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EXHIBIT 2.1
AGREEMENT OF MERGER
by and among
Datalink.net, Inc.,
Five Acquisition, Inc.,
Five Star Advantage, Inc.,
And
Jeff Gleckman
Dated: December 8, 2000
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AGREEMENT OF MERGER
This Agreement of Merger (this "Agreement"), dated as of December 8,
2000, is by and among Datalink.net, Inc., a Nevada corporation ("Parent"), Five
Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Sub"), Five Star Advantage, Inc. a California corporation (the
"Company") and Jeff Gleckman (the "Shareholder").
RECITALS
WHEREAS, the Company is engaged in the business of e-commerce
fulfillment services (the "Business"); and
WHEREAS, the Boards of Directors of each of Parent, Sub and the
Company determined that it would be advisable and in the respective best
interests of each such corporation and its shareholder(s) that: (i) the Company
be merged with Sub, with Sub as the surviving entity (the "Surviving
Corporation"); and (ii) the Shareholder of the Company, who currently owns all
of the issued and outstanding shares of capital stock of the Company (the
"Company Shares"), will have the right to receive that certain number of shares
of common stock of Parent (the "Parent Shares") as provided in Section III
below.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Defined Terms. As used herein, the terms below shall have the
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following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"affiliate" shall have the meaning set forth in the Securities
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Exchange Act of 1934, as amended, and the rules and regulations thereunder.
"Closing Date" shall mean the date of this Agreement or such other
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date as Parent, Sub and the Company shall mutually agree upon.
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"Contract" shall mean any agreement, contract, note, loan, evidence of
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indebtedness, purchase order, letter of credit, franchise agreement,
undertaking, covenant not to compete, employment agreement, license, instrument,
obligation or commitment to which the Company is a party or is bound, whether
oral or written, but excluding all leases.
"Disclosure Schedule" shall mean a schedule executed and delivered by
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the Company to Parent and Sub as of the date hereof which sets forth the
exceptions to the representations and warranties contained in Articles V and VI
hereof and certain other information called for by this Agreement. Unless
otherwise specified, each reference in this Agreement to any numbered schedule
is a reference to that numbered schedule which is included in the Disclosure
Schedule.
"Effective Time" shall mean the date and time of receipt of the
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Certificate of Merger for filing by the Secretary of State of the State of
Delaware and the Secretary of State of the State of California, unless a delayed
effective time is specified therein.
"Financial Statements" shall mean the compiled balance sheet dated
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September 30, 2000 and the related statement of income of the Company for the
nine months ended September 30, 2000. The definition of Financial Statements
shall also include an updated balance sheet and income statement of the Company
as of ________, 2000.
"Material Adverse Effect" or "Material Adverse Change" shall mean any
----------------------- -----------------------
adverse effect or change in the condition (financial or other), business,
results of operations, prospects, assets, liabilities or operations of the
Company, taken as a whole, or on the ability of the Company to consummate the
transactions contemplated hereby, or any event or condition which would, with
the passage of time, constitute a "material adverse effect" or "material adverse
change."
"Parent MFN Rates" shall mean rates at least as favorable as rates
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charged by Parent at such time to any third party for substantially similar
services.
"Permits" shall mean all licenses, permits, franchises, approvals,
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authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, or any other person,
necessary or desirable for the past, present or anticipated conduct of, or
relating to the operation of the Business.
1.2 Other Defined Terms. The following terms shall have the meanings
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defined for such terms in the indicated Sections set forth below. Certain other
capitalized terms are defined elsewhere in this Agreement.
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Term Section
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Action 5.15
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Term Section
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Business Recitals
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Business Plan 5.14
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Capitalization Representations 10.4
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Claim 10.5(f)
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Claim Notice 10.5(f)
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Closing 4.1
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Company Shares Recitals
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Damages 10.5
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DGCL 2.1
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Expiration Date 10.4
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CGCL 2.1
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Merger Certificate 2.2
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Merger Consideration 3.1
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Parent Preamble
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Parent CFO 3.2
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Parent Services 10.3
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Parent Shares Recitals
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Proprietary Rights 5.21(a)
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Shareholder Preamble
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Sub Preamble
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Preamble
Surviving Corporation
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ARTICLE II.
THE MERGER
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2.1 The Merger. Upon the terms and subject to the conditions hereof and
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in accordance with the Delaware General Corporation Law (the "DGCL") and the
California General Corporation Law (the "CGCL"), the Company shall be merged
with Sub (the "Merger") at the Effective Time. Following the Merger, the
separate existence of the Company shall cease, and Sub shall continue as the
surviving corporation (the "Surviving Corporation"), and shall succeed to and
assume all the rights and obligations of the Company.
2.2 Effective Time. The parties hereto shall cause the Merger to be
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consummated by filing a Certificate of Merger with respect thereto with the
Secretary of State of the State of Delaware and with the Secretary of State of
the State of California (the "Certificate of Merger") in the form attached
hereto as Exhibit 2.2.
2.3 Effects of the Merger. The Merger shall have the effects set forth
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in Section 259 of the DGCL and Section 1107 of the CGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, except
as otherwise provided herein, all of the property, rights, privileges, powers
and franchises of the Company and Sub shall rest in the Surviving Corporation,
and all debts, liabilities and duties of the Company and Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
2.4 Certificate of Incorporation and By-laws of the Surviving Corporation;
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Officers and Directors. The Certificate of Incorporation of Sub shall be the
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Certificate of Incorporation for the Surviving Corporation until thereafter
changed or amended, and the By-laws of Sub shall be the By-laws of the Surviving
Corporation until thereafter changed or amended. From and after the Effective
Time, until their successors are duly elected or appointed and qualified, the
officers and the Board of Directors of Sub shall be the officers and directors,
respectively, of the Surviving Corporation.
2.5 Effect of the Merger on Company Shares. At the Effective Time, by
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virtue of the Merger and without any action on the part of the Shareholder, or
the Board of Directors of the Parent, Sub or the Company, all of the Company
Shares held by the Shareholder shall be converted into the right to receive the
Merger Consideration (as defined below).
2.6 Cancellation of Company Shares; Delivery of Merger Consideration.
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On the Closing Date, the Shareholder shall surrender to Sub the certificate
representing 100% of the issued and outstanding Company Shares, and such
certificate shall thereafter be cancelled and will cease to represent any
interest in the Company. On the Closing Date, Parent shall deliver (or cause
its transfer agent to deliver) to the Shareholder, in exchange for the
certificate representing the Company Shares, the Merger Consideration (as
defined below).
