SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 15, 1999
(DE) U.S. Environmental, Inc.
(Exact name of registrant as specified in charter)
Delaware 33-25969-NY 11-2906904
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
8130 66th Street North
Pinellas Park, Florida, 33781
(Address of principal executive offices)
201 East Kennedy Blvd., Suite 1900
Tampa, Florida 33602
(Former address of principal executive offices)
Registrant's telephone number, including area code (813) 228-0285
<PAGE>
FORM 8-K
ITEM 5. OTHER EVENTS.
On January 15, 1999 the Company entered into an agreement with Virtual
Empowerment Network, Inc. (VEN) a Kansas corporation wherein VEN agreed to
purchase shares equaling 83% of the outstanding shares of USE after the
purchase. In consideration for the issuance of the shares, VEN will negotiate,
secure and assign, with full rights, contracts in the aggregate amount of
$5,000,000 to USE, whereby USE will receive not less than $5,000,000 in gross
revenues during a five year period after the closing date of the VEN
Agreement. The assignment of such contracts is to occur within one year of
the Company's ability to perform under such contracts. Additionally, VEN
agreed to loan funds for payment of outstanding accounts payable and working
capital for the next year.
VEN is a minority-owned, for profit, development stage company with
principal offices in the State of Kansas, organized to promote economic
empowerment, business development and financial resources in urban communities
throughout America. VEN was formed as a holding company to facilitate
ownership and management in the areas of construction, telecommunications,
financial services, insurance, environmental services and products, and
acquisition and development of real estate and businesses. It will conduct
these business activities through several autonomous subsidiaries.
The VEN Agreement requires that as a condition precedent to Closing, the
Company must undergo a one share for one hundred shares reverse stock split
and a reduction of the number of authorized shares to 100 million.
It is anticipated that at Closing, VEN will be issued 9,620,842 shares of
common stock representing 83% of the shares of common stock of approximately
11,591,376 shares of common stock which will be issued and outstanding after
the Closing. Under the terms of the agreement VEN's shares will be held by an
escrow agent to be released when the consideration agreed to has been met.
For further information with respect to the VEN Agreement, reference is made
to a copy of such agreement filed as Exhibit 10.22 to this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a. N/A
b. N/A
c. Exhibits
Exhibit 10.22 - Agreement between Registrant and VEN
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
U.S. ENVIRONMENTAL, INC.
-------------------------------
By: Thomas P. Dolan
Secretary, Executive
Vice President
Dated: February 19, 1999
<PAGE>
Exhibit 10.22
AGREEMENT
This Agreement made this 29th. day of December, 1998, between U.S.
Environmental, Inc., a publicly traded Delaware Corporation with its principal
office address of 8130 66th Street North, Suite 6, Pinellas Park, FL 33781;
("USE") and Virtual Empowerment Network, Inc., a Kansas corporation, with its
principal office address of 8200 State Ave, Kansas City, Kansas 66112-1854;
(hereinafter "VEN").
WHEREAS, USE is desirous of selling VEN common stock in USE amounting to
83% of the outstanding and issued shares following certain events contained
herein; And
WHEREAS VEN is desirous of paying for shares under a structured payment
schedule as contained herein;
NOW, THEREFORE, in consideration of the premises and the mutual premises
herein made and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. Definitions.
"Adverse Consequences" means all material charges, complaints,
actions, suits, proceedings, hearings, investigations, claims, demands,
judgments, orders, decrees, stipulations, injunctions, damages, dues,
penalties, fines, costs, amounts paid in settlement, liabilities, obligations,
taxes, liens, losses, expenses, and fees, including all attorneys fees and
court costs.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities and Exchange Act.
"Affiliated Group" has the meaning set forth in Code Section
1504(a).
"Bankruptcy" means, with respect to any entity, the happening of
any of the following:
1. the filing of an application by such entity for, or
consent to, the appointment of a trustee over all or substantially all of the
assets;
2. the filing by such entity of a voluntary petition in
bankruptcy or the filing of a pleading in any court of record admitting in
writing its inability to pay its debt as they come due;
3. the making by such entity of a general assignment for the
benefit of creditors;
4. the filing by such entity of an answer admitting the
material allegations of, or its consenting to, or defaulting in answering, a
bankruptcy petition filed against it in any bankruptcy proceeding; or
5. the entry of an order, judgment, or decree by any court of
competent jurisdiction adjudicating such entity bankrupt or appointing a
trustee over its assets, and such order, judgment, or decree continuing
unstayed and in effect for a period of sixty (60) consecutive days.
"Closing" has the meaning set forth in Section 2d below.
"Closing Date" has the meaning set forth in Section 2d below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Confidential Information of the USE" means any information
concerning the businesses and affairs of USE and its Subsidiaries or
Affiliates.
"Confidential Information of VEN" means any information concerning
the businesses and affairs of VEN and its Subsidiaries or Affiliates.
"Disclosure Schedule" has the meaning set forth in Section 4 below.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Extremely Hazardous Substance" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Financial Statement" has the meaning set forth in Section 4(e)
below.
"GAAP" means United States generally accepted accounting principles
as in effect from time to time.
"Intellectual Property" means all (a) patents, patent applications,
patent disclosures, and improvements thereto, (b) trademarks, service markers,
logos, trade names, and corporate names and registrations and applications for
registration thereof, (c) copyrights and registrations and applications for
registration thereof, (d) computer software, data, and documentation, (e)
trade secrets and confidential business information (including ideas,
formulas, compositions, inventions (whether patentable or unpatentable and
whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable
works, financial, marketing, and business data, pricing and cost information,
business and marketing plans, and customer and supplier lists and
information), (f) other proprietary rights, and (g) copies and tangible
embodiments thereof (in whatever form or medium).
"Knowledge" means knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and whether due or
to become due), including any liability for taxes.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in
Section 4(e) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
4(e) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section
4(e) below.
"NASDAQ/NMS" means the National Association of Securities Dealers
Automatic Quotation/National Market System.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Person" means an individual or a corporation, association,
partnership, joint venture, organization, business, trust, or any other entity
or organization, including a government or any subdivision or agency thereof.
"Securities Act" means the Securities Act of 1933, as amended, and
all rules and regulations promulgated thereunder.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended, and all rules and regulations promulgated thereunder.
"Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) mechanic's, materialmen's,
or similar liens, (b) liens for taxes not yet due and payable or for taxes
that the taxpayer is contesting in good faith through appropriate proceedings,
(c) liens arising under worker's compensation, unemployment insurance, social
security, retirement, and similar legislation, (d) liens arising in connection
with sales of foreign receivables, (e) liens on goods in transit incurred
pursuant to documentary letters of credit, (f) purchase money liens and liens
securing rental payments under capital lease arrangements, and (g) other liens
arising in the Ordinary Course of Business and not incurred in connection with
the borrowing of money.
"Subsidiary" means any corporation with respect to which another
specified corporation has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), custom duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Treasury Regulations" means the Treasury Regulations promulgated
under the Code.
"USE" has the meaning set forth in the preface above.
"VEN" has the meaning set forth in the preface above.
2. Purchase and Sale of USE Shares.
Purchase and Sale of Shares. On the terms and subject to the
conditions of this Agreement, USE will sell, transfer and deliver to VEN, and
VEN will purchase from USE, free and clear of all liens, claims, options,
charges, encumbrances, security interests, rights of third parties and
restrictions of any kind, USE shares equaling 83% of the issued and
outstanding common stock of USE (including the VEN shares) as of the Closing
Date, for the following consideration:
Within three business days of the contract signing of
this Agreement VEN shall pay the following obligations of USE: Pender
Newkirk and Company, $31,057 representing the outstanding sums due said
accounting firm by USE and an additional $5,000 as a retainer towards the
estimated cost of $15,000 for completing the accounting work for the
proposed transaction; Stephen M. Robinson P.A., $9,437 representing prior
outstanding amounts due from USE and a retainer of $10,000 towards an
estimated cost of $25,000 to complete the legal work for the proposed
transaction. The balance of these fees and the balance of the
payables($53,506) listed in Exhibit 1 will be paid within three business
days of the Closing. In the event the contemplated transaction set forth
in this Agreement does not close for any reason, then in such event the
monies so paid by VEN on behalf of USE shall be treated as a debt owed by
USE to VEN. In order to secure this possible debt the Company will file with
a first priority, a lien on USE assets including but not limited to the
Niagara prototype facility owned by USE in conjunction with Geo-Tech
Development Corporation. Within 180 days of the Closing
Date, VEN will cause the settlement, upon terms and conditions acceptable
to the Board of Directors of USE, of the litigation entitled "USE vs.
