penalty.
Pursuant to the terms of the Loan Agreement, the Promissory Note will
be secured by 2,448,000 of the Exchanging Shareholders' Shares to be received by
the Company upon consummation of the Proposed Split-Off and other assets of the
Company, a list of which is included in the UCC-1 Financing Statement attached
to the Loan Agreement as Exhibit C.
Pursuant to the terms of the Loan Agreement, the Company has agreed
that for so long as all or any portion of the Promissory Note remains unpaid,
the Company's Board of Directors shall have no more than five members, two of
whom shall be designated by the West-OK Investment, LLC. West-OK Investment,
LLC's nominees will serve as members of the Company's Board of Directors until
the next annual meeting of the Company's shareholders and until their successors
are duly elected and qualified. West-OK Investment LLC's nominees will owe
fiduciary obligations to the Company and its shareholders and must discharge
their fiduciary obligations to the best of their abilities, and will not
unreasonably prevent the Company from obtaining financing or otherwise entering
into one or more agreements to raise additional capital for the Company, all or
a portion of which may be used by the Company to retire the Company's
obligations under the Promissory Note.
McDonald & Fredrickson, P.C. Release Agreement.
-----------------------------------------------
By bill dated February 18, 2000 the law firm of McDonald & Fredrickson,
P.C. ("M&F") has demanded payment from the Company in the amount of $56,200, for
services purportedly performed for the benefit of the Company over a fourteen
month period commencing in November, 1998 and ending January, 2000. The Company
denies liability for all or any portion of this bill. However, without admitting
any liability, and as a means of amicably resolving this potential dispute, the
Company and Titan have agreed to pay, and M&F has agreed to accept, the sum of
$10,970 ("M&F Settlement Amount") in full satisfaction of any and all claims M&F
has or may have against the Company, Titan, their respective directors,
officers, agents and employees. M&F will deliver at Closing a full release, a
copy of which is attached to the Agreement as Exhibit 2.4.5, in exchange for
payment of the M&F Settlement Amount. At Closing, the Company will pay $5,000 of
the M&F Settlement Amount, and the balance will be paid by Titan.
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<PAGE>
Additionally, following closing of the transactions contemplated by
this Agreement, Titan has agreed to purchase from Loyd T. Fredrickson, Trustee
of the Lucille W. Fredrickson 1994 Revocable Trust and the Loyd T. Fredrickson
1994 Revocable Trust, Lucille W. Fredrickson, Trustee of the Lucille W.
Fredrickson 1994 Revocable Trust, Jean A. McDonald and Kirk D. Fredrickson (the
"Fredricksons"), a total of 250,000 shares of Titan common stock, together with
options exercisable to acquire an additional 20,000 shares of Titan common
stock, for an aggregate price of $216,900. Following consummation of this
transaction, the Fredricksons will have no further ownership interest in either
the Company or Titan.
Tax Sharing Agreement.
----------------------
At closing, Titan and the Company will execute and enter into a Tax
Sharing Agreement, a copy of which is attached to the Agreement as Exhibit 2.6.
The Tax Sharing Agreement sets forth the rights and responsibilities of Titan
and the Company with respect to the filing of the Company's tax returns for the
fiscal year ended June 30, 2001, shall apportion to Titan a portion of the
Company's net operating loss ("NOL") carryforward, if any remains at Closing,
based on the Company's and Titan's Net Income for fiscal 2001, but excluding
therefrom any NOL or NOL carryforward relating to the Paul Scale Company, the
assets of which were acquired by the Company during the fiscal year ended June
30, 2000.
Significant Shareholder Consent and Release Agreement.
------------------------------------------------------
Millard T. Webster and Murle F. Webster, as significant shareholders of
the Company, have each agreed to execute and deliver to Titan and the Exchanging
Shareholders a Consent and Release in the form of Exhibit 3.6.11 attached to the
Agreement pursuant to which each shall have acknowledged that he has had an
opportunity to review the Agreement with counsel, that he approves the
transactions contemplated thereby, and whereby each waives and/or releases
Titan, its officers, directors, agents and employees, and the Exchanging
Shareholders from any and all claims he may have against each, if any, pursuant
to the terms and conditions of the Consent and Release.
Company Lock-Up Agreement.
--------------------------
Under the terms of the Agreement, the Company has agreed to execute and
enter into a Lock- Up Agreement in the form of Exhibit 6.4 attached to the
Agreement pursuant to which the Company agrees that after the Split-Off it will
not engage in any transaction, or enter into any agreements to enter into any
transaction, which would result in gain recognition by either Titan or the
Exchanging Shareholders by causing Section 355(a)(1) of the Code to be
inapplicable. The Company further agrees that prior to and in connection with
the Split-Off, and for a period of two years beginning on the effective date of
the Split-Off, the Company will not redeem or otherwise acquire any Company
common stock and will not have made any distributions with respect to its stock
described in Treasury Regulation Section 1.368(e)(1)(ii) without first providing
Titan with advance written notice
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<PAGE>
of the proposed transaction and without obtaining Titan's advance written
consent. The Company has also agreed to indemnify Titan and the Exchanging
Shareholders from and against certain claims arising as a result of the
Company's breach of its Lock-Up Agreement.
Titan Lock-Up Agreement.
------------------------
Under the terms of the Agreement, Titan has agreed to execute and enter
into a Lock-Up Agreement in the form of Exhibit 6.3 attached to the Agreement
pursuant to which Titan agrees that for a period of two years following the
Closing of the Split-Off, Titan will not sell, grant, gift or otherwise issue,
or enter into any agreements to sell, grant, gift or otherwise issue, any shares
of its common stock or any other form of equity security, or any rights
convertible into shares of its common stock or any other form of equity
security, or engage in any transaction, or enter into any agreement to enter
into any transaction, which would result in gain recognition by the Company
under Section 355 (e) of the Code or violate the requirements of Section 355(b)
of the Code, without first obtaining the Company's written consent. The Titan
Lock-Up Agreement further provides that Titan will not authorize, give effect
to, recognize or otherwise carry out on it books, any transfer, sale or other
disposition of shares of Titan common stock, or any other equity security
relating to Titan, by any Exchanging Shareholder in violation of the terms and
provisions of any Exchanging Shareholder Lock-Up Agreement (described below).
Titan has also agreed to indemnify the Company from and against certain claims
arising as a result of Titan's breach of its Lock-Up Agreement.
Exchanging Shareholder Lock-Up Agreements.
------------------------------------------
Under the terms of the Agreement, the Exchanging Shareholders (other
than the Fredricksons) have each agreed to execute and enter into a Lock-Up
Agreement in the form of Exhibit 6.1 attached to the Agreement pursuant to which
each Exchanging Shareholder agrees that for a period of two years following the
Closing of the Split-Off the Exchanging Shareholder will not sell, transfer, or
otherwise dispose of, or make any offer or agreement relating to any of the
foregoing with respect to, any Titan Stock without first obtaining the Company's
written consent. Each Exchanging Shareholder (other than the Fredricksons) has
also agreed to indemnify the Company from and against certain claims arising as
a result of the Exchanging Shareholder's breach of his/her/its Lock-Up
Agreement.
Consideration to be Received by the Company
-------------------------------------------
The Agreement provides that the Company will transfer all of the
outstanding capital stock of Titan to the Exchanging Shareholders in exchange
for 3,390,399 shares of Company common stock owned by the Exchanging
Shareholders and the surrender and cancellation of options, warrants and other
rights exercisable to acquire an additional 129,934 shares of the Company's
common stock (after the exercise of the Patton Options). Assuming that: (i) the
Exchanging Shareholders' Shares represent 61.2% of the total number of shares of
common stock issued by the Company; and (ii) no additional value was assigned to
the Exchanging Shareholders' Rights by the Company's Financial
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<PAGE>
Advisor, Due Diligence, Inc., the value of the consideration given by the
Exchanging Shareholders to the Company pursuant to the Proposed Split-Off would
be approximately $2,711,767. The value of Titan on June 30, 2000, as determined
by the Company's Financial Advisor, was $1,861,459. The total value of the
consideration to be received by the Exchanging Shareholders for their Exchanging
Shareholders' Shares is equal to the value of Titan on June 30, 2000, plus
$850,000, or approximately $2,711,459. The Company's Financial Advisor has
indicated that the consideration to be received by the Company pursuant to the
terms of the Proposed Split-Off, including the premium, is fair to the Company's
shareholders who remain following consummation of the Proposed Split-Off. See
"The Proposed Split-Off - Opinion of Financial Advisor."
Shareholder Approval
Under Nevada law, any sale, lease, exchange or other disposition of
assets of a Nevada corporation to or with an interested stockholder, defined as
a stockholder owning 10% or more of the voting power of the outstanding voting
shares of a Nevada corporation, must be approved by the affirmative vote of the
holders of stock representing a majority of the outstanding voting power not
beneficially owned by the interested stockholder. One of the Exchanging
Shareholders, David L. Patton, currently owns more than 10% of the Company's
voting stock. As a result, the holders of a majority of the outstanding shares
of Company common stock, other than Mr. Patton, must approve the Proposed
Split-Off.
Closing
If approved by the shareholders at the Annual Meeting, and provided
that all conditions to Closing have been satisfied or waived, the Closing of the
Proposed Split-Off will occur immediately following the Annual Meeting. See "The
Proposed Split-Off -Conditions."
Representations and Warranties; Covenants
The Agreement contains various customary representations and warranties
of the Company, Titan and the Exchanging Shareholders. These include
representations by the Company and Titan as to corporate organization and good
standing, authority to enter into the Agreement, validity and enforceability of
the Agreement, the absence of conflicts between the Agreement and other
agreements to which the Company and/or Titan are parties, required consents and
approvals and the Company's title to the Titan shares. The Exchanging
Shareholders' representations and warranties include, those as to their
authority to enter into the Agreement, validity and enforceability of the
Agreement, the absence of conflicts between the Agreement and other agreements
to which the Exchanging Shareholders are parties and required consent and
approvals and the Exchanging Shareholders' title to the Exchanging Shareholders'
Shares and Exchanging Shareholders' Rights.
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<PAGE>
Conditions
Conditions precedent to the obligations of the Company, Titan and the
Exchanging Shareholders to effect the Proposed Split-Off include, without
limitation, the following:
Accuracy of Representations and Warranties; Compliance with Covenants.
-----------------------------------------------------------------------
The representations and warranties of each of the Company, Titan and the
Exchanging Shareholders shall be true and correct in all material respects at
the Closing Date, and each of the Company, Titan and the Exchanging Shareholders
will have performed in all material respects its/his/her obligations and
agreements, and complied in all material respects with all covenants and
conditions, required to be performed or complied with by it/him/her under the
Agreement at or prior to the Closing.
Corporate Approvals.
---------------------
The Board of Directors of the Company and Titan shall have approved and ratified
the Agreement and shall have authorized the appropriate officers of each to
execute the Agreement and fully perform its terms. Additionally, Titan's
shareholders and/or Board of Directors shall have undertaken and completed all
actions legally required to increase the number of shares authorized for
issuance by Titan to 5,000,000, and to approve a forward stock split increasing
the number of issued and outstanding shares of Titan common stock from 7,500 to
3,390,399, all of which must be undertaken and completed in accordance with
applicable state law.
Other Consents and Approvals.
-------------------------------
The Company, Titan and the Exchanging Shareholders shall have obtained all
consents of lenders, including Wells Fargo Business Credit, and other third
parties necessary for the consummation of the Proposed Split-Off.
Qualification Under Section 355 of the Code - No State or Local Taxes.
-----------------------------------------------------------------------
The Company, Titan and the Exchanging Shareholders and their respective legal
counsel and/or auditors, shall have determined, to their satisfaction, that the
Proposed Split-Off as contemplated by the Agreement, will qualify as a tax-free
distribution of stock of a controlled corporation under Section 355 of the Code,
and that no state or local taxes will be imposed upon Titan or the Exchanging
Shareholders in conjunction with consummation of the Proposed Split-Off.
Shareholder Approval.
---------------------
The Agreement and the transactions contemplated thereby shall have been approved
by the affirmative vote of the holders of a majority of the outstanding Company
common stock, excluding shares of Company common stock held directly or
beneficially by David L. Patton, in accordance with applicable law.
Significant Shareholder Consent and Release.
-----------------------------------------------
Millard T. Webster and Murle F. Webster, as significant shareholders of the
Company, shall have each executed and delivered to Titan and the Exchanging
Shareholders a Consent and Release in the form of Exhibit 3.6.11 attached to the
Agreement pursuant to which each shall have acknowledged that he has had an
opportunity to review the Agreement with counsel, that he approves the
transactions contemplated by the Agreement, and
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<PAGE>
whereby each waives and/or releases Titan, its officers, directors, agents and
employees and the Exchanging Shareholders from any and all claim he may have
against each, if any, pursuant to the terms and conditions of the Consent and
Release.
Additional Conditions Precedent to the Obligations of the Company.
--------------------------------------------------------------------
In addition to the foregoing, the Company's obligation to consummate the
transactions contemplated by the Agreement, including the Proposed Split-Off,
are conditioned upon: (i) the opinion of Due Diligence, Inc. shall be in effect,
and shall not have been modified in any material adverse respect or withdrawn on
or prior to the date of mailing this Proxy Statement; and (ii) that the Company
will have received the $1 million proceeds of the West-OK Investment, LLC Loan,
which, in turn, is contingent upon the election of the West-OK nominees to the
Company's Board of Directors.
Termination
The Agreement may be terminated prior to the Closing upon certain
occurrences, including: (i) by mutual written consent of the parties; or (ii) by
the Company or the Exchanging Shareholders if the Proposed Split-Off has not
been consummated on or before January 31, 2001.
Waiver and Amendment
The Company and the Exchanging Shareholders may modify or amend the
Agreement by written agreement to the extent permitted by applicable law. The
conditions to each party's obligations to consummate the Proposed Split-Off may
be waived only by a writing signed by the waiving party.
Expenses
Each of the parties will pay all costs and expenses of its or his
performance and compliance with the Agreement; provided, however, the Company's
legal fees incurred in conjunction with the preparation of the Agreement and the
consummation of the Proposed Split-Off, together with the cost of the Fairness
Opinion, will be split equally by Titan and the Company up to a maximum amount
of $50,000 ($25,000 payable by Titan and $25,000 payable by the Company), with
the Company being solely responsible for all costs associated with the Fairness
Opinion and any such legal fees in excess of $50,000. Notwithstanding the
foregoing, if the Agreement is not consummated by reason of a default of one of
the Parties, then the expenses of each of the Parties in connection with the
transactions contemplated by the Agreement will be paid by such defaulting
party.
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<PAGE>
Background and Reasons for the Split-Off
Following the Company's acquisition of Titan in 1991, various
differences of opinion as to the Company's and Titan's operations, future plans
and course of development have arisen between Titan and the Company. Principally
among the disagreements was the belief of Titan's management that certain fees
and costs, including a monthly management fee of $12,000 being charged by the
Company for overseeing Titan's accounting and payroll, were excessive, and that
Titan could handle these functions internally, at a cost to Titan significantly
below the amount being charged by the Company. Additionally, Titan's management
no longer believes that the other benefits of ownership by the Company,
including access to credit facilities, insurance or employee benefits, warrant
the fees and costs being charged by the Company. This disharmony has had an
adverse effect on the ongoing operations of the Company's and Titan's respective
businesses.
As a result of the foregoing, in the fall of 1999, David Patton and the
President of Titan, Ronald Jay, approached the Company to explore the possible
acquisition of Titan by a group of existing Company shareholders, most of whom
had been associated with Titan prior to its acquisition by the Company in 1991.
Mr. Patton, a former director of the Company who was at the time, and continues
to be, the Company's largest shareholder, indicated that he, Mr. Jay and the
other interested shareholders (collectively the "Exchanging Shareholders"), who
collectively own approximately 61.2% of the Company's issued shares of common
stock, were interested in exchanging their shares of Company common stock and
other rights convertible into shares of Company common stock, for all of the
shares of Titan common stock owned by the Company, together with the sum of
$850,000 which would be contributed to the capital of Titan to the equalize the
value of the consideration being exchanged.
To assist with the evaluation of the Exchanging Shareholder' proposal,
the Company's Board of Directors retained Due Diligence, Inc. ("DDI") to provide
an opinion to the Board with respect to the range of values per share of the
Company and Titan. DDI was formally engaged on February 15, 2000.
During the next month, DDI was provided access to the Company's books
and record pertaining to the assets and liabilities of the Company and Titan,
including the Company's audited financial statements for the fiscal year ended
June 30, 1999. On March 20, 2000, DDI submitted to the Board a preliminary draft
of a report containing its financial evaluation of the Proposed Split-Off. At a
telephonic meeting of the Board held on March 23, 2000, DDI discussed selected
analyses from its financial evaluation which had been furnished to the Board.
Representatives of DDI responded to questions regarding the procedures and
analyses used in connection with DDI's evaluation of the Proposed Split-Off but
did not, at that time, render any formal opinion as to the fairness of the
Proposed Split-Off. Following DDI's presentation, the Board had discussions
regarding its fiduciary duties and certain other legal issues regarding the
terms of the Proposed Split-Off. The status of completion of an agreement for
the Proposed Split-Off and the possible schedule for effecting the transaction
were also discussed. At the conclusion of the meeting, the Board preliminarily
approved the Proposed Split-Off, subject to the receipt of a satisfactory
fairness opinion from DDI, the
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<PAGE>
execution of a definitive loan agreement with West-OK Investment, LLC and the
execution of a definitive agreement with the Exchanging Shareholders on
satisfactory terms.
Following the March 23, 2000 Board meeting, negotiations regarding the
various warranties, representations and covenants to be contained in the
Agreement continued between the Company and the Exchanging Shareholders. These
discussions included the terms of the obligations of the Company and Titan
following the Proposed Split-Off, the qualification of the Proposed Split-Off
under Section 355 of the Code, and the terms and conditions under which West-OK
Investment, LLC would agree to make its loan to the Company. Additionally,
during this period, the Board was informed that under Nevada law, and due to Mr.
Patton's involvement in the transaction, the Proposed Split-Off would require
the approval of a majority of the Company's shareholders excluding Mr. Patton.
As a result, a determination was made to submit the Proposed Split-Off to a vote
of the Company's shareholders at the Annual Meeting. Because the Annual Meeting
of the Company's shareholders would take place following completion of the
Company's fiscal year ended June 30, 2000, the Board concluded that DDI's
Fairness Opinion would have to be based, in part, on the Company's audited
financial statements for the fiscal year ended June 30, 2000.
On October 12, 2000, DDI was provided with a copy of the Company's
audited financial statements for the fiscal year ended June 30, 2000 and was
also provided access to the Company's independent accountants. On October 16,
2000, DDI delivered to the Board of Directors its written opinion regarding the
fairness of the Proposed Split-Off, from a financial point of view, to the
shareholders of the Company who will remain following consummation of the
Split-Off.
Recommendation of the Board of Directors
At its meetings held on March 23, 2000 and October 25, 2000, the Board
considered the terms and structure of and the legal, financial and other
ramifications of the Agreement and the Proposed Split-Off. The following is a
summary of all of the material factors considered by the Board of Directors in
reaching its decision to enter into and to recommend the adoption of the
Agreement and the Proposed Split-Off.
1. The differences of opinion as to the Company's and Titan's
operations, future plans and course of development that have
arisen between Titan and the Company following the Company's
acquisition of Titan in 1991, and the adverse effect this
disharmony was having on the ongoing operations of the
Company's and Titan's respective businesses. See "The Proposed
Split-Off - Background and Reasons for the Split-Off."
2. The fact that the proposal to effect the Proposed Split-Off
was made by Mr. Patton, the Company's largest shareholder,
and other existing Company shareholders who collectively own
approximately 61.2% of the Company's issued shares of common
stock;
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3. The presentations by DDI to the Board and the opinion
subsequently issued by DDI to the effect that the Proposed
Split-Off was fair, from a financial point of view, to the
shareholders of the Company who will remain following
consummation of the Split-Off. The Board considered the
various financial analyses which had been included in DDI's
presentation and felt that such analyses, taken as a whole,
supported the conclusion that the Proposed Split-Off was
fair, from a financial point of view, to the shareholders of
the Company. See "The Proposed Split-Off - Opinion of
Financial Advisor."
4. The business and financial effects of the Proposed Split-Off,
including that Titan's earnings had decreased during the
fiscal year ended June 30, 2000, while earnings of the
Company's other subsidiaries had increased during this same
period.
5. The terms of the Agreement generally. In this regard, the
Board placed special emphasis on certain provisions of the
Agreement, in particular the requirement that the Proposed
Split-Off be approved by the affirmative vote of the holders
of a majority of the outstanding Company common stock,
excluding shares held directly or beneficially by Mr. Patton.
The Board believed that this provision adequately provided the
shareholders of the Company, other than Mr. Patton, an
opportunity to approve or disapprove the Proposed Split-Off.
The Board concluded, in light of the above factors, that the Proposed
Split-Off is fair to the Company and its shareholders and approved the Agreement
and the transactions contemplated thereby.
In view of the variety of factors considered by the Board in connection
with its evaluation of the Proposed Split-Off, the Board did not find it
practicable to, and did not, quantify or otherwise attempt to assign relative
weights to the specific factors considered in reaching its determination. The
Board was not aware of, and therefore did not consider, any factors that would
have led it to conclude that the Proposed Split-Off was not fair to the Company
and its shareholders.
THE BOARD BELIEVES THAT THE PROPOSED SPLIT-OFF IS FAIR TO THE COMPANY
AND ITS SHAREHOLDERS, HAS APPROVED THE AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY AND RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY VOTE IN
FAVOR OF THE APPROVAL OF THE PROPOSED SPLIT-OFF.
Opinion of the Financial Advisor
The Board of Directors retained DDI to render an opinion, from a
financial point of view, as to the fairness of the Proposed Split-Off to the
shareholders of the Company who will remain following consummation of the
Split-Off. DDI, as part of its business, is engaged in the valuation
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of businesses in connection with mergers and acquisitions, private placements
and for other purposes. DDI is independent of all parties to the Proposed
Split-Off and neither DDI nor its officers, directors or employees, beneficially
own any Company common stock.
DDI delivered to the Board a written opinion, dated October 16, 2000,
which stated that, based on the assumptions and subject to qualifications set
forth therein which are summarized below, as of the Effective Date of the
Opinion, the Proposed Split-Off was fair, from a financial point of view, to the
shareholders of the Company who will remain following consummation of the
Split-Off. A copy of the full text of the written opinion of DDI, which sets
forth the assumptions made, procedures followed, matters considered and limits
of DDI's review, is attached to this Proxy Statement a Appendix II and is
incorporated herein by reference. Shareholders of the Company are urged to, and
should, read such opinion in its entirety. DDI's opinion is directed only to the
fairness, from a financial point of view, of the Proposed Split-Off and does not
constitute a recommendation to any shareholder of the Company by DDI as to how
such shareholder should vote at the Annual Meeting. DDI did not structure,
establish or negotiate the terms of the Proposed Split-Off, did not advise the
Company as to the terms of the Proposed Split-Off and was not requested to, and
accordingly did not, express any opinion with respect to either the underlying
business decision of the Company to effect the Proposed Split-Off or the
availability or advisability of any alternatives to the Proposed Split-Off.
Furthermore, DDI was not required to, and did not make any independent
evaluation or appraisal of, the assets or liabilities of the Company or Titan,
nor were they furnished with any such evaluations or appraisals. In addition,
DDI did not consider, and did not express any opinion regarding the operations,
business prospects, financial condition or viability as a going concern of the
Company or Titan, either before or after the Proposed Split-Off. In rendering
its opinion, DDI was not engaged as an agent or fiduciary of the shareholders of
the Company or any other third-party. The summary of the opinion of DDI set
forth in this Proxy Statement is qualified in its entirety by reference to the
full text of such opinion.
In connection with its opinion, DDI, among other things, (i) considered
financial information concerning the assets of the Company and Titan furnished
to DDI by the Company, including certain internal financial analyses and
forecasts prepared by the Company; (ii) analyzed publicly available information;
(iii) held discussions with the management of the Company; (iv) read drafts of
the definitive agreement; and (v) made such other studies and inquiries, and
considered such other data, as it deemed relevant.
Upon the assurance of the Company and management that they were unaware
of any information that would make information provided to DDI inaccurate or
misleading, DDI relied, without independent verification, on the accuracy and
completeness of all financial and other information that was publicly available
or provided to it by the Company.
With respect to the financial and operating forecasts (and the
assumptions and basis therefor) of the Company and Titan which were used by DDI
in the development of its opinion, DDI assumed that such forecasts have been
reasonably prepared in good faith on the basis of reasonable assumptions,
reflect the best available estimates and judgments of the Company's management
and
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that such projections and forecasts will be realized in the amounts and in the
time periods currently estimated by management. In addition, DDI assumed that
the historical financial statements of the Company and Titan that were made
available to them had been prepared and presented in accordance with generally
accepted accounting principles. DDI's opinion is based solely upon financial,
economic and other conditions that existed, could be evaluated, and was
available to DDI as of the date of the opinion.
DDI, in rendering its opinion, used the following approaches to
valuation: (a) capitalization of excess earnings; (b) book accounting value; and
(c) adjusted going-concern. The final value was a blended (without weights)
calculation of capitalized earnings, book value, and acquisition premium for an
unbiased estimate of fair value for the Split-Off.
The Company does not make, as a matter of course, public forecasts or
projections as to future performance or earnings. However, in connection with
its ongoing budgetary and financing activities, management of the Company
periodically prepares certain projections of results of operations of the
Company and Titan, and has prepared a budget for the Company (the
"Projections"). The Projections were not prepared for, or with a view toward
dissemination to the public and were not prepared in accordance with published
guidelines of the American Institute of Certified Public Accountants or the
Commission regarding projections and forecasts, nor have the Projections been
audited, examined or otherwise reviewed either by independent auditors of the
Company or DDI. In addition, the Projections are based upon many estimates and
are inherently subject to significant economic and competitive uncertainties and
contingencies, many of which are beyond the control of management of the
Company, including, without limitation, the effect of economic and market
conditions, business conditions, the price of livestock, and in particular
cattle, and other competitive factors and pricing pressure. Accordingly, actual
results may be materially higher or lower than those projected. The use of
Projections by DDI should not be regarded as a representation by the Company or
any other person that the Projections will prove to be correct. Neither DDI or
any party to whom any of the Projections were provided assumes any
responsibility for the accuracy of such information and, in connection with its
review, DDI assumed, without independent verification, that the Projections were
reasonably prepared on basis reflecting the best currently available estimates
and judgments of the management which prepared the Projections.
Based upon its analysis, DDI calculated the fair market values of the
Company and Titan as of June 30, 2000, of $2,569,532 and $1,861,459,
respectively, or $4,430,991 collectively. The Agreement provides that the
Company will transfer all of the outstanding capital stock of Titan and an
additional $850,000 to the Exchanging Shareholders in exchange for 3,390,399
shares of Company common stock owned by the Exchanging Shareholders and the
surrender and cancellation of options, warrants and other rights exercisable to
acquire an additional 129,934 shares of the Company's common stock (after the
exercise of the Patton Options). The Exchanging Shareholders' Shares represent
61.2% of the total number of shares of common stock issued by the Company, and
no additional value was assigned to the Exchanging Shareholders' Rights by DDI.
As a result, the value of the consideration given by the Exchanging Shareholders
to the Company pursuant to the Proposed Split-Off is approximately $2,711,767.
The total value of the consideration to be received
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by the Exchanging Shareholders for their Exchanging Shareholders' Shares equals
approximately $2,711,459. As more fully set forth in its report, and subject to
the assumptions and qualifications set forth therein, DDI has indicated that the
consideration to be received by the Company pursuant to the terms of the
Proposed Split-Off is fair, from a financial point of view, to the Company's
shareholders who will remain following consummation of the Proposed Split-Off.
Pursuant to a letter agreement dated February 15, 2000 (the "Engagement
Letter"), the Company engaged DDI to render its opinion with respect to the
fairness of the Proposed Split-Off. Pursuant to the terms of the Engagement
Letter, the Company has agreed to pay DDI $12,500 for the rendering of its
opinion. The Company subsequently agreed to pay DDI an additional $2,000 for
time spent incorporating the Company's most recent audited financial statements,
and information contained therein, into DDI's opinion. The Company has also
agreed to reimburse DDI for all fees, disbursements and out-of-pocket expenses,
and to indemnify DDI and certain related persons against certain liabilities
arising out of or in connection with its engagement.
Conflict of Interest; Interest of Certain Persons in Matters to be Acted Upon
Due to his direct involvement in the Proposed Split-Off, the interests
of Mr. Patton and the other Exchanging Shareholders in the Proposed Split-Off
are different from the interests of other shareholders of the Company. The
Proposed Split-Off was first proposed by Mr. Patton and Ronald Jay, for and on
behalf of themselves and the Exchanging Shareholders, and the material terms of
the Agreement were determined principally in negotiations between Messrs. Patton
and Jay and the Board of Directors. Shareholders of the Company should consider
the interests of Messrs. Patton and Jay and the Exchanging Shareholders in the
Proposed Split-Off in connection with their vote.
In connection with the Proposed Split-Off, West-OK Investment, LLC has
agreed to make a $1 million loan to the Company, $850,000 of which will be
transferred to Titan as part of the Proposed Split-Off and to equalize the value
of the consideration being exchanged. Pursuant to the terms of the Loan
Agreement, so long as all or any portion of the Promissory Note remains unpaid,
the Company's Board of Directors will have five members, two of whom will be
designated by West-OK Investment, LLC. Messrs. Gleason and Kourt, who have been
nominated by West-OK Investment, LLC, have been included in the list of nominees
to be elected to serve as members of the Company's Board of Directors until the
next annual meeting of the Company's shareholders and until their successors are
duly elected and qualified. However, the election of Messrs. Gleason and Kourt
to the Company's Board of Directors is contingent upon obtaining shareholder
approval of the Proposed Split-Off. Likewise, failure to elect Messrs. Gleason
and Kourt, as the nominees designated by West-OK Investment, LLC, may result in
the Company's inability or unwillingness to consummate the Proposed Split-Off,
even if a majority of the Company's disinterested shareholders have approved the
transaction. Failure by the Company's shareholders to comply with these
provisions, and, specifically, to elect the nominees designated by West-OK
Investment, LLC
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at any time during which all or any portion of the Promissory Note remains
unpaid will constitute an event of default under the Promissory Note and the
Loan Agreement. Upon the occurrence of a default, the entire principal balance
of the Promissory Note, plus accrued interest, shall, at the option of West-OK
Investment, LLC, become immediately due and payable without notice or demand.
Messrs. Gleason and Kourt, and any subsequent nominees designated by West-OK
Investment, LLC, will owe fiduciary obligations to the Company and its
shareholders and must discharge their fiduciary obligations to the best of their
abilities. As outside directors, Messrs. Gleason and Kourt, and any subsequent
nominees designated by West-OK Investment, LLC, will be entitled to receive $100
for each meeting of the Board of Directors they attend, will be reimbursed their
expenses associated with attendance at such meetings or otherwise incurred in
connection with the discharge of their duties as a director, and will be
entitled to receive an annual grant of non-qualified stock options exercisable
to purchase up to 10,000 shares of Company common stock at an exercise price
equal to the market value of the underlying shares of Company common stock on
the date of grant.
Governmental and Regulatory Approvals
The Company is not aware of any material governmental or regulatory
approvals required for consummation of the Proposed Split-Off, other than
compliance with applicable corporate laws and federal and state laws regulating
the issuance of securities.
Federal Income Tax Consequences
The following discussion summarizes the material federal income tax
considerations relevant to the shareholders of the Company upon the exchange by
the Exchanging Shareholders' of their Company common stock for the Titan Shares
pursuant to the Proposed Split-Off. This discussion is generally applicable to
the Company and to the shareholders of the Company that are U.S. persons. As
used in this Proxy Statement, a U.S. person means a person that is (1) a citizen
or resident of the United States, (2) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, (3) an estate the income of which is subject to United
States federal income taxation regardless of its source, or (4) any trust if a
court within the United States is able to exercise primary supervision over the
administration of the trust and one or more U.S. persons have the authority to
control all substantial decisions of the trust. The tax treatment of Company
shareholders may vary depending on their particular circumstances. This
discussion does not address the tax consequences that may be relevant to
shareholders who may be subject to special tax treatment, such as banks, real
estate investment trusts, regulated investment companies, insurance companies,
dealers in securities or currencies, tax-exempt investors, foreign investors,
persons that will hold their Company common stock as part of a position in a
"straddle" or as part of a "hedging" or other integrated transaction, or persons
whose functional currency is not the United States dollar. In addition, the
discussion does not address the tax consequences of the Proposed Split-Off under
foreign, state or local tax laws, the tax consequences under the alternative
minimum tax provisions of the Internal Revenue Code of 1986, as amended
("Code"), or the tax consequences of transactions effectuated prior or
subsequent to or concurrently with the Proposed Split-Off, whether or not any
such transactions are undertaken in connection with the Proposed Split-
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Off, including, without limitation, any transaction in which shares of Company
common stock are acquired or are disposed of. This discussion is based on the
Code, the Treasury regulations promulgated thereunder and administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change, possibly on a retroactive basis. Any change of this nature
could cause the tax consequences to vary substantially from the consequences
described below, possibly adversely affecting an owner of Company common stock.
The discussion assumes that the value of the Exchanging Shareholders'
Shares is equivalent to the Titan Shares received in the Proposed Split-Off. If
the values are not equivalent, the Proposed Split-Off transaction may not
qualify under Section 355 of the Code. If the Proposed Split-Off does not
qualify under Section 355 of the Code for any reason, the proposed transaction
could subject both the Company and the Exchanging Shareholders to federal income
taxation.
No rulings have been or will be sought from the IRS regarding the
Proposed Split-Off, nor is the Company obtaining an opinion of counsel.
Accordingly, there can be no assurance that the IRS will not challenge the tax
consequences expressed in this discussion or that a court would not sustain this
type of challenge. It is therefore possible that the federal income tax
treatment of the Proposed Split-Off may differ from the treatment described
below.
SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE
PARTICULAR PERSONAL TAX CONSEQUENCES TO THEM OF THE PROPOSED SPLIT-OFF,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN, AND OTHER TAX LAWS
AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.
Qualification of the Proposed Split-Off Under Section 355 of the Code
The Proposed Split-Off has been structured as a distribution of stock
of a controlled corporation under Section 355 of the Code. If the transaction
qualifies under Section 355 of the Code, the Exchanging Shareholders should not
recognize any gain or loss for federal income tax purposes as a result of the
exchange of their Company common stock for Titan Shares. Gain or loss for
federal income tax purposes should be recognized at such time as an Exchanging
Shareholder sells or otherwise disposes of the Titan Shares issued in the
Proposed Split-Off. An Exchanging Shareholder's basis and holding period for his
or her Titan Shares should be the same as the basis and holding period for the
Company common stock exchanged therefore. While the Company believes that the
Proposed Split-Off will qualify as a tax-free distribution of stock of a
controlled corporation under Section 355 of the Code and that the Company and
the Exchanging Shareholders should not recognize any gain or loss for federal
income tax purposes as a result of the Proposed Split-Off, the Company makes no
warranties or representations to this effect. A split-off transaction under
Section 355 of the Code is complicated and controlled by numerous factual tests
and statutory requirements, the satisfaction of which may be subject to
challenge by the Internal Revenue Service. Therefore, there can be no assurance
that the Proposed Split-Off transaction will not give rise to a taxable event to
the Company, Titan, or the Exchanging Shareholders.
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Remaining Shareholders
Shareholders that remain with the Company after the Proposed Split-Off
will not incur any taxable gain or loss as a result of the Proposed Split-Off.
The Company
The Company believes that the Proposed Split-Off will satisfy the
numerous factual and statutory requirements of Section 355 of the Code. If the
Proposed Split-Off qualifies under Section 355 of the Code, the Company will not
incur any taxable gain or loss as a result of the exchange of Titan Shares for
the Exchanging Shareholders' Company Common Stock.
If the Proposed Split-Off does not qualify under Section 355 of the
Code, the Company would incur taxable gain or loss to the extent the fair market
value of the Titan Shares exceeded the Company's adjusted basis in the Titan
Shares. The exchange of Company common stock for the Titan Shares would be
taxable under Section 302 of the Code to the Exchanging Shareholders either as a
dividend or a sale of stock depending upon their particular circumstances.