ARTICLE III.
MERGER CONSIDERATION
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3.1 Merger Consideration. The Shareholder shall transfer to Sub all of
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the Company Shares owned by the Shareholder (which shall equal 100% of the
issued and outstanding common stock of the Company), in exchange for the right
to receive four hundred and twelve thousand five hundred (412,500) Parent Shares
on the Closing Date (the "Merger Consideration").
3.2 Changes in Parent Shares. If prior to the Closing Date, the Parent
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Shares shall be recapitalized or reclassified or Parent shall effect any stock
dividend, stock split, or reverse stock split of Parent Shares, then the shares
of Parent Shares to be issued as Merger Consideration under this Agreement,
shall be proportionately and equitably adjusted to reflect any increase or
decrease in the number of shares of Parent Shares resulting from such corporate
event.
ARTICLE IV.
CLOSING
4.1 Closing Date and Location. The closing of the transactions
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contemplated herein (the "Closing") shall be held at 10:00 a.m. local time on
the Closing Date at the offices of Greenberg Glusker Fields Claman & Machtinger
LLP, at 1900 Avenue of the Stars, Suite 2100, Los Angeles, CA 90067 (1) on the
first business day following the date on which the last of the conditions set
forth in Articles VIII and IX (other than the filing of the Merger Certificate)
are satisfied or to the extent permissible, waived, or (2) on such other date
and at such other time or place as is mutually agreed by the parties hereto.
4.2 Obligations to the Company. At the Closing, the Company shall deliver
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to Parent and Sub the following documents:
(a) A certificate of good standing from the State of California dated
as of a date not more than two (2) business days prior to the Closing Date and
certifying that the Company is duly qualified and in good standing as of the
date of such certificate;
(b) The officers' certificate provided for in Section 9.4; and
(c) The executed Certificate of Merger substantially in the form of
Exhibit 2.2.
4.3 Obligation of the Shareholder. At the Closing, the Shareholder
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shall deliver to Parent and Sub the certificate evidencing all of the issued and
outstanding shares of the Company, duly endorsed in blank for transfer or
accompanied by a stock power duly executed in blank in a form reasonably
requested by Sub to evidence the acknowledgment of and consent to the sale of
the Company Shares.
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4.4 Obligations of Parent and Sub. At the Closing, the Shareholder shall
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deliver to Parent and Sub an officers' certificate provided for in Section 8.3.
4.5 Assumption by Parent and Sub of Company's Broker Agreement. At the
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Closing, Parent shall assume the responsibility of negotiating and paying an
acceptable fee, in Parent's sole discretion, pursuant to Company's agreement
with Capital Management International dated ______, the Company's acquisition
agent or brokers.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES AS TO COMPANY
Each of the Company and the Shareholder, jointly and severally, hereby
represents and warrants to Parent and Sub as follows, except as otherwise set
forth on the Disclosure Schedule, which representations and warranties are, as
of the date hereof, and will be, as of the Closing Date, true and correct:
5.1 Organization and Good Standing. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
California. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
its properties owned or leased or the nature of its activities make such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a material adverse effect on the Company or the
Business. Copies of the Articles of Incorporation and Bylaws of the Company,
and all amendments thereto, heretofore delivered to Parent and Sub are accurate
and complete as of the date hereof. Schedule 5.1 contains a true, correct and
complete list of all jurisdictions in which the Company is qualified to do
business as a foreign corporation.
5.2 Capitalization. The authorized capital stock of the Company consists
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of 10,000,000 shares of common stock and 2,000,000 shares of preferred stock, of
which 10,000 shares of common stock and no shares of preferred stock are
outstanding. All of the Company Shares have been validly issued and are fully
paid and non-assessable. No shares of common stock are held by the Company as
treasury stock. There is no existing option, warrant, call, commitment or other
security or agreement of any kind to which the Company is a party requiring, and
there are no convertible securities of the Company outstanding which upon
conversion would require, the issuance of any additional shares of capital stock
of the Company or other securities convertible into shares of capital stock or
any debt or equity security of the Company of any kind.
5.3 Subsidiaries. The Company does not have any subsidiaries or any
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equity interest in another entity.
5.4 Authorization. The Company has all requisite corporate power and
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authority, and has taken all corporate action necessary, to execute and deliver
this Agreement, to consummate the
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transactions contemplated hereby and to perform its obligations hereunder. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby have been duly approved by
the board of directors and the shareholder of the Company. No other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
and the transactions contemplated hereby. This Agreement has been duly executed
and delivered by the Company and is a legal, valid and binding obligation,
enforceable against it in accordance with its terms.
5.5 Employee Benefit Plans. Except as set forth on Schedule 5.5, the
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Company does not have any Employee Benefit Plan as defined in the Employee
Retirement Income Security Act of 1974.
5.6 Tax Returns and Payments. The Company has filed all tax returns and
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reports as required by law. These returns and reports are true and correct in
all material respects. The Company has paid all taxes and other assessments
due.
5.7 Title to Property and Assets. The Company owns its property and
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assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens which arise in the ordinary course of business and
do not materially impair the Company's ownership or use of such property or
assets. With respect to the property and assets it leases, the Company is in
compliance with such leases and, to its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances.
5.8 No Adverse Change. Since November 8, 2000, there has not been
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(a) any change in the assets, liabilities, financial condition or
operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business that have not
been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company;
(c) any waiver or compromise by the Company of a valuable right or of
a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or encumbrance
or payment of any obligation by the Company, except in the ordinary course of
business and that is not material to the business, properties, prospects or
financial condition of the Company;
(e) any material change to a material contract or agreement by which
the Company or any of its assets is bound or subject;
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(f) any material change in any compensation arrangement or agreement
with any employee, officer, director or shareholder;
(g) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of any officer or
key employee of the Company; and the Company is not aware of any impending
resignation or termination of employment of any such officer or key employee;
(i) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(j) any loans or guarantees made by the Company to or for the benefit
of its employees, officers or directors, or any members of their immediate
families, other than travel advances and other advances made in the ordinary
course of its business;
(k) any declaration, setting aside or payment or other distribution
in respect to any of the Company's capital stock, or any direct or indirect
redemption, purchase, or other acquisition of any of such stock by the Company;
(l) to the Company's knowledge, any other event or condition of any
character that might materially and adversely affect the business, properties,
prospects or financial condition of the Company; or
(m) any arrangement or commitment by the Company to do any of the
things described in this Section 5.8.