Geotech Development Corporation, et al.". Within three
business days of the signing of this agreement VEN will cause a
agreement for an interest free loan to be executed between VEN and USE
wherein VEN will loan and disburse within three business days to USE $11,500 a
month for overhead for USE's continuing operation. The $11,500 will be
allocated as follows:1.T. Dolan $3,000 per month, 2. B. Lewis $2,500 per
month, 3. Rent, telephones, and utilities $1,500 per month.4. American
Stock Transfer, ADP, etc. for notifications to shareholders of this
proposed transaction, $4,500. Within three (3) business days of the
closing, T. Dolan and B. Lewis will receive an additional $3,000 and $2,500
respectively per month for each month from the date of this agreement to
the date of Closing, representing the second half of the salary for each
month, which will be an additional disbursement under the existing loan.
No more payments will be made under the $11,500 loan, which shall be
supplanted by the $17,000 loan described in paragraph 2(a)(iv) below.
At the Closing Date, VEN will cause a new loan agreement to be
executed between the VEN and USE wherein VEN will loan to USE Seventeen
Thousand ($17,000) dollars per month, payable on the first day of each
month, for ten (10) months from the Closing Date for USE's working
capital requirements. Said loan will be repaid by USE commencing twelve
(12) months after the last monthly loan disbursement by VEN to USE.
Within one year of the Company's ability to perform under
such contract, VEN will negotiate, secure and assign, with full rights,
contracts in the aggregate amount of $5,000,000 to USE, whereby USE will
receive not less than $5,000,000 in revenues during the five year period
after the Closing Date. In the event that VEN does not cause USE to
receive said contracts then all outstanding loans from VEN to USE will be
forgiven. VEN shall have all enticier ownership of said escrowed stock
including voting rights during the escrow period.
b) Stock Split. The authorized capital stock of USE consists of
200 million (200,000,000) shares of common stock with a par value of one
ten-thousandth of a dollar ($.0001) per share. Immediately prior to Closing,
approximately 1,970,534 common shares (assuming a 100:1 reverse stock split
and subject to adjustments for rounding of fractional shares) will be issued
and outstanding and owned of record by stockholders as appears in the records
of American Stock Transfer & Trust Company (Transfer Agent), and no other
shares of USE will have been issued or are outstanding.
On or before fifteen (15) days prior to the closing date as
hereinafter set forth, a stockholder list, certified as accurate by the
Transfer Agent, shall be furnished to VEN. c) The shares of USE
are trading in the "over the counter" market and the bid and ask price on the
date of this Agreement as quoted by NASD OTC Bulletin Board is $.03 ask,
$.015 bid. It is the representation and warrant of USE by its Board of
Directors and Officers that USE is a publicly trading company and that all
filings required by state and federal agencies have been complied with and are
current.
d) Present Capitalization. As of the date of this Agreement, USE
capitalization consists of 200 Million (200,000,000) shares of common stock,
with One Hundred Ninety Seven Million Fifty Three Thousand Four hundred Thirty
Eight (197,053,438) common shares issued and outstanding. It is a specific
representation by USE that the officers, directors and shareholders of USE
shall forthwith do such things as are necessary to cause a 100-to-one
(100:__:1) reverse stock split, which will result in One Million Nine Hundred
Seventy Thousand Five Hundred Thirty Four (1,970,534) common shares (plus
shares issued to round fractional shares to the next full share) being
outstanding on the Closing Date, in this connection, the officers and
directors and shareholders as required by the bylaws and Certificate of
Incorporation will, at least ten (10) days prior to the Closing Date, do all
things necessary to accomplish this end, including, but not limited to the
following:
(i) adopt appropriate resolutions in compliance with the
Articles of Incorporation and the appropriate By-law provisions which will
amend the Articles of Incorporation to authorize a reverse split of 100-to-one
(100:1); ii) obtain the consent of shareholders, in compliance
with all Articles of Incorporation and By-law provisions, and pursuant to the
law of the State of Delaware which will include all necessary authority for
(1) the reverse split provisions, including an amendment to the Articles of
Incorporation in a form and manner necessary, and (2) for the issuance of an
additional 9,620,842 of fully paid, duly authorized, and validly issued shares
of USE common stock post- rollback (100:1) shares (the "USE Shares") to VEN.
Total capitalization will then be approximately 11,591,376 shares.
iii) thereafter to provide the Transfer Agent with appropriate
notices to be sent to all shareholders and to otherwise ensure that proper
notice and information filings be completed to comply with any and all State
and Federal regulatory agencies to ensure the continuity of the publicly
tradable share characterization, including but not limited to the maintenance
of the original stock issue date and to cause a notice of this action to be
communicated to any USE market maker(s) and published in a securities
publication in a manner that will provide due diligence notice to the
securities industry as needed; (iv) the Nine Million Six
Hundred Twenty Thousand Eight Hundred Forty Two (9,620,842) USE Shares which
shall be issued to VEN at the Closing, shall be delivered to VEN in such names
and in such denominations as set forth on Exhibit 2(b)(iv). Provided, however,
the USE shares to be issued to VEN at Closing shall be held in escrow by
Gregory Frost Esquire, subject to satisfaction of the conditions precedent,
set forth in 2(a) (i) through (v) herein.
Closing. The Closing shall occur no later than sixty (60) days
subsequent to USE completing to the satisfaction of VEN and VEN's Counsel all
of the actions provided for in this Section 2 and Section 4 of this Agreement
, and VEN completing to the satisfaction of USE and USE's counsel all of
VEN's actions provided for in this Agreement (the "Closing Date"). In the
event the Closing Date does not occur on or before June 30, 1999, unless
extended by written mutual consent of the Parties, this Agreement shall be
null and void and of no further force and effect .
3. Representations and Warranties of VEN.
a) Representations and Warranties of VEN. VEN represents and
warrants to USE that the statements contained in this Section 3 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date
were substituted for the date of this Agreement throughout this Section 3 with
respect to each.
(1) Organization of VEN. VEN is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Kansas.
(2) Authorization of Transaction. VEN has full power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of VEN, enforceable in accordance with its terms and
conditions, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principals relating to
or limiting creditors' rights generally. Except as described in Section
3(a)(2) of the Disclosure Schedule, VEN need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency or other Person in order to consummate the
transactions contemplated by this Agreement.
(3) Noncontravention. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
governmental agency, or court to which VEN is subject or any provision of its
charter or by-laws) or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other arrangement to which VEN is a party or by which VEN is
bound or to any of its assets is subject.
(4) Certain Occurrences. Except as described in Section
3(a)(4) of the Disclosure Schedules, the VEN (A) has not suffered an event of
Bankruptcy within one year prior to the date hereof, (B) within the last ten
years, has not violated any provision of any statute, regulation, rule
(whether such statute, regulation or rule is criminal or civil in nature),
judgment, order, decree, stipulation, injunction, charge, or other restriction
of any government, governmental agency, or court to which VEN are subject, if
the effect of any such violation would have a material adverse effect on the
rights intended to be granted to USE under this Agreement, (C) is not the
subject of any proceeding or investigation relating to any of the matters
described in clause (B) above, and (D) is not aware of any threatened
investigation by any governmental agency relating to any of the matters
described in clause (B) above. (5) Brokers' Fees. VEN has no
liability or obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this Agreement for
which USE could become liable or obligated.