Accounting Treatment
The Proposed Split-Off will be accounted for as a treasury stock
transaction. The consideration for the Exchanging Shareholders' Shares and
Rights received by the Company from the Exchanging Shareholders in the Proposed
Split-Off will be deemed to be the cost basis of the Company in the Titan
Shares. No gain or loss will be recognized in connection with the Proposed
Split-Off. Following the Closing, the business operations of Titan will be
accounted for as discontinued operations for the current and prior periods.
Absence of Dissenters' Rights of Appraisal
Nevada law governs the rights of shareholders in connection with the
Proposed Split-Off. Based upon the Company's Articles of Incorporation and
Bylaws and under the applicable provisions of Nevada law, holders of Company
common stock will not be entitled to rights of appraisal or similar rights of
dissenters in connection with the Proposed Split-Off.
Business of the Company After the Split-Off
Following consummation of the Proposed Split-Off, Titan will be owned
exclusively by the Exchanging Shareholders, and the Company, exclusive of Titan,
will be owned by the Company's remaining shareholders, excluding the Exchanging
Shareholders. Following consummation of the Proposed Split-Off, the Company,
through its remaining subsidiaries, will continue to engage in the manufacture
and sale of livestock handling equipment. The Company's principal assets
following the Proposed Split-Off will include one hundred percent (100%) of the
capital stock of W-W Manufacturing Co., Inc., and certain other assets. A more
complete discussion of the Company's
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business and assets that will remain following consummation of the Proposed
Split-Off can be found in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2000 under the heading "LIVESTOCK HANDLING EQUIPMENT
GROUP."
Unaudited Pro Forma Financial Statements
Attached hereto as Appendix III are the unaudited pro forma condensed
balance sheet as of June 30, 2000 and the pro forma condensed statements of
earnings for the year ended June 30, 2000. The unaudited pro forma condensed
balance sheet as of June 30, 2000 and the pro forma condensed statements of
earnings for the year ended June 30, 2000 have been prepared by adjusting the
Company's historical condensed balance sheet as of June 30, 2000 and the
Company's condensed statement of earnings for the year ended June 30, 2000. The
historical financial statements have been adjusted to give effect to the
Split-Off as if the Split-Off had occurred as of July 1, 1999. Such pro forma
adjustments are described in the accompanying legend to the pro forma financial
statements which should be read in conjunction with the pro forma financial
statements. Such pro forma financial statements should also be read in
conjunction with the Company's historical financial statements and notes thereto
appearing elsewhere herein.
The pro forma financial statements presented herein do not purport to
be indicative of the actual financial position or results of operations of the
Company had the Split-Off actually been consummated on the dates indicated or of
the future financial position or future results of operations of the Company
which will result from the consummation of the Split-Off.
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PRICE RANGE OF COMMON STOCK AND RELATED MATTERS.
Market Information.
The Company common stock is traded over-the-counter on a limited and
very sporadic basis and quoted on the Bulletin Board under the symbol "WWCL."
The reported high and low bid and asked prices for the Company common stock are
shown below for the period through September 30, 2000. The prices presented are
bid and asked prices which represent prices between broker-dealers and do not
include retail mark-ups and mark-downs or any commission to the broker-dealer.
The prices do not necessarily reflect actual transactions.
Bid Ask
--- ---
Low High Low High
--- ---- --- ----
1999
First Quarter $0.1300 $0.1300 $0.1300 $0.1500
Second Quarter 0.0625 0.1250 0.1500 0.1875
Third Quarter 0.0625 0.0625 0.3125 0.3125
Fourth Quarter 0.0625 0.0625 0.0625 0.0625
2000
First Quarter $0.0625 $0.0625 $0.0625 $0.0625
Second Quarter 0.0625 0.0625 0.0625 0.0625
Third Quarter 0.0625 0.0625 0.0625 0.5100
Fourth Quarter 0.0625 0.0625 0.0625 0.5000
2001
First Quarter $0.0625 $0.0800 $0.1500 $0.5000
The bid and ask prices of the Company common stock on November 29,
2000 were $.07 and $.3125, respectively, as quoted on the Bulletin Board. As of
November 29, 2000 there were approximately 566 stockholders of record of the
Company common stock.
Dividends
The Company has not paid any dividends on its common stock and does not
expect to do so in the foreseeable future. It is anticipated that any earnings
generated from operations of the Company will be used to finance its ongoing
operations. No restrictions exist upon the Company's ability to pay dividends.
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ELECTION OF DIRECTORS.
Unless marked otherwise, proxies received will be voted FOR the
election of each of the nominees named below. Messrs. Zamzow and Webster are
currently Directors of the Company. If any nominee is unable or unwilling to
serve as a nominee for the office of director at the time of the Annual Meeting,
the proxies may be voted either (i) for a substitute nominee who shall be
designated by the proxy holders or by the present Board of Directors to fill
such vacancy or (ii) for the balance of the nominees, leaving a vacancy.
Alternatively, the size of the Board may be reduced accordingly. Except as set
forth below, the Board of Directors has no reason to believe that any of the
following nominees will be unwilling or unable to serve if elected as a
director. Such persons have been nominated to serve until the next annual
meeting of stockholders following the 2000 Annual Meeting or until their
successors, if any, are elected or appointed. The Board of Directors recommends
a vote "FOR" the election of each of the nominees listed below.
The election of Messrs. Gleason and Kourt, both of whom were nominated
by West-OK Investment, LLC pursuant to the terms of the West-OK Investment, LLC
Loan Agreement, is contingent upon obtaining shareholder approval of the
Proposed Split-Off. In the event the Proposed Split-Off is not approved by the
Company's shareholders at the meeting, the nominations of Messrs. Gleason and
Kourt will be deemed to have been withdrawn, and shareholders will elect,
instead, three directors for terms expiring at the Annual Meeting of Company
shareholders in 2001, upon the election and qualification of their successors.
Likewise, failure to elect Messrs. Gleason and Kourt, as the nominees designated
by West-OK Investment, LLC, may result in the Company's inability or
unwillingness to consummate the Proposed Split-Off, even if a majority of the
Company's disinterested shareholders have approved the transaction.
The Company's Articles of Incorporation expressly prohibit cumulative
voting. Therefore, the holders of a majority of the Company's shares could elect
all of the Directors. It is expected that the proxies received by the Directors'
nominees will be voted, except to the extent that authority is withheld on any
proxy as to all or one or more individuals, to elect as Directors the following
nominees, whose principal occupations during the past five years, directorships
and certain other affiliations and information are set forth below:
Name Age Position
------------------------ --- ---------------------------------
Steve D. Zamzow 52 Director Since 1993, President and CEO
Millard T. Webster 51 Director Since 1988
L. M. "Mick" McCarty 66 Nominee
Harold Gleason 50 Nominee
A. Randall Kourt 58 Nominee
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STEVE D. ZAMZOW serves as President and Chief Executive Officer
(CEO) of the Company. Mr. Zamzow joined the Company in 1991. In June, 1992, he
was elected Chief Financial Officer and in December, 1993, he became the
Company's President and CEO, and was elected to the Company's Board of
Directors. Mr. Zamzow has extensive experience in the fields of financial
consulting and business workouts, and from 1971 to 1974 was employed by Peat,
Marwick, Mitchell & Co. as an auditor. Mr. Zamzow received his Accounting degree
from the University of Nebraska.
MILLARD T. WEBSTER has been a Director of the Company since 1988
and currently serves as a Vice President of the Company's subsidiary, W-W
Manufacturing Company. Mr. Webster has been employed by W-W Manufacturing since
1962, where he has served as a piecework production foreman, production manager,
Vice President and President. Mr. Webster graduated from Evangel College,
Springfield, Missouri in 1970 with a Bachelor's degree in Business
Administration.
L. M. "MICK" McCARTY has been a farm/ranch real estate broker and
owner of McCarty and Associates since 1981. Additionally, he is vice-president
of BOMAC Energy Performance Systems, a marketing firm for a walking beam
compressor which enhances production of marginal oil wells. Mr. McCarty is past
Region 10 vice president, director and membership drive chairman for Club 20, a
consulting broker for the Registry of Million Dollar Properties, executive
secretary of the Colorado Livestock Marketing Association, advertising and
public relations manager of International Beef Breeders and regional sales
manager for Murphy Products Company, a livestock additive company. Mr. McCarty
graduated from the University of Arizona in 1959 with a Bachelor of Animal
Science degree and a minor in Agricultural Economics. He was a member of Alpha
Zeta, a men's honorary agricultural fraternity, a member of Phi Delta Theta
Fraternity and National President of the Intercollegiate Rodeo Association.
HAROLD GLEASON, is the president and CEO of Thomas Publishing
Company which owns The Thomas Tribune, a newspaper published in Thomas,
Oklahoma. Mr. Gleason purchased Thomas Publishing Company in 1972. Mr. Gleason
also has a ranching operation that includes raising, showing and marketing
registered Hereford Cattle on a national basis. In 1986, Mr. Gleason purchased a
small insurance agency and began operating The Gleason Agency which provides
full line coverage. The Gleason Agency has grown to be the largest insurance
agency in the area. Mr. Gleason graduated from Southwestern Oklahoma State
University in 1971 with Bachelor of Science degrees in Business Administration
and Journalism. Mr. Gleason has served as Chairman of the Thomas Economic
Development Authority since 1986.
A. RANDALL KOURT, a pharmacist by profession, has been the
president of Thomas Drug, Inc. for over thirty years. Thomas Drug, Inc.
currently operates four stores in Oklahoma. Mr. Kourt also owns MKM Apartments
of Thomas. In addition to retail and real estate experience, Mr. Kourt has
served on the Baptist Retirement Centers of Oklahoma board of directors for
three years, and has been Chairman of the Board for the last year. Mr. Kourt
graduated with Bachelor of Science in Pharmacy and Bachelor of Arts in Chemistry
degrees from Southwestern State University in Weatherford, Oklahoma.
-35-
<PAGE>
Each Director will be elected to serve until the next Annual
Meeting of Shareholders in 2001 or until a successor is duly elected and
qualified.
During the fiscal year ended June 30, 2000, five (5) meetings
of the Board of Directors were held, including regularly scheduled and special
meetings. All meetings were attended by 100% of the Board members. Outside
Directors were paid $100 for each meeting of the Board of Directors attended,
and were reimbursed their expenses associated with attendance at such meetings
or otherwise incurred in connection with the discharge of their duties as a
Director. Additionally, each outside Director is entitled to receive an annual
grant of non-qualified stock options exercisable to purchase up to 10,000 shares
of common stock, all options having an exercise price equal to the market value
of the underlying shares of Company common stock on the date of grant. This
amount is prorated based on the number of meetings of the Board of Directors
attended during the year.
During the fiscal year ended June 30, 2000, the Company had no
standing Audit, Compensation and Nominating Committees of the Board of
Directors, but plans to impanel such committees for the fiscal year ended June
30, 2001. No member of the Audit Committee will receive any additional
compensation for his service as a member of that Committee. The Audit Committee
will be responsible for providing assurance that financial disclosures made by
Management reasonably portray the Company's financial condition, results of
operations, plan and long-term commitments. To accomplish this, the Audit
Committee will oversee the external audit coverage, including the annual
nomination of the independent public accountants, review accounting policies and
policy decisions, review the financial statements, including interim financial
statements and annual financial statements, together with auditor's opinions,
inquire about the existence and substance of any significant accounting
accruals, reserves or estimates made by Management, review with Management the
Management's Discussion and Analysis section of the Annual Report, review the
letter of Management Representations given to the independent public
accountants, meet privately with the independent public accountants to discuss
all pertinent matters, and report regularly to the Board of Directors regarding
its activities.
No member of the Compensation Committee will receive any
additional compensation for his service as a member of that Committee. The
Compensation Committee will be responsible for reviewing pertinent data and
making recommendations with respect to compensation standards for the executive
officers, including the President and Chief Executive Officer, establishing
guidelines and making recommendations for the implementation of Management
incentive compensation plans, reviewing the performance of the President and
CEO, establishing guidelines and standards for the grant of incentive stock
options to key employees under the Company's Incentive Stock Option Plan, and
reporting regularly to the Board of Directors with respect to its
recommendations.
No member of the Nominating Committee will receive any
additional compensation for his service as a member of that Committee. The
Nominating Committee will be responsible for recommending a slate of Director
nominees to be considered for election at the Company's Annual
-36-
<PAGE>
Meeting of Shareholders. While the Nominating Committee has not in the past
considered nominees recommended by security holders outside of Management, if
security holders have recommendations regarding nominees for the Board of
Directors, communication should be addressed to Mr. Zamzow at the principal
executive offices of the Company.
Any transactions between the Company and its officers,
directors, principal shareholders, or other affiliates have been and will be on
terms no less favorable to the Company than could be obtained from unaffiliated
third parties on an arms-length basis and will be approved by a majority of the
Company's independent, outside disinterested directors.
EXECUTIVE COMPENSATION
The following tables and discussion set forth information with respect
to all plan and non- plan compensation awarded to, earned by or paid to the
Chief Executive Officer ("CEO"), and the Company's four (4) most highly
compensated executive officers other than the CEO, for all services rendered in
all capacities to the Company and its subsidiaries for each of the Company's
last three (3) completed fiscal years; provided, however, that no disclosure has
been made for any executive officer, other than the CEO, whose total annual
salary and bonus does not exceed $100,000.
<TABLE>
<CAPTION>
TABLE 1
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
Other All
Annual Restricted Options Other
Compen- Stock / LTIP Compen-
Name and Principal Salary Bonus sation Award(s) SARs Payouts sation
Position Year ($) ($) ($)(1) ($) (#) ($) ($)(2)
-------- ---- --- --- ------ --- --- --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Steve D. Zamzow, 2000 $120,858 -0- -0- -0- -0- -0- $13,749
CEO and President 1999 $120,358 -0- -0- -0- -0- -0- $6,874
1998 $119,896 -0- -0- -0- -0- -0- $4,575
--------------------------------------------------------------------------------------- ----------------------
---------------------
<FN>
(1) All executive officers of the Company participate in the Company's
group health insurance plan. In addition, no executive officer received
perquisites and other personal benefits which, in the aggregate,
exceeded the lesser of either $50,000 or 10% of the total of annual
salary and bonus paid during the respective fiscal years.
(2) Includes accrued vacation and compensated absences earned in prior
years and paid during the fiscal years ended June 30, 2000, 1999 and
1998, respectively.
</FN>
</TABLE>
-37-
<PAGE>
Incentive Stock Option Plan
In 1990, the Board of Directors and the shareholders of the Company
adopted the W. W. Capital Corporation 1990 Incentive Stock Options Plan (the
"ISOP"). Pursuant to the terms of the ISOP, the Company's Board of Directors is
authorized to issue options for the purchase of up to 950,000 shares of the
Company's common stock to key employees of the Company. Options granted under
the ISOP are incentive stock options within the meaning of Section 422 of the
Internal Revenue Code. They are exercisable at prices which were equal to at
least one hundred percent (100%) of the fair market value of the Company's
freely trading common stock on the date of grant, or in the case of an optionee
who beneficially owns stock representing more than ten percent (10%) of the
total combined voting power of the Company, the exercise price of the option is
not less than one hundred and ten percent (110%) of the market price of the
shares on the date of grant. Only key management and employees of the Company
are eligible to participate in the ISOP.
The ISOP is administered by the Board of Directors, which determines
eligible employees, the times and numbers of options to be granted, and the
periods for which such options may be granted. There are limitations on the
number of options which may be granted and the aggregate fair market value of
the stock in any given year. All options granted under the ISOP are subject to
vesting over a period of three (3) years from the date of grant.
As of June 30, 2000, incentive stock options to purchase 222,500 shares
of common stock were outstanding and unexercised, having an average exercise
price of $.92 per share. During the Company's fiscal year ended June 30, 2000,
no options were exercised to purchase shares pursuant to the ISOP.
The following tables set forth certain information concerning the grant
and exercise of incentive stock options during the last completed fiscal year by
each of the named executive officers and the fiscal year-end value of
unexercised options on an aggregated basis:
<TABLE>
<CAPTION>
TABLE 2
Option/SAR Grants for Last
Fiscal Year - Individual Grants
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise Expiration
Name Granted (#) Fiscal Year Price ($/sh) Date
---- ----------- ----------- ------------ ----
<S> <C> <C> <C> <C> <C>
Steve D. Zamzow 2000 -0- 0% -0-
1999 -0- 0% -0-
1998 -0- 0% -0-
</TABLE>
-38-
<PAGE>
<TABLE>
<CAPTION>
TABLE 3
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares at FY-End (#) at FY-End
Acquired -------------- ---------
on Exercise Value Realized(1) Unexercisable/ ($)(2)
------
Name (#) ($) Exercisable Exercisable
<S> <C> <C> <C> <C> <C>
Steve D. 2000 -0- -0- -0-/150,000 -0-
Zamzow 1999 -0- -0- -0-/150,000 -0-
1998 -0- -0- -0-/150,000 -0-
-------------------------
<FN>
(1) Value Realized is determined by calculating the difference between the
aggregate exercise price of the options and the aggregate fair market
value of the common stock on the date the options are exercised.
(2) Calculated based on the trade price of the Company's common stock on
June 30, 2000, or the most recent trade date prior to June 30, 2000
($.0625 per share) minus the exercise price.
</FN>
</TABLE>
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Brock and Company CPAs
as the Company's independent auditors for fiscal year 2000-01. Although action
by the shareholders in this matter is not required, the Board believes that it
is appropriate to seek shareholder ratification of this appointment in light of
the critical role played by independent auditors in maintaining the integrity of
Company financial controls and reporting.
It is expected that one or more representatives of Brock and Company
CPAs will be in attendance at the Annual Meeting. The representatives will have
the opportunity to make a statement, if desired, and will be available to
respond to appropriate questions from shareholders.
The following proposal will therefore be presented for action at the
Annual Meeting by direction of the Board of Directors:
RESOLVED, That action by the Board of Directors appointing Brock and
Company CPAs as the Company's independent auditors to conduct the annual audit
of the financial statements of the
-39-
<PAGE>
Company and its subsidiaries for the fiscal year ending June 30, 2001 is hereby
ratified, confirmed and approved.
The Board of Directors recommends a vote FOR this resolution.
The affirmative vote of a majority of shares participating in the
voting on this proposal is required for adoption of this resolution. The shares
of common stock represented by proxies that have been properly executed and
returned will be voted at the Annual Meeting and, where a choice has been
specified on a proxy, will be voted in accordance with such specification. If no
choice is specified on a proxy, the shares it represents will be voted FOR the
resolution.
TRANSACTIONS WITH MANAGEMENT AND OTHERS.
On June 30, 1989, W-W Land & Cattle, a partnership owned by Millard T.
Webster, a director of the Company, Mickey J. Winfrey, a former officer of the
Company and Terry L. Webster, a brother of Millard Webster and Mickey Winfrey,
executed a promissory note evidencing amounts due and owing by W-W Land & Cattle
to the Company's subsidiary, W-W Manufacturing Co., Inc. The original principal
amount of the promissory note was $96,424. Interest on the outstanding balance
of the promissory note is payable annually at 9% per annum and the principal is
due on demand. On June 30, 1993, Ms. Winfrey satisfied her obligations under
this note by paying to the Company the amount of $11,361 and was released from
all further obligations arising under or related to this note. As of June 30,
2000, $22,134 remained payable under this note by Millard and Terry Webster.
The Company currently leases its manufacturing facility in Dodge City,
Kansas from Murle F. Webster, father of Millard T. Webster. This lease required
a monthly rental payment of $5,000. This lease expired on December 31, 1994,
however, the Company has continued to lease the facility on a month-to-month
basis. During the fiscal year ended June 30, 2000, $60,000 was paid by the
Company under the lease.
-40-
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table gives information concerning the beneficial
ownership of the Company's common stock by all Directors and nominees, each
named executive officer, all Directors and executive officers as a group, and
the owners of more than five percent of the outstanding common stock, on October
11, 2000. Each person has sole voting and investment power with respect to the
shares shown, except as noted.
<TABLE>
<CAPTION>
Title of Name and Address Amount and Nature
Class of Beneficial Owner of Beneficial Ownership Percent of Class(1)
------ ------------------- ----------------------- -------------------
<S> <C> <C>
Common Steve D. Zamzow 150,437(2) 2.7%
Stock 4112 Sherman Court
Ft. Collins, Colorado 80525
" Millard T. Webster 278,969(3) 5.1%
1003 Central
Dodge City, KS 67801
" David L. Patton 1,200,389(4) 21.9%
807 SW Terrace Ave.
Dodge City, KS 66611
" James H. Alexander 30,000(5) .5%
5495 W. 115th Place
Broomfield, CO 80020
" Harold Gleason 5,000 nil
115 West Orient
Thomas, Oklahoma 73669
" A. Randall Kourt -0- 0.0%
523 North 4th
Thomas, Oklahoma 73660
" L.M. McCarty -0- 0.0%
P.O. Box 87
Huntley, Wyoming 82218
" Glenn A. Mull 507,184 9.4%
Route 1, Box 74
Pawnee Rock, Kansas 67567
</TABLE>
-41-
<PAGE>
<TABLE>
<CAPTION>
Title of Name and Address Amount and Nature
Class of Beneficial Owner of Beneficial Ownership Percent of Class(1)
------ ------------------- ----------------------- -------------------
<S> <C> <C>
" Robert L. and L. Louise Cullinan 284,958 5.3%
HCR 38, Box 32
Paxton, Nebraska 69155
" Jerry R. Beller 275,000 5.1%
4411 Harding Place
Nashville, Tennessee 37025
" All Directors, officers and
nominees as a group (5) 459,406 8.2%
---------------------
<FN>
(1) Shares not outstanding but deemed beneficially owned by virtue of the
individual's right to acquire them within sixty (60) days of the date
of this statement are treated as outstanding when determining the
percent of the class owned by such individual and when determining the
percent owned by the group.
(2) Includes Incentive Stock Options exercisable to purchase 50,000 shares
of the Company's common stock at an exercise price of $1.50 per share,
and Incentive Stock Options exercisable to purchase an additional
100,000 shares of the Company's common stock at an exercise price of
$.75 per share.
(3) Includes Incentive Stock Options exercisable to purchase 22,500 shares
of the Company's common stock at an exercise price of $.75 per share.
(4) Includes Non-Qualified Stock Options exercisable to purchase 7,500
shares of the Company's common stock at an exercise price of $2.50 per
share, Non-Qualified Stock Options exercisable to purchase an
additional 10,000 shares of the Company's common stock at an exercise
price of $.8125 per share, Non-Qualified Stock Options exercisable to
purchase an additional 10,000 shares of the Company's common stock at
an exercise price of $.75 per share, Non-Qualified Stock Options
exercisable to purchase an additional 10,000 shares of the Company's
common stock at an exercise price of $.5625 per share, Non-Qualified
Stock Options exercisable to purchase an additional 10,000 shares of
the Company's common stock at an exercise price of $.17 per share,
Non-Qualified Stock Options exercisable to purchase an additional
10,000 shares of the Company's common stock at an exercise price of
$.13 per share, and Non-Qualified Stock Options exercisable to purchase
an additional 10,000 shares of the Company's common stock at an
exercise price of $.0625 per share.
(5) Includes Non-Qualified Stock Options exercisable to purchase 10,000
shares of the Company's common stock at an exercise price of $.30 per
share, and Non-Qualified Stock Options exercisable to purchase, in the
aggregate, an additional 20,000 shares of the Company's common stock at
an exercise price of $.0625 per share.
</FN>
</TABLE>
-42-
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Under the securities laws of the United States, the Company's
Directors, its executive (and certain other) officers, and any persons holding
more than ten percent of the Company's common stock are required to report their
ownership of the Company's common stock and any changes in that ownership to the
Securities and Exchange Commission and the NASDAQ stock market. Specific due
dates for these reports have been established and the Company is required to
report in this Proxy Statement any failure to file by these dates.
Based solely on a review of the copies of such reports required by
Section 16(a), the Company believes that its officers, Directors, and
stockholders owning greater than 10% of the common stock of the Company complied
with all applicable Section 16(a) filing requirements during the fiscal year
ended June 30, 2000, except that Steve D. Zamzow, Millard T. Webster and James
H. Alexander each failed to timely file an Annual Statement of Beneficial
Ownership of Securities on Form 5.
OTHER MATTERS
The Company's management is not aware of other matters which may come
before the Meeting. The Directors' designees or other persons named in the
accompanying form of proxy will vote said proxy in accordance with their
judgment if any other matter does properly come before the Meeting. A majority
of those votes present at the Meeting cast in favor of any such matter will
result in the passage of such matter.
A copy of Form 10-K, the annual report filed by the Company with the
Securities and Exchange Commission, for the fiscal year ended June 30, 2000 is
furnished herewith.
W. W. CAPITAL CORPORATION
By:____________________________
James Alexander, Secretary
2001 Annual Meeting
No definitive date for the Annual Meeting of Shareholders in 2001 has
been established. Qualifying shareholders may submit proposals that are
consistent with the Company's Bylaws and federal securities laws to the Company
for inclusion in the Company's proxy material relating to the 2001 Annual
Meeting. The Company must receive such proposals at its business address (set
forth at the beginning of this Proxy Statement) no later than June 30, 2001.
-43-
<PAGE>
W. W. CAPITAL CORPORATION
PROXY SOLICITED ON BEHALF OF THE COMPANY
The undersigned hereby constitutes and appoints Steve D. Zamzow or
Michael Dick (SEE NOTE BELOW) or either of them acting in the absence of the
other, with full power of substitution the true and lawful attorneys or attorney
and proxies of the undersigned to attend the Annual Meeting of the Shareholders
of W. W. Capital Corporation (the "Company") to be held at the Marriott Hotel,
350 East Horsetooth Road, Fort Collins, Colorado 80525, on January 5, 2001 at
10:00 o'clock a.m. Mountain Standard Time, or any adjournment or adjournments
thereof, and vote all the shares of the Company standing in the name of the
undersigned with all the powers the undersigned would possess if present at said
meeting.
(1) FOR _______ AGAINST _______ ABSTAIN _______
To Split-Off the Company's wholly-owned subsidiary, Titan Industries,
Inc., to certain existing shareholders of the Company.
(2) FOR _______ WITHHOLD AUTHORITY _______
To elect all of the nominees listed below:
Steve D. Zamzow, Millard T. Webster, L. M. "Mick" McCarty and
(if Item 1 above is approved) Harold Gleason and A. Randall Kourt
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name below)
(3) FOR _______ AGAINST _______ ABSTAIN _______
To ratify the appointment of Brock and Company CPAs as the Company's
independent auditors for fiscal year 2000-001.
(4) Upon such other matters as may properly come before the meeting.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ITEM 1, FOR ITEM 2, FOR
ITEM 3, AND IN THE DISCRETION OF THE PERSON HOLDING THE PROXY FOR ANY OTHER
BUSINESS.
(NOTE: Should you desire to appoint a proxy other than the management designees
named above, strike out the names of management designees and insert the name of
your proxy in the space provided above. Should you do this, give this proxy card
to the person you appoint instead of returning the proxy card to the Company.)
(PLEASE DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.)
Receipt is acknowledged of Notice of Annual Meeting and Proxy Statement for the
meeting.
Date ________________________________ , 2000
____________________________________________
Name (please type or print)
____________________________________________
Signature
____________________________________________
Signature, if held jointly
Please sign exactly as name appears to the left. When shares are held
by joint tenants, both should sign. When signing as executor,
administrator, attorney, trustee, or guardian, please give full title
as such. If a corporation, please sign in full corporation name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
<PAGE>
--------------------------------------------------------------------------------
APPENDIX I
--------------------------------------------------------------------------------
<PAGE>
STOCK TRANSFER AND EXCHANGE AGREEMENT
THIS STOCK TRANSFER AND EXCHANGE AGREEMENT is made and entered into
this Ist day of December, 2000, between and among W. W. CAPITAL CORPORATION, a
Nevada corporation having its principal place of business at 3500 JFK Parkway,
Suite 202, Fort Collins, Colorado 80525 (the "Company"), TITAN INDUSTRIES, INC.,
a Nebraska corporation and wholly-owned subsidiary of the Company having its
principal place of business in Paxton, Nebraska ("Titan"), and those undersigned
shareholders also listed on the Exchanging Shareholder List attached hereto as
Exhibit A and incorporated herein by this reference ("Exchanging Shareholders").
The Company, Titan and the Exchanging Shareholders may hereafter be referred to
individually as a "Party," or collectively as the "Parties."
WITNESSETH
----------
WHEREAS, following its formation in September, 1987, the Company
engaged in a number of acquisition transactions pursuant to which the Company
acquired one hundred percent (100%) ownership of the following companies: (i)
W-W Manufacturing Co., Inc. ("WWM"), a Kansas corporation, in 1988; (ii) Titan,
in 1991; and (iii) in 1992, Eagle Enterprises, Inc., a Tennessee corporation
that was merged with and into WWM in 1998.
WHEREAS, following the acquisitions referred to above, various
differences of opinion as to the Company's operations, future plans and course
of development have arisen between Titan and the Company; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Exchanging Shareholders desire to exchange their ownership interest in the
Company for one hundred percent (100%) of the issued and outstanding shares of
Titan and other consideration; and
WHEREAS, Management and the Board of Directors of the Company believe
that, subject to the terms and conditions of this Agreement, it is in the best
interest of the Company and its shareholders for the Company to divide its
businesses so that following consummation of the Split-Off Titan will be owned
exclusively by the Exchanging Shareholders and the Company (which will continue
to hold one hundred percent (100%) of the stock of WWM) will be owned by the
Company's remaining shareholders (sans the Exchanging Shareholders), and that
neither group of shareholders, after the Split-Off, will have any interest in
the businesses owned by the other group, except as provided below; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Company has agreed to contribute the sum of $850,000 to the capital of Titan
prior to consummation of the Split-Off, which sum is being contributed to Titan
to equalize the value of the consideration being exchanged in the Split-Off; and
WHEREAS, being familiar with the facts and circumstances surrounding
the Split-Off, and having reviewed the results of an independent Fairness
Opinion (defined below) commissioned by
<PAGE>
the Board and relating to the terms and conditions of the Split-Off contained
herein, management and the Board of Directors of the Company believe the
Split-Off to be fair to, and in the best interest of, the Company and its
shareholders.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, and other good and
valuable consideration, the receipt and adequacy whereof is hereby acknowledged,
the parties agree as follows:
SECTION 1: GENERAL DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
1.1 Best Knowledge. "Best Knowledge" shall mean both what a Person knew
as well as what the Person should have known had the Person exercised reasonable
diligence. When used with respect to a Person other than a natural person, the
term "Best Knowledge" shall include matters that are known to the current
directors, officers and managers or what such persons should have known had they
exercised reasonable diligence.
1.2 Closing Date. "Closing Date" shall mean the date referred to in
Section 3.2 of this Agreement.
1.3 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.4 ERISA. "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
1.5 Exchange Act. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
1.6 Fairness Opinion. "Fairness Opinion" shall mean that certain
Fairness Opinion and report dated October 16, 2000, prepared and issued by Due
Diligence, Inc. at the request of the Board of Directors of the Company for the
purpose of evaluating the fairness of the Split-Off to the Company and its
shareholders.
1.7 Fiscal Year. "Fiscal Year" shall mean a twelve-month period
beginning July 1.
1.8 Governmental Authority. "Governmental Authority" shall mean any and
all foreign, federal, state or local governments, governmental institutions,
public authorities and governmental entities of any nature whatsoever, and any
subdivisions or instrumentalities thereof, including, but not limited to,
departments, boards, bureaus, commissions, agencies, courts, administrations and
panels, and any division or instrumentalities thereof, whether permanent or ad
hoc.
-2-
<PAGE>
1.9 Governmental Requirement. "Governmental Requirement" shall mean any
and all laws (including, but not limited to, applicable common law principles),
statutes, ordinances, codes, rules, regulations, interpretations, guidelines,
directions, orders, judgments, writs, injunctions, decrees, decisions or similar
items or pronouncements, promulgated, issued, passed or set forth by any
Governmental Authority.
1.10 Legal Requirements. "Legal Requirements" shall mean applicable
common law and any statute, ordinance, code or other laws, rule, regulation,
order, technical or other standard, requirement, judgment, or procedure enacted,
adopted, promulgated, applied or followed by any Governmental Authority,
including, without limitation, any order, decree, award, verdict, findings of
fact, conclusions of law, decision or judgment, whether or not final or
appealable, of any court, arbitrator, arbitration board or administrative
agency.
1.11 Person. "Person" shall mean any natural person, any Governmental
Authority and any entity the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not limited
to, corporations, partnerships, joint ventures, joint stock companies, limited
liability companies, trusts, estates, companies and associations, whether
organized for profit or otherwise.
1.12 Rights. "Rights" shall mean any right to acquire capital stock or
any ownership or profits interest in an entity or an affiliate of such entity
including, but not limited to, options, warrants, and instruments or obligations
convertible into capital stock, ownership or profits interest.
1.13 Section. Unless otherwise stated herein, the term "Section" when
used in this Agreement shall refer to the Sections of this Agreement.
1.14 Securities Act. "Securities Act" shall mean the Securities Act of
1933, as amended.
1.15 Split-Off. "Split-Off" shall mean the transfer by the Company of
one hundred percent (100%) of the issued and outstanding shares of Titan to the
Exchanging Shareholders in exchange for all of the Exchanging Shareholders'
ownership interests and/or Rights in the Company, which transaction is to be
structured as a tax-free distribution of stock and securities of a controlled
corporation under Section 355 of the Code.
SECTION 2: EXCHANGE OF STOCK
2.1 Exchange. Subject to the terms and conditions hereafter set forth,
on the Closing Date the Company agrees to transfer, assign, surrender and
deliver to the Exchanging Shareholders, on a pro- rata basis, a total of 7,500
pre-forward split or 3,390,399 post-forward split shares of the common stock of
Titan, $1.00 par value ("Titan Shares") (for a description of the forward stock
split see Section 3.6.3 below), which Shares shall constitute one hundred
percent (100%) of the shares of Titan capital stock issued and outstanding on
the Closing Date, in exchange for the transfer, assignment, surrender and
delivery by the Exchanging Shareholders, to the Company, of a total of
-3-
<PAGE>
3,390,399 shares (the "Exchanging Shareholders' Shares") of the $0.01 par value
common stock ("Common Stock") of the Company (after the exercise by Mr. Patton
of options to acquire, in the aggregate, 24,566 shares of Company Common Stock),
together with options, warrants and other Rights (collectively the "Exchanging
Shareholders' Rights") exercisable to acquire an additional 129,934 Shares of
the Company's Common Stock (after the exercise by Mr. Patton of options to
acquire, in the aggregate, 24,566 shares of Company Common Stock). The
Exchanging Shareholders' Shares and Exchanging Shareholders' Rights collectively
constitute all of the Shares of Company Common Stock or Rights convertible into
Shares of Company Common Stock owned by the Exchanging Shareholders on the
Closing Date. Upon receipt, the Exchanging Shareholders' Rights shall be
cancelled by the Company and thereafter be of no further force or effect. At
Closing, Titan shall, however, deliver to those Exchanging Shareholders who
delivered Exchanging Shareholders' Rights for cancellation by the Company, new
options exercisable for a period of ninety (90) days to acquire the number of
post-forward split Titan shares, at the exercise prices, set forth opposite
their name on Exhibit 2.1 attached hereto and incorporated herein by this
reference. In conjunction with the exercise of these Titan Options, Titan and
the Exchanging Shareholders shall provide written notice to the Company in
accordance with, and shall otherwise comply with all restrictions contained in,
the Titan and/or Exchanging Shareholder Lock-Up Agreements attached hereto as
Exhibits 6.3 and 6.1 respectively.
2.2 Contribution to Capital of Titan. To equalize the value of the
consideration being exchanged in the Split-Off, at or prior to Closing, the
Company shall contribute to the capital of Titan the sum of $850,000.