5.9 Contracts and Commitments.
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(a) Contracts. Schedule 5.9 sets forth a complete and accurate list
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of all Contracts of the following categories:
(1) Contracts not made in the ordinary course of business;
(2) Employment contracts and severance agreements;
(3) Labor or union contracts;
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(4) Distribution, franchise, license, sales, commission,
consulting agency or advertising contracts which are not cancelable on thirty
(30) calendar days notice;
(5) Contracts involving expenditures or liabilities, actual or
potential, in excess of $5,000 or otherwise material to the Company, taken as a
whole, and not cancelable (without liability) within thirty (30) calendar days;
(6) Contracts or commitments relating to commission arrangements
with others;
(7) Promissory notes, loans, agreements, indentures, evidences
of indebtedness, letters of credit, guarantees, or other instruments relating to
an obligation to pay money, whether the Company shall be the borrower, lender or
guarantor thereunder or whereby any assets are pledged (excluding credit
provided by the Company to purchasers in the ordinary course of business;
(8) Contracts containing covenants limiting the freedom of the
Company or any officer, director, shareholder or affiliate, to engage in any
line of business or compete with any person;
(9) Any Contract with the United States, state or local
government or any agency or department thereof;
(10) Leases of real property;
(11) Leases of personal property not cancelable (without
liability) within thirty (30) calendar days; and
(12) Governmental or regulatory Permits or approvals required to
conduct the Business as presently conducted.
The Company has delivered to Sub and Parent true, correct and complete copies of
all of the written Contracts listed on Schedule 5.9, including all amendments
and supplements thereto, and a written summary setting forth the material terms
and conditions of each and every oral Contract listed on Schedule 5.9, including
all amendments and supplements thereto.
(b) Absence of Breaches or Defaults. All of the Contracts are valid
-------------------------------
and in full force and effect. The Company has duly performed all of its
obligations under the Contracts, and no violation of, or default or breach under
any Contracts has accrued.
5.10 Permits. The Company has all Permits required to conduct its business
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except such Permits the failure of which to obtain would not have a material
adverse effect. All such permits are
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valid and in full force and effect and are listed on Schedule 5.10. No notice
to, declaration, filing or registration with, or Permit from, any domestic or
foreign governmental or regulatory body or authority, or any other person or
entity, is required to be made or obtained by the Company or any shareholder in
connection with the execution, delivery or performance of this Agreement and the
consummation of the transactions contemplated hereby.
5.11 Corporate Documents. The Articles of Incorporation and Bylaws of the
-------------------
Company are in the form provided to counsel for Parent and Sub. The copy of the
minute books of the Company provided to Parent and Sub' counsel contains minutes
of all meetings of directors and shareholders and all actions by written consent
without a meeting by the directors and shareholders since the date of
incorporation and reflects all actions by the directors (and any committee of
directors) and shareholders with respect to all transactions referred to in such
minutes accurately in all material respects.
5.12 No Conflict or Violation. Neither the execution, delivery or
------------------------
performance of this Agreement nor the consummation of the transactions
contemplated hereby, nor compliance by the shareholder or the Company with any
of the provisions hereof, will (1) violate or conflict with any provision of the
Company's Articles of Incorporation or Bylaws, (2) violate, conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under any of the terms,
conditions or provisions of any Contract, agreement, or other instrument or
obligation (1) to which the Company is a party or (2) by which the Company is
bound, (3) violate any statute, rule, regulation, ordinance, code, order,
judgment, ruling, writ, injunction, decree or award, or (4) impose any
encumbrance restriction or charge on the Company or the Business except in the
case of each of clauses (a), (b), and (c) above, for such violations, conflicts,
breaches, defaults, terminations or accelerations which, in the aggregate would
not have a material adverse effect on the Company or the Business.
5.13 Financial Statements. The Financial Statements (1) are in
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accordance with the books and records of the Company, (2) except as set forth in
Section 5.13 of the Disclosure Schedule or in the notes to the Financial
Statements, have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods covered thereby and (3)
fairly and accurately present the assets, liabilities (including all reserves)
and financial position of the Company as of the respective dates thereof and the
results of operations and changes in cash flows for the periods then ended.
Financial Statements have been compiled by Harold Spector, an independent
certified public accountant. At the respective dates of the Financial
Statements, there were no liabilities of the Company, which, in accordance with
generally accepted accounting principles, should have been shown or reflected in
the Financial Statements or the notes thereto, which are not shown or reflected
in the Financial Statements or the notes thereto.
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5.14 Disclosure. The Company has fully provided Parent and Sub with all
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the information that has been requested for deciding whether to enter into this
transaction and all information that the Company believes is reasonably
necessary to enable Parent and Sub to make such a decision, including the
Company's projections described in the business plan (the "Business Plan"). No
representation or warranty of the Company contained in this Agreement and the
exhibits attached hereto, any certificate furnished or to be furnished to Parent
and Sub at the Closing, or the Business Plan (when read together) contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made. To the extent the
Business Plan was prepared by management of the Company, the Business Plan and
the financial and other projections were prepared in good faith.
5.15 Litigation. There is no action, order, writ, injunction, judgment
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or decree outstanding or any claim, suit, litigation, proceeding, labor dispute,
arbitral action, governmental audit or investigation (collectively, "Actions")
pending, threatened or anticipated (1) against, related to or affecting: (1) the
Company, (2) any officers or directors of the Company, or (3) the Shareholder,
(2) seeking to delay, limit or enjoin the transactions contemplated by this
Agreement, (3) that involve the risk of criminal liability, or (4) in which the
Company is a plaintiff, including any derivative suits. The Company is not in
default with respect to or subject to any judgment, order, writ, injunction or
decree of any court or governmental agency, and there are no unsatisfied
judgments.
5.16 Labor Matters. The Company is not a party to any labor agreement
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with any labor organization, union, group or association; there are no employee
unions (nor any other similar labor or employee organizations) under local
statutes, custom or practice; there has not been any attempt by organized labor
or its representatives to make the Company conform to demands of organized labor
relating to its employees or to enter into a binding agreement with organized
labor. There is no labor strike or labor disturbance pending or threatened, nor
is any grievance currently being asserted. The Company is in compliance in all
material respects with all applicable laws respecting employment practices,
employee documentation, terms and conditions of employment and wages and hours
and has not engaged in any unfair labor practice.