(6) Investment. VEN is not acquiring the USE Shares with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act. (7) Disclosure. The
representations and warranties of VEN contained in this Section 3a do not
contain any untrue statement of a fact or omit to state any fact necessary in
order to make the statements and information contained in this Section 3a not
misleading. 4. Representations and Warranties of USE and its
Subsidiaries. USE represents and warrants to VEN that the statements
contained in this Section 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 4), except as set forth in the disclosure
schedule delivered by USE to VEN on the date hereof and initialed by the
Parties (the "Disclosure Schedule"). The Disclosure Schedules will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Agreement.
a) Organization, Qualification and Corporate Power. USE and its
Subsidiaries are corporations duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation. USE and its
Subsidiaries are duly authorized to conduct business and are in good standing
under the laws of each jurisdiction in which the nature of its businesses or
the ownership or leasing of its properties requires such qualification. USE
and its Subsidiaries have full corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. Section 4(a) of the Disclosure Schedule lists the directors and
officers of USE and its Subsidiaries. USE will deliver to VEN correct and
complete copies of the charter and by-laws of USE and its Subsidiaries (as
amended to date). The minute book containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors, the stock certificate books, and the stock record books of USE and
its Subsidiaries are correct and complete. USE and its Subsidiaries are not
in default under or in violation of any provision of their representative
charter or by-laws. b) Capitalization. As of Closing, the entire
authorized capital stock of USE will consist of 100 million (100,000,000)
shares of common stock. As of Closing, 11,591,376 shares will be issued and
outstanding. All of the issued and outstanding shares will have been duly
authorized, validly issued, fully paid, and nonassessable, and held of record
by the respective Shareholders as set forth in the Shareholder list provided
by American Stock Transfer & Trust Company (Transfer Agent). All issued and
outstanding shares of the capital stock of USE will have been duly authorized,
validly issued, fully paid and non-assessable. At the Closing Date, there
will exist no pre-emptive rights on the part of any holder of any class of
securities of USE and no options, warrants, conversions or other rights,
agreements or commitments of any kind obligating USE, or its stockholders,
contingently or otherwise, to issue or sell any shares of USE stock of any
class or any securities convertible into or exchangeable for any such shares
other than what is covered in paragraph 2 (d). All USE Shares shall contain
no liens, claims or encumbrances of any kind when issued to VEN.
c) Noncontravention. Neither the execution and the delivery of
this Agreement, for the consummation of the transactions contemplated hereby,
will (i) violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
governmental agency, or court to which USE and its Subsidiaries are subject or
any provision of the charter or by-laws of any of USE or its Subsidiaries or
(ii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or, except as described Section 4(c) of the
Disclosure Schedule, require any notice under any agreement, contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement, or
mortgage for borrowed money, instrument of indebtedness, Security Interest, or
other arrangement to which USE and its Subsidiaries are a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets). Except as described in
Section 4(c) of the Disclosure Schedule, none of USE and its Subsidiaries
needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency
or other Person in order for the Parties to consummate the transactions
contemplated by this Agreement. Notwithstanding the above, USE shall fully
comply with all the requisite requirements of Section 4 of this Agreement ten
(10) days prior to the Closing Date. d) Subsidiaries. Section
4(d) of the Disclosure Schedule sets forth for each Subsidiary of USE and each
other entity in which USE holds an equity interest (i) its name and
jurisdiction of incorporation, (ii) the number of shares of authorized capital
stock of each class of its capital stock, (iii) the number of issued and
outstanding shares of each class of its capital stock, the names of the
holders thereof, and the number of shares held by each such holder, and (iv)
the number of shares of its capital stock held in treasury. All of the issued
and outstanding shares of capital stock of each Subsidiary of USE have been
duly authorized are validly issued, fully paid and nonassessable. The shares
of capital stock of the Subsidiaries held by USE are held free and clear of
any restrictions on transfer (other than restrictions under the Securities Act
and state securities laws), claims, taxes, Security Interests, options,
warrants, rights, contracts, calls, commitments, equities and demands. There
are no outstanding or authorized options, warrants, rights, contracts, calls,
puts, preferred stock rights to subscribe, conversion rights or other
agreements or commitments to which USE and its Subsidiaries are a party or
which are binding on any of them providing for the issuance, disposition, or
acquisition of any capital stock of any Subsidiary of USE. There are no
outstanding stock appreciation, phantom stock, or similar rights with respect
to any Subsidiary of USE. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of any Subsidiary of
USE. e) Financial Statements. Attached hereto as Schedule 4(e) are
true and complete copies of (i) the audited, consolidated balance sheet of USE
for each of the last fiscal years1995,1996 and 1997 and the related audited
consolidated statement of income and cash flow of USE together with all
related notes thereto, accompanied by the report of USE's accountants
(collectively the "Financial Statements"): (ii) audited consolidated and
unaudited consolidating balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal year ended 1998
(the "Most Recent Recent Fiscal Year EndFiscal Year End") for USE and its
Subsidiaries; and (iii) unaudited, consolidated and consolidating balance
sheets and statements of income, changes in stockholders' equity, and cash
flow (the "Most Recent Financial Statements") as of and for the month ended
October, 1998 (the "Most Recent Fiscal Month End") for USE and its
Subsidiaries. The Financial Statements have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby, are
correct and complete, and are consistent with the books and records of USE and
its Subsidiaries (which books and records are correct and complete); provided,
however, that the Most Recent Financial Statements are subject to normal year
end adjustments (which will not be material) and lack footnotes and other
presentation items.
f. Events Subsequent to Most Recent Fiscal Year EndQuarterly
Filing -10QSB. Except as described in Section 4(f) of the Disclosure
Schedule, since the Most Recent Fiscal Year End Quarterly Filing -10QSB.,
there has not been any material adverse change in the assets, liabilities,
business, financial condition, operations, results of operations, or future
prospects of USE or any of its Subsidiaries in excess of $25,000 in the
aggregate for all such adverse changes. Without limiting the generality of
the foregoing, since that date: 1) USE and its Subsidiaries
have not sold, leased, transferred, or assigned any of its assets, tangible or
intangible, other than for a fair consideration in the Ordinary Course of
Business;
2) USE and its Subsidiaries have not entered into any
contract, lease, sublease, license or sublicense (or series of related
contracts, leases, subleases, licenses and sublicenses) either involving more
than $$__25,000 _______ or outside the Ordinary Course of Business;
3) no party (including USE and its Subsidiaries) has
accelerated, terminated, modified, or cancelled any contract, lease, sublease,
license or sublicense (or series of related contracts, leases, subleases,
licenses and sublicenses) involving more than $25,000 to which USE and its
Subsidiaries are a party or by which any of them is bound; 4)
USE and its Subsidiaries have not imposed any Security Interest upon any of
its assets, tangible or intangible;
5) USE and its Subsidiaries have not made any capital
expenditure (or series of related capital expenditures) either involving more
than $25,000 or outside the Ordinary Course of Business;
6) USE and its Subsidiaries have not made any capital
investment in, any loan to, or any acquisition of the securities or assets of
any other Person (or series of related capital investments, loans, and
acquisitions) either involving more than $25,000 or outside the Ordinary
Course of Business;
7) USE and its Subsidiaries have not created, incurred,
assumed, or guaranteed any indebtedness (including capitalized lease
obligations) either involving more than $25,000 singly or in the aggregate or
outside the Ordinary Course of Business; 8) USE and its
Subsidiaries have not delayed or postponed (beyond its normal practice) the
payment of accounts payable and other known liabilities not already disclosed
to VEN;
9) USE and its Subsidiaries have not cancelled, compromised,
waived, or released any right or claim (or series of related rights and
claims) either involving more than $25,000 or outside the Ordinary Course of
Business;
10) USE and its Subsidiaries have not granted any license or
sublicense of any rights under or with respect to any Intellectual Property;
11) there has been no change made or authorized in the charter or
by- laws of any USE and its Subsidiaries;
12) USE and its Subsidiaries have not issued, sold, or
otherwise disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon conversion or
exercise) any of its capital stock; 13) USE and its
Subsidiaries have not declared, set aside, or paid any dividend or
distribution with respect to its capital stock or redeemed, purchased, or
otherwise acquired any of its capital stock;
14) USE and its Subsidiaries have not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its property in
excess of $25,000; 15) USE and its Subsidiaries have not made
any loan in excess of $2,500 to, or entered into any other, transaction
involving in excess of $2,500 with, any of its directors, officers, and
employees outside the Ordinary Course of Business; 16) USE and
its Subsidiaries have not entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any existing
such contract or agreement;
17) USE and its Subsidiaries have not granted any increase
outside the Ordinary Course of Business in the base compensation of any of its
directors, officers, and employees;
18) USE and its Subsidiaries have not adopted any (a) bonus,
(b) profit sharing, (c) incentive compensation, (d) pension, (e) retirement,
(f) medical, hospitalization, life, or other insurance, (g) severance, or (h)
other plan, contract, or commitment for any of its directors, officers, and
employees, or modified or terminated any existing such plan, contract, or
commitment;
19) USE and its Subsidiaries have not made any other change in
employment terms for any of its directors, officers, and employees;
20) USE and its Subsidiaries have made or pledged to make any charitable
or other capital contribution in excess of $5,000 outside the Ordinary Course
of Business; and
21) USE and its Subsidiaries have not committed to any of the
foregoing.
g) Undisclosed Liabilities/Security Interests.