2.3 Inter-Company Receivable. At Closing, the Company shall deliver to
Titan the sum of $88,880.55 (the "Inter-Company Receivable Reduction Payment"),
and shall execute and deliver to Titan its Promissory Note substantially in the
form of Exhibit 2.3 attached hereto, which, together, document the Company's
obligation to repay to Titan an existing inter-company receivable incurred in
the ordinary course of the trade or business of the companies. The Promissory
Note shall obligate the Company to pay Titan, in quarterly installments, the
amount of this inter-company receivable less the Inter-Company Receivable
Reduction Payment, which sum totals $200,000.00, together with interest thereon
at the prime lending rate of Wells Fargo Business Credit, plus two percent (2%).
The interest rate shall be calculated on the Closing Date and adjusted quarterly
thereafter. If not sooner paid, the entire principal amount of the Promissory
Note, together with accrued but unpaid interest, shall be due and payable three
(3) years after the Closing Date. The Company shall have the right to prepay the
Promissory Note at any time without penalty. The Promissory Note shall be
secured by a letter of credit ("Letter of Credit") in an amount equal to the
amount of the Promissory Note. The Letter of Credit shall be opened in favor of
Titan by Wells Fargo Business Credit, or such other bank as shall be acceptable
to Titan.
2.4 Post-Closing Adjustments:
------------------------
2.4.1 Other Obligations of Titan. At or prior to Closing, the
Company shall have delivered to Titan an accurate list, as of the Closing Date,
showing all commitments and/or obligations of Titan, sums paid or advanced in
conjunction with the Split-Off, obligations of Titan
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guaranteed by the Company and all other monies paid or advanced by the Company
for the benefit of Titan, which list shall be attached hereto as Exhibit
2.4.1(a). It is understood that the Company is not retaining liability for any
such commitments and/or obligations, all of which, to the extent valid, shall be
and remain the obligation of Titan, and Titan hereby agrees to indemnify and
hold harmless the Company from any liability with respect thereto. To this end,
on the Closing Date Titan shall deliver to the Company releases, in a form
acceptable to the Company and its attorneys, releasing the Company from all
guarantee obligations relating to Titan or its operations, a list of which is
attached hereto as Exhibit 2.4.1(b). Additionally, if on the Closing Date, or at
any time thereafter, the Company has made or is required to make payments on
behalf of, or for the benefit of, Titan for any obligation identified on Exhibit
2.4.1(a), any such payment shall be reimbursed by Titan to the Company within
ten (10) days of receipt by Titan of an invoice or other written evidence of
such payment. In the event Titan fails for any reason to timely make such
payments, the Company shall be entitled to offset such payment amount against
any sums due and owing by the Company to Titan, including any sums due and owing
under the Promissory Note contemplated by Section 2.3 above. The provisions of
this Section 2.4.1 shall survive the Closing and consummation of the Split-Off.
2.4.2 Obligations Guaranteed by, or Secured by the Assets of,
Titan. At Closing, the Company shall deliver to Titan releases, in a form
acceptable to Titan, the Exchanging Shareholders and their attorneys, releasing
Titan from all guarantee obligations relating to the Company or its operations,
a list of which is attached hereto as Exhibit 2.4.2, and releasing all of
Titan's assets securing the same; provided however, that the Company's
obligation to deliver releases related to Titan's assets is contingent upon
payment and/or satisfaction by Titan of that portion of all amounts due and
owing under any line-of-credit, loan or other obligation or agreement carried on
the Company's books as, or which otherwise is, an obligation or debt of Titan,
repayment of which is secured in whole or in part by assets of Titan, including,
but not limited to, that portion of the Titan's Line-of-Credit with Wells Fargo
Business Credit (f/k/a Norwest Business Credit) as shown on the Company's books
on the date of Closing.
2.4.3 Labor Matters. The Company shall not be responsible for
any payroll costs, including medical insurance and any accrued vacation, related
to or stemming from Titan, its operations, employees, independent contractors or
any other person or entity performing services for or on behalf of Titan.
Likewise, the Company is not retaining any employment or union contracts,
pension liabilities, workmen's compensation commitments, or any other employee
obligations of Titan, including, without limitation, any liability for
severance, accrued vacation and other compensation or other obligations of
Titan. All such matters shall be and remain the obligation of Titan, and Titan
agrees to indemnify and hold harmless the Company from any liability with
respect thereto. The provisions of this Section 2.4.3 shall survive the Closing
and consummation of the Split-Off.
2.4.4 Employee Benefit Plans of Titan. The Company and Titan
agree to take, or cause to be taken, the following action with respect to the
interests in the Company's 401(k)/Profit Sharing Plan ("Retirement Plan") and
the Company Cafeteria Plan ("Cafeteria Plan") of employees of Titan
participating therein on the Closing Date:
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2.4.4.1 As soon as practicable after Closing, but in
any event within sixty (60) days, a new retirement plan and trust will be
established by Titan which shall be designated to qualify under Sections 401(a)
and 501(a) of the Code. Titan shall pay all of the expenses paid to outside
parties to establish a new plan, if any.
2.4.4.2 As soon as practicable after the appointment of
a trustee of the trust under the new retirement plan and provided such cash or
other assets have not previously been distributed to participants who are
employees of Titan, there shall be transferred from the trust fund created for
the Company Retirement Plan to such trustee, in accordance with the controlling
Retirement Plan documents, cash or other assets which are attributable to
participants thereof who are employees of Titan if permissible under the
relevant provisions of the Code and ERISA. Notwithstanding the foregoing, no
further contributions for the benefit of, or on behalf of, any Titan employees
will be accepted by the Company's 401k/Profit Sharing Plan after the effective
date of Closing.
2.4.4.3 All costs and expenses associated with auditing
the Company's Retirement Plan and/or Cafeteria Plan, and associated with the
preparation and/or filing of any tax or other IRS or ERISA filings or returns,
shall be paid by the Company.
2.4.5 McDonald & Fredrickson, P.C. Obligation. By bill dated
February 18, 2000 the law firm of McDonald & Fredrickson, P.C. ("M&F") has
demanded payment from the Company in the amount of $56,200.24, for services
purportedly performed for the benefit of the Company over a fourteen (14) month
period commencing in November, 1998 and ending January, 2000. The Company denies
liability for all or any portion of this bill. However, without admitting any
liability, and as a means of amicably resolving this potential dispute, the
Company and Titan have agreed to pay, and M&F has agreed to accept, the sum of
$10,970.24 ("M&F Settlement Amount") in full satisfaction of any and all claims
M&F has or may have against the Company, Titan, their respective directors,
officers, agents and employees. M&F will deliver at Closing a release
substantially in the form of Exhibit 2.4.5 attached hereto in exchange for
payment of the M&F Settlement Amount. At Closing, the Company shall pay $5,000
of the M&F Settlement Amount, and the balance shall be paid by Titan.
Additionally, following closing of the transactions contemplated by this
Agreement, Titan has agreed to purchase from Loyd T. Fredrickson, Trustee of the
Lucille W. Fredrickson 1994 Revocable Trust and the Loyd T. Fredrickson 1994
Revocable Trust, Lucille W. Fredrickson, Trustee of the Lucille W. Fredrickson
1994 Revocable Trust, Jean A. McDonald and Kirk D. Fredrickson (the
"Fredricksons"), a total of 250,000 shares of Titan common stock, together with
options exercisable to acquire an additional 20,000 shares of Titan common
stock, for an aggregate purchase price of $216,900, which sum will be due and
payable in cash or certified funds at the closing of this transaction. Following
consummation of this transaction, the Fredricksons will have no further
ownership interest in either the Company or Titan.
2.5 Taxes and Other Costs. All stock transfer taxes payable to the
State of Colorado related to the transfer of the Titan Shares to the Exchanging
Shareholders, if any, shall be payable by the Company, and the Company shall
indemnify, defend and hold harmless the Exchanging
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Shareholders with respect thereto. The Company shall also be responsible for,
and shall pay, when due, any and all income, sales and other taxes, costs and
expenses arising from or related to the operations of WWM and/or Eagle
Enterprises, Inc., including, but not limited to, all taxes for prior years if
adjusted. The Exchanging Shareholders and Titan will be responsible for any
expenses incurred solely by the Exchanging Shareholders and Titan. As more fully
described in the Tax Sharing Agreement (defined below), Titan shall also be
responsible for, and shall pay, when due, any and all income, sales or other
taxes, costs and expenses arising from, or related to, Titan's operations,
including, but not limited to, all taxes for prior years if adjusted.
2.6 Tax Sharing Agreement. At closing, Titan and the Company shall
execute and enter into a Tax Sharing Agreement, a copy of which is attached
hereto as Exhibit 2.6. The Tax Sharing Agreement shall set forth the rights and
responsibilities of Titan and the Company with respect to the filing of the
Company's tax returns for the fiscal year ended June 30, 2001, shall apportion
to Titan a portion of the Company's NOL carryforward, but excluding therefrom
any NOL or NOL carryforward relating to the Paul Scale Company, based on the
Company's and Titan's net income for fiscal 2001. Titan's obligation to pay to
the Company its continuing management fee, in the amount of $12,000.00 per
month, was terminated effective June 30, 2000.
2.7 Shareholder Approval. Consummation of the Split-Off and other
transactions contemplated by this Agreement is expressly contingent upon
obtaining the consent of the Company's shareholders, as required by, and in
accordance with the provisions of, Nevada Revised Statutes 78.411 through
78.444, which require, in part, that the Split-Off be approved by the
affirmative vote of the holders of stock representing a majority of the
outstanding voting shares of the Company not beneficially owned by any
Exchanging Shareholder who is an interested stockholder as defined in the above
referenced statutes. For purposes of the above referenced statutes, an
"interested stockholder" is any Exchanging Shareholder that owns, directly or
indirectly, ten percent (10%) or more of the voting power of the outstanding
shares of the Company. The Company shall submit the Split-Off to the Company's
shareholders for approval at the Company's next Annual Meeting of Shareholders
currently scheduled for January 5, 2001.
SECTION 3: CLOSING
3.1 General Procedure. At the Closing each party shall deliver such
documents, instruments and materials as may be reasonably required in order to
effectuate the intent and provisions of this Agreement, and all such documents,
instruments and materials shall be satisfactory in form and substance to counsel
for the other Parties.
3.2 Time and Place. The Closing shall take place in the offices of
Jones & Keller, P.C., 1625 Broadway, Suite 1600, Denver, Colorado 80202, as soon
as practicable but in any event no later than (i) five (5) business days from
the date of the satisfaction or waiver of all conditions precedent set forth in
Sections 3.5 and 3.6, and/or (ii) January 5,2001, or such time and place as
shall be mutually acceptable to the parties.
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3.3 Effective Date of Closing. The parties stipulate and agree that
the effective date of Closing shall be December 31, 2000.
3.4 Covenants Regarding Closing. The Parties hereby covenant and agree
that they shall (i) use reasonable efforts to cause each of their respective
Exhibits not already attached to this Agreement on the date of execution to be
prepared and exchanged with the other party, and its legal counsel, within
thirty (30) business days following the execution of this Agreement, except to
the extent the express terms of this Agreement provide for a different time
period for such delivery to be accomplished, (ii) use reasonable efforts to
cause all of their respective representations and warranties set forth in this
Agreement, and Exhibits hereto, to be true on and as of the Closing Date, (iii)
use reasonable efforts to cause all of their respective obligations that are to
be fulfilled on or prior to the Closing Date to be so fulfilled, (iv) use
reasonable efforts to cause all conditions to the Closing set forth in this
Agreement to be satisfied on or prior to the Closing Date, and (v) use
reasonable efforts to deliver to each other at the Closing the certificates,
updated lists, notices, consents, authorizations, approvals, agreements,
transfer documents, receipts and amendments contemplated hereby (with such
additions or exceptions to such items as are necessary to make the statements
set forth in such items accurate and acceptable, provided that if any such
additions or exceptions cause any of the conditions to the Parties' obligations
hereunder as set forth hereinbelow not to be fulfilled, such additions and
exceptions shall in no way limit the rights of the Parties hereunder to
terminate this Agreement or refuse to consummate the transactions contemplated
hereby).
3.5 Conditions to Obligation of the Company. The obligation of the
Company to complete the Split-Off on the Closing Date on the terms set forth in
this Agreement is, at the option of the Company, subject to the satisfaction or
waiver by the Company of each of the following conditions:
3.5.1 Accuracy of Representations and Warranties. The
representations and warranties made by the Exchanging Shareholders and Titan in
this Agreement and the Exhibits attached hereto shall be correct in all material
respects on and as of the Closing Date with the same force and effect as though
such representations and warranties had been made on the Closing Date.
3.5.2 Compliance with Covenants. All covenants which the
Exchanging Shareholders and Titan are required to perform or comply with on or
before the Closing Date shall have been fully complied with or performed in all
material respects.
3.5.3 Corporate Approvals. Deleted
3.5.4 Consents and Approvals. To the extent that any material
lease, mortgage, deed of trust, line-of-credit, guarantee, contract or agreement
to which the Company or Titan is a party shall require the consent of any person
to the Split-Off or any other transaction provided for herein, such consent
shall have been obtained; provided, however, that Titan and/or the Exchanging
Shareholders shall not make, as a condition for the obtaining of any such
consent, any agreements
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or undertakings not approved in writing by the Company to the extent that such
condition otherwise has an effect on the Company.
3.5.5 Review and Due Diligence. The Company and its legal
counsel shall have had the opportunity to complete, and shall have completed on
or before December 20, 2000 a satisfactory due diligence investigation of the
marketability of the Exchanging Shareholders' title to the Exchanging
Shareholders' Shares and the Exchanging Shareholders' Rights. To this end, on or
before December 15, 2000, the Exchanging Shareholders shall deliver to the
Company copies, front and back, of the certificates and/or other documentation
representing all of the Exchanging Shareholders' Shares and all of the
Exchanging Shareholders' Rights.
3.5.6 No Governmental Actions. No action or proceeding before
any Governmental Authority shall have been instituted or threatened to restrain
or prohibit the transactions contemplated by this Agreement, and the Parties
shall have delivered to each other certificates dated as of the Closing Date and
executed by such Parties, stating that to their Best Knowledge, no such actions
or proceedings exist. No Governmental Authority shall have taken any other
action as a result of which the management of any of the Parties, in its sole
discretion, reasonably deems it inadvisable to proceed with the transactions
contemplated by this Agreement.
3.5.7 Review of Fairness Opinion. Deleted.
3.5.8 Qualification Under Section 355 of the Code. The
Company, its legal counsel and/or auditors shall have determined, to their
reasonable satisfaction, that the Split-Off, as contemplated by this Agreement,
will qualify as a tax-free distribution of stock and securities of a controlled
corporation under Section 355 of the Code.
3.5.9 No Adverse Information. The investigations with respect
to the Parties, the Exchanging Shareholders' Shares and Exchanging Shareholders'
Rights performed by the Company and its professional advisors and other
representatives shall not have revealed any information concerning the
Exchanging Shareholders' Shares and/or Exchanging Shareholders' Rights that has
not been made known to the Company, in writing prior to the date of this
Agreement and that, in the opinion of the Company and its advisors, materially
and adversely affects the viability of the transaction contemplated by this
Agreement.
3.5.10 Appointment of Exchanging Shareholders' Authorized
Representatives, Release, Exchanging Shareholder Questionnaire and Compliance
with Securities Laws. Each of the Exchanging Shareholders shall have executed
and delivered to the Company an Exchanging Shareholder Representative
Appointment and Power of Attorney, in the form of Exhibit 3.5.10(a) attached
hereto, appointing Ronald Jay and David Patton, or either of them, as their
authorized representatives ("Authorized Representatives") to act for and bind
each of the Exchanging Shareholders in all matters related to the Split-Off and
this Agreement. Each of the Exchanging Shareholders shall also have executed and
delivered to the Company a Release in the form of Exhibit 3.5.10(b) attached
hereto, releasing the Company, its officers, directors, agents and employees,
from any and all liabilities such Exchanging Shareholders may have against each,
if any, pursuant to the
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terms and conditions of the Release. Each of the Exchanging Shareholders shall
have executed and delivered to the Company an Exchanging Shareholder
Questionnaire in the form of Exhibit 3.5.10(c) attached hereto, and the Company
and its professional advisors shall have concluded, in their reasonable
discretion, that consummation of the Split-Off as contemplated by this Agreement
will not result in an actionable violation of federal securities laws or the
securities laws of any state.
3.5.11 Escrow of Funds. On or before December 5, 2000, the
Company, Titan and Jones & Keller, P.C., shall execute and enter into an escrow
agreement ("Escrow Agreement") acceptable to the parties and their respective
legal counsel. Thereafter, on or before December 29, 2000, the Company shall
deliver to Jones & Keller, P.C., as escrow agent, all sums due and owing to
Titan, at Closing, under this Agreement to be held by Jones & Keller, P.C., in
trust, pending Closing, and delivered to Titan at Closing in accordance with the
terms of the Escrow Agreement.
3.5.12 McDonald & Fredrickson, P.C. Release. McDonald &
Fredrickson, P.C., shall have executed and delivered to the Company and Titan
its release in the form of Exhibit 2.4.5 hereto.
3.5.13 Company Shareholder Approval. The Split-Off and other
transactions contemplated by this Agreement shall have been presented to, and
approved by, the Company's shareholders in accordance with all applicable
federal and state laws, including, without limitation, the laws of the State of
Nevada and in particular the provisions of Nevada Revised Statutes 78.411
through 78.444, and the nominees designated by West-OK Investment, LLC shall
have been elected to the Company's Board of Directors at the Annual Meeting of
Shareholders currently scheduled for January 5, 2001.
3.5.14 Other Documents. The Exchanging Shareholders shall have
delivered or caused to be delivered all other documents, agreements,
resolutions, certificates or declarations as the Company or its attorneys may
have reasonably requested.
3.6 Conditions to Obligation of the Exchanging Shareholders. The
obligation of the Exchanging Shareholders to complete the Split-Off on the
Closing Date on the terms set forth in this Agreement is, at the option of the
Exchanging Shareholders, subject to the satisfaction or waiver by the Exchanging
Shareholders of each of the following conditions:
3.6.1 Accuracy of Representations and Warranties. The
representations and warranties made by the Company in this Agreement and the
Exhibits attached hereto shall be correct in all material respects on and as of
the Closing Date with the same force and effect as though such representations
and warranties had been made on the Closing Date.
3.6.2 Compliance with Covenants. All covenants which the
Company is required to perform or comply with on or before the Closing Date
shall have been fully complied with or performed in all material respects.
3.6.3 Corporate Approvals. The Boards of Directors of the
Company and Titan shall have approved and ratified this Agreement and shall have
authorized the appropriate officers of each to execute same and fully perform
its terms. Additionally, Titan's shareholders and/or Board of Directors shall
have undertaken and completed all actions legally required to increase the
number of shares authorized for issuance by Titan to 5,000,000, and to approve a
forward stock split increasing the number of issued and outstanding shares of
Titan Common Stock from 7,500 to
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3,390,399, all of which must be undertaken and completed in accordance with the
laws of the State of Nebraska.
3.6.4 Consents and Approvals. To the extent that any material
lease, mortgage, deed of trust, line-of-credit, contract or agreement to which
the Company or Titan is a party shall require the consent of any person to the
Split-Off or any other transaction provided for herein, such consent shall have
been obtained; provided, however, that the Company shall not make, as a
condition for the obtaining of any such consent, any agreements or undertakings
not approved in writing by the Exchanging Shareholders, through their Authorized
Representatives, to the extent that such condition otherwise has an effect on
Titan or the Exchanging Shareholders.
3.6.5 Review and Due Diligence. The Exchanging Shareholders
and their legal counsel shall have had the opportunity to complete, and shall
have completed on or before December 20, 2000, a satisfactory due diligence
investigation of the marketability of the Company's title to the Titan Shares.
3.6.6 No Governmental Actions. No action or proceeding before
any Governmental Authority shall have been instituted or threatened to restrain
or prohibit the transactions contemplated by this Agreement, and the Parties
shall have delivered to each other certificates dated as of the Closing Date and
executed by such Parties, stating that to their Best Knowledge, no such actions
or proceedings exist. No Governmental Authority shall have taken any other
action as a result of which the management of any of the Parties, in its sole
discretion, reasonably deems it inadvisable to proceed with the transactions
contemplated by this Agreement.
3.6.7 No Adverse Information. The investigations with respect
to the Titan Shares performed by the Exchanging Shareholders, Titan and their
respective professional advisors and other representatives shall not have
revealed any information concerning the Titan Shares that has not been made
known to the discovering Party, in writing prior to the date of this Agreement
and that, in the opinion of such Party and its advisors, materially and
adversely affects the viability of the transaction contemplated by this
Agreement.
3.6.8 Other Documents. The Company and Titan shall have
delivered or caused to be delivered all other documents, agreements,
resolutions, certificates or declarations as the Exchanging Shareholders or
their attorneys may have reasonably requested.
3.6.9 Qualification Under Section 355 of the Code - No State
of Local Taxes Imposed. Titan and the Exchanging Shareholders, their legal
counsel and/or auditors shall have determined, to their reasonable satisfaction,
that the Split-Off as contemplated by this Agreement, will qualify as a tax-free
distribution of stock and securities of a controlled corporation under Section
355 of the Code, and that no state or local taxes will be imposed upon Titan or
the Exchanging Shareholders in conjunction with consummation of the Split-Off.
3.6.10 Company Shareholder Approval. The Split-Off and other
transactions contemplated by this Agreement shall have been presented to, and
approved by, the Company's
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shareholders in accordance with all applicable federal and state laws,
including, without limitation, the laws of the State of Nevada and in particular
the provisions of Nevada Revised Statutes 78.411 through 78.444.
3.6.11 Significant Shareholder Consent and Release. Millard T.
Webster and Murle F. Webster, as significant shareholders of the Company, shall
have each executed and delivered to Titan and the Exchanging Shareholders a
Consent and Release in the form of Exhibit 3.6.11 attached hereto pursuant to
which each shall have acknowledged that he has had an opportunity to review this
Agreement with counsel, that he approves the transactions contemplated hereby,
and whereby each waives and/or releases Titan, its officers, directors, agents
and employees, and the Exchanging Shareholders from any and all claims he may
have against each, if any, pursuant to the terms and conditions of the Consent
and Release.
3.6.12 Company Release. The Company shall have executed and
delivered to Titan and the Exchanging Shareholders its release in the form of
Exhibit 3.6.12 hereto.
3.7 Specific Items to be Delivered at the Closing. The Parties shall
deliver the following items to the appropriate Party at the Closing of the
transactions contemplated by this Agreement.
3.7.1 To be delivered by the Company:
3.7.1.1 Copy of corporate resolutions authorizing the
execution of this Agreement, and the consummation by the Company of the
transactions contemplated by this Agreement.
3.7.1.2 A certificate of the President of the Company
stating that the representations and warranties of the Company set forth in this
Agreement are true and correct. Said certificate shall further verify and affirm
that all consents, waivers and/or approvals, including shareholder approval, if
any, which may be necessary to execute and deliver this Agreement have been
obtained and are in full force and effect.
3.7.1.3 A certificate dated the Closing Date, signed by the
Chief Executive Officer of the Company in form and substance satisfactory to the
other Parties and their legal counsel, certifying that all conditions precedent
set forth in this Agreement to the obligations of the Company to close, have
been fulfilled, and that no event of default hereunder and no event which, with
the giving of notice or passage of time, or both, would be an event of default,
has occurred as of such date.
3.7.1.4 Certificates dated the Closing Date, signed by the
Secretary of the Company, (i) certifying resolutions duly adopted by the Board
of Directors of the Company, authorizing the execution of this Agreement and all
of the other transactions to be consummated
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pursuant thereto; (ii) certifying the names and incumbency of the officers of
the Company who are empowered to execute the foregoing documents for and on
behalf of the Company; (iii) certifying the authenticity of copies of the
Articles of Incorporation and Bylaws of the Company; and (iv) certifying the
authenticity of a reasonably current Certificate of Good Standing in Nevada.
3.7.1.5 All accounting books and records, the stock record
book, the minute book and all other corporate documents of Titan and such other
business records as Titan and the Exchanging Shareholders may reasonably
request; provided, however, the Company shall thereafter be entitled to
reasonable access to such records and documents as are applicable to periods
prior to the Closing Date, and as may be specified in, and/or required under,
the Tax Sharing Agreement.
3.7.1.6 Certificate or certificates representing 100% of the
issued and outstanding Shares of Common Stock of Titan, which stock certificates
shall be endorsed in favor of, and distributed to, the Exchanging Shareholders
on a pro rata basis, based upon their percentage ownership of the Company. To
this end, attached hereto as Exhibit 3.7.1.6 is a list of the Exchanging
Shareholders setting forth the number of Titan Shares to be received by each at
Closing.
3.7.1.7 Evidence acceptable to the Exchanging Shareholders
that the sum of $850,000 has been contributed to the capital of Titan;
3.7.1.8 The Promissory Note attached hereto as Exhibit 2.3,
fully executed by the President of the Company, together with a validly issued
letter-of-credit in accordance with the provisions of, and as contemplated by,
Section 2.3 above;
3.7.1.9 The fully executed releases contemplated by Section
2.4.2 above;
3.7.1.10 The fully executed Tax Sharing Agreement
contemplated by Section 2.6 above;
3.7.1.11 Corporate documentation amending Titan's Articles
of Incorporation to increase the number of authorized shares to 5,000,000, and
approving a forward stock split of Titan's issued and outstanding shares of
Common Stock from 7,500 to 3,390,399;
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3.7.1.12 The Company's check in the amount of $5,000.00 made
payable to McDonald & Fredrickson, P.C. pursuant to the provisions of Section
2.4.5; and
3.7.1.13 A fully executed Consent and Release from each of
the Websters as contemplated by Section 3.6.11 above.
3.7.1.14 The Company Lock-Up Agreement duly executed by the
Company substantially in the form of Exhibit 6.4.
3.7.1.15 A certificate of the President of the Company in
the form of Exhibit 3.7.1.15 attached hereto.
3.7.1.16 The Company Release duly executed by the Company
in the form of 3.6.12 hereto.
3.7.2 To be delivered by the Exchanging Shareholders:
3.7.2.1 Certificate or certificates representing 100% of the
Exchanging Shareholders' Shares, which stock certificates shall be endorsed in
favor of the Company;
3.7.2.2 Certificate or certificates representing 100% of the
Exchanging Shareholders' Rights, which certificates shall be endorsed in favor
of the Company and cancelled at Closing.
3.7.2.3 Transmittal Letter of each Exchanging Shareholder in
which each states, among other things, that he owns the Exchanging Shareholders'
Shares and Exchanging Shareholders' Rights free and clear of all liens,
encumbrances, security interests and limitations on transfer whatsoever, a copy
of which is attached hereto as Exhibit 3.7.2.3;
3.7.2.4 Certificate of the Authorized Representatives
confirming the accuracy, to the Best Knowledge of the Exchanging Shareholders,
as of the Closing Date, of the representations and warranties of Exchanging
Shareholders set forth in this Agreement;
3.7.2.5 Lock-Up Agreements signed by each of the Exchanging
Shareholders substantially in the form of Exhibit 6.1; and
3.7.2.6 A fully executed Exchanging Shareholder
Representative Appointment and Power of Attorney, in the form of Exhibit
3.5.10(a) attached hereto, and a fully executed Release, in the form of Exhibit
3.5.10(b) attached hereto, and a fully executed Exchanging Shareholder
Questionnaire, in the form of Exhibit
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3.5.10(c) attached hereto, for each of the Exchanging Shareholders.
3.7.3 To be delivered by Titan:
3.7.3.1 Copy of corporate resolution authorizing the
execution of this Agreement and the Titan Lock-Up Agreement, and the
consummation by Titan of the transactions contemplated by this Agreement,
including an amendment to Titan's Articles of Incorporation increasing the
number of authorized shares to 5,000,000, and approving a forward split of
Titan's issued and outstanding shares of Common Stock from 7,500 to 3,390,399;
3.7.3.2 A certificate of the President of Titan stating that
the representations and warranties of Titan set forth in this Agreement are true
and correct. Said certificate shall further verify and affirm that all consents
or waivers, if any, which may be necessary to execute and deliver this Agreement
have been obtained and are in full force and effect;
3.7.3.3 Certificates dated the Closing Date, signed by the
Secretary of Titan, (i) certifying resolutions duly adopted by the Board of
Directors of Titan, authorizing the execution of the Titan Lock-Up Agreement,
this Agreement and all of the other transactions to be consummated pursuant
thereto, including an amendment of Titan's Articles of Incorporation increasing
the number of authorized shares to 5,000,000, and approving a forward split of
Titan's issued and outstanding shares of Common Stock from 7,500 to 3,390,399;
(ii) certifying the names and incumbency of the officers of Titan who are
empowered to execute the foregoing documents for and on behalf of Titan; (iii)
certifying the authenticity of copies of the Articles of Incorporation and
Bylaws of Titan; and (iv) certifying the authenticity of a reasonably current
Certificate of Good Standing in Nebraska;
3.7.3.4 The fully executed releases contemplated by Section
2.4.1(b) above;
3.7.3.5 The fully executed Tax Sharing Agreement
contemplated by Section 2.6 above;
3.7.3.6 Titan Lock-Up Agreement signed by an authorized
officer of Titan substantially in the form of Exhibit 6.3;
3.7.3.7 Titan Options contemplated by Exhibit 2.1 hereto;
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3.7.3.8 Titan's check in the amount of $5,970.24 made
payable to McDonald & Fredrickson, P.C. pursuant to the provisions of Section
2.4.5.
SECTION 4: REPRESENTATIONS AND WARRANTIES BY THE COMPANY
As a material inducement to the Exchanging Shareholders to enter into
this Agreement and with the understanding and expectation that the Exchanging
Shareholders will be relying thereon in consummating the Split-Off contemplated
hereunder, the Company hereby represents and warrants as follows:
4.1 Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate power and authority to own its assets and
properties and to carry on its business as it is now being conducted.
4.2 Corporate Authority. Except as set forth on Exhibit 4.2 hereto,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby nor compliance by the Company with any of the
provisions hereof will:
4.2.1 conflict with or result in a breach of any provision of its
Articles of Incorporation or By-Laws;
4.2.2 result in a default (or give rise to any right of
termination, cancellation, or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, line-of-credit, license,
agreement or other instrument or obligation to which the Company is a party, or
by which any of its properties or assets may be bound except for such default
(or right of termination, cancellation, or acceleration) as to which requisite
waivers or consents shall either have been obtained by the Company prior to the
Closing Date or the obtaining of which shall have been waived by the other
Parties hereto; or
4.2.3 violate any order, writ, injunction, decree or, to the
Company's Best Knowledge, any statute, rule or regulation applicable to the
Company or any of its properties or assets. No consent or approval by any
Governmental Authority is required in connection with the execution and delivery
by the Company of this Agreement or the consummation by the Company of the
transactions contemplated hereby.
4.3 Taxes. Except as set forth in Exhibit 4.3:
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4.3.1 The Company has filed (or has obtained extensions for
filing) all income, excise, sales, corporate franchise, property, payroll and
other tax returns or reports required to be filed by it, as of the date hereof
by the United States of America, any state or other political subdivision
thereof or any foreign country and has paid all Taxes or assessments relating to
the time periods covered by such returns or reports;
4.3.2 The Company has paid all tax liabilities imposed or assessed
by any Governmental Authority for all periods prior to the Closing Date for
which such taxes have become due and payable and has received no notice from any
such Governmental Authority of any deficiency or delinquency with respect to
such obligation. The Company is not currently undergoing any audit conducted by
any taxing authority and has received no notice of audit covering any prior
period for which taxes have been paid or are or will be due and payable prior to
the Closing Date. There are no present disputes as to taxes of any nature
payable by the Company.
4.4 No Actions, Proceedings, etc. Except as listed on the attached
Exhibit 4.4, there is no action or proceeding (whether or not purportedly on
behalf of the Company) pending or threatened by or against the Company which
might result in any material adverse change in the condition, financial or
otherwise, of the Company's business or assets. No order, writ or injunction or
decree has been issued by, or requested of any court or governmental agency
which does nor may result in any material adverse change in the Company's assets
or properties or in the financial condition or the business of the Company.
Except for liabilities referred to in attached Exhibit 4.4, the Company is not
liable for damages to any employee or former employee as a result of any
violation of any state, federal or foreign laws directly or indirectly relating
to such employee or former employee.
4.5 No Breaches. The Company is not in violation of, and the
consummation of the transactions contemplated hereby do not and will not result
in any material breach of, any of the terms or conditions of any mortgage, bond,
indenture, line-of-credit, agreement, contract, license or other instrument or
obligation to which the Company is a party or by which its assets are bound; nor
will the consummation of the transactions contemplated hereby cause the Company
to violate any statute, regulation, judgment, writ, injunction or decree of any
court, threatened or entered in a proceeding or action in which the Company is,
was or may be bound or to which any of the Company's assets are subject.
4.6 Corporate Acts and Proceedings. This Agreement has been duly
authorized by all necessary corporate action on behalf of the Company, has been
duly executed and delivered by authorized officers of the Company, and is a
valid and binding Agreement on the part of the Company that is enforceable
against the Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or
other similar laws affecting the enforcement of creditors' rights generally and
to judicial limitations on the enforcement of the remedy of specific performance
and other equitable remedies.
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4.7 No Liens or Encumbrances. The Company has good and marketable title
to the Titan Shares, free of any material mortgages, security interests,
pledges, easements or encumbrances of any kind whatsoever except as set forth on
the attached Exhibit 4.7.
4.8 Insurance. Deleted.
4.9 Representations and Warranties. The representations and warranties
of the Company contained in this Agreement shall be true on and as of the
Closing Date with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date. Such representations and
warranties shall survive the Closing Date and shall remain operative in full
force and effect for the period of time set forth in Section 11.7 hereof
regardless of any investigation at any time made by or on behalf of the
Exchanging Shareholders and shall not be deemed merged in any document or
instrument so executed or delivered by the Exchanging Shareholders.
4.10 Corporate Status and Capitalization of Titan. On the Closing Date,
Titan will be a corporation duly organized and existing and in good standing
under the laws of the State of Nebraska and will have all necessary corporate
power and authority to own and conduct the business now being conducted by
Titan. On the Closing Date, the authorized capital of Titan shall consist of
5,000,000 Shares of common stock, $1.00 par value, of which 3,390,399 Shares
shall be issued and outstanding. All of the issued and outstanding Shares shall
have been duly authorized, validly issued, fully paid, and nonassessable and
shall be owned beneficially and of record by the Company, free and clear of any
liens, claims, charges, options or encumbrances.
4.11 Guarantee Obligations. The Company warrants and represents that
Exhibit 2.4.2 constitutes a complete list of all obligations of the Company that
have been guaranteed by Titan, and Titan has been, or on the Closing Date will
be, released from all liabilities and/or obligations under or related to such
guarantees.
SECTION 5: REPRESENTATIONS AND WARRANTIES OF TITAN AND THE EXCHANGING
SHAREHOLDERS
Titan and/or each Exchanging Shareholder, as indicated, shall severally
represent and warrant to the Company that as of the date of Closing, the
following are true and accurate with respect to Titan or such Exchanging
Shareholder:
5.1 Share Ownership. Subject to the provisions of Section 5.3 below and
any restrictive legend that has been placed on the certificates representing the
Shares, each Exchanging Shareholder warrants and represents that he/she/it owns
the number of Exchanging Shareholders' Shares set forth on Exhibit A attached
hereto, which Shares represent all of the Shares of the Company's Common Stock
owned by the Exchanging Shareholders, are fully paid, nonassessable and are
transferred and assigned to the Company free and clear of any claims, liens, and
encumbrances or other restrictions which would in any way impair the Company's
right to effectively sell or transfer such Shares.
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5.2 Rights. Each Exchanging Shareholder warrants and represents that
he/she/it does not own or hold any rights, options, warrants, subscriptions,
calls, convertible securities, or agreements of any character or nature under
which the Company is or may become obligated to issue any shares of its capital
stock of any kind other than those described as Exchanging Shareholders' Rights
on Exhibit A attached hereto.
5.3 No Restriction on Transfer. Each Exchanging Shareholder warrants
and represents that there are no restrictions on the transferability of such
Exchanging Shareholder's Shares or Exchanging Shareholder's Rights being
transferred to the Company imposed by or pursuant to any agreements to which
such Exchanging Shareholder is a party, except for restrictions imposed by or on
account of federal and state securities laws.