5.17 Liabilities. The Company does not have any liabilities,
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obligations or commitments of any nature (whether absolute, accrued, contingent
or otherwise and whether matured or unmatured), including without limitation tax
liabilities due or to become due, except (1) liabilities which are reflected and
reserved against on the Financial Statement, which have not been paid or
discharged since the date thereof, (2) liabilities arising under Contracts,
leases, letters of credit, purchase orders, licenses, Permits, purchase
agreements and other agreements, business arrangements and commitments described
in the Disclosure Schedule (and under those Contracts which are not required to
be disclosed on the Disclosure Schedule) and (3) liabilities incurred since the
date of the Financial Statement in the ordinary course of business and
consistent with past practice and in accordance with this Agreement (none of
which relates to any breach of Contract,
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breach of warranty, tort, infringement or violation of law or arose out of any
Action) which, individually or in the aggregate, has or would have a material
adverse effect.
5.18 Compliance with Law. The Company has not violated and is in
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compliance with all laws, statutes, ordinances, regulations, rules and orders of
any foreign, federal, state or local government and any other governmental
department or agency, and any judgment, decision, decree or order of any court
or governmental agency, department or authority, except where the violation or
failure to comply, individually or in the aggregate, would not have a material
adverse effect. The Company has not received any notice to the effect that it
is not in compliance with any such statutes, regulations, rules, judgments,
decrees, orders, ordinances or other laws. The Company has committed no act,
and there has been no omission, which may result in, and there has been no
occurrence which may give rise to, product liability or liability for breach of
warranty (whether covered by insurance or not) on the part of the Company, with
respect to products designed, manufactured, assembled, repaired, maintained,
delivered, shipped or installed or services rendered prior to or on the Closing
Date which, in the aggregate, would have a material adverse effect.
5.19 No Brokers. Neither the Company nor any of its officers, directors,
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employees, shareholders or affiliates has employed or made any agreement with
any broker, finder or similar agent or any person or firm which will result in
the obligation of Parent or Sub or any of its affiliates to pay any finder's
fee, brokerage fees or commission or similar payment in connection with the
transactions contemplated hereby.
5.20 No Other Agreements. Neither the Shareholder nor the Company, its
-------------------
officers, directors or affiliates have any commitment or legal obligation,
absolute or contingent, to any other person or firm other than Parent and Sub to
sell, assign, transfer or effect a sale of any assets of the Company (other than
inventory in the ordinary course of business), to sell or effect a sale of a
majority of the capital stock of the Company, to effect any merger,
consolidation, liquidation, dissolution or other reorganization of the Company,
or to enter into any agreement or cause the entering into of an agreement with
respect to any of the foregoing.
5.21 Proprietary Rights. With respect to the Company:
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(a) Proprietary Rights. Schedule 5.21 lists all of its domestic or
------------------
foreign, federal, state and foreign registrations of trademarks and of other
marks, trade names or other trade rights, and all pending applications for any
such registrations and all of its patents and copyrights and all pending
applications therefor, all other trademarks and other marks, trade names and
other trade rights or in which it has any interest whatsoever, and all other
trade secrets, designs, plans, specifications, technical information and other
proprietary rights, whether or not registered, created or used by or on behalf
of it (collectively, "Proprietary Rights"). The Proprietary Rights listed in
the Disclosure Schedule are all those used by the Company in connection with the
Business.
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(b) Ownership and Protection of Proprietary Rights. It owns and has
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the sole right to use each of the Proprietary Rights. None of the Proprietary
Rights is involved in any pending or threatened litigation. It has not received
any notice of invalidity or infringement of any rights of others with respect to
such trademarks. No other firm, corporation, association or person (1) has the
right to use any such trademarks, (2) has notified the Company that it is
claiming any ownership of or right to use such Proprietary Rights, or (3) is
infringing upon any such Proprietary Rights in any way. Its use of the
Proprietary Rights is not infringing upon or otherwise violating the rights of
any third party in or to such Proprietary Rights. All of the Proprietary Rights
are valid and enforceable, except where the failure to be so valid and
enforceable would not have a material adverse effect.
5.22 Transactions with Certain Persons. Except as set forth on Schedule
---------------------------------
5.22, no officer, director or employee of the Company, nor any member of any
such person's immediate family, is presently a party to any transaction with the
Company, including without limitation, any contract, agreement or other
arrangement(1) providing for the furnishing of services by, (2) providing for
the rental of real or personal property from, or (3) otherwise requiring
payments to (other than for services as officers, directors or employees of the
Company ) any such person or corporation, partnership, trust or other entity in
which any such person has an interest as a shareholder, officer, director,
trustee or partner.
5.23 Insurance. Schedule 5.23 contains a complete and accurate list of
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all policies or binders of fire, liability, title, worker's compensation,
product liability (which list shall be for five (5) years) and other forms of
insurance (showing as to each policy or binder the carrier, policy number,
coverage limits, expiration dates, annual premiums and a general description of
the type of coverage provided) maintained by the Company. Such insurance
provides, and during such period provided, coverage to the extent required by
law and by any and all Contracts. The Company is not in default under any of
such policies or binders, and has not failed to give any material notice or to
present any material claim under any such policy or binder in a due and timely
fashion. Except as set forth on Schedule 5.23, there are no outstanding unpaid
claims under any such policies or binders. All policies and binders are in full
force and effect on the date hereof and shall be kept in full force and effect
through the Closing Date.
5.24 Accounts Receivable. The accounts receivable set forth in the
-------------------
Financial Statement, and all accounts receivable arising since the date of the
Financial Statement, represent bona fide claims of the Company against debtors
for sales, services performed or other charges arising on or before the date
hereof, and all the goods delivered and services performed which gave rise to
said accounts were delivered or performed in accordance with the applicable
orders, Contracts or customer requirements.
5.25 Customers, Distributors and Suppliers. Schedule 5.25 sets forth a
-------------------------------------
complete and accurate list with respect to the Company, of the names and
addresses of the (1) five (5) largest customers, distributors and other agents
and representatives, showing the approximate total sales
13
<PAGE>
in dollars by the Company to each such customer during such fiscal year; and (2)
five (5) largest suppliers, showing the approximate total purchases in dollars
from each such supplier during such fiscal year. To the knowledge of the Company
and the Shareholder after thorough inquiry of all sales people and other
relevant personnel since November 8, 2000, except as disclosed on Schedule 5.25,
there has been no material adverse change in the business relationship of the
Company with any customer, distributor or supplier named on Schedule 5.25. The
Company has not received any communication from any customer, distributor or
supplier named on Schedule 5.25 of any intention to terminate or materially
reduce purchases from or supplies to the Company.