1) USE and its Subsidiaries have no liability (other than
liabilities for taxes, which are addressed in Section (h) below, except for
(i) Liabilities set forth in the Most Recent Balance Sheet and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business as described in Section 4 (g1) ) of the Disclosure
Schedule. 2) Except as described in Section 4(g2) of the
Disclosure Schedule, there are no Security Interests on any of the assets of
USE and its Subsidiaries. h) Tax Matters.
1) USE and its Subsidiaries will cause to be filed have filed
all tax returns that it was required to file under applicable laws. All such
tax returns are true, correct and complete in all respects and were filed on a
timely basis. All taxes owned by USE and its Subsidiaries (whether or not
shown on any tax return) have, within the time and in the manner prescribed by
law, been paid. Except as described Section 4(h) of the Disclosure Schedule,
USE and its Subsidiaries currently is not the beneficiary of any extension of
time within which to file any tax return. No claim has ever been made by an
authority in a jurisdiction where USE and its Subsidiaries does not file tax
returns that it is or may be subject to taxation by that jurisdiction.
2) USE and its Subsidiaries have complied in all respects with the
provision of the Code relating to the payment and withholding of taxes,
including, without limitation, the withholding and reporting requirements
under Code Sections 1441 through 1464, 3401 through 3406, and 6041 and 6049,
as well as similar provisions under any other laws, and have within the time
and in the manner prescribed by law, withheld and paid all taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employees, creditor, independent contractor, or other third party.
3) No director or officer (or employee responsible for tax
matters) of USE and its Subsidiaries have any reason to believe that any
authority might assess any additional taxes for any period for which tax
returns have been filed. There is no dispute or claim concerning any tax
liability of USE and its Subsidiaries either (a) claimed or raised by any
authority in writing or (b) as to which any of the directors and officers (and
employees responsible for tax matters) of USE and its Subsidiaries have
knowledge based upon personal contact with any agent or such authority.
Section 4 (h) of the Disclosure Schedule lists all federal, state, local, and
foreign income tax returns filed with respect to USE and its Subsidiaries for
taxable periods ended on or after September 30, 1998, indicates those tax
returns that have been audited, and indicates those tax returns that currently
are the subject of audit or other administrative proceeding. USE has
delivered to VEN correct and complete copies of all tax returns, examination
reports, and statements of deficiencies assessed against or agreed to by USE
and its Subsidiaries. 4) USE and its Subsidiaries have not
waived any statute of limitations with respect to any taxes or tax returns or
agreed to any extension of time with respect to a tax assessment or
deficiency.
5) USE and its Subsidiaries have not requested or received a
written ruling of a taxing authority relating to taxes or entered into a
written and legally binding agreement with a taxing authority relating to
taxes.
6) No power of attorney currently in force has been granted
by USE or its Subsidiaries concerning any tax matter.
7) USE and its Subsidiaries have not filed a consent under
Code Section 341(f) concerning collapsible corporations. USE and its
Subsidiaries have not made any payments, is obligated to make any payments, or
is a party to any agreement that could obligate it to make any payments that
will not be deductible under Code Section 280G. USE and its Subsidiaries have
not been a United States real property holding corporation within the meaning
of Code Section 897(c)(1)(A)(ii). USE and its Subsidiaries have disclosed on
its federal income tax returns in accordance with Code Section 6662(d)(2)(B)
all positions taken therein that could give rise to a substantial
understatement of federal income tax within the meaning of Code Section 6662.
USE and its Subsidiaries have not ever been (or have any liability for unpaid
taxes because it once was) a member of an Affiliated Group during any part of
any consolidated return year within any part of which consolidated return year
any corporation other than USE and its current Subsidiaries also was a member
of the Affiliated Group.
8) No property of USE and its Subsidiaries are property that
is subject to the alternative depreciation system under Code Section 168(g)
and none of VEN and its Subsidiaries has made an election pursuant to Code
Section 168(g)(7) to have the alternative depreciation system apply to any
property.
9) USE and its Subsidiaries are not required to include in
income any adjustment pursuant to Code Section 481(a) by reason of a voluntary
change in its accounting method.
i) Tangible Assets. USE and its Subsidiaries owns or leases all
tangibleowns or leases all assets necessary for the conduct of its business
as presently conducted. All of the tangible assets of USE and its
Subsidiaries are listed on Section I of the Disclosure Schedule. To the best
of USE's knowledge, Each each such tangible asset is free from material
defects (patent and latent), has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it presently
is used.
j) Real Property Leases. Section 4(j) of the Disclosure Schedule
lists and describes briefly all real property leased or subleased to USE and
its Subsidiaries. USE has delivered to VEN correct and complete copies of the
leases and subleases listed in Section J of the Disclosure Schedule (as
amended to date). Except as described in Section J of the Disclosure
Schedule, with respect to each lease and sublease listed in Section 4(j) of
the Disclosure Schedule; 1) the lease or sublease is legal,
valid, binding, enforceable, and in full force and effect with respect to USE
and/or its Subsidiaries, as the case may be, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
or equitable principals relating to or limiting creditors' rights generally,
and, to the best of USE's knowledge, is legal, valid, binding, enforceable,
and in full force and effect with respect to the lessor, except as enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles relating to or limiting creditors' rights
generally; 2) none of the transactions contemplated in this
Agreement will cause the lease or sublease to not be legal, valid, binding,
enforceable, and in full force and effect on the identical terms in effect
prior to the consummation thereof, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors' rights generally;
3) USE or its Subsidiaries, as the cause may be, are not in
breach or default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default on the part of USE and/or its
subsidiaries, as the case may be, or permit termination, modification, or
acceleration thereunder by the lessor, and, to the best of USE's knowledge,
the Lessor is not in breach or default, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default on the part of
the lessor, or permit termination, modification, or acceleration thereunder by
USE and/or its Subsidiaries, as the case may be; 4) USE
and/or its Subsidiaries, as the case may be, has not repudiated any provision
of the lease or sublease, and, to the best of USE's knowledge, the lessor has
not repudiated any provision of the lease or sublease;
5) there are no material disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
k) Contracts. Section 4(k) of the Disclosure Schedule lists the
following contracts, agreements, and other arrangements to which any of USE
and its Subsidiaries are parties;
1) any written arrangement (or group of related written
arrangements) for the lease of personal property from or to third parties
providing for lease payments in excess of $_________ $10,000 per annum;
2) any written arrangement concerning a partnership or joint
venture; 3) any written arrangement (or group of related
written arrangements) under which it has created, incurred, assumed, or
guaranteed (or may create, incur, assume, or guarantee)indebtedness (including
capitalized lease obligations) involving more than $25,000 or under which it
has imposed (or may impose) a Security on any of its assets, tangible or
intangible; 4) any written arrangement concerning
confidentiality or noncompetition; 5) any written arrangement
with any of its directors, officers, and employees in the nature of a
collective bargaining agreement, bonus, stock incentive plan, option or
warrant rights, employment agreement or severance agreement; 6)
any written arrangement under which the consequences of a default or
termination could have an adverse effect on the assets, liabilities, business,
financial condition, operations, results of operations, or future prospects of
USE or any of its Subsidiaries; or 7) any other written
arrangement (or group of related written arrangements) either involving more
than $25,000 or not entered into in the Ordinary Course of Business;
USE has delivered to VEN a correct and complete copy of each written
arrangement listed in Section 4(k) of the Disclosure Schedule (as amended to
date). With respect to each written arrangement so listed: (a) the written
arrangement is legal, valid, binding and enforceable in accordance with its
terms, and in full force and effect with respect to USE and/or its
Subsidiaries, as the case may be, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors' rights generally, and,
to the best of USE's knowledge, is legal, valid, binding and enforceable in
accordance with its terms, and in full force and effect with respect to any
other parties thereto, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
relating to or limiting creditors' rights generally; (b) none of the
transactions contemplated in this Agreement will cause the written arrangement
to not be legal, valid, binding, enforceable, and in full force and effect on
identical terms in effect prior to the consummation thereof, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles relating to or limiting
creditors' rights generally; (c) USE and/or its Subsidiaries , as the case may
be, are not in breach or default, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default on the part of
USE and/or its Subsidiaries, as the case may be, or permit termination,
modification, or acceleration thereunder by the parties other than USE and/or
its Subsidiaries, as the case may be, and to the best of USE's knowledge, the
parties other than USE and/or its Subsidiaries are not in breach or default,
and no event has occurred which, with notice or lapse of time, would
constitute a breach or default on the part of the other parties or permit
termination, modification, or acceleration thereunder by USE and/or its
Subsidiaries; (d) USE and/or its Subsidiaries, as the case may be, have not
repudiated any provision of the written arrangement, and, to the best of USE's
knowledge, the parties other than USE and/or its Subsidiaries, as the case may
be, have not repudiated any provision of the written arrangement; and (e) to
the best knowledge of USE, no event of bankruptcy has occurred with respect to
any third party to any of the written arrangements. USE and its Subsidiaries
are not a party to any verbal contract, agreement or other arrangement which,
if reduced to written form, would be required to be listed in Section 4(k) of
the Disclosure Schedule under the terms of this Agreement. No supplier of USE
and its Subsidiaries have indicated within the past year that it will stop, or
decrease the rate of, supplying materials, products, or services to them and
no customer of any of USE and its Subsidiaries have indicated within the past
year that it will stop, or decrease the rate of, buying materials, products,
or services from them, in each case where such action cause a material adverse
change to the operations and profitability of USE or its Subsidiaries.