5.4. Guarantee Obligations. Titan warrants and represents that Exhibit
2.4.1(b) constitutes a complete list of all obligations of Titan that have been
guaranteed by the Company, and the Company has been, or on the Closing Date will
be, released from all liabilities and/or obligations under or related to such
guarantees.
5.5 Acquisition of Company Stock and No Present Intention or
Arrangement to Sell. Except as reported on Exhibit 5.5 attached hereto, each
Exchanging Shareholder represents and warrants that he has not acquired any
shares of Company Common Stock during the past five (5) years and that he has no
present intention or arrangement to sell, exchange or transfer his respective
shares of stock he will receive in Titan.
5.6 Fair Consideration. Each of the Exchanging Shareholders warrants,
represents and agrees that the distribution to them of shares of Titan Common
Stock in accordance with the provisions of this Agreement, in exchange for their
Exchanging Shareholders' Shares and Exchanging Shareholders' Rights, is fair and
adequate consideration for all their interests and claims in, to and against the
Company.
SECTION 6: COVENANTS OF THE EXCHANGING SHAREHOLDERS, TITAN AND THE COMPANY
6.1 Exchanging Shareholders' Lock-Up Agreements. The Exchanging
Shareholders (other than the Fredricksons) agree that, except as provided in
Section 6.2 below, they will not sell or exchange, or enter into any agreement
to sell or exchange, any of the Titan Shares received by them under this
Agreement or upon the exercise of Titan Options (defined on Exhibit 2.1) for a
period of two (2) years after the Closing Date, without the Company's express
written consent, which consent will not be unreasonably withheld. Consent will
be deemed to be unreasonably withheld if withheld for any purpose other than to
prevent the adverse effect such proposed sale or exchange may have on the
Company under the provisions of Section 355 of the Code. To this end, each of
the Exchanging Shareholders (other than the Fredricksons) hereby agrees to
execute and
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deliver to the Company at Closing a Lock-Up Agreement substantially in the form
of Exhibit 6.1 hereto.
6.2 Transfers of Titan Shares to a Family Member. Nothing in the
foregoing Section 6.1 shall be construed to preclude a transfer of Titan Shares
to a Family Member (as defined in the Exchanging Shareholder Lock-Up Agreement)
that does not constitute a sale or exchange.
6.3 No Issuance of Stock by Titan. Titan hereby agrees that it will not
sell, grant, gift or otherwise issue, or enter into any agreements to sell,
grant, gift or otherwise issue, any shares of its capital stock, or any Rights
convertible into shares of its capital stock (save and except for the Titan
Options listed on Exhibit 2.1), for a period of two (2) years after Closing,
without the Company's express written consent, which consent will not be
unreasonably withheld. Titan further agrees that it will not engage in any
transaction, or enter into any agreement to enter into any transaction, which
would result in gain recognition by the Company under Section 355(e) of the Code
or violate the requirements of Section 355(b) of the Code. Consent will be
deemed to be unreasonably withheld if withheld for any purpose other than to
prevent the adverse effect such proposed issuance may have on the Company under
the provisions of Section 355 of the Code. To this end, Titan hereby agrees to
have executed and deliver to the Company at Closing the Titan Lock-Up Agreement
substantially in the form of Exhibit 6.3 hereto.
6.4 Company Lock-Up Agreement. The Company hereby agrees that it will
not engage in any transaction, or enter into any agreement to engage in any
transaction, which would result in gain recognition by either Titan or the
Exchanging Shareholders under the provisions of Section 355 of the Code. The
Company further agrees that prior to and in connection with the Split-Off, and
for a period of two (2) years after the Closing Date, the Company will not
redeem or otherwise acquire any Company common stock and will not have made any
distributions with respect to its stock described in Treasury Regulation Section
1.368-1(e)(1)(ii) without Titan's express written consent, which consent will
not be unreasonably withheld. Consent will be deemed to be unreasonably withheld
if withheld for any purpose other than to prevent the incurrence of income
taxation by the Exchanging Shareholders or Titan by reason of the
non-applicability of Section 355(a)(1) of the Code. To this end, the Company
hereby agrees to have executed and deliver to Titan and the Exchanging
Shareholders at Closing the Company Lock-Up Agreement substantially in the form
of Exhibit 6.4 hereto
6.5 Board of Directors. For any period during which any portion of the
$1,000,000 promissory note payable by the Company to West-OK Investment, LLC
("West-OK") remains unpaid but West-OK has not acquired any stock in the Company
pursuant to Section 8 of that certain Stock Pledge Agreement entered into
between West-OK and the Company, the Company shall maintain a Board of Directors
consisting of five directors, and upon the death, resignation, removal, or
expiration of the term of any member of the Board of Directors who had not been
designated as a director by West-OK pursuant to Section 7.8 of the Loan
Agreement between West-OK and the Company, the Company shall use its best
efforts to cause the shareholders of the Company to elect promptly a successor
director who is not related to West-OK or any of its members, managers or
employees.
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SECTION 7: TERMINATION
7.1 Grounds For Termination. This Agreement may be terminated and
abandoned solely as follows:
7.1.1 At any time until the Closing Date by the unanimous mutual
agreement of the Authorized Representatives and the Boards of Directors of the
Company and Titan.
7.1.2 By any Party hereto, if for any reason the Parties have
failed to close the transactions contemplated by this Agreement on or before
January 5, 2001, provided that the Party requesting termination is not then in
default thereunder.
In the event of any termination pursuant to Section 7.1.2
written notice setting forth the reasons therefor shall forthwith be given by
the terminating Party to all of the other Parties hereto.
7.2 Effect of Termination. If the Split-Off is terminated and abandoned
as provided for in this Section, this Agreement shall forthwith become wholly
void and of no effect without liability to any Party to this Agreement except
for breach of this Agreement.
SECTION 8: INDEMNIFICATION AND REMEDIES FOR BREACH
8.1 Indemnification by the Company. The Company shall defend, indemnify
and hold the other Parties hereto harmless against and in respect of any damage,
loss, liability, cost or expense, including expert witness fees and reasonable
attorneys' fees, whether or not recoverable under applicable state law,
resulting or arising from or incurred in connection with:
8.1.1. any misrepresentation, breach of warranty, or nonfulfillment
or nonperformance of any agreement on the part of the Company under this
Agreement, or any misrepresentation or omission from any exhibit, schedule,
list, certificate or other instrument furnished or to be furnished by it under
this Agreement, or any noncompliance on the part of the Company with applicable
law; and
8.1.2 any and all claims against or liabilities of the Company of
any nature whatsoever, whether accrued, absolute, contingent or otherwise and
whether known or unknown, except to the extent that any such liability arises
from the Exchanging Shareholders' or Titan's failure to perform or discharge,
when due, their existing or future obligations, or which arise out of, or are
related to, the Split-Off; and
8.1.3 any and all claims of any nature whatsoever, whether accrued,
absolute, contingent or otherwise, and whether known or unknown, brought by any
shareholder or former shareholder of the Company, other than an Exchanging
Shareholder, which directly or indirectly arise out of, or are directly or
indirectly related to, any of the transactions contemplated by this Agreement
and the Exhibits hereto; and and the Exhibits hereto; and
8.1.4 any actions, suits, proceedings, damages, assessments,
judgments, costs or expenses incident to any of the foregoing.
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8.2 Indemnification by the Exchanging Shareholders and Titan. The
Exchanging Shareholders and Titan shall severally defend, indemnify and hold the
Company harmless against and in respect of any damage, loss, liability, cost or
expense, including expert witness fees and reasonable attorneys' fees, whether
or not recoverable under applicable state law, resulting or arising from or
incurred in connection with:
8.2.1. any misrepresentation, breach of warranty, or nonfulfillment
or nonperformance of any agreement on the part of any Exchanging Shareholder
and/or Titan under this Agreement, including, but not limited to, the breach of
any Lock-Up Agreement, or any misrepresentation or omission from any exhibit,
schedule, list, certificate or other instrument furnished or to be furnished by
them under this Agreement; provided, however, that each Exchanging Shareholder
and Titan shall only be responsible for his/her/its own misrepresentation,
breach of warranty, or non-fulfillment or non-performance of any agreement
hereunder.
8.2.2 any and all claims against or liabilities of Titan of any
nature whatsoever, whether accrued, absolute, contingent or otherwise and
whether known or unknown, except to the extent that any such liability arises
from the Company's failure to perform or discharge, when due, the Company's
existing or future obligations, or which arise out of, or are related to, the
Split-Off, or which arise out of actions undertaken or initiated on behalf of
Titan solely by the Company without the knowledge of Titan or its officers or
directors; provided, however, that no Exchanging Shareholder shall have any
liability pursuant to this Section 8.2.2.
8.2.3 any actions, suits, proceedings, damages, assessments,
judgments, costs or expenses incident to any of the foregoing.
8.3 Notice. Promptly after the receipt by any Party hereto of notice of
any claim asserted by a third party that may give rise to the liability of any
Party for which the right to indemnification may be claimed under this Section,
such Party shall give to each other Party written notice of such claim as soon
as practicable.
8.4 Determination of Damages and Related Matters.
8.4.1 Upon the occurrence of any event which would give rise to a
claim by a Party (the "Claimant Party") against, or to a right of defense and
indemnity against a Party (the "Indemnifying Party") pursuant to this Section 8,
or in the event that any suit, action, investigation, claim or proceeding is
begun, made or instituted as a result of which a Party (the "Indemnifying
Party") may become obligated to another Party hereunder, the Claimant Party
shall give notice to the Indemnifying Party of the occurrence of such event
within thirty (30) days of such occurrence, and shall identify the Claimant
Party's choice of counsel to represent such investigation, claim or proceedings,
provided that the failure of the Claimant Party to give notice shall not affect
the indemnification obligations of the Indemnifying Party hereunder. The
Claimant Party shall have the non-exclusive right to so defend, contest or
protect against such matter utilizing the counsel of the Claimant Party's choice
(who shall be reasonably acceptable to a representative of the Indemnifying
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Party). The Indemnifying Party shall have the right, but not the obligation, to
participate, at its own expense, in the defense thereof by counsel of their
choice. In addition, the Indemnifying Party shall have the right to elect to
assume the defense of any such matter in the name of the Claimant Party with
counsel who shall be reasonably satisfactory to the Claimant Party. If the
Indemnifying Party shall elect to assume the defense in the name of the Claimant
Party, it shall provide written notice of such election to the Claimant Party
and from and after the giving of such notice to the Claimant Party, the
Indemnifying Party shall not be liable to the Claimant Party for any legal or
other expenses subsequently incurred by the Claimant Party in connection with
the defense, other than reasonable costs of investigation. The Indemnifying
Party shall not be liable to the Claimant Party on account of any settlement of
any claim, action or proceeding effected without the Indemnifying Party's
consent, provided that any such consent shall not be unreasonably withheld or
delayed.
8.4.2 Provided that the Indemnifying Party has not elected to
assume the defense of the matter in accordance with the provisions of Section
8.4.1, as the Claimant Party incurs expenses for which indemnification hereunder
is provided and prior to the time any final judgment or award shall have been
rendered by a court, arbitration board or administrative agency of competent
jurisdiction, and after the expiration of the time in which to appeal therefrom,
or a settlement shall have been consummated, the Claimant Party shall forward to
the Indemnifying Party notice of any sums due and owing by them pursuant to this
Agreement with respect to such matter and the Indemnifying Party shall be
required to pay all of the sums so due and owing to the Claimant Party by
certified or bank cashier's check within ten (10) days of such notice.
8.4.3 Each of the Parties shall fully cooperate with the
others in connection with any proceeding for which a claim of indemnification
may be made hereunder.
8.5 Remedies for Breach. In the event of any breach of any of the
provisions of this Agreement, including but not limited to any breach of any
Lock-Up Agreement or any other agreement contemplated by this Agreement, or any
covenant, warranty or representation made by any Party hereto, the breaching or
defaulting Party shall be liable pursuant to the provisions of 8.1, 8.2, 8.3,
and 8.4 above.
SECTION 9: NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Each of the Parties recognizes and acknowledges that it has and will
have access to certain nonpublic information of the others which shall be deemed
the confidential information of the other Parties (including, but not limited
to, business plans, costs, trade secrets, licenses, research projects, profits,
markets, sales, customer lists, strategies, plans for future development,
financial information and any other information of a similar nature) that after
the consummation of the transactions contemplated hereby will be valuable,
special and unique property of the respective company. Information shall not be
deemed Confidential Information and afforded the protections of this Section 9
if, on the Closing Date, such information has been (i) developed by the
receiving Party independently of the disclosing Party, (ii) rightfully obtained
without restriction by the receiving Party from a third party, provided that the
third party had full legal authority to possess and disclose
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such information, (iii) publicly available other than through the fault or
negligence of the receiving Party, (iv) released without restriction by the
disclosing Party to anyone, including the United States government, or (v)
properly and lawfully known to the receiving Party at the time of its
disclosure, as evidenced by written documentation conclusively established to
have been in the possession of the receiving Party on the date of such
disclosure. Each of the Parties agrees that it will not disclose, and that they
will use their best efforts to prevent disclosure by any other Person of, any
such confidential information to any Person for any purpose or reason
whatsoever, except to authorized representatives of the respective company.
Notwithstanding, a Party may use and disclose any such confidential information
to the extent that a Party may become compelled by Legal Requirements to
disclose any such information; provided, however, that such Party shall use all
reasonable efforts and shall have afforded the other Parties the opportunity to
obtain an appropriate protective order or other satisfactory assurance of
confidential treatment for any such information compelled to be disclosed. In
the event of termination of this Agreement, each Party shall use all reasonable
efforts to cause to be delivered to the other Parties, and to retain no copies
of, any documents, work papers and other materials obtained by such Party or on
such Party's behalf during the conduct of the matters provided for in this
Agreement, whether so obtained before or after the execution hereof. Each of the
Parties recognizes and agrees that violation of any of the agreements contained
in this Section 9 will cause irreparable damage or injury to the respective
company, the exact amount of which may be impossible to ascertain, and that, for
such reason, among others, each company shall be entitled to an injunction,
without the necessity of posting bond therefor, restraining any further
violation of such agreements. Such rights to any injunction shall be in addition
to, and not in limitation of, any other rights and remedies each company may
have against the other Parties.
SECTION 10: EXPENSES
Each of the Parties will pay all costs and expenses of its or his
performance and compliance with this Agreement; provided, however, the Company's
legal fees incurred in conjunction with the preparation of this Agreement and
the consummation of the Split-Off, together with the cost of the Fairness
Opinion, shall be split equally by Titan and the Company up to a maximum amount
of $50,000.00 ($25,000.00 payable by Titan and $25,000.00 payable by the
Company), with the Company being solely responsible for all costs associated
with the Fairness Opinion and any such legal fees in excess of $50,000.00.
Notwithstanding the foregoing, if the Agreement is not consummated by reason of
a default of one of the Parties, then the expenses of each of the Parties in
connection with the transaction contemplated herein shall be paid by such
defaulting Party.
SECTION 11: MISCELLANEOUS
11.1 Survival and Incorporation of Representations. All statements
contained in any certificate or other document delivered by any Party hereunder
at or in connection with the Closing
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shall be deemed to constitute representations and warranties made by that Party
to this Agreement. The representations, warranties, covenants and agreements
made herein or any certificates or documents executed in connection herewith,
shall survive the execution and delivery thereof and shall remain operative in
full force and effect for the period of time set forth in Section 11.7 hereof
regardless of any investigation at the time made by or on behalf of such Party
and shall not be deemed merged in any document or instrument so executed or
delivered by the Party.
11.2 Incorporation by Reference. All Exhibits to this Agreement and all
documents delivered pursuant to or referred to in this Agreement are herein
incorporated by reference and made a part hereof.
11.3 Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to, or shall, confer any rights or remedies under, or by
reason of, this Agreement, on any person other than the Parties hereto and their
respective and proper successors and assigns. Nor shall anything in this
Agreement act to relieve or discharge the obligation or liability of any third
persons to any Party to this Agreement.
11.4 Amendments and Waivers. This Agreement may not be amended, nor may
compliance with any term, covenant, agreement, condition or provision set forth
herein be waived (either generally or in a particular instance and either
retroactively or prospectively) unless such amendment or waiver is agreed to in
writing by all Parties hereto.
11.5 Waiver. No waiver of any breach of any one of the agreements,
terms, conditions, or covenants of this Agreement by the Parties shall be deemed
to imply or constitute a waiver of any other agreement, term, condition, or
covenant of this Agreement. The failure of any Party to insist on strict
performance of any agreement, term, condition, or covenant, herein set forth,
shall not constitute or be construed as a waiver of the rights of either or the
other thereafter to enforce any other default of such agreement, term,
condition, or covenant; neither shall such failure to insist upon strict
performance be deemed sufficient grounds to enable any Party hereto to forego or
subvert or otherwise disregard any other agreement, term, condition, or covenant
of this Agreement.
11.6 Construction. It is acknowledged that each party hereto is being
represented by, or has waived the right to be represented by, independent
counsel. Accordingly, the Parties expressly agree that no provision of this
Agreement shall be construed against any Party on the ground that the Party or
its counsel drafted the provision. Nor may any provision of this Agreement be
construed against any Party on the grounds that Party caused the provision to be
present.
11.7 Limitation of Actions. No action may be brought by any Party to
this Agreement to enforce any covenant made by any Party hereto or to seek
damages or equitable relief arising from any claimed breach or nonperformance of
a covenant, representation, warranty or other performance provided for herein
unless such action is commenced within two (2) years of the date the affected
Party knew, or with the exercise of reasonable diligence, should have known, of
the existence of the claim. The Parties hereto agree to be bound by the
aforesaid limitation of actions notwithstanding the provisions of any applicable
statutory limitation of actions to the contrary.
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11.8 Notices. Any notice, communication, offer, acceptance, request,
consent, reply, or advice (herein severally and collectively, for convenience,
called "Notice"), in this Agreement provided or permitted to be given, served,
made, or accepted by any Party or person to any other Party or Parties, person
or persons, hereunder must be in writing, addressed to the Party to be notified
at the address set forth below, or such other address as to which one Party
notifies the other in writing pursuant to the terms of this Section, and must be
served by (1) telefax or other similar electronic method, or (2) depositing the
same in the United States mail, certified, return receipt requested and postage
paid to the Party or Parties, person or persons to be notified or entitled to
receive same, or (3) delivering the same in person to such Party.
Notice shall be deemed to have been given immediately when
sent by telefax or other electronic method and seventy-two hours after being
deposited in the United States mail, or when personally delivered in the manner
hereinabove described. Notice provided in any manner not specified above shall
be effective only if and when received by the Party or Parties, person or
persons to be, or provided to be notified.
All notices, requests, demands and other communications
required or permitted under this Agreement shall be addressed as set forth
below:
If the Company, to: WW Capital Corporation
Attn: Steve Zamzow, President
3500 JFK Parkway, Suite 202
Ft. Collins, Colorado 80025
If Exchange Shareholders to: Ronald Jay
309 E. 3 Street
Paxton, Nebraska 69155
If Titan to: Titan Industries, Inc.
Attn: Ronald Jay, President
East Highway 30
Paxton, Nebraska 69155
Any Party receiving a facsimile transmission shall be entitled to rely
upon a facsimile transmission to the same extent as if it were an original. Any
Party may alter the address to which communications or copies are to be sent by
giving notice of such change of address in conformity with the provisions of
this Section for the giving of notice.
11.9 Fax/Counterparts. This Agreement may be executed by telex,
telecopy or other facsimile transmission, and such facsimile transmission shall
be valid and binding to the same extent as if it were an original. Further, this
Agreement may be signed in one or more counterparts, all of
-26-
<PAGE>
which when taken together shall constitute the same documents. For all
evidentiary purposes, any one complete counter set of this Agreement shall be
considered an original.
11.10 Captions. The caption and heading of various sections and
paragraphs of this Agreement are for convenience only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
11.11 Severability. Wherever there is any conflict between any
provision of this Agreement and any statute, law, regulation or judicial
precedent, the latter shall prevail, but in such event the provisions of this
Agreement thus affected shall be curtailed and limited only to the extent
necessary to bring it within the requirement of the law. In the event that any
part, section, paragraph or clause of this Agreement shall be held by a court of
proper jurisdiction to be invalid or unenforceable, the entire Agreement shall
not fail on account thereof, but the balance of the Agreement shall continue in
full force and effect unless such construction would clearly be contrary to the
intention of the Parties or would result in unconscionable injustice.
11.12 Good Faith Cooperation and Additional Documents. The Parties
shall use their best good faith efforts to fulfill all of the conditions set
forth in this Agreement over which it has control or influence. Each Party
covenants and agrees to cooperate in good faith and to enter into and deliver
such other documents and papers as the other Party reasonably shall require in
order to consummate the transactions contemplated hereby, provided in each
instance, any such document is in form and substance approved by the Parties and
their respective legal counsel.
11.13 Assignment. No Party may directly or indirectly assign or
delegate, by operation of law or otherwise, all or any portion of
its/their/his/her rights, obligations or liabilities under this Agreement
without the prior written consent of all Parties other than the Exchanging
Shareholders, which consent may be withheld in their respective sole and
absolute discretion.
11.14 Entire Agreement. For purposes of this Agreement, the term
"Agreement" shall include this Agreement and the Exhibits and other documents
attached hereto or described in this Section 11. This Agreement, and other
documents delivered pursuant to this Agreement, contain all of the terms and
conditions agreed upon by the Parties relating to the subject matter of this
Agreement and supersede all prior and contemporaneous agreements, letters of
intent, representations, warranties, disclosures, negotiations, correspondence,
undertakings and communications of the Parties, oral or written, respecting that
subject matter.
11.15 Authority to Sign. Each of the persons signing below on behalf of
any Party hereby represents and warrants that s/he or it is signing with full
and complete authority to bind the Party on whose behalf s/he or it is signing,
to each and every term of this Agreement.
11.16 Execution of Documents. The Parties hereto agree to execute and
deliver any and all other documents necessary and convenient to effectuate the
Exchange herein provided for, and each Party as an inducing condition,
represents that it has the authority to enter into this Agreement and to make
the foregoing commitments for itself.
-27-
<PAGE>
11.17 Time. Time is of the essence of this Agreement and each of its
provisions.
(THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK)
-28-
<PAGE>
IN WITNESS WHEREOF, the Parties have signed the Agreement the
date and year first above written.
WW CAPITAL CORPORATION,
a Nevada corporation
ATTEST:
____________________________________ By:______________________
Secretary Steven Zamzow President
TITAN INDUSTRIES, INC.
a Nebraska corporation
ATTEST:
_____________________________ By:_______________________________
Secretary Ronald Jay, President
-29-
<PAGE>
AND EXCHANGING SHAREHOLDERS:
--------------------------------- --------------------------------------
Michael Armstrong Jean A. McDonald
--------------------------------- --------------------------------------
Bob Cullinan Mark K. Hehnke
--------------------------------- --------------------------------------
Beth Lann Cullinan Randy H. Henderson
--------------------------------- --------------------------------------
Erin Cullinan Randy Henderson
--------------------------------- --------------------------------------
Mark Cullinan Annette Jay
--------------------------------- --------------------------------------
Fred Deyoe Ronald Jay
--------------------------------- --------------------------------------
Eakings & Snyder Joel Jay
By: Bruce Snyder
--------------------------------- --------------------------------------
Bruce Snyder, individually Kildare Lumber Company
By:______________________
---------------------------------
Chuck Flaming --------------------------------------
James D. Lawler
---------------------------------
Loyd T. Fredrickson, --------------------------------------
Alexander Perlinger
--------------------------------- --------------------------------------
Loyd T. Fredrickson, Elizabeth Upton
--------------------------------- --------------------------------------
Kirk Fredrickson Miriam Madden
-30-
<PAGE>
---------------------------------- -----------------------------------
Mattingling Perlinger Jim Lawler
---------------------------------- -----------------------------------
Melissa Madden Peggy Lawler
---------------------------------- -----------------------------------
Zachary Upton Raymond Leisy
---------------------------------- -----------------------------------
Margaret A. Patton Betty Leisy
---------------------------------- -----------------------------------
Kathleen S. Patton Edward Wade
---------------------------------- -----------------------------------
Margaret A. Patton Greg Wade
---------------------------------- -----------------------------------
Dennis Dahlkoetter- Ray Ness-Building Group
Building Group D&D Electric
By:________________________ By:_______________________
---------------------------------- -----------------------------------
Halling & Halling Windmill Repair W.M. Franken
By:____________________
-----------------------------------
A.C. Boland
----------------------------------
Larry Leisy
-----------------------------------
Phil Farmer
----------------------------------
Glenn A. Mull
-----------------------------------
---------------------------------- Jim Jadon
David L. Patton
-----------------------------------
---------------------------------- Mark Sullivan
Zebediah Upton
-31-
<PAGE>
EXHIBIT A
(Exchanging Shareholders)
<PAGE>
<TABLE>
<CAPTION>
Rights
------
Shareholder Name Shares Held 1992 1993 1994 1995 1996 1997 1998 1999
---------------- ----------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Michael Armstrong 9,500.00
----------------------------------------------------------------------------------------------------------------------------------
a Michael Armstrong 21,500.00
----------------------------------------------------------------------------------------------------------------------------------
2 Bob Cullinan 284,958.00
----------------------------------------------------------------------------------------------------------------------------------
a Beth Lann Cullinan 3,000.00
----------------------------------------------------------------------------------------------------------------------------------
b Erin Cullinan 3,000.00
----------------------------------------------------------------------------------------------------------------------------------
c Mark Cullinan 3,000.00
----------------------------------------------------------------------------------------------------------------------------------
3 Fred Deyoe 238,958.00 10,000
----------------------------------------------------------------------------------------------------------------------------------
4 Eakings & Snyder 15,000.00
----------------------------------------------------------------------------------------------------------------------------------
a Bruce Snyder 10,000.00
----------------------------------------------------------------------------------------------------------------------------------
5 Chuck Flaming 15,000.00
----------------------------------------------------------------------------------------------------------------------------------
6 Lloyd T. Frederickson,
TTE Lloyd Frederickson 230,350.00 10,000 10,000
----------------------------------------------------------------------------------------------------------------------------------
a Lloyd T. Frederickson,
TTE Lucille Frederickson 6,550.00
----------------------------------------------------------------------------------------------------------------------------------
b Kirk Frederickson 6,550.00
----------------------------------------------------------------------------------------------------------------------------------
c Jean A. McDonald 6,500.00
----------------------------------------------------------------------------------------------------------------------------------
7 Halling & Halling Windmill Repair 1,000.00
----------------------------------------------------------------------------------------------------------------------------------
8 Mark K. Hehnke 35,000.00
----------------------------------------------------------------------------------------------------------------------------------
9 Randy H. Henderson 1,500.00 4,500
----------------------------------------------------------------------------------------------------------------------------------
a Randy Henderson 800.00
----------------------------------------------------------------------------------------------------------------------------------
b Annette Jay 12,000.00
----------------------------------------------------------------------------------------------------------------------------------
10 Ronald Jay 126,797.00 20,000
----------------------------------------------------------------------------------------------------------------------------------
a Joel Jay 6,500.00
----------------------------------------------------------------------------------------------------------------------------------
11 Kildare Lumber Company 15,000.00
----------------------------------------------------------------------------------------------------------------------------------
12 James D. Lawler 134,954.00
----------------------------------------------------------------------------------------------------------------------------------
a James D. Lawler-Alexander Perlinger 3,000.00
----------------------------------------------------------------------------------------------------------------------------------
b James D. Lawler-Elizabeth Upton 3,000.00
----------------------------------------------------------------------------------------------------------------------------------
c James D. Lawler-Miriam Madden 3,000.00
----------------------------------------------------------------------------------------------------------------------------------
d James D. Lawler-Mattingling Perlinger 3,000.00
----------------------------------------------------------------------------------------------------------------------------------
e James D. Lawler-Melissia Madden 3,000.00
----------------------------------------------------------------------------------------------------------------------------------
f James D. Lawler-Zachary Upton 3,000.00
----------------------------------------------------------------------------------------------------------------------------------
g James D. Lawler-Zebediah Upton 3,000.00
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Rights
------
Shareholder Name Shares Held 1992 1993 1994 1995 1996 1997 1998 1999
---------------- ----------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
h Jim Lawler 500.00
----------------------------------------------------------------------------------------------------------------------------------
I Peggy Lawler 134,954.00
----------------------------------------------------------------------------------------------------------------------------------
Raymond Leisy 44,705.00
----------------------------------------------------------------------------------------------------------------------------------
13 a Betty Leisy and Raymond Leisy 12,000.00
----------------------------------------------------------------------------------------------------------------------------------
b Raymond Leisy and Betsy Leisy 10,000.00
----------------------------------------------------------------------------------------------------------------------------------
c Larry Leisy 5,000.00
----------------------------------------------------------------------------------------------------------------------------------
Glenn A. Mull 507,184.00
----------------------------------------------------------------------------------------------------------------------------------
14 David L. Patton 290,908.00 7,500 10,000 10,000 10,000 10,000 10,000 10,000 10,000
----------------------------------------------------------------------------------------------------------------------------------
15 a David L. Patton & Margaret A. Patton 841,981.00
----------------------------------------------------------------------------------------------------------------------------------
b David L. Patton - Kathleen S. 900.00
----------------------------------------------------------------------------------------------------------------------------------
Edward Wade 146,984.00 2,500 10,000 10,000
----------------------------------------------------------------------------------------------------------------------------------
16 a Edward Wade 45,600.00
----------------------------------------------------------------------------------------------------------------------------------
b Edward Wade 18,700.00
----------------------------------------------------------------------------------------------------------------------------------
Greg Wade 3,000.00
----------------------------------------------------------------------------------------------------------------------------------
17 Steve Van-Boening-Local Science Teacher 1,000.00
----------------------------------------------------------------------------------------------------------------------------------
18 Ray Ness-Building Group 15,000.00
----------------------------------------------------------------------------------------------------------------------------------
19 Dennis Dahlkoetter-
Building Group D&D Electric 10,000.00
----------------------------------------------------------------------------------------------------------------------------------
20 W.M. Franken 37,500.00
----------------------------------------------------------------------------------------------------------------------------------
21 A.C. Boland 6,000.00
----------------------------------------------------------------------------------------------------------------------------------
22 Phil Farmer 8,000.00
----------------------------------------------------------------------------------------------------------------------------------
23 Jim Jadon 2,500.00
----------------------------------------------------------------------------------------------------------------------------------
24 Mark Sullivan 15,000.00
----------------------------------------------------------------------------------------------------------------------------------
25 Total 3,365,833.00
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
*Dave Patton 24,566.00
----------------------------------------------------------------------------------------------------------------------------------
3,390,399.00
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 2.1
(Titan Options to be Granted to Exchanging Shareholders
After Exercise by Mr.Patton of Options to Acquire 24,566 Shares of Common Stock)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Exchanging Shareholder W.W. Capital Options Titan Options to be
Name: Currently Held: Issued:
------------------------ ---------------------------------- ------------------------------------
------------------------ ---------------------------------- ------------------------------------
Year Number Exercise Number of
Issued: of Options: Price: Options: Exercise Price:
------------------------ ---------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C>
Fred Deyoe 1994 10,000 $0.75 10,000 $0.75
------------------------ ---------------------------------- ------------------------------------
Lloyd T. Frederickson 1998 10,000 $0.13 10,000 $0.13
------------------------ ---------------------------------- ------------------------------------
Lloyd T. Frederickson 1999 10,000 $.0625 10,000 $.0625
------------------------ ---------------------------------- ------------------------------------
Randy Henderson 1994 4,500 $0.75 4,500 $0.75
------------------------ ---------------------------------- ------------------------------------
Ronald Jay 1994 20,000 $0.75 20,000 $0.75
------------------------ ---------------------------------- ------------------------------------
David L. Patton 1992 7,500 $2.50 7,500 $2.50
------------------------ ---------------------------------- ------------------------------------
David L. Patton 1993 10,000 $.8125 10,000 $.8125
------------------------ ---------------------------------- ------------------------------------
David L. Patton 1994 10,000 $0.75 10,000 $0.75
------------------------ ---------------------------------- ------------------------------------
David L. Patton 1995 10,000 $.5625 10,000 $.5625
------------------------ ---------------------------------- ------------------------------------
David L. Patton 1997 10,000 $0.17 10,000 $0.17
------------------------ ---------------------------------- ------------------------------------
David L. Patton 1998 5,434 $0.13 5,434 $0.13
------------------------ ---------------------------------- ------------------------------------
Edward Wade 1994 2,500 $0.75 2,500 $0.75
------------------------ ---------------------------------- ------------------------------------
Edward Wade 1995 10,000 $.5625 10,000 $.5625
------------------------ ---------------------------------- ------------------------------------
Edward Wade 1996 10,000 $.063 10,000 $.063
------------------------ ---------------------------------- ------------------------------------
Totals: 129,934 129,934
--------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 2.3
(Promissory Note)
PROMISSORY NOTE
$200,000.00 January 5, 2001
FOR VALUE RECEIVED, and intending to be legally bound, W.W. CAPITAL
CORPORATION, a Nevada Corporation ("Debtor") hereby promises to pay to the order
of TITAN INDUSTRIES, INC., a Nebraska corporation whose address is P.O. Box 308,
Paxton, Nebraska 69155-0030, ("Holder") the principal amount of Two Hundred
Thousand Dollars ($200,000.00) ("Principal Amount") subject to the following
terms and conditions:
1. The principal amount of this Note shall bear interest at two
percentage points above the prime lending rate of Wells Fargo Business Credit,
or any successor entity, per annum (the "Rate" said Rate to be determined as of
the date hereof, and adjusted quarterly) until the principal amount hereof,
together with all accrued and unpaid interest, has been paid in full.
Hereinafter, the total outstanding principal balance hereof, together with any
and all accrued and unpaid interest shall be referred to as the "Loan Amount."
2. Subject to the terms and conditions hereinbelow set forth:
the Loan Amount shall be payable in twelve (12) quarterly
installments, each consisting of one-twelfth (1/12) of the
Principal Amount, plus all accrued interest, with the first
installment due and payable on March 31, 2001 and the final
installment together with all accrued but unpaid interest, due
and payable on December 31, 2003. Interest shall accrue
commencing September 1, 2000; provided, however, that if the
entire Loan Amount is paid in full on or before the earlier of
(i) five (5) business days following the date the Company has
obtained permanent financing on its new plant facilities in
Thomas, Oklahoma, or (ii) January 31, 2001, all interest
accruing during the period commencing September 1, 2000
through and including the date of this Note, shall be waived
and the Company shall only be obligated to pay interest on the
principal balance hereof for the period commencing with the
date of this Note, through and including the date the Loan
Amount is paid in full.
3. If Debtor shall default in the payment of principal hereunder when
the same shall become due and payable, the unpaid principal sum of this Note
shall immediately bear interest at four percentage points above the prime
lending rate of Wells Fargo Business Credit or any successor entity per annum
until paid in full, and shall be payable monthly or, at the option of Holder
hereof, on demand.
4. Debtor may at any time prepay the entire unpaid principal of this
Note or any part thereof without additional interest or penalty. Any prepayment
in part shall be applied first to accrued but unpaid interest hereunder, and
second to installments or principal in the reverse order of maturity.
-1-
<PAGE>
5. Payments of both principal and interest on this Note shall be made
to Holder in immediately available funds in lawful money of the United States.
6. This Note is fully negotiable and may be assigned or pledged by
Holder. Neither this Note nor the obligations of Debtor hereunder may be
assigned or delegated by Debtor without the prior written consent of Holder.
7. The occurrence of any of the following events ("Events of Default")
with respect to Debtor, shall constitute a default hereunder: (a) if any payment
of principal or interest shall not be paid in full when due, and shall continue
unpaid for a period of fifteen (15) days thereafter; or (b) if a default shall
occur under any covenant contained in any instrument relating to the rights of
Holder hereunder.
8. Upon the occurrence of a default hereunder, the entire principal
balance of this Note plus accrued interest, shall, at the option of Holder,
become immediately due and payable without notice or demand, and Holder shall
have all rights and remedies provided under all applicable laws and shall be
deemed to have exercised the same immediately upon the occurrence of any such
event without notice or further action, irrespective of when any record of the
same may thereafter be noted by Holder.