5.26 Material Misstatements Or Omissions. No representations or
-----------------------------------
warranties by the Company or the Shareholder in this Agreement, nor any
document, exhibit, statement, certificate or schedule heretofore or hereafter
furnished to the Parent and Sub pursuant hereto, or in connection with the
transactions contemplated hereby, including without limitation the Disclosure
Schedule, contains any untrue statement of a material fact, or omits to state
any material fact necessary to make the statements or facts contained therein
not misleading. The Company and the Shareholder have disclosed all events,
conditions and facts materially affecting the business, prospects and financial
condition of the Company.
ARTICLE IVI.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
The Shareholder hereby represents and warrants to Parent and Sub that the
following representations and warranties are, as of the date hereof, and will
be, as of the Closing Date, true and correct:
6.1 Title. The Shareholder holds of record and holds beneficially 100%
-----
of the issued and outstanding shares of common stock of the Company, free and
clear of any and all encumbrances or other restrictions on transfer. Other than
this Agreement, the Shareholder is not a party to any voting trust, proxy or
other agreement or understanding with respect to any capital stock of the
Company.
6.2 Execution and Effect of Agreement. The Shareholder has the full
---------------------------------
right, power and authority to execute and deliver this Agreement and to perform
her obligations hereunder, and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Shareholder, and
the consummation by the shareholder of the transactions contemplated hereby have
been duly authorized by all necessary action (corporate or otherwise) and no
other proceeding on the part of the Shareholder is necessary to authorize the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Shareholder and constitutes the legal, valid and binding obligation of
Shareholder, enforceable against the shareholder in accordance with its terms.
ARTICLE VI.
14
<PAGE>
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub hereby represent and warrant to the Company and the
Shareholder as follows, which representations and warranties are, as of the date
hereof, and will be, as of the Closing Date, true and correct:
7.1 Organization of Parent and Sub. Parent is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Nevada, and Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
7.2 Authorization. Both Parent and Sub have all requisite corporate
-------------
power and authority, and have taken all corporate action necessary, to execute
and deliver this Agreement, to consummate the transactions contemplated hereby
and to perform their obligations thereunder. The execution and delivery of this
Agreement by Parent and Sub and the consummation by Parent and Sub of the
transactions contemplated hereby have been duly approved by the boards of
directors of Parent and Sub. No other corporate proceedings on the part of
Parent or Sub are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Parent and Sub and is a legal, valid and binding obligation of Parent and Sub,
enforceable against Parent and Sub in accordance with its terms.
7.3 No Conflict or Violation. Neither the execution, delivery or
------------------------
performance of this Agreement nor the consummation of the transactions
contemplated hereby, nor compliance by Parent or Sub with any of the provisions
hereof, will (1) violate or conflict with any provision of (i) the Articles of
Incorporation or Bylaws of Parent or (ii) the Articles of Incorporation or Bylaw
of Sub, (2) violate, conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, any of the terms, conditions or provisions of any contract,
indebtedness, note, bond, indenture, security or pledge agreement, commitment,
license, lease, franchise, permit, agreement, authorization, concession, or
other instrument or obligation to which Parent or Sub is a party, or (3) violate
any statute, rule, regulation, ordinance, code, order, judgment, ruling, writ,
injunction, decree or award except, in the case of each of clauses (a), (b) and
(c) above, for such violations, conflicts, breaches, defaults, terminations,
accelerations or creations of encumbrances which, in the aggregate, would not
have a material adverse effect on the Business or its ability to consummate the
transactions contemplated hereby.
ARTICLE VII.
CONDITIONS TO THE SHAREHOLDER'S OBLIGATIONS
The obligations of the Shareholder to consummate the transactions provided
for hereby are subject, in the discretion of the Shareholder, to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by the Shareholder and the Company:
15
<PAGE>
8.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of Parent and Sub contained in this Agreement shall be true and
correct in all material respects at and as of the date of this Agreement and at
and as of the Closing Date, except to the extent expressly required or permitted
to be changed by the terms hereof, and Parent and Sub shall have performed and
satisfied all agreements and covenants required hereby to be performed by them
prior to or on the Closing Date.
8.2 No Proceedings, Litigation or Laws. No Action by any governmental
----------------------------------
authority or other person shall have been instituted or threatened against the
Parent, Sub, the Company or the Shareholder which questions the validity or
legality of the transactions contemplated hereby and which, in the reasonable
opinion of the Shareholder, makes it inadvisable to consummate such transaction.
8.3 Certificates. Parent and Sub shall furnish the Shareholder with such
------------
certificates of their officers and others to evidence compliance with the
conditions set forth in this Article VIII as may be reasonably requested by the
Company and the Shareholder.
8.4 Corporate Documents. The Shareholder shall have received from Parent
-------------------
and Sub resolutions adopted by the boards of directors of Parent and Sub
approving this Agreement, and the transactions contemplated hereby.
8.5 Exchange Listing. The Parent Shares to be issued as Merger
----------------
Consideration shall have been authorized for listing on either (i) the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation System or (ii) the American Stock Exchange, subject to office notice
of issuance.
ARTICLE IX.
CONDITIONS TO PARENT'S AND SUB' OBLIGATIONS
The obligations of Parent and Sub to consummate the transactions provided
for hereby are subject, in the discretion of Parent and Sub, to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by Parent and Sub.
9.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of the Company and the Shareholder contained in this Agreement shall
be true and correct in all material respects at and as of the date of this
Agreement and at and as of the Closing Date, except to the extent expressly
required or permitted to be changed by the terms hereof, and the Company and the
Shareholder shall have performed and satisfied all agreements and covenants
required hereby to be performed by them prior to or on the Closing Date.
9.2 No Proceedings or Litigation. No Action by any governmental authority
----------------------------
or other person shall have been instituted or threatened against Parent, Sub,
the Company or the Shareholder
16
<PAGE>
which questions the validity or legality of the transactions contemplated hereby
and which, in the reasonable opinion of the Parent and Sub, makes it inadvisable
to consummate such transaction.
9.3 Opinion of Counsel. Unless waived by the Parent and Sub, the Company
------------------
and the Shareholder shall have delivered to Parent and Sub an opinion of
counsel to the Company and the shareholder, dated as of the Closing Date, in
form and substance reasonably satisfactory to Parent and Sub.
9.4 Certificates. The Company shall furnish Parent and Sub with such
------------
certificates of its officers and others to evidence compliance with the
conditions set forth in this Article IX as may be reasonably requested by Parent
and Sub.