l) Notes and Accounts Receivable. All notes and accounts receivable of USE
and its Subsidiaries are reflected properly on their books and records, are
valid receivables subject to no set-offs or counterclaims (except as may be
provided by bankruptcy, insolvency, reorganization, moratorium or similar laws
or equitable principles relating to or limiting creditors' rights generally),
are presently current and collectible in accordance with their terms at their
recorded amounts, subject only to any reserve for bad debts set forth in the
Most Recent Balance Sheet as adjusted for the passage of time through the
Closing Date in accordance with the past custom and practice of USE and its
Subsidiaries. Section 4(l) of the Disclosure Schedule lists all account
debtors who USE has knowledge have suffered an event of bankruptcy.
m) Powers of Attorney. There are no outstanding powers of attorney, executed
on behalf of either USE or its Subsidiaries.
n) Insurance Policies. Section 4(n) of the Disclosure Schedule
sets forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which either USE or
its Subsidiaries has been a party, a named insured, or otherwise the
beneficiary of coverage at any time within the past three years;
1) the name, address, and telephone number of the agent; 2)
the name of the insurer, the name of the policyholder, and the name of each
covered insured, the policy number and the period of coverage;
3) the scope (including an indication of whether the coverage was on a
claims made, occurrence, or other basis) and amount (including a description
of how deductibles and ceilings are calculated and operate) of coverage; and
4) a description of any retroactive premium adjustments or
other loss- sharing arrangements.
USE has delivered to VEN a correct and complete copy of each of the insurance
policies described in Section 4(n) of the Disclosure Schedule. With respect
to each such insurance policy:(A) the policy is legal, valid, binding, and
enforceable in accordance with its terms and in full force and effect with
respect to USE and/or its Subsidiaries, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors' rights generally, as
the case may be, and,. to the best of USE's knowledge, is legal, valid,
binding, enforceable in accordance with its terms, and in full force and
effect with respect to any other parties thereto, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
or equitable principles relating to or limiting creditors' rights generally;
(B) none of the transactions contemplated in this Agreement will cause the
policy to not be legal, valid, binding, enforceable, and in full force and
effect on identical terms in effect prior to the consummation thereof, except
as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles relating to or limiting
creditors' rights generally; (c) USE and/or its Subsidiaries, as the case may
be, are not in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with
notice or lapse of time, would constitute a breach or default on the part of
USE and/or its Subsidiaries, as the case may be, or permit termination,
modification, or acceleration thereunder by the parties to the policy other
than USE and/or its Subsidiaries, as the case may be, and, to the best of
USE's knowledge, the parties to the policy other than USE and/or its
Subsidiaries are not in breach or default, and no event has occurred which,
with notice or lapse of time, would constitute a breach or default on the part
of the other parties to the policy or permit termination, modification, or
acceleration thereunder by USE and/or its Subsidiaries; and (D) Section 4(n)
of the Disclosure Schedule describes any self- insurance arrangements
affecting any of USE and its Subsidiaries. o) Litigation. Section
4(o) of the Disclosure Schedule sets forth each instance in which any of USE
and its Subsidiaries (i) is subject to any unsatisfied judgment, order,
decree, stipulation, injunction, or charge or (ii) is a party or, to the
knowledge of USE, is threatened to be made a party, to any charge, complaint,
action, suit, proceeding, hearing, or investigation of in any court or
quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator. None of the charges,
complaints, actions, suits, proceedings, hearings, and investigations set
forth in Section 4(o) of the Disclosure Schedule could result in any material
adverse change in the assets, liabilities, business, financial condition,
operations, results of operations, or future prospects of USE or its
Subsidiaries. p) Employees.
1) USE and its Subsidiaries are not parties to any
outstanding employment agreements or contracts with officers or employees that
are not terminable at will, or that provide for the payment of any bonus or
commission. USE and its Subsidiaries are not parties to any agreement, policy
or practice that requires payment of termination or severance pay to salaried,
non-exempt or hourly employees (other than as required by law). USE and its
Subsidiaries are not parties to any collective bargaining agreement or other
labor contract applicable to persons employed by USE and its Subsidiaries, nor
to the best of USE's knowledge, does USE and its Subsidiaries know of any
activities or proceedings of any labor union to organize any such employees.
USE has furnished to VEN complete and correct copies of all employment and
labor agreements between USE and/or its Subsidiaries and their respective
employees. USE and its Subsidiaries have not materially breached or otherwise
failed to comply with any provisions of any employment or labor agreement,
and, to the best of USE's knowledge, there are no grievances outstanding
thereunder.
2) USE and its Subsidiaries are in compliance in all material
respects, with all applicable laws relating to employment and employment
practices, wages, hours, and terms and conditions of employment. There is no
unfair labor practice charge or complaint pending before the National Labor
Relations Board ("NLRB") against USE or its Subsidiaries. q)
Employee Benefits. Section 4(q) of the Disclosure Schedule lists all Employee
Benefit Plans that any of USE and its Subsidiaries maintains or to which any
of USE and its Subsidiaries contributes for the benefit of any current or
former employee of any of USE and its Subsidiaries. USE has delivered to VEN
a correct and complete copy of each of the Employee Benefit Plans described in
Section 4(q) of the Disclosure Schedule. Neither USE nor its Subsidiaries
sponsor or has ever sponsored or implemented any Employee Pension Benefit Plan
which is governed by the provisions of ERISA. Except as described in Section
4(q) of the Disclosure Schedule, USE and its Subsidiaries does not maintain or
ever have maintained, or contributes or ever has contributed or been required
to contribute to any Employee Welfare Benefit Plan providing health, accident
or life insurance benefits to former employees, their spouses, or their
dependents (other than in accordance with Code Section 162(k) ). Neither USE
nor its Subsidiaries sponsors or maintains any bonus or incentive plans for
any officers, employees or former officers or employees. No compensation or
benefits paid to any employee or former employee could be characterized as
excess parachute payments under Code Section 280G. r) Guarantees.
Neither USE nor its Subsidiaries is a guarantor or otherwise is liable for any
liability or obligation (including indebtedness) of any other Person.
s) Environment, Health and Safety.