9. Failure by Holder to declare a default hereunder shall not
constitute a waiver of such default or any subsequent default. Debtor further
promises to pay the reasonable attorney's fees, court costs, and any other
expenses, losses, charges, damages incurred or advances made by Holder in
protection of its rights or caused by Debtor's default under the terms of this
Note.
10. If Holder retains an attorney for collection of this Note, or if
any suit or proceeding is brought for the recovery of all or any part of or for
protection of the indebtedness, or any collateral, or to enforce Holder's rights
under any security agreement, or letter of credit securing the Principal Amount,
or other collateral agreement, then Debtor agrees to pay on demand all
reasonable costs and expenses of the suit or proceeding, or any appeal thereof,
incurred by Holder, including, without limitation, reasonable attorney's fees.
11. The terms of this Note shall not be varied, altered or modified
except by a writing signed by Holder and Debtor.
12. Debtor hereby waives presentment for payment or acceptance, demand
and protest, and notice of protest, dishonor and non-payment of this Note.
13. No delay on the part of Holder in exercising any power or right
under this Note shall operate as a waiver of the power or right, nor shall any
single or partial exercise of that power or right, preclude further exercise of
that power or right. The rights and remedies specified in this Note are
cumulative and not exclusive of any rights and remedies that Holder may
otherwise possess.
-2-
<PAGE>
14. The provisions of this Note shall be severable, so that if any
provision hereof is declared invalid under the laws of any state where it is in
effect, or of the United States, all other provisions of this Note shall
continue in full force and effect.
15. This Note shall be binding upon Debtor and its successors and
assigns, and shall inure to the benefit of and be enforceable by Holder, its
successors and assigns.
16. This Note shall be governed by and construed in accordance with the
laws of the State of Nebraska, without giving effect to Nebraska principles of
conflicts of law.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
undersigned has caused this Note to be executed on the date first above written.
Date: January 5 , 2001
W.W. CAPITAL CORPORATION,
A Nevada corporation
By:
---------------------------
Steven Zamzow, President
-3-
<PAGE>
EXHIBIT 2.4.1(a)
(Company Guarantee Obligations Relating to Titan or its Operations)
1. ACE USA Property (formally CIGNA) Workmen's Compensation
Insurance Premiums (actual);
2. AFLAC Insurance Premiums (actual)
3. Anthen (AH&L) (actual)
4. AST fees and costs (40% of actual);
5. Flood and Peterson Insurance Premiums (actual);
6. Jones & Keller, P.C. and Due Diligence, Inc. (limited to $25,000);
7. MCI phone charges (actual);
8. McLeod USA (actual);
9. Principal 401(k) fees (40% of actual);
10.Standard Insurance (actual);
11.Woodburn and Wedge legal fees (50% of actual);
12.Workmen's Compensation premium adjustments based on audit results (actual)
13.Worldcom Technologies (actual)
14.UPS costs, expenses and fees (actual)
<PAGE>
EXHIBIT 2.4.1(b)
(Titan Releases to be Delivered to the Company)
1. PW Pipe (formally Eagle Pacific);
2. Wells Fargo Business Credit (formally Norwest Business Credit);
3. Pinnacle Bank, Ogallala, Nebraska;
4. Keith County Economic Development Corporation;
5. Southwest Leasing for all Titan leased vehicles;
6. Ford Motor Credit for all Titan leased vehicles;
7. McDonald & Fredrickson
<PAGE>
EXHIBIT 2.4.2
(Titan Guarantee Obligations Relating to the Company or its Operations)
1. Wells Fargo Business Credit (formally Norwest Business Credit).
<PAGE>
EXHIBIT 2.4.5
(McDonald & Fredrickson, P.C., Release)
EXHIBIT 2.4.5
GENERAL RELEASE
January 5, 2001
IN ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW THAT for
and in consideration of receipt of the sum of $10,970.24, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned hereto, intending to be legally bound, does, on
behalf of itself, its officers, directors, shareholders, members and/or
employees, hereby fully and forever remise, release, and discharge W.W. Capital
Corporation, a Nevada corporation (the "Company") and its subsidiaries,
including Titan Industries, Inc., a Nebraska corporation, their successors and
assigns, officers, directors and employees, from any and all rights, claims,
demands, agreements, contracts, covenants, promises, actions, suits, causes of
action, obligations, bonds, variances, controversies, debts, costs, sums of
money, expenses, accounts, damages, judgments, losses and liabilities of
whatever kind or nature, in law or in equity or otherwise, whether known or
unknown, which the undersigned ever had, now has, or shall in the future have,
or which its successors, assigns or representatives shall or may in the future
have, for any reason whatsoever, arising out of or relating to facts and
circumstances existing at any time prior to the execution of this General
Release, including, but not limited to, the performance of legal services for or
on behalf of any of the foregoing. This General Release may not be changed
orally.
IN WITNESS WHEREOF, the undersigned hereto has duly executed this
General Release as of the date first above written.
McDONALD & FREDRICKSON, P.C.
_______________________________
Name:__________________________
Title:_________________________
_______________________________
Jean A. McDonald, Individually
_______________________________
Kirk D. Fredrickson, Individually
<PAGE>
EXHIBIT 2.6
(Tax Sharing Agreement)
TAX SHARING AGREEMENT
TAX SHARING AGREEMENT dated January 5 , 2001 by and between WW
CAPITAL CORPORATION, a Nevada corporation, ("WW"), and its wholly-owned
subsidiary TITAN INDUSTRIES, INC., a Nebraska corporation ("Titan").
W I T N E S S E T H:
-------------------
The parties hereto agree as follows:
1. Titan has consented, as provided in Internal Revenue Code Section
1501, to the filing with WW of consolidated income tax returns and with respect
to any income or franchise tax for which a consolidated return is permitted by
law, for taxable years in which Titan and WW are included in an affiliated
group.
2. For taxable years WW and Titan are included in a consolidated income
tax return or returns (whether or not other corporations are included in the
affiliated group filing such tax return or returns), on each due date for the
payment of any income tax (or any portion thereof, including installments of
estimated tax), Titan shall pay to WW the amount of its separate income tax
liability calculated in accordance with Section 3 hereof. The Parties agree to
treat Titan as if it had paid to WW the amount of its separate income tax
liability, calculated in accordance with Section 3 hereof and based upon WW's
consolidated tax returns as filed, for each year in which Titan has been
included in WW's consolidated income tax return, through the taxable year ended
June 30, 1999. WW further acknowledges that Titan has made an estimated payment
to WW for the amount of its separate income tax liability for the taxable year
ended June 30, 2000 in the amount of $6,500. When the consolidated income tax
return for the taxable year ended June 30, 2000 is finalized, Titan shall pay to
WW the excess over the estimated amount if Titan's separate income tax liability
exceeds $6,500 and WW shall pay to Titan the overpayment if $6,500 exceeds
Titan's separate income tax liability calculated in accordance with Section 3
hereof. In the event that upon audit of any consolidated tax returns, there are
adjustments that would have affected Titan's separate income tax liability,
Titan shall make such additional payments to WW of its separate income tax
liability calculated in accordance with Section 3 hereof, including payment of
interest.
3. The amount of separate income tax liability that Titan would have
been obligated to pay had it not filed a consolidated income tax return or
returns with WW shall be computed as follows:
(a) Titan shall be considered to have the same taxable year as
WW (except for short taxable years, if any, when Titan entered or
leaves the affiliated group).
(b) Such computation shall be made solely by reference to both
WW's and Titan's book net income before management fees and income
taxes, provided that after June 30,
1
<PAGE>
2000, such computation shall be made solely by reference to Titan's
and WW's book net income before income taxes only (both hereinafter
referred to as "book net income").
(c) Titan's separate income tax liability shall be the amount
of the consolidated income tax liability for such year allocated in the
proportion that Titan's book net income bears to the consolidated
group's book net income.
(d) If there is any adjustment to taxable income, upon audit
or otherwise, a corresponding adjustment shall be made to book net
income to reflect such adjustment in calculating Titan's separate
income tax liability.
(e) The net operating losses of the consolidated group
previously used to reduce Titan consolidated income for a particular
year, shall remain available to reduce Titan's separate income tax
liability for that year, to the extent there is any separate income tax
liability when such tax liability is calculated in accordance with
3(a)-(d). For the consolidated group income tax return for the period
ending June 30, 2001, a portion of the remaining consolidated group net
operating loss carryforward, which shall not include any net operating
loss or net operating loss carryforward relating to or arising from the
Paul Scale Company, shall be allocated to Titan in the proportion that
its separate income tax liability, calculated as provided in 3(a)-(d)
above, bears to the income tax liability of WW calculated in a similar
manner after excluding Titan's separate taxable income, but only to the
extent the allocation of such portion of the consolidated net operating
loss carryforward is necessary to reduce Titan's separate income tax
liability to zero.
4. In the event that Titan shall have made payments to WW for any
period in excess of its separate income tax liability (whether determined upon
audit or otherwise), the amount of any such overpayment will be paid to Titan by
WW together with interest, if any, in the amount which would have been paid by
the applicable taxing authority. Such payments shall be made to Titan no later
than such payments would have been made to Titan by the applicable taxing
authority had Titan filed a separate return. WW will cooperate with Titan in the
filing of a refund claim with the appropriate taxing authority (and, if
necessary, in the filing of a refund suit) at Titan's expense, if Titan is
entitled to a refund of its separate income tax liability.
5. With respect to any taxable year in which Titan is not included in a
consolidated income tax return filed by WW and files a separate income tax
return (including filing on a consolidated basis with an affiliated group which
does not include WW), if an item or items of loss, deduction or credit (or any
portion thereof), and including any carryback or carryover of such item or
items, claimed on such separate return filed by Titan were previously taken into
account in computing the separate return tax liability of Titan for a prior
taxable year in which Titan was included in a consolidated return filed by WW,
Titan shall pay to WW within 30 days after WW gives notice to Titan an amount
equal to the excess, if any, of the tax liability which would have been shown on
such separate return had such item or items not been claimed on such return over
the actual tax liability shown on such separate return.
2
<PAGE>
6. Deleted.
7. If any separate income tax liability is not timely paid by Titan to
WW, WW upon thirty (30) days written notice to Titan may, if it so elects,
offset such liability against any intercompany receivables owed by WW to Titan,
including those receivables reflected in promissory notes between WW and Titan,
and the outstanding balance of such debt obligation, including interest thereon,
shall be reduced by the amount of the offset.
8. WW agrees to indemnify and hold Titan harmless against and from any
claims against Titan of liability for income taxes, interest thereon and
penalties with respect to any period and any taxing authority as to which WW
filed a consolidated return including Titan, and for which Titan has paid its
separate income tax liability as provided in this Agreement.
9. WW shall remain the sole agent of each subsidiary included in the
affiliated group for which consolidated income tax returns are filed, to act in
all matters relating to the tax liability for a consolidated return year as
provided in Treasury Regulation Section 1.1502-77; provided, however, that with
respect to any audit by any taxing authority or any refund claim affecting
Titan's separate income tax liability (determined in accordance with Section 3
hereof), Titan shall have the right to defend or contest any matter in dispute
with the taxing authority in accordance with the principles set forth in Section
8.4.1 of the Stock Transfer and Exchange Agreement entered into by inter alia,
Titan and WW as of even date herewith, applied as though Titan were the
Indemnifying Party.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
WW CAPITAL, INC.
By:__________________________________
Its:__________________________________
TITAN INDUSTRIES, INC.
By:__________________________________
Its:__________________________________
3
<PAGE>
EXHIBIT 3.5.10(a)
EXCHANGING SHAREHOLDER REPRESENTATIVE APPOINTMENT
AND POWER OF ATTORNEY
1. The undersigned shareholder ("Exchanging Shareholder") of W.W.
Capital Corporation, a Nevada corporation (the "Company") hereby appoints Ronald
Jay and David Patton, or either of them (collectively the "Representatives") to
serve as the Exchanging Shareholder's exchange representative, solely in
connection with the possible split-off (the "Split-Off") of Titan Industries,
Inc. ("Titan") by the Company to a group of existing Company shareholders,
including the Exchanging Shareholder. In the Split-Off, all of the Exchanging
Shareholder's shares of Company stock, together with all options, warrants and
other rights ("Rights") exercisable to acquire and/or convertible into shares of
Company stock, if any, would be exchanged (the "Exchange") for shares of Titan
stock.
2. The Exchanging Shareholder acknowledges that the Representatives
have such knowledge and experience in financial and business matters that they
are capable of evaluating, either alone or together with the Exchanging
Shareholder, the merits and risks of the Exchange, and the Exchanging
Shareholder is relying upon the Representatives' evaluation.
3. The Exchanging Shareholder understands that the Representatives are
also shareholders of the Company. Of the shares of Company stock outstanding as
of October 27, 2000, Mr. Jay owns beneficially 145,297 shares, or approximately
2.7%, together with Rights exercisable to acquire up to an additional 20,000
shares, and Mr. Patton owns beneficially 1,132,889 shares, or 20.5%, together
with Rights exercisable to acquire up to an additional 67,500 shares. The
Exchanging Shareholder understands that the Representatives will therefore
receive shares of Titan stock in the Exchange if the Split-Off is completed.
4. The Exchanging Shareholder hereby constitutes and appoints the
Representatives, as the Exchanging Shareholder's true and lawful
attorney-in-fact, solely and exclusively in order to execute and deliver, for
and on behalf of the Exchanging Shareholder, in the Exchanging Shareholder's
capacity as a shareholder of the Company, such documents, agreements and other
instruments in writing as the Representatives, in the Representatives' sole and
absolute judgment and discretion, may deem necessary or advisable to consummate
the Split-Off and the other transactions contemplated by or provided for in the
definitive Stock Transfer and Exchange Agreement among the Company, Titan and
others (the "Agreement"), and to do and perform any and all acts for and on
behalf of the Exchanging Shareholder which may be necessary or desirable under
the circumstances. It is understood that such instruments will be executed by
the Representatives on behalf of the Exchanging Shareholder pursuant to this
Power of Attorney and may be in such form and shall contain such terms and
conditions as the Representatives may approve in their sole discretion. This
Power of Attorney is coupled with an interest, and, to the extent permitted by
applicable law, shall survive the death or disability of the Exchanging
Shareholder. This Power of Attorney shall remain in full force and effect until
the consummation of the Split-Off or January 31, 2001, whichever is earlier,
unless earlier revoked by the Exchanging Shareholder in a signed writing
delivered to the Representatives.
EXCHANGING SHAREHOLDER:
Date: ________________ , 2000 ______________________________________
Name: ________________________________
Address:______________________________
______________________________
<PAGE>
EXHIBIT 3.5.10(b)
GENERAL RELEASE
January 5 , 2001
IN ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW THAT for
and in consideration of receipt a portion of the Titan Shares (as that term is
defined in that certain Stock Transfer and Exchange Agreement dated as of
December 1, 2000, among W. W. Capital Corporation, a Nevada corporation,
including its successors, affiliates, subsidiaries, officers, directors,
employees and assigns (the "Company"), Titan Industries, Inc., a Nebraska
corporation and certain shareholders of the Company (the "Agreement") and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the undersigned shareholder of the Company hereto,
intending to be legally bound, does hereby fully and forever remise, release,
and discharge the Company from any and all rights, claims, demands, agreements,
contracts, covenants, promises, actions, suits, causes of action, obligations,
bonds, variances, controversies, debts, costs, sums of money, expenses,
accounts, damages, judgments, losses and liabilities of whatever kind or nature,
in law or in equity or otherwise, whether know or unknown, which the undersigned
ever had, now has, or shall in the future have, for any reason whatsoever,
arising out of or relating to facts and circumstances existing at any time prior
to the execution of this General Release and at any time between the execution
of this General Release and the Closing Date (as defined in Section 1.2 of the
Agreement), provided, however, that nothing contained herein shall operate to
release any obligations of the Company to the Exchanging Shareholders (as
defined in the Agreement) pursuant to the terms of the Agreement, and further
provided, however, that if the Company brings any legal or equitable action
against the undersigned shareholder, the undersigned shareholder may pursue a
counterclaim or an offset against the Company on any legal or equitable theory
free from the terms of this General Release. If any part of this General Release
is found to be illegal or invalid by any court, the validity of any remaining
parts hereof shall not be affected. This General Release may not be changed
orally. The obligations of this General Release are binding upon the undersigned
shareholder and his/her/its heirs, devisees, beneficiaries, successors, assigns,
executors, administrators, and legal representatives.
IN WITNESS WHEREOF, the undersigned hereto has duly executed this
General Release as of the date first above written.
_________________________________
Name: _________________________________
Address: ______________________________
______________________________
______________________________
<PAGE>
EXHIBIT 3.5.10(c)
(Exchanging Shareholder Questionnaire)
W.W. CAPITAL CORPORATION
AND
TITAN INDUSTRIES, INC.
EXCHANGING SHARHOLDER QUESTIONNAIRE
Purpose of the Questionnaire
Pursuant to the terms of a proposed Stock Transfer and Exchange Agreement
(the "Agreement") by and among W. W. Capital Corporation, a Nevada corporation
("WW" or the "Company"), its wholly-owned subsidiary, Titan Industries, Inc., a
Nebraska corporation ("Titan"), and certain existing shareholders of the Company
(the "Exchanging Shareholders"), Titan would be acquired by the Exchanging
Shareholders in exchange for all of the Exchanging Shareholders' ownership
interests in the Company (the "Split-Off").
The shares of Titan common stock to be delivered in exchange for the
Exchanging Shareholders' ownership interests in the Company would not be
registered under the Securities Act of 1933, as amended (the "Act"), or the
securities laws of any state, in reliance on exemptions contained in the Act and
in reliance on similar exemptions under applicable state laws. Before signing
the Agreement the Company and Titan must determine that the Exchanging
Shareholders satisfy the requirements for those exemptions. As a result, this
Questionnaire must be completed by each Exchanging Shareholder. This
Questionnaire does not constitute an offer to sell or a solicitation of an offer
to buy shares of Titan common stock or any other security.
ALL EXCHANGING SHAREHOLDERS ARE BEING REQUIRED BY THE COMPANY AND TITAN TO
COMPLETE AN EXCHANGING SHAREHOLDER QUESTIONNAIRE. ANY EXCHANGING SHAREHOLDER,
EITHER ALONE OR WITH HIS/HER PURCHASER REPRESENTATIVE(S) WHO IS NOT AN
ACCREDITED INVESTOR AS DEFINED BY REGULATION D, WHO HAS NOT DULY COMPLETED AN
EXCHANGING SHAREHOLDER QUESTIONNAIRE, WILL NOT BE ALLOWED TO PARTICIPATE IN THE
SPLIT-OFF. ADDITIONALLY, AN EXCHANGING SHAREHOLDER, EITHER ALONE OR WITH HIS/HER
PURCHASER REPRESENTATIVE(S) WHO IS NOT AN ACCREDITED INVESTOR MAY BE EXCLUDED
FROM PARTICIPATING IN THE SPLIT-OFF ON THE BASIS OF THE INFORMATION SET FORTH IN
HIS/HER EXCHANGING SHAREHOLDER QUESTIONNAIRE IF THE COMPANY AND TITAN HAVE
CONCLUDED THAT THE EXCHANGING SHAREHOLDER FAILS TO MEET THE INVESTOR SUITABILITY
REQUIREMENTS ESTABLISHED BY THE COMPANY AND TITAN.
Instructions
One (1) copy of this Questionnaire should be completed, signed, dated and
delivered to the Company. Please contact the attorney for the Exchanging
Shareholders, Deke Karzon, Esq., with the law firm of Husch & Eppenberger, LLC,
100 N. Broadway, Suite 1300, St. Louis, MO 63102 (Telephone No. (314) 622-0676),
if you have any questions with respect to the Questionnaire.
PLEASE ANSWER ALL QUESTIONS. If the appropriate answer is "None" or "Not
Applicable" so state. Please print or type your answers to all questions. Attach
additional sheets if necessary to complete your answers to any item.
Your answer will be kept strictly confidential at all times; however, the
Company and/or Titan may present this Questionnaire to such parties as they deem
appropriate in order to assure themselves that consummation of the Split-Off
will not result in a violation of federal securities laws or the securities laws
of any state.
-1-
<PAGE>
1. NAME AND ADDRESS. Please provide the following personal information:
----------------
Name: Age:
----------------------------------------- ------------------
Residence Address
(including Zip Code):
------------------------------------------------
Business Address
(including Zip Code):
------------------------------------------------
Telephone: Res.: Bus.:
-------------------- ---------------------
Preferred Mailing Address: __ Residence __ Business
2. NUMBER OF SHARES OF W.W. CAPITAL CORPORATION COMMON STOCK, AND OPTIONS
CONVERTIBLE INTO SHARES OF W.W. CAPITAL CORPORATION COMMON STOCK, YOU CURRENTLY
OWN.
Shares . Options .
---------------------------------- ------------------
3. SUITABILITY STANDARDS.
---------------------
(a) Please indicate your individual or joint (with spouse) annual
income during 1999 and your expected annual income* during 2000 by marking the
appropriate box.
INDIVIDUAL JOINT
---------- -----
INCOME 1999 2000 1999 2000
------ ---- ---- ---- ----
Less than $70,000 o o o o
$70,001 to $100,000 o o o o
$100,001 to $150,000 o o o o
$150,001 to $200,000 o o o o
$200,001 to $250,000 o o o o
$250,001 to $300,000 o o o o
In excess of $300,000 o o o o
-2-
<PAGE>
(b) Please indicate your individual or joint (with spouse) net
worth (excluding the principal residence, its furnishings and your automobiles)
by marking the appropriate box.
NET WORTH INDIVIDUAL JOINT
--------- ---------- -----
Less than $150,000 o o
$150,001 to $250,000 o o
$250,001 to $500,000 o o
$500,001 to $1,000,000 o o
In excess of $1,000,000 o o
4. SOPHISTICATION.
---------------
(a) Please list all the educational institutions you have attended
(including high schools, colleges, and specialized training schools) and
indicate the dates attended and the degree(s) (if any) obtained from each.
From - To Institution Degree
--------- ----------- ------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(b) Please provide the following information concerning your business
experience:
(i) Indicate your principal business experience or other
occupations during the last ten years. (Please list your present, or most
recent, position first and the others in reverse chronological order.)
Name and Address
From - To of Employer Position
--------- ----------- --------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
-3-
<PAGE>
(ii) Describe, in greater detail, your present or most recent
business or occupation, as listed in your answer to Question 4(b). Please
indicate such information as the nature of your employment, the principal
business of your employer, the principal activities under your management
or supervision and the scope (e.g. dollar volume, industry rank, etc.) of
such activities.
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(iii) Describe any significant business you engage in or intend
to engage in other than as specified above.
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(c) Please provide the following information concerning your
financial experience:
(i) Indicate by check mark which of the following categories best
describes the extent of your prior experience in the areas of investment
listed below:
Substantial Limited No
Experience Experience Experience
Marketable securities
---------- ---------- ----------
Government securities
---------- ---------- ----------
Municipal (tax-exempt)
securities
---------- ---------- ----------
Stock options
---------- ---------- ----------
Commodities
---------- ---------- ----------
Real estate programs
---------- ---------- ----------
Securities for which
no market exists
---------- ---------- ----------
Limited partnerships or
limited Liability companies
---------- ---------- ----------
Tax deferred
investment generally
---------- ---------- ----------
-4-
<PAGE>
(ii) For those investments for which you indicated "substantial
experience" above, please answer the following additional questions by
checking the appropriate box:
(A) Do you make your own investment decisions with
respect to such investments?
o Always o Frequently
o Usually o Rarely
(B) What are your principal sources of
investment knowledge or advice (you may check more than one):
o First hand experience with industry
o Financial publication(s)
o Trade or industry publication(s)
o Banker(s)
o Broker(s)
o Investment Adviser(s)
o Attorney(s)
o Accountant(s)
(iii) Indicate by check mark whether you maintain any of the
following types of accounts over which you, rather than a third party,
exercise investment discretion, and the length of time you have maintained
each type of account.
Securities (cash) o o Number of years
-------
Yes No
Securities (margin) o o Number of years
-------
Yes No
Commodities o o Number of years
-------
Yes No
(d) Please provide in the space below any additional information which
would indicate that you have sufficient knowledge and experience in financial
and business matters so that you are capable of evaluating the merits and risks
of investing in restricted securities of an enterprise such as the Company and
Titan, and, specifically, provide information regarding your experience in
investing in private placements of restricted securities for which there did not
exist at the time of purchase any public market.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-5-
<PAGE>
5. By signing the Questionnaire I hereby confirm the following statements:
(a) I acknowledge that any delivery to me of offering materials
relating to the Split-Off prior to the determination by the Company of my
suitability as an investor shall not constitute an offer of the Securities until
such determination of suitability shall be made, and I agree that I shall
promptly return all such materials to the Company upon request.
(b) My answers to the foregoing questions are true and complete to the
best of my information and belief, and I will promptly notify the Company and
Titan of any changes in the information I have provided.
___________________________________
(Printed Name)
___________________________________
(Signature)
DATE AND PLACE EXECUTED:
Date:
-----------------------------
Place:
-----------------------------
-6-
<PAGE>
EXHIBIT 3.6.11
(Significant Shareholder Consent and Release)
<PAGE>
SIGNIFICANT SHAREHOLDER CONSENT
AND
GENERAL RELEASE
January 5, 2001
RECITALS:
---------
WHEREAS, pursuant to the terms of that certain Stock Transfer and
Exchange Agreement (the "Agreement") dated as of December 1, 2000, among W.W.
Capital Corporation, a Nevada corporation (the "Company"), Titan Industries,
Inc., a Nebraska corporation and wholly-owed subsidiary of the Company ("Titan")
and certain shareholders of the Company (defined in the Agreement as the
"Exchanging Shareholders") the obligation of Titan and the Exchanging
Shareholders to consummate the Split-Off (as defined in the Agreement) and other
transactions contemplated by the Agreement is contingent upon receipt by Titan
and the Exchanging Shareholders of this Significant Shareholder Consent and
General Release executed by certain Significant Shareholders of the Company,
including the undersigned Significant Shareholder; and
WHEREAS, by executing this Significant Shareholder Consent and General
Release, each Significant Shareholder acknowledges that he has had an
opportunity to review the Agreement and its related Exhibits with counsel, that
he approves and consents to the Split-Off and other transactions contemplated by
the Agreement, and each releases Titan and the Exchanging Shareholders from any
and all claims he may have against each, if any, under the terms and conditions
set forth herein; and
WHEREAS, the undersigned Significant Shareholder has received a copy of
the Agreement and all related Exhibits and documents and has had an opportunity
to have the same reviewed by counsel of his choice and such other advisors as he
has deemed necessary; and
WHEREAS, the undersigned Significant Shareholder is willing to approve
and consent to the Split-Off and other the transactions contemplated by the
Agreement and to waive and/or release Titan and the Exchanging Shareholders from
any and all claims he may have against each, if any, under the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in the Agreement, and other good and
valuable consideration, the receipt and adequacy whereof is hereby acknowledged,
the undersigned Significant Shareholder agrees as follows:
CONSENT
-------
The undersigned Significant Shareholder hereby acknowledges, warrants
and represents that as of the date hereof, the undersigned Significant
Shareholder has received, read and reviewed, individually and with the
assistance of, and input from, the counsel of his choice and such other advisors
as he has deemed necessary, the following documents:
1. Stock Transfer and Exchange Agreement dated December 1, 2000 by and
between the Company, Titan and the Exchanging Shareholders to which
this Significant Shareholder Consent and General Release is attached
as Exhibit 3.6.11; and
<PAGE>
2. Exhibit 2.1 to the Agreement containing a list of Titan Options to be
granted to Exchanging Shareholders after exercise by Mr. Patton of
Options to acquire 24,566 shares of the Company's common stock; and
3. Exhibit 2.3 to the Agreement containing a copy of a Promissory Note
executed by the Company in favor of Titan in the original principal
amount of $200,000; and
4. Exhibit 2.4.1(a) to the Agreement containing a list of Company
guarantee obligations relating to Titan or its operations; and
5. Exhibit 2.4.1(b) to the Agreement containing a list of Titan releases
to be delivered to the Company; and
6. Exhibit 2.4.2 to the Agreement containing a list of Titan guarantee
obligations relating to the Company or its operations; and
7. Exhibit 2.4.5 to the Agreement containing a copy of the McDonald &
Fredrickson, P.C., release; and
8. Exhibit 2.6 to the Agreement containing a copy of the Tax Sharing
Agreement; and
9. Exhibit 3.5.10(a) to the Agreement containing a copy of the Exchanging
Shareholder Representative Appointment and Power of Attorney; and
10. Exhibit 3.5.10(b) to the Agreement containing a copy of the General
Release to be executed by the Exchanging Shareholders in favor of the
Company; and
11. Exhibit 3.5.10(c) to the Agreement containing a copy of the Exchanging
Shareholder Questionnaire; and
12. Exhibit 3.6.11 to the Agreement containing a copy of this Significant
Shareholder Consent and General Release; and
13. Exhibit 3.6.12 to the Agreement containing a copy of the General
Release to be executed by the Company in favor of Titan and the
Exchanging Sharegholders ; and
14. Exhibit 3.7.1.6 to the Agreement containing a copy of the Titan Share
Distribution List; and
15. Exhibit 3.7.1.15 to the Agreement containing a copy of an Officer's
Certificate to be delivered at Closing by the President of the
Company; and
16. Exhibit 3.7.2.3 to the Agreement containing a copy of the Transmittal
Letter to be executed and delivered to the Company by each Exchanging
Shareholder; and
2
<PAGE>
17. Exhibit 4.2 to the Agreement detailing contingencies related to the
Company's ability to consummate the Split-Off and other transactions
contemplated by the Agreement; and
18. Exhibit 4.3 to the Agreement detailing Company Tax Matters; and
19. Exhibit 4.4 to the Agreement detailing pending or threatened actions
or proceedings relating to or against the Company; and
20. Exhibit 4.7 to the Agreement detailing Company liens or encumbrances;
and
21. Exhibit 5.5 to the Agreement detailing the Exchanging Shareholders'
Shares and Rights and Related Representations; and
22. Exhibit 6.1 to the Agreement containing a copy of the Exchanging
Shareholder Lock-Up Agreement; and
23. Exhibit 6.3 to the Agreement containing a copy of the Titan Lock-Up
Agreement; and
24. Exhibit 6.4 to the Agreement containing a copy of the Company Lock-Up
Agreement; and
25. A copy of the Summary Disclosure delivered to each of the Exchanging
Shareholders; and
26. A copy of the Loan Agreement between the Company and West-OK
Investment, LLC relating to a loan from West-Ok Investment, LLC to the
Company of $1,000,000, including a copy of the related Promissory Note
and Stock Pledge Agreement attached to the Loan Agreement as Exhibit A
and Exhibit B respectively.
Based on his review of the above referenced documents, and having had
an opportunity to review the same with counsel of his choice and such other
advisors as the undersigned Significant Shareholder deemed necessary, the
undersigned Significant Shareholder hereby approves and consents to the
consummation by the Company of the Split-Off and other transactions contemplated
by the Agreement and the Exhibits thereto.
GENERAL RELEASE
---------------
IN ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW THAT for
and in consideration of the mutual covenants, agreements, representations and
warranties contained in the Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
undersigned Significant Shareholder, intending to
3
<PAGE>
be legally bound, does hereby fully and forever remise, release, and discharge
Titan and its successors, affiliates, subsidiaries, officers, directors,
employees and assigns, and the Exchanging Shareholders and their heirs,
devisees, beneficiaries, successors, assigns, executors, administrators, and
legal representatives from any and all rights, claims, demands, agreements,
contracts, covenants, promises, actions, suits, causes of action, obligations,
bonds, variances, controversies, debts, costs, sums of money, expenses,
accounts, damages, judgments, losses and liabilities of whatever kind or nature,
in law or in equity or otherwise, whether known or unknown, which the
undersigned ever had, now has, or shall in the future have, for any reason
whatsoever, arising out of or relating to facts and circumstances existing at
any time prior to the execution of this Consent and General Release and at any
time between the execution of this Consent and General Release and the Closing
Date (as defined in Section 1.2 of the Agreement), provided, however, that
nothing contained herein shall operate to release any obligations of Titan
and/or the Exchanging Shareholders to the undersigned Significant Shareholder
under the terms of the Agreement and further provided, however, that if Titan or
any of the Exchanging Shareholders brings any legal or equitable action against
Significant Shareholder, Significant Shareholder may pursue a counterclaim or an
offset on any legal or equitable theory free from the terms of this General
Release only against the person or entity bringing action against Significant
Shareholder. If any part of this General Release is found to be illegal or
invalid by any court, the validity of any remaining parts hereof shall not be
affected. This General Release may not be changed orally. The obligations of
this General Release are binding upon the undersigned Significant Shareholder
and his heirs, devisees, beneficiaries, successors, assigns, executors,
administrators and legal representatives.
IN WITNESS WHEREOF, the undersigned hereto has duly executed this
Significant Shareholder Consent and General Release as of the date first above
written.
SIGNIFICANT SHAREHOLDER:
Name:
---------------------------------
Address:
---------------------------------
4
<PAGE>
EXHIBIT 3.6.12
(Company Release)
<PAGE>
GENERAL RELEASE
_______________, 20___
IN ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW THAT for and
in consideration of receipt of the Exchanging Shareholders' Shares and
Exchanging Shareholders' Rights (as those terms are defined in that certain
Stock Transfer and Exchange Agreement dated as of December 1, 2000, among W. W.
Capital Corporation, a Nevada corporation, including its successors, affiliates,
subsidiaries, officers, directors, employees and assigns (the "Company"), Titan
Industries, Inc., a Nebraska corporation and certain shareholders ("Exchanging
Shareholders") of the Company (the "Agreement") and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company, intending to be legally bound, does hereby fully and forever remise,
release, and discharge Titan and the Exchanging Shareholders from any and all
rights, claims, demands, agreements, contracts, covenants, promises, actions,
suits, causes of action, obligations, bonds, variances, controversies, debts,
costs, sums of money, expenses, accounts, damages, judgments, losses and
liabilities of whatever kind or nature, in law or in equity or otherwise,
whether know or unknown, which the undersigned ever had, now has, or shall in
the future have, for any reason whatsoever, arising out of or relating to facts
and circumstances existing at any time prior to the execution of this General
Release and at any time between the execution of this General Release and the
Closing Date (as defined in Section 1.2 of the Agreement), provided, however,
that nothing contained herein shall operate to release any obligations of Titan
or the Exchanging Shareholders to the Company (as defined in the Agreement)
pursuant to the terms of the Agreement, and further provided, however, that if
Titan and/or any Exchanging Shareholder(s) brings any legal or equitable action
against the Company, the Company may pursue a counterclaim or an offset against
Titan and/or the Exchanging Shareholder on any legal or equitable theory free
from the terms of this General Release. If any part of this General Release is
found to be illegal or invalid by any court, the validity of any remaining parts
hereof shall not be affected. This General Release may not be changed orally.
The obligations of this General Release are binding upon the Company and its
successors, assigns and legal representatives.
IN WITNESS WHEREOF, the undersigned hereto has duly executed this General
Release as of the date first above written.