9.5 Material Changes. There shall not have been any material adverse
----------------
change with respect to the Business or the Company since the date of this
Agreement.
9.6 Corporate Documents. Parent and Sub shall have received a certificate
-------------------
of a duly authorized officer of the Company, dated the Closing Date, setting
forth resolutions of the Board of Directors of the Company authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and certifying that such resolutions were duly
adopted and have not been rescinded or amended as of the Closing Date.
9.7 Due Diligence Review. Parent and Sub and their representatives shall
--------------------
have conducted a due diligence review of the Company's books and records,
financial statements, and other records and accounts of the Company, and in the
sole discretion of Parent and Sub, Parent and Sub shall be satisfied on the
basis of such review that there has been no breach of the representations and
warranties or the pre-closing covenants of the Company or the Shareholder made
pursuant to this Agreement. Such review shall have no effect whatsoever on the
liability of the Company or the Shareholder to Parent or Sub under this
Agreement or otherwise for breach of any representations, warranties, or
covenants of the Company or the shareholder hereunder.
ARTICLE VII.
ACTIONS BY PARTIES AFTER THE CLOSING
10.1 Registration of Parent Shares. Within ninety (90) days of the
-----------------------------
Effective Time, Parent shall prepare and file with the Securities and Exchange
Commission a registration statement on Form S-3 containing a form of prospectus
(as amended or supplemented, if applicable) registering under the Securities Act
of 1933, as amended, 150,000 of the Parent Shares issued to the Shareholder on
the Closing Date.
10.2 Budget. Parent and the Company shall mutually approve (and such
------
approval shall not be unreasonably withheld), the Surviving Corporation's
operating and capital expenditure budget with respect to the projected
expenditures for the following 12 month period (the "Budget") and the
17
<PAGE>
Surviving Corporation (including its officer, directors or agents) shall not
without the prior written approval of Parent, which approval may be given or
withheld in Parent's sole discretion, make or approve an expenditure which would
change, alter or modify the Budget or make or approve an expenditure which would
result in: (i) an increase of greater than 5% of the total amount of the Budget;
or (ii) an increase of greater than 5% of the amount of a respective line item
described in the Budget. The Surviving Corporation shall provide Parent with a
proposed operating and capital expenditure budget no later than 30 days prior to
the first day of the 12 month period related thereto.
10.3 Parent Services. Parent will use commercially reasonable efforts to
---------------
extend to the Surviving Corporation, for the benefit of the Surviving
Corporation, non-monetary contributions in the form of sales, marketing,
engineering and technical support services (including personnel) to assist the
Surviving Corporation during any Year Period (the "Parent Services"). Each
request for Parent Services must be included in the Budget for the respective
Year Period. All Parent Services rendered in accordance with this Section 10.3
shall be provided at Parent MFN Rates.
10.4 Survival of Representations, Etc. All statements contained in the
--------------------------------
Disclosure Schedule or in any certificate, schedule, exhibit or instrument or
conveyance delivered by or on behalf of the parties pursuant to this Agreement
or in connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the parties hereunder. The representations,
warranties, covenants and agreements of the Company, the shareholder, Parent and
Sub contained herein shall survive the consummation of the transactions
contemplated hereby and the Closing Date, without regard to any investigation
made by any of the parties hereto. Except as provided in this sentence, all
such representations and warranties and all claims and causes of action with
respect thereto (other than the provisions of Sections 5.6, 5.22, 5.26 and this
Section X.4, and all claims and causes of action with respect thereto) shall
terminate upon expiration of five (5) years after the Closing Date ("Expiration
Date"). The representations and warranties in Sections 5.6, 5.22, and 5.26
shall survive until the expiration of the applicable statute of limitations
(with extensions) with respect to the matters addressed in such sections. The
representations and warranties in Sections 5.2, 6.1 and 6.2 (the "Capitalization
Representations") shall survive indefinitely. The termination of the
representations and warranties provided herein shall not affect the rights of a
party in respect of any Claim made by such party in a writing received by the
other party prior to the expiration of the applicable survival period provided
herein.
10.5 Indemnifications.
----------------
(a) By the Shareholder. The Shareholder shall indemnify, save and
------------------
hold harmless Parent and Sub, their affiliates and subsidiaries, and their
respective representatives, from and against any and all costs, losses
(including without limitation diminution in value), taxes, liabilities,
obligations, damages, lawsuits, deficiencies, claims, demands, and expenses
(whether or not arising out of third-party claims), reasonable attorneys' fees
and all amounts paid in investigation, defense or settlement of any of the
foregoing (herein, "Damages"), incurred in connection with, arising out of,
resulting from or incident to (1) any breach of any representation or
18
<PAGE>
warranty or the inaccuracy of any representation made by the Company or the
Shareholder in or pursuant to this Agreement, or (2) any breach of any covenant
or agreement made by the Company or the shareholder in or pursuant to this
Agreement; provided, however, that Parent and Sub makes a written claim for
-------- -------
indemnification against the shareholder within the applicable survival period.
(b) Tax Indemnity. The shareholder, shall indemnify, save and hold
-------------
harmless Parent and Sub, their affiliates and subsidiaries, and their respective
representatives, from and against any and all Damages incurred in connection
with, arising out of, resulting from or incident to (1) any taxes of the Company
with respect to any tax year or portion thereof ending on or before the Closing
Date and (2) for the unpaid taxes of any person (other than the Company) under
Treasury Regulations Section 1.1502-6 (or any similar provision of state, local
or foreign law), as a transferee or successor, by contract, or otherwise.
(c) By Parent and Sub. Parent and Sub, jointly and severally, shall
-----------------
indemnify and save and hold harmless the Company, the shareholder and each of
their affiliates and subsidiaries, and their respective representatives from and
against any and all Damages incurred in connection with, arising out of,
resulting from or incident to (1) any breach of any representation or warranty
or the inaccuracy of any representation, made by Parent or Sub in or pursuant to
this Agreement, (2) any breach of any covenant or agreement made by Parent or
Sub in or pursuant to this Agreement; or (3) operation of the Business of the
Company from and after the Closing Date; provided, however, that the shareholder
-------- -------
make a written claim for indemnification against Parent or Sub within the
applicable survival period.
(d) Damages. The term "Damages" as used in this Section 10.5 is not
-------
limited to matters asserted by third parties against the Company, the
Shareholder, Parent or Sub, but includes Damages incurred or sustained by the
Company, the Shareholder, Parent or Sub in the absence of third party claims.