1) USE, its Subsidiaries, and their respective predecessors
and Affiliates has complied in all material respects with all laws (including
rules and regulations thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), concerning the environment, public
health and safety, and employee health and safety, and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand or notice has
been filed or commenced against any of them alleging any failure to comply
with any such law or regulation. 2) Neither USE nor its
Subsidiaries have any liability under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Resource Conservation
and Recovery Act of 1976, the Federal Water Pollution Control Act of 1972, the
Clean Air Act of 1970, the Safe Drinking Water Act of 1974, the Toxic
Substances Control Act of 1974, the Refuse Act of 1989, or the Emergency
Planning and Community Right-to-Know Act of 1986 (each as amended), or any
other law (or rule or regulation thereunder) of any federal, state, local, or
foreign government (or agency thereof), concerning release or threatened
release of hazardous substances, public health and safety, or pollution or
protection of the environment. 3) Neither USE and its
Subsidiaries have any liability for damage to any site, location, or body of
water (surface or subsurface) or for illness of or personal injury to any
employee or any other person.
4) Neither USE and its Subsidiaries have any liability under
the Occupational Safety and Health Act, as amended, or any other law (or rule
or regulation thereunder) of any federal, state, local, or foreign government
(or agency thereof) concerning employee health and safety.
5) USE and its Subsidiaries have obtained and been in
compliance with all of the terms and conditions of all permits, licenses, and
other authorizations which are required under, and has complied with all other
limitations, restrictions, schedules, and timetables which are contained in,
all federal, state, local, and foreign laws (including rules, regulations,
codes, plans, judgments, orders, decrees, stipulations, injunctions, and
charges thereunder), relating to public health and safety, worker health and
safety, and pollution or protection of the environment, including laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacturer, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or
wastes. 6) all properties and equipment used in the business
of USE and its Subsidiaries have been free of asbestos, PCB's, methylene
chloride, trichloroethylene, 1,2 transdichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances. 7) No
pollutant, contaminant, or chemical, industrial, hazardous, or toxic material
or waste ever has been buried, stores, spilled, leaked, discharged, emitted,
or released (i) by USE and its Subsidiaries in connection with the
installation and operation of its business and (ii) to the best knowledge of
USE by any third parties on any real property that any of USE and its
Subsidiaries leases or ever has leased.
t) Legal Compliance.
1) USE and its Subsidiaries have complied in all material
respects with all laws (including rules and regulations thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no charge, compliant, action, suit, proceeding, hearing, investigation,
claims, demand, or notice has been filed or commenced against any of VEN and
its Subsidiaries alleging any failure to comply with any such law or
regulation. 2) USE and its Subsidiaries have complied in all
material respects with all applicable laws (including rules and regulations
thereunder), relating to the employee civil rights, and equal employment
opportunities.
3) USE and its Subsidiaries have not:
a) made or agreed to make any contribution, payment, or
gift of funds or property to any governmental official, employee, or agent
where either the contribution, payment or gift or the purpose thereof was
illegal under the laws of any federal, state, local, or foreign jurisdiction;
b) established or maintained any unrecorded fund or
asset for any purpose, or made any false entries on any books or records for
any reason; or made or agreed to make any contribution, or
reimbursed any political gift or contribution made by any other person, to any
candidate for federal, state, local, or foreign public office.
u) Validity of Contemplated Transactions. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby (i) have been duly approved by the unanimous consent of
the Board of Directors of USE and its Subsidiaries; (ii) do not and will not
contravene, violate and / or result in a breach or default under any provision
of the Certificate of incorporation or bylaws of USE or its subsidiaries that
are in effect; (iii) do not violate, are not in conflict with, and do not
constitute a default under, or cause the acceleration of any payments pursuant
to, or otherwise impair the good standing, validity, or effectiveness of any
material agreement, contract, license, indenture, instrument, lease, or
mortgage, or subject USE or its subsidiaries, or any of their (collective)
assets to any indenture, mortgage, contract, commitment or agreement, other
than this Agreement, to which they are a Party or by which any of the assets
are bound; and (iv) do not violate any material provision of law, rule, order,
permit, or license to which USE or its Subsidiaries are subject. v)
Questionable Payments. Neither USE or its subsidiaries, any Director,
officer, agent, employee, nor other person associated with, or acting on
behalf of, such entities or individuals has, directly or indirectly: (i) used
any corporate funds for unlawful contributions, gifts, entertainment, or other
unlawful payment to foreign or domestic governmental officials or employees,
or domestic political parties or campaigns; (ii) violated any provision of the
Foreign Corrupt Practices Act of 1977; (iii) established or maintained and
unlawful or unrecorded fund of corporate monies or other assets; (iv) made any
false or fictitious entry on the books or records of USE or its Subsidiaries;
(v) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment; (vi) given any favor or gift which is not deductible for
federal income tax purposes; and / or (vii) made any bride, kickback, or other
payment of a similar or comparable nature, whether in money, property, or
services, to obtain favorable treatment in securing business or to obtain
special concessions, or to pay for favorable treatment for business secured or
for special concessions already obtained.
w) Directors and Officers. A true and complete list as of the
date of this Agreement indicating USE and its subsidiaries, directors and
officers, each of whom has been duly elected is as follows:
NAME
POSITION
Max P. Schmid
Thomas P. Dolan
Robert W. Lewis Jr.
Chairman and President
Executive Vice President, Secretary and Director
Chief Financial Officer, Treasurer and Director
x) Patents, Trademarks, et cetera. Schedule X accurately sets
forth all patents, patent applications, trademark, trademark applications,
trade name, service mark, copyright, franchise, or other intangible property
or asset (all of the foregoing being herein called "Intangibles"), owned by,
licensed by and / or pending on behalf of USE or its Subsidiaries. All
Intangibles are in good standing and uncontested. Schedule X 1 accurately
sets forth with respect to Intangibles owned by USE or its Subsidiaries, where
appropriate, a statement of cost, book value and reserve for depreciation of
each item for financial reporting purposes, and with respect to Intangibles
licensed by USE and its Subsidiaries, from or to a third party, a description
of such license. Neither VEN, nor any Stockholder or employee of USE or its
subsidiaries, any relative of affiliate of any Stockholder of USE or its
Subsidiaries, any such director, officer, or employee of the foregoing, or any
such relative or affiliate had, or now has, a 5% or greater equity or voting
or other substantial interest, possesses any Intangible which relates to the
business of USE or its Subsidiaries. There is no right under any Intangible
necessary to the business of USE or its Subsidiaries as presently conducted,
or as it contemplates conducting, except as are so designated in Schedule X.
Neither USE or its Subsidiaries have infringed, is infringing, or has received
notice of infringement with asserted Intangibles of others. There is no
infringement by others of Intangibles of USE or its Subsidiaries. There is no
Intangible of others which may materially adversely affect the financial
condition, results of operations, business, properties, assets, liabilities,
or future prospects of USE or its Subsidiaries. Securities Filings.
USE and its Subsidiaries have filed all reports, registration
statements and forms required to be filed by USE and its Subsidiaries pursuant
to the Securities Act of 1934 (the "Act") and / or the Securities and Exchange
Act (the "Exchange Act") and all State securities bureaus. All reports and
forms filed by USE and its Subsidiaries under the Act and / or the Exchange
Act (I) have been prepared in accordance with the requirements of the Act, the
Exchange Act, and all rules and regulations promulgated thereunder; (ii) do
not contain any material misrepresentations; and (iii) do not omit any
information necessary to make statements contained therein not misleading.
Annexed hereto as Exhibit 2 are true and complete copies of all
forms, reports and registration statements filed by USE and its Subsidiaries
with the Securities and Exchange Commission (the "Commission") under the Act
and / or the Exchange Act and all state securities bureaus within the last
three years.
USE and its Subsidiaries has (or have) not received
notification from the Commission, the National Association of Securities
Dealers, Inc., and / or any state securities bureaus that any investigation
(formal or informal), inquiry or claim is pending, threatened or placed
against USE or its Subsidiaries.
z) Veracity of Statements Neither this Agreement, nor the
representations and warranties by USE or its Subsidiaries, contained herein or
in other documents, instruments, certificates or schedules furnished pursuant
hereto or in connection with the transactions contemplated hereby, contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements or facts contained herein, or therein, not
misleading. There is no fact that has a material effect, or in the future may
have a material adverse effect (to the knowledge of USE or its Subsidiaries)
on the business, operations, affairs, condition of prospects of USE or its
Subsidiaries, their assets, business which has not been set forth in this
Agreement, provided, however, that USE or its Subsidiaries express no opinion
as to political or economic matters of general applicability.