W. W. CAPITAL CORPORATION
By: ______________________________
Steve Zamzow, President
<PAGE>
EXHIBIT 3.7.1.6
(TITAN SHARE DISTRIBUTION LIST)
<TABLE>
<CAPTION>
Shares of Percentage of Number of
Shareholder Name W.W. Held Titan Shares Titan Shares
=========================================================== ============== ================= ===============
<S> <C> <C> <C>
1 Michael Armstrong 9500 0.0028 9500
----------------------------------------------------------- ------------ ------------------ ---------------
a Michael Armstrong 21500 0.0063 21500
----------------------------------------------------------- ------------ ------------------ ---------------
2 Bob Cullinan 284958 0.0840 284958
----------------------------------------------------------- ------------ ------------------ ---------------
a Beth Lann Cullinan 3000 0.0009 3000
----------------------------------------------------------- ------------ ------------------ ---------------
b Erin Cullinan 3000 0.0009 3000
----------------------------------------------------------- ------------ ------------------ ---------------
c Mark Cullinan 3000 0.0009 3000
----------------------------------------------------------- ------------ ------------------ ---------------
3 Fred Deyoe 238958 0.0705 238958
----------------------------------------------------------- ------------ ------------------ ---------------
4 Eakings & Snyder 15000 0.0044 15000
----------------------------------------------------------- ------------ ------------------ ---------------
a Bruce Snyder 10000 0.0029 10000
----------------------------------------------------------- ------------ ------------------ ---------------
5 Chuck Flaming 15000 0.0044 15000
----------------------------------------------------------- ------------ ------------------ ---------------
6 Lloyd T. Frederickson, TTE Lloyd Frederickson 230350 0.0679 230350
----------------------------------------------------------- ------------ ------------------ ---------------
a Lloyd T. Frederickson, TTE Lloyd Frederickson 6550 0.0019 6550
----------------------------------------------------------- ------------ ------------------ ---------------
b Kirk Frederickson 6550 0.0019 6550
----------------------------------------------------------- ------------ ------------------ ---------------
c Jean A. McDonald 6500 0.0019 6500
----------------------------------------------------------- ------------ ------------------ ---------------
7 Halling & Halling Windmill Repair 1000 0.0003 1000
----------------------------------------------------------- ------------ ------------------ ---------------
8 Mark K. Hehnke 35000 0.0103 35000
----------------------------------------------------------- ------------ ------------------ ---------------
9 Randy H. Henderson 1500 0.0004 1500
----------------------------------------------------------- ------------ ------------------ ---------------
a Randy Henderson 800 0.0002 800
----------------------------------------------------------- ------------ ------------------ ---------------
b Annett Jay 12000 0.0035 12000
----------------------------------------------------------- ------------ ------------------ ---------------
10 Ronald Jay 126797 0.0374 126797
----------------------------------------------------------- ------------ ------------------ ---------------
a Joel Jay 6500 0.0019 6500
----------------------------------------------------------- ------------ ------------------ ---------------
11 Kildare Lumber Company 15000 0.0044 15000
----------------------------------------------------------- ------------ ------------------ ---------------
12 James D. Lawler 134954 0.0398 134954
----------------------------------------------------------- ------------ ------------------ ---------------
a James D. Lawler-Alexander Perlinger 3000 0.0009 3000
----------------------------------------------------------- ------------ ------------------ ---------------
b James D. Lawler-Elizabeth Upton 3000 0.0009 3000
----------------------------------------------------------- ------------ ------------------ ---------------
c James D. Lawler-Miriam Madden 3000 0.0009 3000
----------------------------------------------------------- ------------ ------------------ ---------------
d James D. Lawler-Mattingling Perlinger 3000 0.0009 3000
----------------------------------------------------------- ------------ ------------------ ---------------
e James D. Lawler-Melissia Madden 3000 0.0009 3000
----------------------------------------------------------- ------------ ------------------ ---------------
f James D. Lawler-Zachary Upton 3000 0.0009 3000
----------------------------------------------------------- ------------ ------------------ ---------------
g James D. Lawler-Zebediah Upton 3000 0.0009 3000
----------------------------------------------------------- ------------ ------------------ ---------------
h Jim Lawler 500 0.0001 500
----------------------------------------------------------- ------------ ------------------ ---------------
i Peggy Lawler 134954 0.0398 134954
----------------------------------------------------------- ------------ ------------------ ---------------
13a Raymond Leisy 44705 0.0132 44705
----------------------------------------------------------- ------------ ------------------ ---------------
b Betty Leisy and Raymond Leisy 12000 0.0035 12000
----------------------------------------------------------- ------------ ------------------ ---------------
c Raymond Leisy and Betsy Leisy 10000 0.0029 10000
----------------------------------------------------------- ------------ ------------------ ---------------
d Larry Leisy 5000 0.0015 5000
----------------------------------------------------------- ------------ ------------------ ---------------
e Glenn A. Mull 507184 0.1496 507184
----------------------------------------------------------- ------------ ------------------ ---------------
<PAGE>
EXHIBIT 3.7.1.6
(TITAN SHARE DISTRIBUTION LIST)
14 David L. Patton 290908 0.0858 290908
----------------------------------------------------------- ------------ ------------------ ---------------
15a David L. Patton & Margaret A. Patton 841981 0.2483 841981
----------------------------------------------------------- ------------ ------------------ ---------------
b David L. Patton & Kathleen S. Patton 900 0.0003 900
----------------------------------------------------------- ------------ ------------------ ---------------
c David L. Patton (option shares) 24566 0.0072 24566
----------------------------------------------------------- ------------ ------------------ ---------------
16 Edward Wade 146984 0.0434 146984
----------------------------------------------------------- ------------ ------------------ ---------------
a Edward Wade 45600 0.0134 45600
----------------------------------------------------------- ------------ ------------------ ---------------
b Edward Wade 18700 0.0055 18700
----------------------------------------------------------- ------------ ------------------ ---------------
c Greg Wade 3000 0.0009 3000
----------------------------------------------------------- ------------ ------------------ ---------------
17 Steve Van-Boening 1000 0.0003 1000
----------------------------------------------------------- ------------ ------------------ ---------------
18 Ray Ness - Building Group 15000 0.0044 15000
----------------------------------------------------------- ------------ ------------------ ---------------
19 Dennis Dahlkoetter - Building Group D&D Electric 10000 0.0029 10000
----------------------------------------------------------- ------------ ------------------ ---------------
20 W.M. Franken 37500 0.0111 37500
----------------------------------------------------------- ------------ ------------------ ---------------
21 A.C. Boland 6000 0.0018 6000
----------------------------------------------------------- ------------ ------------------ ---------------
22 Phil Farmer 8000 0.0024 8000
----------------------------------------------------------- ------------ ------------------ ---------------
23 Jim Jadon 2500 0.0007 2500
----------------------------------------------------------- ------------ ------------------ ---------------
24 Mark Sullivan 15000 0.0044 15000
----------------------------------------------------------- ------------ ------------------ ---------------
Totals: 3390399 3390399
======= =======
</TABLE>
<PAGE>
EXHIBIT 3.7.1.15
(Officer's Certificate)
OFFICER'S CERTIFICATE
OF
W. W. CAPITAL CORPORATION
-------------------------
The undersigned, Steven Zamzow, President of W. W. Capital Corporation,
a Nevada corporation ("Company"), hereunto duly authorized, does hereby certify
the following to Husch & Eppenberger, LLC, in connection with its rendering of
an opinion regarding the federal income tax consequences to the Exchanging
Shareholders of the split-off of Titan Industries, Inc., a Nebraska corporation
("Titan"), from the Company, as more fully described in the Stock Transfer and
Exchange Agreement dated December 1, 2000, by and between the Company, Titan,
and the Exchanging Shareholders (the "Exchange Agreement"). Capitalized terms
not defined herein shall have the meanings ascribed to them in the Exchange
Agreement.
1. The management of the Company, to the best of its knowledge, is not
aware of any plan or intention by any remaining shareholder of the Company after
the Split-Off who owns five percent (5%) or more of the Company's stock, to
sell, exchange, transfer by gift, or otherwise dispose of any stock in the
Company after the Split-Off is complete.
2. The fair market value of the Titan stock, together with any Rights,
to be received by each Exchanging Shareholder in the Split-Off will be
approximately equal to the fair market value of the Company's stock, together
with any Rights, surrendered by each Exchanging Shareholder.
3. For a period of five (5) years preceding the date of the Split-Off,
the Company's wholly-owned subsidiaries (Titan and W-W Manufacturing Co., Inc.
("WWM")) have been continuously engaged in the active conduct of a trade or
business, without any substantial change in the type of business activity
conducted or the method of conducting business during such period of time.
4. Immediately after the Split-Off, at least 90 percent of the fair
market value of the gross assets of the Company will consist of the stock and
securities of WWM, which has been engaged in the active conduct of a trade or
business as defined in section 355(b)(2) of the Internal Revenue Code of 1986,
as amended.
5. Following the Split-Off, WWM will remain a wholly-owned subsidiary
of the Company and will continue the active conduct of its business,
independently of Titan and with its separate employees.
6.There is no plan or intention by the Company, directly or through its
remaining subsidiary (WWM), to purchase any of its outstanding stock after the
Split-Off, other than through stock purchases meeting the requirements under
Rev. Proc. 96-30.
7. There is no plan or intention to liquidate the Company, to merge the
Company or WWM with any other corporation, or to sell or otherwise dispose of
the assets of the Company
<PAGE>
or WWM after the Split-Off, except in the ordinary course of business, or a
transaction after the Split-Off with an affiliated entity which will not result
in the non-application of Section 355(a)(1) of the Code.
8. Payments to be made in connection with any inter-corporate
indebtedness between Company and Titan and any other continuing transactions, if
any, between the parties will be for fair market value based on the terms and
conditions arrived at by the parties bargaining at arm's length.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
this 5th day of January , 2001.
___________________________________
Steven Zamzow
President, W. W. Capital Corporation
STATE OF COLORADO )
) SS
COUNTY OF DENVER )
On this 5th day of January , 2001, before me, a Notary Public, personally
appeared Steven Zamzow, to me known to be the person described in and who
executed the foregoing Officer's Certificate and acknowledged that he executed
the same as his free act and deed.
IN WITNESS WHEREOF, I have hereunder set my hand and affixed my
official seal at my office in _____________________________________, the day and
year last above written.
-------------------------------------
Notary Public
My commission expires:
2
<PAGE>
EXHIBIT 3.7.2.3
(Transmittal Letter)
LETTER OF TRANSMITTAL
For Shares of Common Stock and Rights Exercisable to Acquire
Shares of Common Stock
of
W.W. CAPITAL CORPORATION
Pursuant to the Stock Transfer and Exchange Agreement,
dated as of December 1 , 2000
--------------------------------------------------------------------------------
THIS LETTER OF TRANSMITTAL SHOULD BE COMPLETED, SIGNED AND SENT TO THE PERSON
NAMED BELOW, TOGETHER WITH YOUR ENDORSED STOCK CERTIFICATE(S) NO LATER THAN
DECEMBER 15, 2000.
--------------------------------------------------------------------------------
To: Nathan L. Stone, Esq.
By mail, hand or overnight delivery:
Nathan L. Stone, Esq.
Jones & Keller, P.C.
World Trade Center
1625 Broadway, Suite 1600
Denver, Colorado 80202
Telephone Inquiries:
1-303-573-1600
--------------------------------------------------------------------------------
Certificate(s) Enclosed (Attach list if necessary)
--------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s)
(Please fill in)
Number of
Rights
Number of Convertible
Shares into Shares
Certificate Represented Represented
Number by Certificate by Certificate
------------ --------------- ---------------
------------ --------------- ---------------
------------ --------------- ---------------
------------ --------------- ---------------
------------ --------------- ---------------
------------ --------------- ---------------
------------ --------------- ---------------
------------ --------------- ---------------
------------ --------------- ---------------
Total
Shares/Rights:
------------ --------------- ---------------
I have lost my certificate(s) for _________ Certificate(s) and require
assistance with respect to obtaining a replacement Certificate(s). (See
Instruction 4).
--------------------------------------------------------------------------------
<PAGE>
PLEASE READ THE FOLLOWING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
In accordance with the terms of the Stock Transfer and Exchange
Agreement dated as of December 1, 2000, by and among W.W. Capital Corporation, a
Nevada corporation (the "Company"), Titan Industries, Inc., a Nebraska
corporation ("Titan") and certain shareholders of the Company (the "Agreement"),
the undersigned hereby surrenders to Jones & Keller, P.C., as counsel to the
Company (the "Agent"), the certificates described below formerly representing
(i) shares (the "Shares") of Common Stock, par value $0.01 per share
(collectively, "Common Stock"), of the Company, and (ii) rights convertible into
Shares ("Rights"). The certificates accompanying this Letter of Transmittal are
being surrendered in exchange for the number of shares of Common Stock of Titan,
par value $1.00 per share ("Titan Common Stock"), calculated as set forth in
Exhibit 3.7.1.6 to the Agreement for each share of common stock represented by
the enclosed certificates (the "Exchange Consideration").
The undersigned hereby warrants that the undersigned has full power and
authority to surrender the certificates delivered herewith, that the Common
Stock and Rights represented thereby is free and clear of all liens, charges,
encumbrances, pledges, security interests, or other obligations, and that such
certificates and Common Stock and Rights will not be subject to any adverse
claim. Upon request, the undersigned hereby agrees to execute and deliver any
additional documents deemed necessary or desirable by the Agent to complete the
surrender of the certificates.
-----------------------------------------------------------------
ALL SUBMITTERS MUST SIGN IN THE SPACE PROVIDED BELOW
.................................................................
.................................................................
Signature(s) of Submitter(s)
(Must be signed by the Registered Holder(s) exactly as name(s)
appear(s) on Certificate(s) or by person(s) authorized to become
registered holder(s) by certificate(s) and document(s)
transmitted herewith. If signature is by trustee, executor,
administrator, guardian, attorney-in-fact, officer of a
corporation, agent or another acting in a fiduciary or
representative capacity, please set forth full title and
information. (See Instruction 3.)
Dated............................................................
Name(s)..........................................................
.................................................................
(Please Print)
Capacity.........................................................
Address..........................................................
.................................................................
(Zip Code)
Telephone Number................................................
(Include Area Code)
Tax Identification or
Social Security No..............................................
----------------------------------------------------------------
<PAGE>
THE FOLLOWING INSTRUCTIONS MUST BE FOLLOWED.
1. Delivery of Letter of Transmittal and Certificate(s). This Letter of
Transmittal, completed, signed and dated, must be used in connection with a
delivery and surrender of Certificate(s). A Letter of Transmittal and such
Certificate(s) must be received by the Agent, in satisfactory form, no later
than December 15, 2000, in order to make an effective surrender. Surrender may
be made by mail or by hand delivery to Jones & Keller, P.C., as Agent, at the
respective addresses shown on this Letter of Transmittal. An envelope addressed
to the Agent is enclosed for your convenience.
The method of delivery of Certificate(s) and other documents is at the
election and risk of the transmitting shareholder. In order to protect against
loss, if delivery is made by mail, registered mail with return receipt
requested, properly insured, is recommended.
2. Delivery of the Shares. The shares of Titan Common Stock payment of
the Exchange Consideration will be issued in the name of the person(s) signing
this Letter of Transmittal and will be sent to such person at the address shown
on the records of the Company. (See also Instruction 3.)
3. Signatures, Powers and Endorsements. In all cases, this Letter of
Transmittal and the transmitted Certificate(s) must be endorsed and/or
accompanied by appropriate separate powers. Such endorsements(s) must be exactly
the same as the name of the Registered Holder(s) appears on the face of such
Certificate(s), without alteration or any change whatsoever. If the
Certificate(s) transmitted hereby are registered in the name of two or more
joint holders, all such holders must sign this Letter of Transmittal and the
Certificate(s). If this Letter of Transmittal, endorsements or Certificate(s)
transmitted hereby or powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations, agents or others acting
in a fiduciary or representative capacity, such persons should so indicate when
signing, and proper evidence satisfactory to the Agent of their authority so to
act must be submitted.
If surrendered Certificate(s) are registered in different ways on
several Certificate(s), it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
such Certificate(s).
4. Lost Certificates. If you have lost any of your Certificate(s) for
Shares or Rights, please complete (noting your loss of Certificates on the front
hereof), date, sign and deliver this Letter of Transmittal to the Agent along
with those Certificates for the Shares or Rights in your possession. You will
receive further instructions.
5. Questions of Validity; Waiver. All questions as to the validity,
form and eligibility of Certificate(s) surrendered will be determined by the
Agent, except for questions as to irregularities or defects in the surrender of
any Certificate(s), which will be determined by the Company. The Company
reserves the right to waive any irregularities or defects in the surrender of
any Certificate(s). The Agent's interpretations of the terms and conditions of
this Letter of Transmittal (including these instructions) shall be final and
binding. Any irregularities in connection with the surrender of Certificate(s)
must be cured within such time as the Agent shall determine, unless waived. A
surrender will not be deemed to have been made until all irregularities and
defects have been cured or waived.
6. Additional Copies. Additional copies of this Letter of
Transmittal may be obtained from the Agent at the address listed on the face
hereof.
7. Inadequate Space. In the space provided on this Letter of
Transmittal is inadequate, the Certificate numbers and numbers of Shares and/or
Rights should be listed on a separate signed schedule affixed hereto.
Important: This Letter of Transmittal hereof, appropriately completed
and signed, together with Certificate(s) for surrendered Shares and/or Rights
and all other required documents, must be received by the Agent before payment
of the Exchange Consideration can be made.
3
<PAGE>
EXHIBIT 4.2
(Company Corporate Authority)
The Company's ability to consummate the transactions contemplated by this
Agreement is contingent upon obtaining the approval of Wells Fargo Business
Credit (formally Norwest Business Credit). Wells Fargo Business Credit has
indicated that it will provide the necessary approval upon the condition that
Titan repay all sums due and owing by Titan to Wells Fargo Business Credit at
Closing, or has made other arrangements acceptable to Wells Fargo Business
Credit.
<PAGE>
EXHIBIT 4.3
(Company Tax Matters)
The Tennessee Secretary of State has issued a Notice of Determination relating
to Eagle Enterprises, Inc., pursuant to which the Tennessee Secretary of States
office has determined that grounds for corporate dissolution and/or the
revocation of Eagle's authority to do business in Tennessee exist. This notice
was issued due to the Company's alleged failure to file Eagle's Annual Corporate
Report in 1998.
Problems exist due to the merger between Eagle Enterprises and WW Manufacturing
in October, 1998. The Company is in the process of resolving this matter with
the Tennessee Secretary of States office and all reports are in the process of
being filed. The Company does not expect to be assessed penalties or interest as
a result of this matter.
<PAGE>
EXHIBIT 4.4
(Company Pending or Threatened Actions or Proceedings)
Kirk Fredrickson, of McDonald and Fredrickson, a professional corporation (the
"Firm"), has indicated that the Firm may initiate legal proceedings against the
Company to collect sums allegedly due and owing for services purportedly
performed on behalf of the Company. The Company is informed that this dispute
has been resolved. However, should the Firm, for any reason, elect to proceed
with an action, the Company is currently of the opinion that no basis, in law or
fact, exists to support any such action.
Except for the foregoing, there are currently no actions or proceedings (whether
or not purportedly on behalf of the Company) pending or threatened by or against
the Company which might result in any material adverse change in the condition,
financial or otherwise, of the Company's business or assets.
<PAGE>
EXHIBIT 4.7
(Company Liens or Encumbrances)
The Company has good and marketable title to the Titan Shares, free of any
material mortgages, security interests, pledges, easements or encumbrances of
any kind whatsoever; save and except for restrictions imposed by or on account
of federal and state securities laws.
<PAGE>
EXHIBIT 5.5
(Exchanging Shareholders' Shares and Rights and related Representations)
None, and save for the transactions of Mr. Patton disclosed in writing to the
Company and its counsel prior to the date of this Agreement; the transactions
involving the Fredricksons more fully described in this Agreement, and possible
transactions involving Bruce Snyder involving a non-material number of shares of
WW common stock.
<PAGE>
EXHIBIT 6.1
(Form Exchanging Shareholder Lock-Up Agreement)
EXCHANGING SHAREHOLDER
LOCK-UP AGREEMENT
THIS EXCHANGING SHAREHOLDER LOCK-UP AGREEMENT (the "Agreement") is made and
entered into as of January 5 , 2001 by and among W.W. Capital Corporation, a
Nevada corporation (the "Company"), Titan Industries, Inc., a Nebraska
corporation ("Titan") and the undersigned Exchanging Shareholder ("Exchanging
Shareholder").
RECITALS
A. The Company, Titan and the Exchanging Shareholder have entered into
a Stock Transfer and Exchange Agreement (the "Exchange Agreement"), which
Agreement provides for the split-off (the "Split-Off") of Titan Industries, Inc.
("Titan") by the Company to a group of existing Company shareholders, including
the Exchanging Shareholder. The Split-Off is intended to qualify as a tax-free
distribution of stock and securities of a controlled corporation under Section
355 of the Internal Revenue Code of 1986, as amended (the "Code").
B. The Exchanging Shareholder will, as a result of the Split-Off,
receive shares of Titan common stock, $1.00 par value ("Titan Stock"), in
exchange for all of the Exchanging Shareholder's shares of Company stock, $0.01
par value (the "Company Stock"), together with all options, warrants and other
rights ("Rights") exercisable to acquire and/or convertible into shares of
Company Stock, if any.
C. The Exchanging Shareholder understands that, because of certain
restrictions placed upon the sale or transfer of the Titan Stock resulting in a
change of control of Titan following consummation of the Split-Off by Section
355 of the Code, the shares of Titan Stock beneficially owned by the Exchanging
Shareholder may be disposed of only in conformity with the limitations described
herein.
NOW THEREFORE, the parties agree as follows:
1. Agreement to Retain Shares. The Exchanging Shareholder agrees not to
transfer, sell, or otherwise dispose of or direct or cause the sale, transfer or
other disposition of, and further agrees not to enter into any agreements to
transfer, sell or otherwise dispose of or direct or cause the sale, transfer or
other disposition of, any shares of Titan Stock held by the Exchanging
Shareholder or on the Exchanging Shareholder's behalf, whether owned on the date
hereof or after acquired, for a period of two (2) years following the Closing of
the Split-Off, without the Company's express written consent, which consent will
not be unreasonably withheld.
Consent will be deemed to be unreasonably withheld if withheld
for any purpose other than to prevent the adverse effect such proposed sale or
exchange may have on the Company under the provisions of Section 355 of the
Code.
1
<PAGE>
2. Representations, Warranties and Covenants of Exchanging Shareholder.
-----------------------------------------------------------------------
The Exchanging Shareholder represents, warrants and covenants as follows:
(a) The Exchanging Shareholder has full power and authority to
execute this Agreement, to make the representations, warranties and covenants
herein contained and to perform the Exchanging Shareholder's obligations
hereunder.
(b) For a period of two (2) years following the Closing of the
Split-Off the Exchanging Shareholder will not sell, transfer, or otherwise
dispose of, or make any offer or agreement relating to any of the foregoing with
respect to, any Titan Stock, without first providing the Company with advance
written notice of the proposed transaction ("Notice"), including the number of
shares of Titan Stock involved, the name of the proposed transferee, and the
proposed effective date of the transaction, and without obtaining the Company's
advance written consent as required by Section 1 above. The Company will provide
the requested written consent, or, alternatively, its written objection setting
forth the basis for its objection, within fifteen (15) calendar days following
receipt by the Company of the Notice.
(c) For a period of two (2) years following the Closing of the
Split-Off the Exchanging Shareholder will not sell, transfer, or otherwise
dispose of, or make any offer or agreement relating to any of the foregoing with
respect to, any Titan Stock, except in accordance with the contractual
restrictions set forth herein and in the Exchange Agreement; provided, however,
that nothing contained herein shall be construed to preclude a transfer of Titan
Stock by the Exchanging Shareholder to a Family Member that does not constitute
a sale or exchange, provided, however, that the Exchanging Shareholder must
provide notice of the proposed transfer to the Company in accordance Section
2(b) above, and the transferee Family Member must, as a condition to transfer,
execute and agree to be bound by the terms of this Agreement. For purposes of
this Agreement, Family Member means (i) any member of the family (within the
meaning of IRC ss. 267(c)(4)) of an Exchanging Shareholder; (ii) any trust for
the exclusive benefit of any person described in clause (i) of this Section
2(c), provided, however, that in determining if the trust is for the exclusive
benefit of any person described in clause (i) of this Section 2(c) there shall
be disregarded all contingent interests in favor of other persons if the
aggregate actuarially adjusted value of all such contingent interests in favor
of others is less than 3% of the value of the trust estate at the time of the
transfer of the percentage interest to the trust; (iii) any custodial account
for the benefit of any persons described in clause (i) of this Section 2(c)
under any state's uniform gifts or transfers to minors law or similar law; (iv)
the probate estate of persons described in clause (i) of this Section 2(c); and
(v) any corporation, limited liability company, partnership or other entity
wholly owned by one or more persons described in clauses (i) through (iv) of
this Section 2(c).
3. Legend and Stop Transfer Orders. The Exchanging Shareholder also
understands and agrees that stop transfer instructions will be given to Titan's
transfer agent with respect to certificates evidencing shares of Titan Stock and
that there will be placed on the certificate evidencing said shares legends
stating in substance:
2
<PAGE>
PURSUANT TO THE TERMS OF A STOCK TRANSFER AND EXCHANGE
AGREEMENT (THE"AGREEMENT") DATED AS OF DECEMBER 1, 2000,
AMONG W.W. CAPITAL CORPORATION, A NEVADA CORPORATION (THE
"COMPANY"), TITAN INDUSTRIES, INC., A NEBRASKA CORPORATION,
AND CERTAIN SHAREHOLDERS OF THE COMPANY, THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE
EFFECT TO ANY ATTEMPTED SALE, TRANSFER OR ASSIGNMENT, FOR A
PEROID OF TWO (2) YEARS FOLLOWING THE CLOSING OF THE
SPLIT-OFF CONTEMPLATED BY THE AGREEMENT WITHOUT THE ADVANCE
WRITTEN CONSENT OF THE COMPANY. UPON THE WRITTEN REQUEST OF
THE HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE
THE RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE
TRANSFER AGENTS) WHEN THIS REQUIREMENT HAS BEEN MET.
Titan agrees to remove such stop transfer instructions made to the transfer
agent, authorize its transfer agent to remove such restrictive legend and
release such shares of Titan Stock only on a date that is two (2) years after
the Closing of the Split-Off as those terms are defined in the Agreement.
4. Indemnification. The Exchanging Shareholder shall defend, indemnify
and hold the Company harmless against and in respect of any damage, loss,
liability, cost or expense, including, but not limited to, any taxes, penalties
and/or interest incurred by, or imposed on, the Company under the provisions of
the Code, including Section 355 thereof, due to the Exchanging Shareholder's
breach of this Agreement, expert witness fees and reasonable attorneys' fees,
whether or not recoverable under applicable state law, resulting or arising from
or incurred in connection with, any misrepresentation or nonfulfillment or
nonperformance of any agreement on the part of the Exchanging Shareholder under
this Agreement, or any actions, suits, proceedings, damages, assessments,
judgments, costs or expenses incident to any of the foregoing.
5. Miscellaneous.
-------------
(a) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
(b) Binding Agreement. This Agreement will inure to the
benefit of and be binding upon and enforceable against the parties and their
successors and assigns, including administrators, executors, representatives,
heirs, legatees and devisees of the Exchanging Shareholder and pledgees holding
Titan Stock as collateral. This Agreement is made pursuant and subject to the
Exchange Agreement.
3
<PAGE>
(c) Waiver. No waiver by any party hereto of any condition or
of any breach of any provision of this Agreement shall be effective unless in
writing and signed by each party hereto.
(d) Governing Law. This Agreement shall be governed by and
construed, interpreted and enforced in accordance with the laws of the State of
Nebraska.
(e) Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
(f) Third Party Reliance. Counsel to and independent auditors
for the parties shall be entitled to rely upon this Agreement.
(g) Attorneys' Fees. In any action brought for declaratory
relief or to enforce any of the provisions or rights or obligations under this
Agreement, the unsuccessful party to such proceeding, shall pay the successful
party all statutorily recoverable costs, expenses and reasonable attorneys' fees
incurred by the successful party, including, without limitation, costs,
expenses, and fees on any appeals and the enforcement of any award, judgment or
settlement obtained, such costs, expenses and attorneys' fees shall be included
as part of the judgment. The successful party shall be that party who obtained
substantially the relief or remedy sought, whether by judgment, compromise,
settlement or otherwise.
(THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK)
4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
W.W. CAPITAL CORPORATION EXCHANGING SHAREHOLDER:
By:
------------------------------- --------------------------------------
Name: Steve Zamzow Name: -------------------------------
Title: President Title: -------------------------------
Exchanging Shareholder's Address for Notice:
TITAN INDUSTRIES, INC.
By:
-----------------------------------------------------------------------
Name: Ronald Jay
Title: President
5
<PAGE>
EXHIBIT 6.3
(Titan Lock-Up Agreement)
TITAN INDUSTRIES, INC.
LOCK-UP AGREEMENT
THIS TITAN INDUSTRIES, INC. LOCK-UP AGREEMENT (the "Agreement") is made and
entered into as of January 5 , 2001 by and among W.W. Capital Corporation, a
Nevada corporation (the "Company") and Titan Industries, Inc., a Nebraska
corporation ("Titan").
RECITALS
A. The Company, Titan and certain shareholders of the Company (the
"Exchanging Shareholders") have entered into a Stock Transfer and Exchange
Agreement (the "Exchange Agreement"), which Agreement provides for the split-off
(the "Split-Off") of Titan Industries, Inc. ("Titan") by the Company to the
Exchanging Shareholders. The Split-Off is intended to qualify as a tax-free
distribution of stock and securities of a controlled corporation under Section
355 of the Internal Revenue Code of 1986, as amended (the "Code").
B. The Exchanging Shareholders will, as a result of the Split-Off,
receive 7,500 pre-split or 3,390,399 post-split shares of Titan common stock,
$1.00 par value ("Titan Shares"), in exchange for all of the Exchanging
Shareholders' shares of Company stock, $0.01 par value (the "Company Stock"),
together with all options, warrants and other rights ("Rights") exercisable to
acquire and/or convertible into shares of Company Stock.
C. Titan understands that, because of certain restrictions placed upon
the sale or transfer of the Titan Stock resulting in a change in control of
Titan following consummation of the Split-Off by Section 355 of the Code, the
issuance by Titan of additional shares of Titan common stock or other equity
securities of Titan, and/or the issuance by Titan of any Rights convertible into
common stock or other equity securities of Titan may be undertaken by Titan only
in conformity with the limitations described herein.
NOW THEREFORE, the parties agree as follows:
1. Agreement to Refrain From Issuing Securities. Titan agrees not to
sell, grant, gift or otherwise issue, or enter into any agreements to sell,
grant, gift or otherwise issue, any shares of its common stock or any other form
of equity security, or any Rights convertible into shares of its common stock or
any other form of equity security, for a period of two (2) years following the
Closing of the Split-Off, without the Company's express written consent, which
consent will not be unreasonably withheld. Titan further agrees that it will not
engage in any transaction, or enter into any agreement to enter into any
transaction, which would result in gain recognition by the Company under Section
355(e) of the Code, or violate the requirements of Section 355(b) of the Code.
Consent will be deemed to be unreasonably withheld if withheld
for any purpose other than to prevent the adverse effect such issuance may have
on the Company under the provisions of Section 355 of the Code.
-1-
<PAGE>
2. Representations, Warranties and Covenants of Titan.
----------------------------------------------------
Titan represents, warrants and covenants as follows:
(a) This Agreement has been duly authorized by all necessary
corporate action on behalf of Titan, has been duly executed and delivered by
authorized officers of Titan, and is a valid and binding agreement on the part
of Titan that is enforceable against Titan in accordance with its terms.
(b) For a period of two (2) years following the Closing of the
Split-Off, Titan will not sell, grant, gift or otherwise issue, or enter into
any agreements to sell, grant, gift or otherwise issue, any shares of its common
stock or any other form of equity security, or any Rights convertible into
shares of its common stock or any other form of equity security, or engage in
any transaction, or enter into any agreement to enter into any transaction,
which would result in gain recognition by the Company under Section 355(e) of
the Code or violate the requirements of Section 355(b) of the Code, without
first providing the Company with advance written notice of the proposed
transaction ("Notice"), including the type, class and number of shares of Titan
common stock or other equity security or assets involved, the name of the
proposed recipient or material terms of and participants involved in the
proposed transaction, and the proposed effective date of the transaction, and
without obtaining the Company's advance written consent as required by Section 1
above. The Company will provide the requested written consent, or,
alternatively, its written objection setting forth the basis for its objection,
within fifteen (15) calendar days following receipt by the Company of the
Notice.
(c) Titan will not sell, grant, gift or otherwise issue, or
enter into any agreements to sell, grant, gift or otherwise issue, any shares of
its common stock or any other form of equity security, or any Rights convertible
into shares of its common stock or any other form of equity security, or engage
in any transaction, or enter into any agreement to enter into any transaction,
which would result in gain recognition by the Company under Section 355(e) of
the Code or violate the requirements of Section 355(b) of the Code, except in
accordance with the contractual restrictions set forth herein and in the
Exchange Agreement.
(d) Titan hereby acknowledges that each of the Exchanging
Shareholders has executed and entered into a Lock-up Agreement ("Exchanging
Shareholder Lock-up Agreement") with Titan and the Company, copies of which have
been provided to Titan. Titan shall not authorize, give effect to, recognize or
otherwise carry out on its books, any transfer, sale or other disposition of
shares of Titan common stock, or any other equity security relating to Titan, by
any Exchanging Shareholder in violation of the terms and provisions of the
Exchanging Shareholder's Exchanging Shareholder Lock-up Agreement.
3. Indemnification.
-------------------
Titan shall defend, indemnify and hold the Company harmless against and in
respect of any damage, loss, liability, cost or expense, including, but not
limited to, any taxes, penalties and/or interest incurred by, or imposed on, the
Company under the provisions of the Code, including Section 355 thereof, due to
Titan's breach of this Agreement, expert witness fees and reasonable attorneys'
fees, whether or not recoverable under applicable state law, resulting
-2-
<PAGE>
or arising from or incurred in connection with, any misrepresentation or
nonfulfillment or nonperformance of any agreement on the part of Titan under
this Agreement, or any actions, suits, proceedings, damages, assessments,
judgments, costs or expenses incident to any of the foregoing.
4. Miscellaneous.
-------------
(a) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
(b) Binding Agreement. This Agreement will inure to the
benefit of and be binding upon and enforceable against the parties and their
successors and assigns. This Agreement is made pursuant and subject to the
Exchange Agreement.
(c) Waiver. No waiver by any party hereto of any condition or
of any breach of any provision of this Agreement shall be effective unless in
writing and signed by each party hereto.
(d) Governing Law. This Agreement shall be governed by and
construed, interpreted and enforced in accordance with the laws of the State of
Nebraska.
(e) Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
(f) Third Party Reliance. Counsel to and independent
auditors for the parties shall be entitled to rely upon this Agreement.
(g) Attorneys' Fees. In any action brought for declaratory
relief or to enforce any of the provisions or rights or obligations under this
Agreement, the unsuccessful party to such proceeding, shall pay the successful
party all statutorily recoverable costs, expenses and reasonable attorneys' fees
incurred by the successful party, including, without limitation, costs,
expenses, and fees on any appeals and the enforcement of any award, judgment or
settlement obtained, such costs, expenses and attorneys' fees shall be included
as part of the judgment. The successful party shall be that party who obtained
substantially the relief or remedy sought, whether by judgment, compromise,
settlement or otherwise.
(THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
-3-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
W.W. CAPITAL CORPORATION TITAN INDUSTRIES, INC.
By: By:
------------------------------- ------------------------------------
Name: Steve Zamzow Name: Ronald Jay
Title: President Title: President
<PAGE>
EXHIBIT 6.4
(Company Lock-Up Agreement)
COMPANY
LOCK-UP AGREEMENT
THIS COMPANY LOCK-UP AGREEMENT (the "Agreement") is made and entered
into as of January 5, 2001 by and among W.W. Capital Corporation, a Nevada
corporation (the "Company") and Titan Industries, Inc., a Nebraska corporation
("Titan"), for itself and for the benefit of the Exchanging Shareholders defined
below.
RECITALS
A. The Company, Titan and certain shareholders of the Company (the
"Exchanging Shareholders") have entered into a Stock Transfer and Exchange
Agreement (the "Exchange Agreement"), which Agreement provides for the split-off
(the "Split-Off") of Titan Industries, Inc. ("Titan") by the Company to the
Exchanging Shareholders. The Split-Off is intended to qualify as a tax-free
distribution of stock and securities of a controlled corporation under Section
355 of the Internal Revenue Code of 1986, as amended (the "Code").
B. The Exchanging Shareholders will, as a result of the Split-Off,
receive 7,500 pre-split or 3,390,399 post-split shares of Titan common stock,
$1.00 par value ("Titan Shares"), in exchange for all of the Exchanging
Shareholders' shares of Company stock, $0.01 par value (the "Company Stock"),
together with all options, warrants and other rights ("Rights") exercisable to
acquire and/or convertible into shares of Company Stock.