Payments by Parent or Sub of amounts for which Parent or Sub is indemnified
hereunder, and payments by the Company or the shareholder of amounts for which
the Company or the shareholder are indemnified, shall not be a condition
precedent to recovery. The Company's or the Shareholder's obligation to
indemnify Parent or Sub, and Parent's or Sub' obligation to indemnify the
Company or the Shareholder, shall not limit any other rights, including without
limitation rights of contribution which either party may have under statute or
common law.
(e) Cooperation. The indemnified party shall cooperate in all
-----------
reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the indemnified party may, at its own
-------- -------
cost, participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom. The parties shall cooperate with each
other in any notifications to insurers.
(f) Defense of Claims. If a claim for Damages (a "Claim") is to be
-----------------
made by a party entitled to indemnification hereunder against the indemnifying
party, the party claiming such indemnification shall give written notice (a
"Claim Notice") to the indemnifying party as soon as
19
<PAGE>
practicable after the party entitled to indemnification becomes aware of any
fact, condition or event which may give rise to Damages for which
indemnification may be sought under this Section 10.5. If any lawsuit or
enforcement action is filed against any party entitled to the benefit of
indemnity hereunder, written notice thereof shall be given to the indemnifying
party as promptly as practicable (and in any event within thirty (30) calendar
days after the service of the citation or summons). The failure of any
indemnified party to give timely notice hereunder shall not affect rights to
indemnification hereunder, except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. After such notice, if the
indemnifying party shall acknowledge in writing to the indemnified party that
the indemnifying party shall be obligated under the terms of its indemnity
hereunder in connection with such lawsuit or action, then the indemnifying party
shall be entitled, if it so elects, (1) to take control of the defense and
investigation of such lawsuit or action, (2) to employ and engage attorneys of
its own choice to handle and defend the same, at the indemnifying party's cost,
risk and expense unless the named parties to such action or proceeding include
both the indemnifying party and the indemnified party and the indemnified party
has been advised in writing by counsel that there may be one or more legal
defenses available to such indemnified party that are different from or
additional to those available to the indemnifying party, and (3) to compromise
or settle such claim, which compromise or settlement shall be made only with the
written consent of the indemnified party, such consent not to be unreasonably
withheld. If the indemnifying party fails to assume the defense of such claim
within fifteen (15) calendar days after receipt of the Claim Notice, the
indemnified party against which such claim has been asserted will (upon
delivering notice to such effect to the indemnifying party) have the right to
undertake, at the indemnifying party's cost and expense, the defense, compromise
or settlement of such claim on behalf of and for the account and risk of the
indemnifying party. In the event the indemnified party assumes the defense of
the claim, the indemnified party will keep the indemnifying party reasonably
informed of the progress of any such defense, compromise or settlement. The
indemnifying party shall be liable for any settlement of any action effected
pursuant to and in accordance with this Section 10.5 and for any final judgment
(subject to any right of appeal), and the indemnifying party agrees to indemnify
and hold harmless an indemnified party from and against any Damages by reason of
such settlement or judgment.
(g) Parent's Right of Offset. Anything in this Agreement to the
------------------------
contrary notwithstanding, Parent may withhold and set off against any Merger
Consideration otherwise due to the Shareholder, any amount as to which the
Shareholder is obligated to indemnify Parent or Sub pursuant to any provision of
this Section 10.5.
(h) Product and Warranty Liability. The provisions of this Section
------------------------------
10.5 shall cover, without limitation, all obligations and liabilities of
whatsoever kind, nature or description relating, directly or indirectly, to
product liability, litigation or claims against Parent, Sub or the Surviving
Corporation in connection with, arising out of, or relating to products
developed or sold by Parent, Sub or the Surviving Corporation in connection with
the Business.
20
<PAGE>
(i) Brokers and Finders. Except for Capital Management Int'l,
-------------------
William K. Lundy, President, pursuant to the provisions of this Section 10.5,
each of Parent, Sub, the Company and the Shareholder shall indemnify, hold
harmless and defend the other party from the payment of any and all broker's and
finder's expenses, commissions, fees or other forms of compensation which may be
due or payable from or by the indemnifying party, or may have been earned by any
third party acting on behalf of the indemnifying party in connection with the
negotiation and execution hereof and the consummation of the transactions
contemplated hereby.
10.6 Agreement Not to Compete. During the Non-Competition Period (as
------------------------
hereinafter defined), the Shareholder shall not in any manner, directly or
indirectly, including through entities controlled by such Shareholder (i) engage
or participate in the Business, or otherwise perform services for third parties
which are competitive with those performed by the Surviving Corporation with
respect to the Business ("Competitive Services"), or (ii) own or operate any
business which engages or participates in the same or similar business or
businesses conducted by the Surviving Corporation or which performs Competitive
Services. A Shareholder shall be deemed to be engaged in the Business or
performing Competitive Services if the Shareholder engages in such business or
performs such services directly or indirectly, whether for the Shareholder own
account or for that of another person, firm or corporation, or whether as a
stockholder, principal, partner, member, agent, investor, proprietor, director,
officer, employee or consultant, except as an employee, director or consultant
of the Surviving Corporation or any parent, subsidiary or other affiliate of the
Surviving Corporation (a "Surviving Corporation Affiliate"); provided, however,
-------- -------
that the Shareholder may hold an investment of no more than 5% of the equity
securities of any publicly traded entity without violating this Agreement. For
the purposes of this Agreement, "Non-Competition Period" shall mean a period of
two (2) years following the termination of a Majority Shareholder's employment
or consultant relationship with the Surviving Corporation, or any current or
future Surviving Corporation Affiliate.
10.7 Non-Solicitation. During the Non-Solicitation Period (as hereinafter
----------------
defined), the Shareholder shall not in any manner solicit or hire any employees
or consultants of the Surviving Corporation, or any Surviving Corporation
Affiliate, which shall include employees or consultants: (i) with continuing
contracts with the Surviving Corporation or a Surviving Corporation Affiliate;
(ii) retained, employed or engaged by the Surviving Corporation or a Surviving
Corporation Affiliate but without continuing contracts; or (iii) whose contracts
expire or otherwise terminate for any reason preceding or following the first
day of the Non-Solicitation Period. For the purposes of this Agreement, "Non-
Solicitation Period" shall mean a period of two (2) years following the
termination of the Shareholder's employment or consultant relationship with the
Surviving Corporation, or any current or future Surviving Corporation Affiliate.
ARTICLE VIIII.