5. Pre-Closing. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing:
a) General. Each of the Parties will use his or its best efforts
to take all action and to do all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
b) Notices and Consents. USE and its Subsidiaries will give any
notice to, make any filings with, or seek any authorizations, consents or
approvals from third parties, including, but not limited to State regulatory
agencies to use their best efforts to obtain any third- party authorizations,
consents or approvals required or that VEN may request in connection with
consummation of the transactions contemplated by this Agreement. c)
Operation of Business. USE and its Subsidiaries will not engage in any
practice, take any action, embark on any course of inaction, or enter into any
transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, USE and its Subsidiaries will not engage in any
practice, take any action, embark on any course of inaction, or enter into any
transaction of the sort described in Section 4f above; provided, however, that
for purposes of this sentence, the provisions of Section 4 .(f2) and 4 (f15),
shall be read without the dollar limitations contained therein.
d) Preservation of Business. Company USE and its Subsidiaries
will keep its business and properties substantially intact, including its
present operations, physical facilities, working conditions, and relationships
with lessors, licensors, suppliers, customers, and employees. e)
Full Access. Both parties will permit their respective representatives to
have full access to all premises, properties, books, records, contracts, tax
records, and documents of or pertaining to the proposed transaction. USE will
make appropriate arrangements to allow an on- site transition team of VEN's
personnel or other authorized representatives to monitor the operations of USE
from the execution of this Agreement to Closing. f) Notice of
Developments. Both parties will give prompt written notice of any material
development affecting the assets, liabilities, business, financial condition,
operations, results of operations, or future prospect. Each Party will give
prompt written notice to the others of any material development affecting the
ability of the Parties to consummate the transactions contemplated by this
Agreement.
g) Exclusivity. USE and its Subsidiaries will not: (i) solicit,
initiate, or encourage the submission of any proposal or offer from any Person
relating to any (A) liquidation, dissolution, or recapitalization, (B) merge
or consolidation, (C) acquire or purchase of securities or assets, or (D)
similar transaction or business combination involving any of USE and its
Subsidiaries or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any person to do so or
seek to do any of the foregoing. h) No Disclosure. Except as
specifically provided herein, none of the Parties will make any disclosures
regarding the existence or contents of this Agreement or the transactions
contemplated hereby without the prior consent of the other Parties hereto,
which consent shall not be unreasonably withheld, conditioned or delayed. In
the event that any of the Parties is requested or required (by oral question
or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any information regarding the existence or content of this Agreement
or the transactions contemplated hereby and any other Party does not wish to
have such information disclosed, the Party who is so requested or required
will notify the other parties promptly of the request or requirement so that
the other Parties may seek an appropriate protective order or waive compliance
with the provisions of this Section 4f. If, in the absence of a protective
Order or the receipt of a waiver hereunder, any of the Parties is, on the
advice of counsel, compelled by law to disclose any information regarding the
contents of this Agreement or the transactions contemplated hereby or else
stand liable for contempt, that Party may disclose such information as
required by law; provided, however, that the disclosing Party shall use his or
its best efforts to obtain, at the request of any other Party, an order or
other assurance that confidential treatment will be accorded to such portion
of the information required to be disclosed as any Party shall designate. The
foregoing provision shall not apply to any information which is generally
available to the public immediately prior to the time of disclosure.
Notwithstanding the foregoing, USE may, if required by applicable rules and
regulations of the Commission or other applicable law, and with prior or
concurrent written notice to VEN, make such disclosures as are so required.
i) Further Assurances. Each Party will at any time and from time to
time execute and deliver additional agreements and documents, including
documents of conveyance and transfer, and take such other action as may be
reasonable necessary to consummate, confirm or evidence the transactions
contemplated in this Agreement.
j) USE's SEC Filings. USE and its Subsidiaries shall furnish to
VEN copies of all filings made by USE from the date of this Agreement to
Closing. k) No Dividends USE shall not declare or pay any
dividends or other distribution on its stock or purchase or redeem any of its
stock or issue any stock or other securities including options or warrants for
said stock thereof other than in compliance with this Agreement which provides
for a reverse split of 100:1 set forth in Section 2 hereof. Information
Statement. The two largest shareholders of USE after the reverse stock
split, but prior to the Closing Date, agree to execute a fee agreement between
said two shareholders and Capital One, Inc., wherein Capital One, as the
finder in this completed transaction, will receive two percent (2%) of said
shareholder USE shares to Capital One as payment for Capital One's work
regarding the transaction.
Upon execution of this Agreement, counsel for USE shall promptly
prepare, an proxy information statement seeking the approval by USE's
Shareholders for the transactions contemplated by the Agreement. As promptly
as practicable after the Proxy Statement has been cleared by the Commission.
The Proxy Information Statement shall be mailed to USE's Shareholders of
record providing notice of the approval of the actions herein by the Board of
Directors and the consent of shareholders holding a majority of USE shares.
The Proxy Information Statement, when mailed to applicable shareholders, will
contain all material statements and information required to be included
therein by the Exchange Act and Act, as applicable, and will not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
7. Conditions to Obligations Regarding Closing.
a) Conditions to Obligation of the VEN. The obligation of VEN to
consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
1) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of the
Closing Date; 2) USE and its Subsidiaries shall have
performed and complied with all of their covenants hereunder in all material
respects through the Closing; 3) no action, suit, or
proceeding shall be pending or threatened before any court or quasi-judicial
or administrative agency of any federal, state, local, or foreign jurisdiction
wherein unfavorable judgment, order, decree, stipulation, injunction or charge
would (A) prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation, or (C) affect adversely in any material
respect the right of Stockholder to own, operate, or control USE and/or its
Subsidiaries (and no such judgment, order, decree, stipulation, injunction, or
charge shall be in effect.
4) USE shall have received from counsel to USE and its
Subsidiaries an opinion with respect to the matters set forth in Exhibit 7a)4)
attached hereto, addressed to VEN and dated the Closing Date;
5) USE shall have delivered a copy of the resolutions of the
shareholders and Board of Directors authorizing the transactions contemplated
pursuant to this Agreement, which resolutions shall be certified by an officer
of USE. 6) USE shall have delivered a Certificate of
Incumbency with respect to USE officers;
7) Except for Thomas P. Dolan, the Officers and Directors of
USE shall have delivered resignations, effective as of the Closing, of each
director and officer of USE and its Subsidiaries. Stockholder shall vote its
shares to elect Thomas P. Dolan, or his designee, as a director of USE or its
successor for two years after Closing. Sellers may waive any
condition specified in this Section _______ if it executes a writing so
stating at or prior to the Closing.
b) Conditions to Obligation of USE. The obligation of USE to
consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions.
1) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of the
Closing Date; 2) VEN shall have performed and complied with
all of its covenants hereunder in all material respects through the Closing.
3) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction wherein an unfavorable
judgment, order, decree, stipulation, injunction, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such judgment, order, decree, stipulation,
injunction, or charge shall be in effect) 4) USE shall have
received from counsel to VEN an opinion with respect to the matters set forth
in Exhibit 7b)4) attached hereto, addressed to USE and dated the Closing Date;
5) VEN shall have delivered to USE a copy of the resolutions
of the Board of Directors or the Executive Committee of VEN authorizing the
transactions contemplated pursuant to this Agreement, which resolutions shall
be certified by an officer of VEN; and
6) VEN shall have delivered a Certificate of Incumbency with
respect to VEN's officers; USE may waive any condition specified in this
Section 6 in writing so stating at or prior to the Closing.
7) VENs' Right to Terminate. Notwithstanding any other
provision of this Agreement, if at or before Closing the aggregate amount of
claims made in good faith by VEN under Section 4 hereof for the breach of
USE's representations, warranties and covenants set forth in this Agreement
exceeds $500,000, VEN may, in their sole discretion, terminate this Agreement.