C. The Company understands that, because of certain restrictions placed
upon the sale or transfer of the Company common stock resulting in a change in
control of the Company following consummation of the Split-Off by Section 355 of
the Code, the issuance by the Company of additional shares of Company common
stock or other equity securities of the Company, and/or the issuance by the
Company of any Rights convertible into common stock or other equity securities
of Company may be undertaken by the Company only in conformity with the
limitations described herein.
D. The Company further understands that, because of certain continuity
of interest provisions contained in Section 355 of the Code, prior to and in
connection with the Split-Off, and for a period of two (2) years thereafter, the
Company will be prohibited from redeeming or otherwise acquiring any Company
common stock, and from making any distributions with respect to its stock
described in Treasury Regulation Section 1.368-1(e)(1)(ii) that would result in
a violation of continuity of interest.
NOW THEREFORE, the parties agree as follows:
1. Agreement to Refrain From Certain Transactions. The Company
hereby agrees that after the Split-Off it will not engage in any transaction, or
enter into any agreements to enter into any transaction, which would result in
gain recognition by either Titan or the Exchanging Shareholders by causing
Section 355(a)(1) of the Code to be inapplicable. The Company further
-1-
<PAGE>
agrees that prior to and in connection with the Split-Off, and for a period of
two (2) years beginning on the effective date of the Split-Off, the Company will
not redeem or otherwise acquire any Company common stock and will not have made
any distributions with respect to its stock described in Treasury Regulation
Section 1.368-1(e)(1)(ii) without Titan's express written consent, which consent
will not be unreasonably withheld. Consent will be deemed to be unreasonably
withheld if withheld for any purpose other than to prevent the incurrence of
income taxation by the Exchanging Shareholders or Titan under the provisions of
Section 355 of the Code.
2. Representations, Warranties and Covenants of the Company.
---------------------------------------------------------
The Company represents, warrants and covenants as follows:
(a) This Agreement has been duly authorized by all necessary
corporate action on behalf of the Company, has been duly executed and delivered
by authorized officers of the Company, and is a valid and binding agreement on
the part of the Company that is enforceable against the Company in accordance
with its terms.
(b) From the date of this Agreement and after the Split-Off,
the Company will not engage in any transaction, or enter into any agreements to
enter into any transaction, which would result in gain recognition by either
Titan or the Exchanging Shareholders by causing Section 355(a)(1) of the Code to
be inapplicable.
(c) Prior to and in connection with the Split-Off, and for a
period of two (2) years beginning on the effective date of the Split-Off, the
Company will not redeem or otherwise acquire any Company common stock and will
not have made any distributions with respect to its stock described in Treasury
Regulation Section 1.368-1(e)(1)(ii) without first providing Titan with advance
written notice of the proposed transaction ("Notice"), including the number of
shares of Company common stock involved, the name of the proposed transferee,
and the proposed effective date of the transaction, and without obtaining
Titan's advance written consent as required in Section 1 above. Titan will
provide the requested written consent, or, alternatively, its written objection
setting forth the basis for its objection, within fifteen (15) calendar days
following receipt by Titan of the Notice.
3. Indemnification.
-------------------
The Company shall defend, indemnify and hold Titan and the Exchanging
Shareholders harmless against and in respect of any damage, loss, liability,
cost or expense, including, but not limited to, any taxes, penalties and/or
interest incurred by, or imposed on, Titan and/or the Exchanging Shareholders as
a result of the non-applicability of the provisions of Section 355(a)(1) of the
Code due to the Company's breach of this Agreement, expert witness fees and
reasonable attorneys' fees, whether or not recoverable under applicable state
law, resulting or arising from or incurred in connection with, any
misrepresentation or nonfulfillment or nonperformance of any agreement on the
part of the Company under this Agreement, or any actions, suits, proceedings,
damages, assessments, judgments, costs or expenses incident to any of the
foregoing.
-2-
<PAGE>
4. Miscellaneous.
-----------------
(a) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
(b) Binding Agreement. This Agreement will inure to the
benefit of and be binding upon and enforceable against the parties and their
successors and assigns. This Agreement is made pursuant and subject to the
Exchange Agreement.
(c) Waiver. No waiver by any party hereto of any condition or
of any breach of any provision of this Agreement shall be effective unless in
writing and signed by each party hereto.
(d) Governing Law. This Agreement shall be governed by and
construed, interpreted and enforced in accordance with the laws of the State of
Nebraska.
(e) Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
(f) Third Party Reliance. Counsel to and independent
auditors for the parties shall be entitled to rely upon this Agreement.
(g) Attorneys' Fees. In any action brought for declaratory
relief or to enforce any of the provisions or rights or obligations under this
Agreement, the unsuccessful party to such proceeding, shall pay the successful
party all statutorily recoverable costs, expenses and reasonable attorneys' fees
incurred by the successful party, including, without limitation, costs,
expenses, and fees on any appeals and the enforcement of any award, judgment or
settlement obtained, such costs, expenses and attorneys' fees shall be included
as part of the judgment. The successful party shall be that party who obtained
substantially the relief or remedy sought, whether by judgment, compromise,
settlement or otherwise.
(THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK)
-3-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
W.W. CAPITAL CORPORATION TITAN INDUSTRIES, INC.
By: By:
-------------------------------------- ---------------------------------
Name: Steve Zamzow Name: Ronald Jay
Title: President Title: President
-4-
<PAGE>
--------------------------------------------------------------------------------
APPENDIX II
--------------------------------------------------------------------------------
<PAGE>
DUE DILIGENCE, INC.
October 16, 2000
Board of Directors
WW Capital Corporation
3500 JFK Parkway, Suite 202
Fort Collins, Colorado 80525
Members of the Board:
The purpose of this fairness opinion is to provide the board of directors of WW
Capital Corporation and its shareholders with an opinion as to the fairness of
the split-off of WW Capital's subsidiary, Titan Industries, Inc., as of June 30,
2000.
This opinion is to the fairness, from a financial point of view, to the holders
of the outstanding shares of common stock of WW Capital Corporation, for 100% of
the issued and outstanding shares of the company's wholly-owned subsidiary,
Titan Industries, Inc. ("Titan") that are transferred to a specific group of
existing company shareholders ("Titan Shareholders") in exchange for all of the
Titan shareholders' ownership interest in the company ("split off").
Titan Shareholder ownership interest is 3,390,399 shares, or approximately 61.2%
of the company's issued and outstanding $0.01 par value common stock, after
exercise of common stock purchase options. The split-off is structured as a
tax-free distribution of stock under ss.355 of the Internal Revenue Code of
1986. The Titan shareholders are also surrendering for cancellation Common Stock
Purchase Options exercisable to acquire in the aggregate, an additional 129,934
shares of Company Common Stock. After the split-off, the Titan shareholders will
acquire $850,000 and all of the Titan assets, and liabilities including an
outstanding inter-company receivable for $200,000.
Due Diligence, Inc. has reviewed the proposed transaction in conjunction with a
fairness opinion, and has:
1) Reviewed the terms of the transaction split-off with management, company
counsel, auditors, and accountants.
2) Reviewed publicly-available financial documents relevant to the
split-off. This included review of publicly available information about
similar companies and the trading markets for their securities. This
review excluded audits and detailed inspections of financial information,
or estimates of the fair market value of tangible assets.
3) Discussed with management the company, its past and present business
operations, financial condition, prospects, assets, and subsidiary
operations.
4) Used the following approaches to valuation: (a) capitalization of excess
earnings; (b) book accounting value; (c) adjusted going-concern. The
final value was a blended (without weights) calculation of capitalized
earnings, book value, and acquisition premium for an unbiased estimate of
fair value for the split-off.
Due Diligence, Inc. in rendering this opinion has assumed, without independent
verification, the accuracy and completeness of the financial and other
information and representations contained in publicly available
<PAGE>
materials provided us by WW Capital, including discussion with management. Also,
the value is effective on June 30, 2000, and events subsequent to that date are
not considered or applied retroactively. Information was insufficient to permit
estimation of value based on future revenues, income, or cash flows. No detailed
analysis of line items in the chart of accounts was performed or compared with
industry averages.
This fairness opinion was developed with no bias with respect to the parties in
the transaction. No officer, director, executive or employee of Due Diligence,
Inc. has a financial interest in the transaction, and the fees paid Due
Diligence, Inc. are not contingent on any use of this report.
Due Diligence, Inc. has no further financial advisory relationship with WW
Capital. The split-off and consideration to be received by the company in
conjunction therewith is, in our opinion, fair to the shareholders of WW Capital
based on the foregoing discussion and our experience in such transactions.
Sincerely,
Charles F. Bacon and William J. May
Due Diligence, Inc.
<PAGE>
FAIRNESS OPINION OF WW CAPITAL CORPORATION
================================================================================
WW Capital Corporation
3500 JFK Parkway, Suite 202, Fort Collins Colorado 80525
Telephone: (970) 207-1100 Facsimile: (970) 207-1115
Summary
================================================================================
This report by Due Diligence, Inc. constitutes a Fairness Opinion which has been
prepared for WW Capital Corporation ("WW Capital" or the "Company"), a
publicy-held corporation located in Fort Collins, Colorado.
Due Diligence, Inc. has been engaged by the Board of Directors (the "Board") of
W.W. Capital Corporation to provide a "Fairness Opinion" to be evaluated by the
Board in conjunction with a proposed transaction whereby 100% of the issued and
outstanding shares of the Company's wholly-owned subsidiary, Titan Industries,
Inc. ("Titan"), are transferred to a specific group of existing Company
shareholders (the "Titan Shareholders") in exchange for all of the Titan
Shareholders' ownership interest in the Company (hereinafter referred to as the
"Split-Off'). The Titan Shareholders' ownership interest in the Company consists
of 3,390,399 shares, or approximately 61.2%, of the Company's issued and
outstanding $0.01 par value common stock ("Common Stock"), after giving effect
to the exercise of outstanding Common Stock Purchase Options currently held by
certain Titan Shareholders. The Titan Shareholders are also surrendering for
cancellation Common Stock Purchase Options exercisable to acquire, in the
aggregate, an additional 129,934 shares of Company Common Stock. Following
consummation of the Split-Off, the Titan Shareholders will own all of Titan's
assets and liabilities, including an outstanding intercompany receivable in the
approximate amount of $200,000, together with the sum of $850,000. As currently
contemplated, the Split-Off is to be structured as a tax-free distribution of
stock of a controlled corporation under ss.355 of the Internal Revenue Code of
1986, as amended.
The reported purpose of this "Fairness Opinion" is to provide a financial
opinion to the Board to be utilized in determining the fairness of the Split-Off
to WW Capital and its shareholders from a financial point of view. This
"Fairness Opinion" addresses and discusses the analysis and financial inspection
performed by Due Diligence, Inc. and the respective findings made by Due
Diligence, Inc.
For purposes of this report, WWM refers to the combination of WW Manufacturing,
Inc. and Eagle Enterprises, Inc., and Titan refers to Titan Industries, Inc.
The standard of value utilized in this report is "fair market value", which is
defined in valuation standards and Internal Revenue Ruling 59-60 as "the price
at which the property would change hands between a willing buyer and a willing
seller when the former is not under any compulsion to buy and the latter is not
under any compulsion to sell, both parties having reasonable knowledge of
relevant facts." This Revenue Ruling adds: "Court decisions frequently state in
addition that the hypothetical buyer and seller are assumed to be able, as well
as willing, to trade and to be well informed about the property and concerning
the market for such property." It is referred to here and in this report because
it is a major guiding document for the business valuation profession and its
standard-setting organizations.
----------------------------------------------------------- --------------------
October 16, 2000 Fairness Opinion of WW Capital Corporation Page 1 of 5
----------------------------------------------------------- --------------------
<PAGE>
This Fairness Opinion encompasses all significant items which could be
identified from financial and other documents of the Company, and from limited
external references and sources of information on the Company and limited
sources of information on the industry in which it conducts trade. No detailed
inspection or audit was made of bank statements, employment records, payroll,
expenditures, nor was a detailed item-by-item estimate made of fair market value
of furniture, fixtures and equipment.
The approaches to valuation which were utilized in this report are summarized in
Table 1 below. The final approach chosen to be utilized for the estimates of
value was a blended calculation of capitalized earning, book value, and an
acquisition premium, and the application of those values to the financial data
of the Company.
Other approaches were considered by Due Diligence, Inc., including the cost to
create the intangible asset values of the Company, the "market value" approach
using comparable companies, and other approaches. No weight was placed in these
values relative to the values estimated from use of the blended calculations
referred to above.
Table 1: Summary of Fair Market Valuation Approaches Considered and Chosen
------------------------------------------------------------------------
Valuation Approaches
-------------------------------------------------------------- ---------
1. Capitalization of Earnings No
-------------------------------------------------------------- ---------
2. Capitalization of Excess Earnings Yes
-------------------------------------------------------------- ---------
3. Capitalize N/A
------------------------------------------------------------- ---------
(a) Dividends
-------------------------------------------------------------- ---------
(b) Dividend Paying Capacity N/A
-------------------------------------------------------------- ---------
4. Book Value Yes
(a) Accounting
-------------------------------------------------------------- ---------
(b) Economic (license, intellectual property) No
-------------------------------------------------------------- ---------
(c) Adjusted (Going Concern) Yes
-------------------------------------------------------------- ---------
5. Guideline Comparables - Entire Companies N/A
-------------------------------------------------------------- ---------
6. Guideline Comparables- Stock N/A
(a) Price/Earnings
-------------------------------------------------------------- ---------
(b) Price/Book Value N/A
-------------------------------------------------------------- ---------
(c) Price/Dividend N/A
-------------------------------------------------------------- ---------
(d) Price/Cash Flow N/A
-------------------------------------------------------------- ---------
(e) Price/Gross Revenue N/A
-------------------------------------------------------------- ---------
(f) Price/Assets N/A
-------------------------------------------------------------- ---------
7. Liquidation Value No
-------------------------------------------------------------- ---------
8. Sales of Stock No
-------------------------------------------------------------- ---------
9. Net Present Value, Discounted Future Income No
-------------------------------------------------------------- ---------
10. Discounted Earnings No
-------------------------------------------------------------- ---------
11. Company Transactions No
-------------------------------------------------------------- ---------
Notes: N/A = Not Applicable
----------------------------------------------------------- --------------------
October 16, 2000 Fairness Opinion of WW Capital Corporation Page 2 of 5
----------------------------------------------------------- --------------------
<PAGE>
In completion of this opinion, the following inspections were accomplished in
addition to our normal valuation review:
1) Reviewed the prospective summary plan of split-off.
2) Reviewed publicly available information concerning the Company.
3) Reviewed publicly available information concerning potential similar
companies, the trading markets for their securities and the nature and
terms of certain other transactions believed to be relevant by Due
Diligence, Inc.
4) Reviewed and discussed with certain representatives of management of the
Company information concerning their past and current operations, financial
condition and prospects.
5) Reviewed and discussed the prospective plan of Split-off with certain of
Company's counsel and management.
6) Reviewed and discussed various aspects of this report and approaches to
valuation with certain Company's auditors and accountants.
7) Performed such other analyses and examinations as Due Diligence, Inc. has
deemed appropriate.
The review process relied on representations provided by the management of the
Company. The "Fairness Opinion" is offered based on consummation of the
Split-off under consideration upon the terms described to Due Diligence, Inc.,
without any additional amendments or waivers by the Company's shareholders of
any of the terms or conditions of the transaction.
Based upon the analysis of this report, it is the opinion of Due Diligence,
Inc., that the Book Value of WW Capital for the purposes identified within the
stated engagement, is $2,953,994. A Book Value multiple of 1.5-1.7 times Book
Value offers a fair premium range for a possible acquisition of the Company,
which may be as much as a multiple of 2 times book value. However, no such
possible acquisition currently exists. Therefore, it is the opinion of Due
Diligence, Inc. that the Fair Market Value of WW Capital Corporation for
purposes as identified within the stated engagement is 1.5 times Book Value or
$4,430,991. Further, based upon the analysis of this report, it is the opinion
of Due Diligence, Inc., that the Values for Titan and WWM are as shown in the
Table 2 below.
Table 2: Fair Market Value for WW Capital Corporation, WW
Manufacturing/Eagle, and Titan
Based on Book Value Combined with Capitalized Earnings
Based on Year Ended June 30, 2000
--------------------------------------------------------------------------------
Book Value of WW Capital $2,953,994
--------------------------------------------------------------------------------
Fair Market Value of WW Capital (1.5 multiple of Book Value) $4,430,991
--------------------------------------------------------------------------------
Capitalized Earnings Comparative Ratio, WWM 57.99%
--------------------------------------------------------------------------------
Capitalized Earnings Comparative Ratio, Titan 42.01%
--------------------------------------------------------------------------------
Fair Market Value, WWM $2,569,532
--------------------------------------------------------------------------------
Fair Market Value, Titan $1,861,459
--------------------------------------------------------------------------------
Differential in Fair Market Value of Titan $708,073
--------------------------------------------------------------------------------
Fair Market Value of Shares of WW Capital to be $2,711,767
Acquired by WW Capital ($4,430,991 times 0.612)
--------------------------------------------------------------------------------
Additional Consideration for Equalization of Values
$850,000
--------------------------------------------------------------------------------
----------------------------------------------------------- --------------------
October 16, 2000 Fairness Opinion of WW Capital Corporation Page 3 of 5
----------------------------------------------------------- --------------------
<PAGE>
--------------------------------------------------------------------------------
Statement of Fairness Opinion
The Split-off, as described to Due Diligence, Inc. by Company
management and counsel to the Company, as analyzed by Due
Diligence, Inc., and based on the values as shown in this
report, determined by an examination of the audited and
unaudited financial statements, and adjusted to reflect an
equalization amount of $850,000, to account for the
acquisition by the Company of approximately 61.2% of the
Company's outstanding Common Stock, is, in our opinion, fair
to the shareholders of WW Capital Corporation, who shall
remain following consummation of the Split-Off.
--------------------------------------------------------------------------------
This opinion is valid for this referenced "Fairness Opinion" report for the
stated purpose of assessing the fairness of the transaction and is contingent
upon various limitations and other statements, and including those contingencies
and limitations specifically expressed within this report.
A hypothetical buyer would most probably consider all analyses. However, they
are not all of equal decision-making importance. The emphasis on book value
combined with earnings (with the weight on capitalized earnings to reflect
comparative values between WWM and Titan and the weight on book value for
overall valuation) with a systematic business and mathematical analysis reflects
Due Diligence, Inc.'s current assessment of the status of the Company.
Capitalized earnings, on average, provide less biased estimates of a firm's
value than book value does. By combining book value and earnings in this report,
and taking into account the acquisition premium, Due Diligence, Inc. has arrived
at a blended calculation of capitalized earnings, book value and acquisition
premium which yields a less biased estimate of fairness for the Split-Off
currently under consideration by WWM and Titan.
XII. Assumptions and Limiting Conditions
================================================================================
This Fairness Opinion incorporates the following assumptions and limiting
conditions:
1) The Fairness Opinion was made, and this report has been prepared for the
purposes stated in the report. Neither the report nor the information it
contains should be used for any other purpose, and they are invalid if so
used. Further, the report and findings are relevant only to the definition
of value as stated in the report.
2) This Fairness Opinion is based upon information obtained from sources that,
with exceptions as noted herein, Due Diligence, Inc. believes to be
reliable. However, Due Diligence, Inc. has not had the opportunity to
confirm the validity of all of the information, and, accordingly, it cannot
be guaranteed.
3) Due Diligence, Inc. assumes no responsibility for matters of a legal nature
affecting the property or company valued, nor is any opinion of title
rendered. The Fairness Opinion assumes marketable titles to the securities
and related Company property.
4) Neither this Fairness Opinion nor any part of it shall be used in
connection with any other valuation, gift of securities, valuation estimate
or decision, promotional or public purpose, or other application not
directly related to the purpose and function of this Fairness Opinion.
----------------------------------------------------------- --------------------
October 16, 2000 Fairness Opinion of WW Capital Corporation Page 4 of 5
----------------------------------------------------------- --------------------
<PAGE>
5) Due Diligence, Inc., by reason of performing this valuation and preparing
this report, is not to be required to give testimony nor to be in
attendance in court or at any governmental hearing with reference to the
matters herein, unless prior arrangements have been made with Due
Diligence, Inc. relative to such additional professional services
employment.
6) None of the contents of this report, nor copy thereof, shall be conveyed by
anyone, including the client or their representatives, to the public
through advertising, public relations, news, sales, or other media, without
prior approval and written consent of Due Diligence, Inc. including
conclusions relative to value, or the identity of Due Diligence, Inc.
7) Copies of this report are provided to Client, with Due Diligence, Inc.'s
permission for further conveyance to Auditor and/or Legal Counsel of
Client. It is recognized that Client and Auditor and/or Legal Counsel, or
their agents, have permission to use the report for official purposes
pursuant to the value estimates of securities. The intent of this
restriction of dissemination to the above-mentioned entities is that Due
Diligence, Inc.'s intent is to avoid any inference that Due Diligence, Inc.
may have breached any responsibilities of confidentiality, and to avoid any
inference that Due Diligence, Inc.'s conclusions or report may have a
beneficial or negative effect on the Client, the Company, or on any
regulatory agency which could have an influence on the Company or on any
investors, employees or other party which could be affected in any manner
by this valuation or report.
XIII. Due Diligence, Inc.'s Certification
================================================================================
Pursuant to the Fairness Opinion of WW Capital Corporation, Due Diligence, Inc.
certifies that, to the best of its knowledge and belief:
1) The statements of fact contained in this report are true and correct;
2) The reported analyses, opinions, and conclusions are limited only by the
reported assumptions and limiting conditions, and are Due Diligence, Inc.'s
corporate, unbiased professional analyses, opinions and conclusions;
3) Due Diligence, Inc.'s compensation is not contingent on an action or event
resulting from the analyses, opinions, or conclusions in, or the use of,
this report;
4) None of Due Diligence, Inc. or its affiliates, or personnel employed by Due
Diligence, Inc. or its affiliates, have any present interest in the
property that is the subject of this report;
5) Due Diligence, Inc. has no bias with respect to the parties involved; and
6) Due Diligence, Inc. has examined the documents and financial records
described herein, and has held the discussions mentioned in this report.
October 16, 2000
Due Diligence, Inc.
----------------------------------------------------------- --------------------
October 16, 2000 Fairness Opinion of WW Capital Corporation Page 5 of 5
----------------------------------------------------------- --------------------
<PAGE>
--------------------------------------------------------------------------------
APPENDIX III
--------------------------------------------------------------------------------
<PAGE>
WW Capital Corporation
Consoladation Worksheet
30-Jun-00
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------------- ---------------------------------------------------------------
WW Capital Titan
Adjustments Adjustments WW Capital Titan
WW Capital Titan Industries For Disposition For Disposition Adjusted Adjusted
============ ================ --------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CASH 410,883.41 96,985.69 1,000,000.00 1 850,000.00 7 219,897.72 946,985.69
(850,000.00) 2
(144,000.00) 3
(100,000.00) 4
A/R 2,778,733.53 1,628,434.56 1,150,298.97 1,628,434.56
ALLOWANCE (88,000.00) (50,000.00) (38,000.00) (50,000.00)
------------ ------------ ------------ ------------
Net A/R's 2,690,733.53 1,578,434.56 1,112,298.97 1,578,434.56
------------ ------------ ------------ ------------
A/R OTHER 42,789.03 1,350.24 41,438.79 1,350.24
INVENTORIES: -
RAW MATERIALS 563,122.83 - 563,122.83 -
WIP 388,055.86 - 388,055.86 -
FINISHED GOODS 3,366,775.28 2,537,366.93 829,408.35 2,537,366.93
----------- ---------- ----------- ----------
Total Inventory 4,317,953.97 2,537,366.93 1,780,587.04 2,537,366.93
------------ ------------ ------------ ------------
PREPAID EXP 35,914.48 13,817.11 22,097.37 13,817.11
DEFERRED TAXES 114,000.00 22,000.00 (92,000.00) 6 (22,000.00) 9 - -
S/T NOTES- STOCKHOLDERS 507.00 - 507.00 -
----------- ---------- ----------- ----------
Sub-Total 150,421.48 35,817.11 22,604.37 13,817.11
TOTAL CURRENT ASSETS 7,612,781.42 4,249,954.53 3,176,826.89 5,077,954.53
------------ ------------ ------------ ------------
PROPERTY & EQUIP 4,817,913.25 1,593,974.90 3,223,938.35 1,593,974.90
ACCUM DD&A (2,858,586.16) (723,927.99) (2,134,658.17) (723,927.99)
------------ ------------ ------------ ------------
1,959,327.09 870,046.91 1,089,280.18 870,046.91
------------ ------------ ------------ ------------
OTHER ASSETS: - -
L/T NOTES RELATED 21,627.11 - 21,627.11 -
LOAN ACQUISITION COSTS 41,294.39 16,723.38 24,571.01 16,723.38
OTHER 10,453.75 - 10,453.75 -
------------ ------------ ------------ ------------
TOTAL OTHER ASSETS 73,375.25 16,723.38 56,651.87 16,723.38
------------ ------------ ------------ ------------
TOTAL ASSETS 9,645,483.76 5,136,724.82 4,322,758.94 5,964,724.82
============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------------- ---------------------------------------------------------------
WW Capital Titan
Adjustments Adjustments WW Capital Titan
WW Capital Titan Industries For Disposition For Disposition Adjusted Adjusted
============ ================ --------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
ACCOUNTS PAYABLE 2,728,866.82 1,731,931.75 996,935.07 1,731,931.75
S/T OF L/T DEBT 418,000.00 57,000.00 361,000.00 57,000.00
S/T OF CAP LEASE 23,000.00 - 23,000.00 -
ACCR PAYROLL & TAXES 303,279.61 93,460.41 209,819.20 93,460.41
ACCR INCOME TAXES 45,000.00 9,000.00 (36,000.00) 6 (9,000.00) 9 - -
ACCR PROPERTY TAXES 30,253.93 13,258.93 16,995.00 13,258.93
ACCRUED INTEREST 26,203.08 11,126.77 15,076.31 11,126.77
OTHER 88,195.53 11,649.02 76,546.51 11,649.02
------------ ------------ ------------ ------------
TOTAL CURRENT LIAB 3,662,798.97 1,927,426.88 1,699,372.09 1,918,426.88
------------ ------------ ------------ ------------
OTHER LIABILITIES:
L/T DEBT 2,783,192.05 1,330,200.28 1,000,000.00 1 2,741,872.32 1,330,200.28
288,880.55 5
L/T CAP LEASE 68,426.55 - 68,426.55 -
DEFERRED TAXES 131,000.00 25,000.00 (106,000.00) 6 (25,000.00) 9 - -
OTHER 46,071.97 - 46,071.97 -
------------ ------------ ------------ ------------
3,028,690.57 1,355,200.28 2,856,370.84 1,330,200.28
------------ ------------ ------------ ------------
TOTAL LIABILITIES 6,691,489.54 3,282,627.16 4,555,742.93 3,248,627.16
------------ ------------ ------------ ------------
STOCKHOLDERS EQUITY
COMMON STOCK 55,406.06 8,000.00 47,406.06 8,000.00
PAID IN CAPITAL 3,304,628.96 288,804.67 3,015,824.29 288,804.67
RETAINED EARNINGS (695,911.74) 1,498,115.83 (288,880.55) 5 850,000.00 7 (2,482,908.12) 2,348,115.83
CURRENT EARNINGS 338,776.94 67,177.16 (144,000.00) 3 12,000.00 9 77,599.78 79,177.16
(100,000.00) 4
50,000.00 6
------------ ------------ ------------ ------------
3,002,900.22 1,862,097.66 657,922.01 2,724,097.66
LESS TREAS STOCK (48,906.00) (8,000.00) (850,000.00) 2 (890,906.00) (8,000.00)
------------ ------------ ------------ ------------
TOTAL STOCK EQUITY 2,953,994.22 1,854,097.66 (232,983.99) 2,716,097.66
------------ ------------ ----------- ------------
TOTAL LIAB & EQUITY 9,645,483.76 5,136,724.82 4,322,758.94 5,964,724.82
============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------------- ----------------------------------------------------------------
WW Capital Titan
Adjustments Adjustments WW Capital Titan
WW Capital Titan Industries For Disposition For Disposition Adjusted Adjusted
============ ================ --------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES 21,263,752.85 9,053,165.57 12,210,587.28 9,053,165.57
COST OF GOODS 17,209,258.51 7,494,237.10 9,715,021.41 7,494,237.10
------------- ------------ ------------ ------------
GROSS PROFIT 4,054,494.34 1,558,928.47 2,495,565.87 1,558,928.47
------------ ------------ ------------ ------------
OPERATING EXPENSES:
SELLING 1,516,131.05 552,226.93 963,904.12 552,226.93
GENERAL & ADMINISTRATIVE 1,904,143.02 684,944.32 144,000.00 8 1,219,198.70 828,944.32
------------ ------------ ------------ ------------
TOTAL EXPENSES 3,420,274.07 1,237,171.25 2,183,102.82 1,381,171.25
------------ ------------ ------------ ------------
OPERATING EARNINGS 634,220.27 321,757.22 312,463.05 177,757.22
------------ ------------ ------------ ------------
OTHER INCOME(EXPENSE):
INTEREST INCOME 64,251.95 44,349.03 19,902.92 44,349.03
INTEREST EXPENSE (316,604.50) (145,480.68) (100,000.00) 4 (271,123.82) (145,480.68)
(LOSS)GAIN ON ASSETS 685.44 (458.41) 1,143.85 (458.41)
OTHER INCOME (EXPENSE) 18,223.78 3,010.00 15,213.78 3,010.00
TOTAL OTHER INCOME(EXP) (233,443.33) (98,580.06) (234,863.27) (98,580.06)
------------ ------------ ------------ ------------
EARNINGS BEFORE TAXES 400,776.94 223,177.16 77,599.78 79,177.16
INCOME TAXES 62,000.00 12,000.00 (50,000.00) 6 (12,000.000) 9 - -
------------ ------------ ------------ ------------
NET EARNINGS 338,776.94 211,177.16 77,599.78 79,177.16
MAN FEES - 144,000.00 144,000.00 3 (144,000.00) 8 - -
------------ ------------ ------------ ------------
338,776.94 67,177.16 77,599.78 79,177.16
========== ========= ========= =========
EARNINGS PER SHARE 0.06 0.02 0.04 0.02
========== ========= ========= =========
W AVE SHARES O/S 5,540,661.00 3,390,399.00 2,150,262.00 3,390,399.00
</TABLE>
LEGEND
WW Capital Pro Forma Adjustments:
Loan from Thomas Investment Group 1
Pay out to buy back stock 2
Loss of Titan management fees 3
Additional interest cost - Thomas Investment Group 4
Record note payable to Titan for intercompany balance 5
Reduce income tax expense. NOL sufficient 6
Titan Pro Forma Adjustments:
Cash received from WW Capital 7
Administrative expenses 8
Reduce income tax expense. NOL sufficient 9
--------------------------------------------------------------------------------
APPENDIX IV
--------------------------------------------------------------------------------
LOAN AGREEMENT
WEST-OK INVESTMENT, LLC
and
W.W. CAPITAL CORPORATION
Dated as of ____________, 2000
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of _________________, 2000, is between
WEST-OK INTESTMENT, LLC, an Oklahoma limited liability company (the "Lender")
and W.W. CAPITAL CORPORATION, a Nevada corporation (the "Company").
RECITALS
Lender and the Company acknowledge the following:
A. The Company and certain existing Company shareholders (the
"Exchanging Shareholders") have entered into an agreement (the "Split-Off
Agreement") under which the Exchanging Shareholders will exchange their
ownership interest in the Company consisting of approximately 3,390,399 shares
of the Company's common stock together with options exercisable to acquire an
additional 129,934 shares of the Company's common stock, for one hundred percent
(100%) of the issued and outstanding shares of the Company's wholly-owned
subsidiary, Titan Industries, Inc., a Nebraska corporation ("Titan") and other
consideration (the "Split-Off").
B. Subject to the terms and conditions of the Agreement, the Company
has agreed to contribute the sum of $850,000 to the capital of Titan prior to
consummation of the Split-Off, which sum is being contributed to Titan to
equalize the value of the consideration being exchanged in the Split-Off.
C. In order for the Company to meet its obligations under the
Agreement, the Company has requested, and the Lender has agreed, to loan the
Company the Loan Proceeds (defined below) subject to the terms and conditions of
this Loan Agreement.
D. The Company will execute and deliver to the Lender this Loan
Agreement together with the Promissory Note (defined below), which Promissory
Note shall be secured by a pledge of 2,448,000 of the Exchanging Shareholders'
Shares (as hereafter defined), and certain assets of the Company and/or its
Subsidiaries.
AGREEMENTS
In consideration of the recitals and the promises and agreements
contained herein, the Lender and the Company agree as follows:
1. Definitions As used in this Agreement, the following terms
-----------
shall have the following meanings:
1.1 "Closing Date" means the date on which the
-------------
Split-Off closes.
1.2 "Debt" means all liabilities, obligations and indebtedness
of the Company to any Person, of any kind or nature, now or hereafter owing,
arising, due or payable, howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise, and
includes capitalized leases.
<PAGE>
1.3 "Event of Default" means the occurrence of any of the
-----------------
events described in section 9.1.
1.4 "Exchanging Shareholders' Shares means the 3,390,399
shares of Company common stock received by the Company from the Exchanging
Shareholders under the terms of the Agreement, 2,448,000 of which will be
pledged by the Company to secure repayment of the Promissory Note.
1.5 "GAAP" means generally accepted accounting principles in
effect in the United States from time to time applicable to entities such as the
Company.
1.6 "Lender Security Documents" means the documents described
in Section 4 and any other document, instrument or agreement furnished by the
Company to the Lender, which provides collateral for the obligations of the
Company under the Loan Documents.
1.7 "Loan Documents" means this Agreement, the Promissory
Note, the Lender Security Documents and all other documents, instruments,
agreements and certificates related to or executed in connection with this
Agreement and the transactions contemplated hereby.
1.8 "Loan Proceeds" means the sum of $1,000,000 to be
--------------
loaned by the Lender to the Company.
1.9 "Obligations" means all indebtedness and other obligations
of the Company to the Lender now existing or hereafter arising under this
Agreement or the Lender Security Documents or any other Loan Documents,
including without limitation any obligations to repay the Loan Proceeds to the
Lender in accordance with the terms of the Promissory Note.
1.10 "Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, or any other entity.
1.11 "Promissory Note" means the Promissory Note of the
Company in the form of Exhibit A attached hereto and incorporated herein by this
reference.
1.12 "Subsidiary" means, as of a particular date, any limited
liability company more than 50 percent of whose membership interest shall at the
time be owned or controlled by the Company or by one of its Subsidiaries or any
corporation more than 50 percent of whose outstanding stock having ordinary
voting power for the election of directors shall at the time be owned or
controlled by the Company or by one of its Subsidiaries. "Subsidiary" does not
include Titan.
2. Loan; Promissory Note; Interest; Default.
----------------------------------------
2.1 Loan. The Lender agrees that concurrently with the closing
of the Split-Off, on the terms and subject to the conditions hereinafter set
forth, and upon receipt of the Loan Documents fully executed by the Company, it
shall deliver the Loan Proceeds to the Company on the Closing Date.
-2-
<PAGE>
2.2 Promissory Note. The Loan shall be evidenced by the
Promissory Note, which shall be dated the Closing Date, duly executed by the
Company, the original principal amount of which shall be equal to the Loan
Proceeds. The Promissory Note shall mature, if not sooner paid, ten years from
the Closing Date, and be subject to prepayment as provided in Section 3 below.
2.3 Interest. The Promissory Note shall bear interest from the
date thereof to maturity on the unpaid principal balance thereof at a rate of
twelve percent (12%) per annum. After maturity (whether by acceleration or
otherwise) interest shall accrue on the unpaid principal balance at the rate of
eighteen percent (18%) per annum. Interest shall be calculated on the basis of a
365-day year.