MISCELLANEOUS
11.1 Termination.
-----------
21
<PAGE>
(a) Termination. This Agreement may be terminated at any time prior
-----------
to Closing:
(1) By mutual written consent of Parent, Sub, the Company and the
Shareholder;
(2) By Parent, Sub, the Company or the Shareholder: (i) if the
Merger shall not have been consummated on or before December 15, 2000, provided
that the right to terminate this Agreement pursuant to this clause (a) (ii)
shall not be available to any party whose failure to perform any of its
obligations under this Agreement resulted in, or has been the cause of a or a
substantial cause of, the failure of the Merger to be consummated on or before
such date, and provider further that if the Merger has not been consummated on
or before December 15, 2000 solely or primarily as a result of the failure of
the conditions set forth in Sections 8.2 or 9.2 to be satisfied or waived, and
party, by written notice to each other party, may extend such date up to
December 31, 2000;
(3) By Parent or Sub if there is a material breach of any
representation or warranty set forth in Articles V and VII hereof or any
covenant or agreement to be complied with or performed by the Company or the
shareholder pursuant to the terms of this Agreement or the material failure of a
condition set forth in Article IX to be satisfied (and such condition is not
waived in writing by Parent or Sub) on or prior to the Closing Date, or the
occurrence of any event which results or would result in the failure of a
condition set forth in Article IX to be satisfied on or prior to the Closing
Date, provided that Parent or Sub may not terminate this Agreement prior to the
Closing Date if the Company or the shareholder has not had an adequate
opportunity to cure such failure; or
(4) By the Company or the Shareholder if there is a material
breach of any representation or warranty set forth in Article VII hereof or of
any covenant or agreement to be complied with or performed by Parent or Sub
pursuant to the terms of this Agreement or the failure of a condition set forth
in Article VIII to be satisfied (and such condition is not waived in writing by
the Company or the shareholder) on or prior to the Closing Date, or the
occurrence of any event which results or would result in the failure of a
condition set forth in Article VIII to be satisfied on or prior to the Closing
Date; provided that, the Company and the shareholder may not terminate this
Agreement prior to the Closing Date if Parent or Sub has not had an adequate
opportunity to cure such failure.
(b) In the Event of Termination. In the event of termination of this
---------------------------
Agreement:
(1) Each party will redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same;
22
<PAGE>
(2) The provisions of the Mutual Non-Disclosure Agreement (the
"Mutual Non-Disclosure Agreement"), dated as of November 9, 2000, by and between
Parent and the Company shall continue in full force and effect; and
(3) No party hereto shall have any liability or further
obligation to any other party to this Agreement, except as stated in subsections
(i), (ii) and (iii) of this Section 11.1(b), except for any willful breach of
this Agreement occurring prior to the proper termination of this Agreement. The
foregoing provisions shall not limit or restrict the availability of specific
performance or other injunctive relief to the extent that specific performance
or such other relief would otherwise be available to a party hereunder.
11.2 Assignment. Neither this Agreement nor any of the rights or
----------
obligations hereunder may be assigned by any party without the prior written
consent of the other parties. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, and no other person shall have any right,
benefit or obligation under this Agreement as a third party beneficiary or
otherwise.
11.3 Notices. All notices, requests, demands and other communications
-------
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (e.g., Federal Express); and
upon receipt, if sent by certified or registered mail, return receipt requested.
In each case notice shall be sent to:
If to the Company before the Effective Time,
addressed to:
Five Star Advantage, Inc.
25006 Avenue Kearny
Valencia, CA 91355
Attention: Jeff Gleckman
Facsimile: __________________________
With a copy to:
[Attorney}
Attention:
Facsimile: __________________________
23
<PAGE>
If to Parent or Sub at any time or the Surviving
Corporation, addressed to:
Datalink.net, Inc.
1735 Technology Drive, Suite 790
San Jose, CA 95125
Attention: Tali Durant, Esq.
Facsimile: 408-367-1701
With a copy to:
Greenberg Glusker Fields Claman & Machtinger LLP
1900 Avenue of the Stars, Suite 2100
Los Angeles, CA 90067-4590
Attention: Kevin Garrett Monroe, Esq.
Facsimile: (310) 553-0687
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
11.4 Choice of Law. This Agreement shall be construed, interpreted and
-------------
the rights of the parties determined in accordance with the laws of the State of
California (without reference to the choice of law provisions of California
law), except with respect to matters of law concerning the internal corporate
affairs of any corporate entity which is a party to or the subject of this
Agreement, and as to those matters the law of the jurisdiction under which the
respective entity derives its powers shall govern.
11.5 Entire Agreement; Amendments and Waivers. This Agreement, the Mutual
----------------------------------------
Non-Disclosure Agreement, together with all exhibits and schedules hereto and
thereto (including the Disclosure Schedule) constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. No
amendment, supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
11.6 Multiple Counterparts. This Agreement may be executed in one or more
---------------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
24
<PAGE>
11.7 Expenses. Except as otherwise specified in this Agreement, each part
--------
hereto shall pay its own legal, accounting, out-of-pocket and other expenses
incident to this Agreement and to any action taken by such party in preparation
for carrying this Agreement into effect.
11.8 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
11.9 Titles. The titles, captions or headings of the Articles and
------
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.10 Cumulative Remedies. All rights and remedies of either party hereto
-------------------
are cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
11.11 Attorneys' Fees. If any party to this Agreement brings an action to
---------------
enforce its rights under this Agreement, the prevailing party shall be entitled
to recover its costs and expenses, including without limitation reasonable
attorneys' fees, incurred in connection with such action, including any appeal
of such action.
11.12 Pre-Signing Consultation. The Company represents and warrants that
------------------------
it has had an opportunity to consult with its advisors, accountants and
attorneys concerning the execution of this Agreement, and the transactions
contemplated herein. By the Company's execution hereof, the Company confirms
that either it has consulted with an attorney or has determined not to obtain
such representation in connection with this Agreement or transactions
contemplated herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective officers thereunto
duly authorized, all as of the day and year first above written.
PARENT:
DATALINK.NET, INC.
By: /s/ Anthony N. LaPine
25
<PAGE>
Name: Anthony N. LaPine
Its: President and CEO
SUB:
FIVE ACQUISITION, INC.
By: /s/ Anthony N. LaPine
Name: Anthony N. LaPine
Its: President
COMPANY:
FIVE STAR ADVANTAGE, INC.
By: /s/ Jeff Gleckman
Name: Jeff Gleckman
Its: President
SHAREHOLDER:
By: /s/ Jeff Gleckman
Name: Jeff Gleckman
26