18. Survival of Representations and Warranties.
1a) Survival. All of the representations, warranties and
covenants of the Parties contained in this Agreement, (other than the
representations and warranties of USE contained in Section 4 above) shall
survive the Closing Date hereunder (even if the damaged Party knew or had
reason to know of any misrepresentation or breach of warranty at the time of
Closing and elected to proceed with the Closing notwithstanding such
Knowledge) and continue in full force and effect for a period of two years
following the Closing Date. The representations, warranties and covenants of
USE and its Subsidiaries contained in Section 4 above shall survive the
Closing Date (even if the damaged party knew or had reason to know of any
misrepresentation or breach of warranty or covenant at the time of Closing and
elected to proceed with the Closing notwithstanding such knowledge) and
continue in full force and effect forever thereafter.
a)Indemnification
i) By USE . USE shall defend and promptly indemnify VEN, its
officers, board members, and save and hold them harmless from,
against, for and in respect of and shall pay any and all damages,
losses, obligations, liabilities, claims, encumbrances,
deficiencies, costs and expenses, including without limitation,
reasonable attorney's fees and other costs and expenses incident to any suit,
action, investigation, claim or proceeding suffered, sustained,
incurred or required to be paid by VEN, its officers, and / or board
members by reason of (i) the existence of any and all obligations
and / or liabilities of USE which were not disclosed in this
Agreement; (ii) any breach or failure of observance or performance
of any representation, warranty, covenant, agreement of commitment
made by USE hereunder or relating hereto or as a result of any representation,
warranty, covenant, agreement or commitment being untrue or incorrect
in any respect, and / or (iii) any and all actions, suits,
investigations, proceedings, demands, assessments, audits, judgments
and claims arising out of any of the foregoing or from any material
misrepresentation or omission from any Schedules or Exhibits to this
Agreement, certificates, financial statements or from any document
furnished by USE or required to be furnished hereunder. ii) By
VEN VEN shall defend and promptly indemnify USE and its officers and
directors, and save harmless from, against, for and in respect of and
shall pay any and all damages, losses, obligations, liabilities, claims,
encumbrances, deficiencies, costs and expenses, including without
limitations, reasonable attorneys' fees and other costs and expenses
incident to any suit, action, investigation, claim or proceeding
suffered, sustained, incurred or required to be paid by any of them
by reason of (I) any breach or failure of observance or performance
of any representation, warranty, covenant, agreement or commitment
made by VEN hereunder or related hereto or as a result of any such
representation, warranty, covenant, agreement or commitment being untrue or
incorrect in any respect, and/or (ii) any and all actions, suits,
investigations, proceedings, demands, assessments, audits, judgments
and claims arising out of any of the foregoing or from any material
misrepresentation or omission from any Schedules or Exhibits to this
Agreement, certificates, financial statements or from any document
furnished or required to be furnished by VEN hereunder. 9.
Miscellaneous.
a) No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
b) Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto and the documents referred to herein) constitutes the entire
agreement among the Parties with regard to the subject matter hereof and
supersedes any prior understandings, agreements, or representations by or
among the Parties, written or oral, that may have related in any way to the
subject matter hereof.
c) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement
or any of its rights, interests or obligations hereunder without the prior
written approval of the other party.
d) Counterparts/Facsimile Signatures. This Agreement may be
executed in one or more counterparts and may be executed by facsimile
signature, each of which shall be deemed an original but all of which together
will constitute one and the same instrument. e) Headings. The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement. f) Notices. All notices, requests, demands, claims,
and other communications hereunder, including notices, requests, demands,
claims and other communications relating to indemnification matters will be in
writing. Any notice, request, demand, claim or other communication hereunder
shall be deemed only given three business days after it is sent by registered
or certified mail, return receipt requested, postage prepaid, and addressed to
the intended recipient as set forth below.
If to USE:
U.S. Environmental, Inc.
8130 66th Street North, Suite 6,
Pinellas Park, FL 33781
Copy to:
Stephen M. Robinson, Esq.
Stephen M. Robinson, P.A.
172 Tuckerton Road
Medford, NJ 08055
If to VEN:
Virtual Empowerment Network, Inc.
8200 State Avenue
Kansas City, KS 66112-1854
Copy to:
Gregory Frost, Esq.
Robson, Miller & Frost
666 3rd Avenue
New York, NY 10017
If to the Escrow Agent:
Gregory Frost, Esq.
Robson, Miller & Frost
666 3rd Avenue
New York, NY 10017
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim or other communication shall
be deemed to have been duly given unless and until it actually is received by
the individual for whom it is intended. Any Party may change the address to
which notices, requests, demands, claims and other communications hereunder
are to be delivered by giving the other parties notice in the manner herein
set forth.
g) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law governing
conflicts of laws) of the State of Delaware.
h) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by a
duly authorized officer. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence. i) Severability. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of the remaining
terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction. If the
final judgment of a court of competent jurisdiction declares that any term or
provision hereof is invalid or unenforceable, the parties agree that the court
making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area of the term or provision, to
delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and that this Agreement shall be enforceable as so modified
after the expiration of the term within which the judgment may be appealed.
j) Expenses. Each Party will bear its own costs and expenses
(including legal fees and expenses) incurred in connection (unless previously
specified) with this Agreement and the transactions contemplated hereby.
k) Construction. The language used in this Agreement will be
deemed to be the language chosen by the Parties to express the mutual intent,
and no rule of strict construction shall be applied against any Party. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless the contract requires otherwise. The parties intend that each
representation, warranty and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in
breach of the first representation, warranty, or covenant. l)
Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof. m) Specific Performance. Each of the Parties
acknowledges and agrees that the other Parties would be damaged irreparably
the event certain of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are breached. Accordingly,
each of the Parties agrees that the other Parties shall be entitled to an
injunction or injunctions (temporary and/or permanent), without the necessity
of proving actual damages, to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereon.
1. Securities Act Provisions
a)Evidence of Compliance with Private Placement Offering Exemption.
VEN agrees to supply USE with such evidence as counsel for USE may reasonably
require in order to evidence the private offering character of the
distribution of the Shares of USE common stock made pursuant to this
Agreement.
a) Representations and Warranties of VEN.
1. The shares being purchased under this Agreement are being
offered and sold in reliance upon an exemption provided under the Securities
Act of 1933, as Amended, for offerings not involving any public offering.
Accordingly, VEN represents that the shares being purchased hereunder are
being acquired by VEN for investment and shall not be sold, pledged, or
otherwise transferred by VEN except upon the issuance to USE of a favorable
opinion of its counsel or submission to USE of such other evidence
satisfactory to counsel to USE, in either case, to the effect that a proposed
transfer shall not be in violation of the Securities Act of 1933, as Amended,
and applicable state securities laws.
2. VEN hereby indemnifies and agrees to hold USE harmless
from all liability imposed upon USE by reason of any sale, pledge, transfer or
other disposition of the shares by VEN in such circumstances as to make the
transaction in which the shares were issued to VEN no longer a transaction
exempt from the registration provisions of the Securities Act of 1933, as
Amended, or the applicable state securities laws. 1.VEN further
agrees and consents to the placement of a legend on the shares, which legend
shall be in the form substantially as follows:
NOTICE
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES
UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF USE'S COUNSEL THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT."
c) VEN represents that:
(1) VEN is domiciled in the state of Kansas, and VEN has no present
intention of becoming domiciled in any other state or jurisdiction.
(2) VEN is aware that no Federal or State agency has made any
finding or determination as to the fairness for investment, nor any
recommendation or endorsement of the shares.
(3) VEN understands that the exemption under Rule 144 of the
Securities Act of 1933, as Amended, may not be generally available because of
the conditions and limitations of such rule; that, in the absence of the
availability of such rule, any disposition by VEN of any portion of VEN's
investment may require compliance with some other exemption under the Act; and
that USE is under no obligation to take any action in furtherance of making
exemptions under Rule 144 or any other exemption so available.
(4) VEN is an "accredited investor" pursuant to Regulation D of the
Securities Act of 1933, as amended.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed on the date first above written.
U.S. ENVIRONMENTAL, INC. WITNESS:
[signature] [signature]
By:______________________________ By:_____________________________________
VIRTUAL EMPOWERMENT NETWORK WITNESS:
[signature] 20 JAN 99 [signature]
BY:_______________________________ By:______________________________________