2.4 Default. Upon the occurrence of an Event of Default, the
Company agrees to pay to the Lender, immediately upon its demand after the
occurrence of an Event of Default, the full amount then due and owing under the
Promissory Note, including, but not limited to, the unpaid principal balance of
the Promissory Note, together will all accrued but unpaid interest thereon.
3. Prepayments. The Company may from time-to-time, by giving the Lender
not less than 10 days' prior written notice, prepay the Promissory Note in part
or at any time in whole. Any such prepayment may be made without premium or
penalty. If notice of prepayment is given under this Section 3, the amount
specified therein to be paid shall be due and payable on the date specified
therein for such prepayment, together with accrued interest to such date. No
prepayment of less than the entire unpaid principal amount of the Promissory
Note shall relieve the Company to any extent from its obligation to comply with
all unsatisfied terms and conditions of the Loan Documents.
4. Security. As security for the full and timely payment of
--------
the principal of and interest on the Promissory Note and all other of the
Company's existing or future indebtedness or Obligations to the Lender:
4.1 Stock Pledge. In consideration of the indebtedness of the
Company to the Lender, the Company shall grant a security interest to the Lender
in the following treasury shares of the common stock of the Company, as
evidenced by instruments of the following description:
Certificate Shares of
Name Number Capital Stock
W.W. Capital Corporation _______ 2,448,000
duly endorsed in blank, which shares shall be delivered to the Lender. The
Lender shall hold the pledged shares as collateral security for the repayment of
the indebtedness to the Company in the principal sum of the Loan Proceeds,
together with interest thereon and any other sums that may become due and owing
as evidenced by the Promissory Note. The Lender shall hold the pledged shares as
security and shall not encumber or dispose of said shares except in accordance
with the provisions of the Stock Pledge Agreement attached hereto as Exhibit B
and incorporated herein by this reference.
4.1.1 No Dividends. During the term of the
pledge, and for so long as the Promissory Note is not in default, the Lender
shall not have any right, title or interest in or to any dividends or other
amounts paid by the Company to the holders of its capital stock.
4.1.2 No Voting Rights. During the term of
the pledge, and so long as the Promissory Note is not in default and the
Company is not in default in the performance of any of the terms of this Loan
Agreement, whether same may exist now or arise in the future, the Lender shall
not have the right to vote the pledged shares on any corporate questions.
4.1.3 Adjustments. In the event that, during
the term of the pledge, any share reclassification, readjustment, or other
change is declared or made in the capital structure of the Company, all new or
substituted shares or other securities, issued by reason of any such change,
shall be delivered to the Lender in substitution of the shares referenced above
and thereafter held by the Lender under the terms of the Stock Pledge Agreement
in the same manner as the shares originally pledged thereunder.
4.2 UCC-1 Financing Statement. As additional consideration for
the indebtedness of the Company to the Lender, the Company and/or certain of its
Subsidiaries shall execute and deliver to the Lender a UCC-1 Financing Statement
in the form of Exhibit C attached hereto pursuant to which the Company and/or
certain of its Subsidiaries will grant a security interest to the Lender in
those assets of the Company and/or certain of its Subsidiaries specifically
defined on Exhibit C which shall include certain accounts, accounts receivable,
fixtures, proceeds, equipment, machinery, contract rights, inventory or products
of the Company and/or certain of its Subsidiaries.
5. Representations and Warranties. In order to induce the
--------------------------------
Lender to enter into this LoanAgreement and to cause the Lender to loan the
Loan Proceeds to the Company, the Company represents and warrants to the Lender:
5.1 Organization; Subsidiaries; Power. The Company is a
corporation validly existing and in good standing under the laws of the State of
Nevada and in every other jurisdiction in which the nature of its business or
the ownership of its properties requires such qualification and in which the
failure to so qualify would materially adversely affect the business operations
or financial condition of the Company. The Company has the proper authority and
power to own its properties and carry on its business as currently being
conducted.
5.2 Authorization and Binding Effect. The execution and
delivery of the Loan Documents to which it is a party, and the performance by
the Company of its obligations thereunder, are within its power, have been duly
authorized by proper action on the part of the Company, are not in violation of
any existing law, rule or regulation of any governmental agency or authority,
any order or, decision of any court, the Articles of Incorporation of the
Company or the terms of any material agreement, restriction or undertaking to
which the Company is a party or by which it is bound, and do not require the
approval or consent of any governmental body, agency or authority or any other
person or entity, or, to the extent approval is required, such approval has been
obtained. The Loan Documents to which the Company is a party, when executed and
delivered, will constitute the valid and binding obligations of the Company
enforceable in accordance with their terms, except as limited by bankruptcy,
insolvency or similar laws of general application affecting the enforcement of
creditors' rights and except to the extent that general principles of equity
might restrict the specific enforcement of such Loan Documents.
5.3 Litigation. Except as disclosed in writing to the Lender,
there is no litigation or administrative proceeding pending or, to the knowledge
of the Company, threatened against or affecting the Company or the properties of
the Company that if decided or resolved adversely to the Company or its
properties would have a material adverse effect on the Company or its properties
taken as a whole.
5.4 No Default. There exists no material default nor has any
act or omission occurred which, with the giving of notice or the passage of
time, would constitute a material default under the provisions of any instrument
evidencing material indebtedness for borrowed money incurred or assumed by the
Company or any material agreement relating thereto or any other material
agreement or instrument to which the Company is a party as of the date of this
Agreement.
5.5 Ownership of Pledged Securities; Liens. On the Closing
Date the Company will acquire the Exchanging Shareholders' Shares free and clear
of any liens, security interests, or pledges (other than the pledge granted
pursuant to the Stock Pledge Agreement hereunder) or other encumbrances. The
Company has not entered into or granted any mortgages, agreements, or permitted
the filing or attachment of any security interests, liens or encumbrances on or
affecting the Exchanging Shareholders' Shares pledged by the Company to secure
repayment of the Promissory Note that would be prior or that may in any way be
superior to the Lender's security interests and rights in and to such Exchanging
Shareholders' Shares granted to the Lender except as permitted in this Loan
Agreement or as disclosed in writing to the Lender.
5.6 Ownership of Pledged Assets; Liens. Subject to those
security interests granted by the Company and in existence as of the Closing
Date, including, but not limited to, the security interest of Wells Fargo Fort
Collins, NA, each of which is listed on Exhibit D hereto, the Company and/or
certain of its Subsidiaries has or will have acquired good and marketable title
to the assets described on Exhibit C and pledged as additional collateral to
secure repayment of the Promissory Note. Neither the Company nor its
Subsidiaries have entered into or granted any mortgages, agreements, or
permitted the filing or attachment of any security interests, liens or
encumbrances on or affecting said assets that would be prior or that may in any
way be superior to the Lender's security interests and rights in and to such
assets except as permitted in this Loan Agreement or as disclosed in writing to
the Lender.
5.7 Tax Returns Filed. The Company has filed when due all
federal and state income and other tax returns, which are required to be filed.
The Company has paid or made provision for all taxes shown on said returns and
on all assessments received by it to the extent that such taxes have become due
except any such taxes which are being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP have been
established. The Company has no knowledge of any liabilities which may be
asserted against it upon audit of its federal or state tax returns, except that
the Tennessee Secretary of State has issued a Notice of Determination relating
to Eagle Enterprises, Inc., pursuant to which the Tennessee Secretary of State's
office has determined that grounds for corporate dissolution and/or the
revocation of Eagle's authority to do business in Tennessee exist.
5.8 Accuracy of Information. All information furnished by the
Company to the Lender is true, correct and complete in all material respects as
of the date furnished and does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make such information not
misleading as of such date.
6. Conditions for Funding. The Lender's obligation to deliver
-----------------------
the Loan Proceeds to the Company is subject to the Lender's receipt of the
following documents and the satisfaction of the following conditions (in a
form or manner acceptable to the Lender in its reasonable discretion):
6.1 Lender Security Documents.
-------------------------
(a) A Stock Pledge Agreement in the form of
Exhibit B granting the Lender a first priority security interest in the
Company's right, title and interest in and to 2,448,000 of the Exchanging
Shareholders' Shares, duly executed by the Company; and
(b) UCC-1 Financing Statement in the form of
Exhibit C granting the Lender a security interest in certain assets of the
Company and/or certain of its Subsidiaries, duly executed by the proper
corporate entity; and
(c) such other documents or agreements as the
Lender may reasonably request.
6.2 Promissory Note. The Promissory Note, duly executed
---------------
by the Company.
6.3 Certified Articles of Incorporation. A copy of the
-------------------------------------
Articles of Incorporation of the Company, certified as of a recent date by
the Secretary of State of Nevada.
6.4 Good Standing Certificates. A certificate of good
----------------------------
standing with respect to the Company, issued as of a recent date by the
Secretary of State of Nevada.
6.5 Closing Certificate of Company. A copy, certified by an
executive officer of the Company to be true and correct and in full force and
effect on the Closing Date, of (i) the By-laws of the Company; (ii) proper
authorizations of the Company authorizing the issuance, execution and delivery
of the Loan Documents to which the Company is a party; and (iii) a statement
containing the names of the officer or officers of the Company authorized to
sign such Loan Documents, together with the signatures of such officer or
officers.
6.6 No Default Certificate. The representations and warranties
contained in section 5 hereof and in the other Loan Documents shall be true and
correct in all material respects on and as of the Closing Date; there shall
exist on the Closing Date no Event of Default, and the Lender shall have
received a certificate to those effects, signed by an executive officer of the
Company.
6.7 Other Documents. Such other documents, instruments
----------------
and agreements as the Lender may reasonably require.
6.8 Split-Off Agreement Closing. The Company shall have
entered into the Split-Off Agreement with the Exchanging Shareholder and,
simultaneously with the delivery of the Loan Proceeds to the Company, the
transactions contemplated by and under the Split-Off Agreement shall be
consummated.
6.9 Proceedings Satisfactory. All proceedings taken in
connection with the transactions contemplated by the Split-Off Agreement, this
Loan Agreement, and all instruments, authorizations and other documents
applicable thereto, shall be satisfactory to the Lender. All such proceedings
and all instruments, authorizations and other documents applicable thereto,
shall be deemed to be satisfactory to the Lender unless the Lender, on or before
September, 20, 2000, provides the Company with written notice of its objection
setting forth the objection, and the action required to remedy the objection.
7. Affirmative Covenants. The Company agrees that it will,
----------------------
while the Promissory Note is outstanding or any of the Obligations remain
unpaid:
7.1 Annual Financial Information. Furnish to the Lender within
150 days after the end of each fiscal year of the Company, a statement of
financial position of the Company as of the close of such fiscal year and
related statements of activities and cash flows for such year, setting forth in
each case in comparative form corresponding figures from the preceding annual
financial statements, all in reasonable detail and satisfactory in scope to the
Lender, prepared in accordance with GAAP applied on a consistent basis, examined
and certified by independent public accountants selected by the Company, whose
opinion as to such financial statements shall be unqualified in scope and
substance, and, if requested by the Lender, certified by an executive officer of
the Company. If requested by Lender in writing, each such annual statement shall
be accompanied by a written statement from such executive officer certifying
that there exists no Default or Event of Default or, if any Default or Event of
Default exists, specifying the nature thereof, the period of existence thereof
and what action the Company proposes to take with respect thereto.
7.2 Interim Financial Statements. Furnish to the Lender within
60 days after the end of each of the first three quarters of each fiscal year of
the Company a statement of financial position of the Company as of the end of
each such period and related statements of activities and cash flows for the
period from the beginning of the fiscal year to the end of such quarter which
are correct, complete and fairly present the financial condition of the Company,
certified, subject to normal year-end adjustments, by an executive officer of
the Company and accompanied by the certificate of such executive officer to the
effect that there exists no Event of Default or, if any Default or Event of
Default exists, specifying the nature thereof, the period of existence thereof
and what action the Company proposes to take with respect thereto.
7.3 Books and Records. Keep proper, complete and accurate
books of record and account and permit any representatives of the Lender to
examine any of the books and records of the Company at any reasonable time upon
five business day's prior notice and as often as may reasonably be desired.
7.4 Compliance with Law. Do all things necessary to (a)
maintain its existence in good standing in its state of incorporation, (b)
preserve and keep in full force and effect all material licenses, rights and
franchises necessary to continue its business and (c) comply with all applicable
laws, rules, regulations, ordinances in all material respects, and comply with
all writs, judgments, injunctions, decrees and awards to which it may be
subject, except those being contested in good faith and involving no possibility
of criminal liability.
7.5 Compliance with Other Loan Documents. Timely comply
-------------------------------------
with all of its Obligations under the Loan Documents. Compliance shall be
considered timely if it occurs within any applicable grace period set forth
in the Loan Documents.
7.6 Notice of Event of Default or Claimed Default. Furnish to
the Lender (a) immediately upon becoming aware of any Event of Default, a
written notice specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect thereto; (b)
immediately upon becoming aware that the holder of any indebtedness issued or
assumed by the Company, or the lessor under any lease as to which the Company is
the lessee, has given notice or has taken any action with respect to a claimed
default thereunder, or under any agreement under which any such indebtedness was
issued or secured, a written notice specifying the notice given or action taken,
the nature of the claimed default and what action the Company is taking or
proposes to take with respect thereto; (c) written notice of a material adverse
change in the financial condition of the Company, as soon as the Company becomes
aware of such condition or event.
7.7 Operations. Maintain executive and management personnel
with substantially the same qualifications and experience as the present
executive and management personnel; provide written notice to the Lender of any
change in executive and management personnel; and conduct its business affairs
in a reasonable and prudent manner.
7.8 Board of Directors. For so long as all or any portion of
the Promissory Note remains unpaid, the Company's Board of Directors shall have
five members, two (2) of whom shall be designated by the Lender. To this end, on
the Closing Date, the Lender shall submit to the Company the names of two
nominees for appointment to the Company's Board of Directors ("Lender's
Nominees"), each of whom shall be appointed to the Company's Board of Directors
to fill vacancies created by the resignation of two (2) previous directors.
Lender's Nominees shall serve as members of the Company's Board of Directors
until the next annual meeting of the Company's shareholders and until their
successors are duly elected and qualified. Lender's Nominees shall owe fiduciary
obligations to the Company and its shareholders and shall discharge their
fiduciary obligations to the best of their abilities, and shall not unreasonably
prevent the Company from obtaining financing or otherwise entering into one or
more agreements to raise additional capital for the Company, all or a portion of
which may be used by the Company to retire the Company's obligations under the
Promissory Note and other Loan documents.
7.9 Litigation. Notify the Lender of any litigation in which
the Company or its assets are involved, where the Company's liability is
asserted to be, or may be, in the judgment of the Company, in excess of $50,000.
8. Negative Covenants. The Company covenants that, without
-------------------
the prior written consent of the Lender, it will not while the Promissory Note
is outstanding or while any of the Obligations remain unpaid:
8.1 Limitations on Liens and Encumbrances. Create, assume or
permit to exist any mortgage, security interest, lien or charge of any kind upon
the Exchanging Shareholders' Shares pledged to Lender other than the lien and
security interest arising under the Stock Pledge Agreement hereunder.
8.2 Continuity of Operations. (a) Merge, transfer, acquire or
consolidate with any other entity, change ownership or change its name without
giving prior written notice to, and obtaining the consent of, the Lender, which
consent shall not be unreasonably withheld or (b) cease operations, liquidate,
dissolve or transfer or sell all or substantially all of its assets without the
prior written consent of the Lender, which consent shall not be unreasonably
withheld.
9. Events of Default; Remedies.
---------------------------
9.1 Events of Default. The occurrence of any of the
-----------------
following shall constitute an Event of Default:
(a) Failure to Pay Obligations. The Company
----------------------------
fails to pay when due any of the Obligations, which failure to pay continues
for a period of thirty (30) days following receipt of written notice by the
Company from the Lender; or
(b) Failure to Pay Other Obligations.
----------------------------------
The Company fails to pay when due any of its other obligations, such default
shall continue for a period of thirty (30) days and such default would cause an
adverse material effect on the business of the Company, unless the Company, in
good faith, is disputing the existence or amount of such obligation and has set
aside a reserve sufficient to cover such obligation; or
(c) Falsity of Representations and Warranties.
--------------------------------------------
Any representation or warranty made in any Loan Document is false or
misleading in any material respect on the date as of which made or as of
which the same is to be effective; or
(d) Breach of Affirmative Covenants.
---------------------------------
The Company fails to comply with any term, covenant or agreement contained in
section 7 of this Agreement and such default shall continue for a period of
thirty (30) days after written notice to the Company from the Lender; or
(e) Breach of Negative Covenants.
------------------------------
The Company fails to comply with any term, covenant or agreement contained
in section 8 of this Agreement and such default shall continue for a period of
thirty (30) days after written notice to the Company from the Lender; or
(f) Breach of Other Provisions.
----------------------------
The Company fails to comply with any other agreement contained herein and
such default shall continue for a period of thirty (30) days after written
notice to the Company from the Lender; or
(g) Default Under Loan Documents. An Event of
-----------------------------
Default (as defined therein) shall occur under one or more of the other Loan
Documents, including, but not limited to, the Promissory Note and such default
continues beyond any grace period provided therein; or
(h) Insolvency, Failure to Pay Debts or
Receiver, Etc.
------------------------------------
The Company becomes insolvent or the subject of state insolvency proceedings,
fails generally to pay Debts as they become due or fails to perform on any term,
covenant or agreement of the Company relating to Debt of the Company which
results in the holder of such Debt being able to accelerate such Debt or makes
an assignment for the benefit of creditors; or a receiver, trustee, custodian or
other similar official is appointed for, or takes possession of any substantial
part of the property of, the Company which appointment remains in place for a
period of sixty days; or
(i) Subject of United States Bankruptcy.
-------------------------------------
The taking of action by the Company to authorize such corporation to become the
subject of proceedings under the United States Bankruptcy Code; or the execution
by the Company of a petition to become a debtor under the United States
Bankruptcy Code; or the filing of an involuntary petition against the Company
under the United States Bankruptcy Code which remains undismissed for a period
of sixty days; or the entry of an order for relief under the United States
Bankruptcy Code against the Company.
9.2 Remedies. Upon the occurrence of an Event of Default, all
of the Obligations shall, at the Lender's option and without notice or demand,
become immediately payable with interest at the rate specified in Section 2.3.
The Lender shall have all of the remedies for default provided in the Lender
Security Documents, as well as applicable law, and the Lender may, at the
Lender's option, accelerate the maturity of the Promissory Note, and/or exercise
such other rights and remedies as may be available under the Loan Documents.
10. Indemnification. The Company agrees to defend, indemnify and hold
harmless the Lender, its members, directors, officers, employees and agents from
and against any and all claims, damages, losses, liabilities, costs or expenses
(including reasonable attorneys' fees) incurred in connection with any and all
claims and proceedings (whether brought by a private party or governmental
agency) as a result of or arising out of or related to:
(a) the execution and delivery or transfer of, or payment or
failure to pay under, the Promissory Note; provided, however, that the Company
shall not be required to indemnify the Lender for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent, caused by
the willful misconduct or gross negligence of the Lender, its members,
directors, officers, employees and/or agents; or
(b) the entering into, performance of and exercise of
its rights under any Loan Document by the Lender.
11. Obligations Absolute. The Obligations of the Company under this
Loan Agreement shall be absolute, unconditional and irrevocable and shall remain
in full force and effect until the Promissory Note has been paid in full, and
such obligations of the Company shall not be affected, modified or impaired upon
the happening of any event, including, without limitation, any of the following,
whether or not with notice to, or the consent of, the Company:
(a) Any amendment, modification, waiver, consent, or
any substitution, exchange, or release of collateral, with respect to any of the
Loan Documents;
(b) Any failure, omission or delay on the part of the Lender
or any party to any of the Loan Documents in enforcing, asserting or exercising
any right, power or remedy conferred upon the Lender or any such party under
this Loan Agreement or any of the operative documents, or any other acts or
omissions on the part of the Lender or any such party;
(c) Any other event or action that would, in the absence of
this clause, result in the release or discharge by operation of law of the
Company from the performance or observance of any obligation, covenant or
agreement contained herein.
12. Waiver. The Lender shall not be deemed to have waived any
------
of its rights hereunder unless the Lender shall have signed such waiver in
writing.
13. Binding Effect. This Agreement inures to the benefit of,
---------------
and is binding upon, the successors and assigns of the Lender and the Company,
provided that none of the rights of the Company hereunder may be assigned
without the prior written consent of the Lender.
14. Governing Law. This Agreement is being delivered in and
--------------
shall be deemed to be a contract governed by the laws of the State of
Oklahoma and shall be interpreted and enforced in accordance with the laws
of that state without regard to the principles of conflicts of laws.
15. Notices. All notices provided for herein shall be in writing and
shall be (a) delivered; (b) sent by express or first-class mail, postage prepaid
and return receipt requested; (c) sent by Federal Express or other nationally
recognized overnight courier service; or (d) sent by facsimile transmission and
confirmation in writing provided to the recipient in a manner described in (a),
(b) or (c) and, if to the Lender, addressed to it at 115 West Orient, Thomas,
Oklahoma, 73669 and, if to the Company, addressed to it at 3500 JFK Parkway,
Suite 320, Ft. Collins, Colorado, 80525 Attention: President, or to such other
address with respect to any party as such party shall notify the others in
writing; such notices shall be deemed given when delivered, mailed or so
transmitted.
16. Titles. The titles of sections in this Agreement are for
------
convenience only and do not limit or construe the meaning of any section.
17. Submission to Jurisdiction; Service of Process.
----------------------------------------------
(a) THE LENDER AND COMPANY AGREE THAT ALL ACTIONS OR
PROCEEDINGS IN ANY MANNER RELATING TO OR ARISING OUT OF THIS LOAN AGREEMENT OR
THE OTHER LOAN DOCUMENTS MAY BE BROUGHT ONLY IN COURTS OF THE STATE OF COLORADO
LOCATED IN DENVER COUNTY OR THE FEDERAL DISTRICT COURT IN COLORADO AND THE
LENDER AND COMPANY CONSENT TO THE JURISDICTION OF SUCH COURTS. THE LENDER AND
COMPANY WAIVE ANY OBJECTION THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
SUCH COURT AND ANY RIGHT THEY MAY HAVE NOW OR HEREAFTER HAVE TO CLAIM THAT ANY
SUCH ACTION OR PROCEEDING IS IN AN INCONVENIENT COURT; and
(b) The Lender and Company consent to the service of process
in any such action or proceeding by certified mail sent to the address specified
in section 15; provided, however, that nothing contained herein shall affect the
right of either the Lender or the Company to serve process in any other manner
permitted by law.
18. Limitation of Liability. THE COMPANY AND THE LENDER HEREBY WAIVE
ANY RIGHT EITHER OF THEM MAY HAVE TO CLAIM OR RECOVER FROM THE OTHER PARTY ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES, OF
WHATEVER NATURE, OTHER THAN ACTUAL DAMAGES.
19. Entire Agreement. This Agreement and the other Loan
-----------------
Documents shall constitute the entire agreement of the parties pertaining
to the subject matter hereof and supersede all prior or contemporaneous
agreements and understandings of the parties in connection therewith.
20. Arbitration. Except for "Core Proceedings" under the United States
Bankruptcy Code, the Lender and the Company agree to submit to binding
arbitration all claims, disputes and controversies between or among them,
whether in tort, contract or otherwise (and their respective employees,
officers, directors, attorneys, and other agents) arising out of or relating to
in any way the Loan Documents or transactions which are the subject of this
Agreement and their negotiation, execution, collateralization, administration,
repayment, modification, extension, substitution, formation, inducement,
enforcement, default or termination. Any arbitration proceeding will (i) proceed
in Denver, Colorado; (ii) be governed by the Federal Arbitration Act (Title 9 of
the United States Code); and (iii) be conducted in accordance with the
Commercial Arbitration rules of the American Arbitration Association ("AAA").
The arbitration requirement does not limit the right of either party to
(i) foreclose against collateral; (ii) exercise self-help remedies relating to
collateral or proceeds of collateral such as setoff or repossession; or (iii)
obtain provisional ancillary remedies such as replevin, injunctive relief,
attachment or the appointment of a receiver, before, during or after the
pendency or any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of either party to submit any dispute to
arbitration, including those arising from the exercise of the actions detailed
in sections (i), (ii) and (iii) of this paragraph.
Any arbitration proceeding will be before a single arbitrator selected
according to the Commercial Arbitration Rules of the AAA. The arbitrator will be
a neutral attorney who has practiced in the area of commercial law for a minimum
of ten years. The arbitrator will determine whether or not an issue is
arbitratable and will give effect to the statutes of limitation in determining
any claim. Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction.
In any arbitration proceeding the arbitrator will decide (by documents
only or with a hearing at the arbitrator's discretion) any pre-hearing motions
which are similar to motions to dismiss for failure to state a claim or motions
for summary adjudication.
In any arbitration proceeding discovery will be permitted and will be
governed by the Colorado Rules of Civil Procedure. All discovery must be
completed no later than 20 days before the hearing date and within 180 days of
the commencement of arbitration proceedings. Any requests for an extension of
the discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party's presentation and that no alternative means for
obtaining information is available.
The arbitrator shall award costs and expenses of the arbitration
proceeding in accordance with the provisions of this Agreement, the Promissory
Note and/or other Loan Documents.
<PAGE>
WEST-OK INVESTMENT, LLC, an Oklahoma
limited liability company
By:
-------------------------------------------
Managing Member
W.W. CAPITAL CORPORATION, a Nevada corporation
By:
-------------------------------------------
Title:
----------------------------------------------
<PAGE>
EXHIBIT A
PROMISSORY NOTE
$1,000,000.00 ___________, 2000
FOR VALUE RECEIVED, and intending to be legally bound, W.W. CAPITAL
CORPORATION, a Nevada Corporation ("Debtor") hereby promises to pay to the order
of WEST-OK INVESTMENT, LLC., an Oklahoma limited liability company whose address
is 115 West Orient, Thomas, Oklahoma 73669 ("Holder") the principal amount of
One Million Dollars ($1,000,000) ("Principal Amount") subject to the following
terms and conditions:
1. The principal amount of this Note shall bear interest at the rate of
twelve percent (12%) per annum until the principal amount hereof, together with
all accrued and unpaid interest, has been paid in full. Hereinafter, the total
outstanding principal balance hereof, together with any and all accrued and
unpaid interest shall be referred to as the "Loan Amount."
2. Subject to the terms and conditions hereinbelow set forth,
the Loan Amount shall be payable as follows:
(a) No payments shall be due or payable for the period
commencing on the date hereof and ending on the first
anniversary date of this Note (the "Abatement
Period"). Interest shall continue to accrue on the
unpaid portion of the Principal Amount during the
Abatement Period.
(b) On the second anniversary date of this Note, the
Debtor shall pay to the Holder one payment consisting
exclusively of twelve months accrued interest.
(c) Commencing on the third anniversary date of the Note,
and continuing on each anniversary date thereafter
until the entire Principal Amount, together with all
accrued but unpaid interest thereon, has been paid in
full, the Debtor shall pay to the Holder one-eighth
(1/8) of the Principal Amount, plus all accrued
interest. If not sooner paid, the final installment,
together with all accrued but unpaid interest, shall
be due and payable on ________________, 2010.
3. If Debtor shall default in the payment of principal hereunder when
the same shall become due and payable, the unpaid principal sum of this Note
shall immediately bear interest at the rate of eighteen percent (18%) per annum
until paid in full, and shall be payable monthly or, at the option of Holder
hereof, on demand.
4. Debtor may at any time, upon ten days advance notice, prepay the
entire unpaid principal of this Note or any part thereof without additional
interest or penalty. Any prepayment
A-1
<PAGE>
in part shall be applied first to accrued but unpaid interest hereunder, and
second to installments of principal in the reverse order of maturity.
5. Payments of both principal and interest on this Note shall be made
to Holder in immediately available funds in lawful money of the United States.
6. This Note is fully negotiable and may be assigned by Holder. Neither
this Note nor the obligations of Debtor hereunder may be assigned or delegated
by Debtor without the prior written consent of Holder.
7. The occurrence of any of the following events ("Events of Default")
with respect to Debtor, shall constitute a default hereunder: (a) if any payment
of principal or interest shall not be paid in full when due, and shall continue
unpaid for a period of thirty (30) days thereafter; or (b) if a default shall
occur under any covenant contained in any instrument relating to the rights of
Holder hereunder including, but not limited to, that certain Loan Agreement of
even date herewith and to which this Note is attached as Exhibit A, or any of
the Loan Documents referenced in said Loan Agreement.
8. Upon the occurrence of a default hereunder, the entire principal
balance of this Note plus accrued interest, shall, at the option of Holder,
become immediately due and payable without notice or demand, and Holder shall
have all rights and remedies provided under all applicable laws and shall be
deemed to have exercised the same immediately upon the occurrence of any such
event without notice or further action, irrespective of when any record of the
same may thereafter be noted by Holder.
9. Failure by Holder to declare a default hereunder shall not
constitute a waiver of any subsequent default. Debtor further promises to pay a
reasonable attorney's fee, court costs, and any other expenses, losses, charges,
damages incurred or advances made by Holder in protection of its rights or
caused by Debtor's default under the terms of this Note.
10. If Holder retains an attorney for collection of this Note, or if
any suit or proceeding is brought for the recovery of all or any part of or for
protection of the indebtedness, or any collateral, or to enforce Holder's rights
under any security agreement, letter of credit securing the Principal Amount, or
other collateral agreement, then Debtor agrees to pay on demand all reasonable
costs and expenses of the suit or proceeding, or any appeal thereof, incurred by
Holder, including, without limitation, reasonable attorney's fees.
11. The terms of this Note shall not be varied, altered or modified
except by a writing signed by Holder and Debtor.
12. Debtor hereby waives presentment for payment or acceptance, demand
and protest, and notice of protest, dishonor and non-payment of this Note.
13. No delay on the part of Holder in exercising any power or right
under this Note shall operate as a waiver of the power or right, nor shall any
single or partial exercise of that power or right, preclude further exercise of
that power or right. The rights and remedies
A-2
<PAGE>
specified in this Note are cumulative and not exclusive of any rights and
remedies that Holder may otherwise possess.
14. The provisions of this Note shall be severable, so that if any
provision hereof is declared invalid under the laws of any state where it is in
effect, or of the United States, all other provisions of this Note shall
continue in full force and effect.
15. This Note shall be binding upon Debtor and its successors and
assigns, and shall inure to the benefit of and be enforceable by Holder, its
successors and assigns.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
undersigned has caused this Note to be executed on the date first above written.
W.W. CAPITAL CORPORATION, a Nevada corporation
By:
-------------------------------------------
Steven Zamzow, President
A-3
<PAGE>
EXHIBIT B
STOCK PLEDGE AGREEMENT
THIS AGREEMENT made and entered into this ______ day of ___________,
20___, by and between W.W. CAPITAL CORPORATION, a Nevada corporation, hereafter
referred to as "Pledgor," and WEST-OK INVESTMENT, LLC., an Oklahoma limited
liability company, hereinafter referred to as "Pledgee."
WITNESSETH
WHEREAS, Pledgor is obligated to repay certain indebtedness to Pledgee
in the principal amount of One Million Dollars ($1,000,000.00); and
WHEREAS, the Pledgor has agreed to pledge certain stock with the
Pledgee as security for the repayment of said debt;
NOW, THEREFORE, in consideration of the mutual covenants hereinbelow
set forth, the parties agree as follows:
1. PLEDGE.
In consideration of certain indebtedness of Pledgor to
Pledgee, Pledgor hereby grants a security interest to the Pledgee in the
following shares of the capital stock of Pledgor, (the "Shares"), as evidenced
by instruments of the following description:
Certificate Shares of
Name Number Capital Stock
W.W. Capital Corporation 2,448,000
---------------
duly endorsed in blank and herewith delivered to the Pledgee. The Pledgee shall
hold the pledged shares as collateral security for the repayment of the
indebtedness to the Pledgee in the principal sum of One Million Dollars
($1,000,000.00) together with interest thereon and any other sums that may
become due and owing as evidenced by its promissory note ("Promissory Note") of
even date herewith (the "Loan"). The Pledgee shall hold the pledged shares as
security and shall not encumber or dispose of said shares except in accordance
with the provisions of this Agreement.
2. DIVIDENDS.
During the term of this pledge, and for so long as the Loan is
not in default, the Pledgee shall not have any right, title or interest in or to
any dividends or other amounts paid by Pledgor to the holders of its capital
stock.
B-1
<PAGE>
3. VOTING RIGHTS.
During the term of this pledge, and so long as the Loan is not
in default and Pledgor is not in default in the performance of any of the terms
of this Agreement, whether same may exist now or arise in the future, the
Pledgee shall not have the right to vote the pledged shares on any corporate
questions.
4. REPRESENTATIONS.
The Pledgor warrants and represents that there are no
restrictions upon the transfer of any of the pledged shares, other than may
appear on the face of the certificates, or as are imposed by state and federal
securities laws. Except for the foregoing, Pledgor is the true and lawful
beneficial owner of the Shares, free of any claims, liens, or encumbrances, and
Pledgor has the right to transfer such Shares except as may hereinabove be
expressly provided.
5. ADJUSTMENTS.
In the event that, during the term of this pledge, any share
reclassification, readjustment, or other change is declared or made in the
capital structure of Pledgor, all new or substituted shares or other securities,
issued by reason of any such change shall be delivered by Pledgor to Pledgee and
held by the Pledgee under the terms of this Agreement in the same manner as the
shares originally pledged hereunder.
6. TERMINATION.
This Pledge Agreement shall terminate upon the full and
satisfactory discharge by Pledgor of the indebtedness which is owed to the
Pledgee and evidenced by the Promissory Note. So long as there may exist any
indebtedness or obligation of Pledgor owed to the Pledgee, this Agreement shall
remain in full force and effect. Upon the termination of this Agreement, the
Pledgee shall return to the Pledgor all of the shares then remaining covered by
this pledge and all rights received by the Pledgee as a result of this Agreement
shall terminate.
7. DEFAULT.
Default of this Agreement shall be deemed to have occurred in
the event that Pledgor defaults in the repayment of the indebtedness owed to the
Pledgee under the Promissory Note. In the event of default, Pledgee shall serve
written notice of said default upon Pledgor demanding that said default be cured
within thirty (30) days. In the absence of a cure within the thirty (30) day
period, Pledgee may exercise the rights and remedies set forth in Section 8
hereof.
8. REMEDIES UPON DEFAULT.
In the event of default as hereinabove defined, the Pledgee
shall have the rights and remedies provided in the Uniform Commercial Code in
effect in the State of Oklahoma at the date of this Agreement and in this
connection, the Pledgee may, upon five (5) days' notice to the Pledgor, sent by
registered mail, and without liability for any diminution in price which may
B-2
<PAGE>
have occurred, sell all the pledged shares in such manner and for such price as
the Pledgee may determine. At any bona fide public sale the Pledgee shall be
free to purchase all or any part of the pledged shares. Upon disposition of the
pledged shares, the proceeds shall be applied in accordance with the Uniform
Commercial Code in effect in the State of Oklahoma on the date of this
Agreement, and in addition shall be governed by the following:
Pledgee shall sell or otherwise dispose of such number of
shares as may be necessary to yield an amount sufficient to satisfy the
principal and interest of any debt or obligation of Pledgor in default, plus the
amount of the expenses of the sale including Pledgee's attorneys' fees and legal
expenses incurred in connection therewith. The balance of the shares remaining
after the sale or other disposition shall remain in Pledgee's possession to
secure any remaining obligations of Pledgor owed to Pledgee. In the event the
sale or other disposition of the shares yields an amount sufficient to satisfy
the principal and interest of all of the indebtedness and obligation of Pledgor
to Pledgee, then Pledgee shall forthwith return any shares remaining after such
sale or other disposition to Pledgor. In the event the proceeds of the sale or
other disposition of all of the shares pledged pursuant to this Agreement are
insufficient to cover the principal and interest of all debts of Pledgor which
are in default and which are covered by this Agreement, plus the expenses of the
sale, then the Pledgee may proceed to collect any deficiency from such persons
or entities as may be liable on the underlying debts or obligations secured
hereby.
IN WITNESS WHEREOF, the parties have signed the Agreement the date and
year first above written.
PLEDGOR:
W.W. CAPITAL CORPORATION
______________________________
Steve Zamzow, President
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