UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number 33-55254-45
ASSOCIATED TECHNOLOGIES
(Exact name of registrant as specified in its charter)
NEVADA 87-0485306
(State or other jurisdiction of incorporation (IRS Employer Identification
or organization) Number)
1204 THIRD AVENUE, SUITE 172
NEW YORK, NY 10021
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 988-0394
-------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [ X ] Yes [ ] No
Class Outstanding as of July 1, 1996
- ----------------------------- ----------------------------------
CLASS A COMMON STOCK 1,430,000 shares
Par Value $0.001
1
<PAGE>
PART I - FINANCIAL INFORMATION
- -------------------------------------------------------------------------------
Item 1. Financial Statements
- -------------------------------------------------------------------------------
Financial Statements Page
Consolidated Balance Sheets as at December 31, 1995 and
June 30, 1996 F-1
Consolidated Statements of Operations for the quarter ending
June 30, 1996 F-2
Consolidated Statement of Shareholders' Equity for the period
from August 9, 1990 to June 30, 1996 F-3
Consolidated Statements of Cash Flows for the quarter ending
June 30, 1996 F-4
Selected Notes to Consolidated Financial Statements F-5
- -------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
- -------------------------------------------------------------------------------
Results of Operations
During the quarter ended June 30, 1996, the Company acquired all of the issued
and outstanding capital of Ogenic Technologies Pty Limited, an Australian based
operating company. Ogenic was acquired towards the end of June, following the
completion of a creditor protection administration, the Australian equivalent of
a Chapter XI reorganization, controlled by accountants Ernst & Young. The
reorganization was funded and promoted by Chancellor Group, Inc. with First
Sydney Capital Limited.
The necessity to seek creditor protection was not caused by any weakness in the
underlying operations of the business, but through personal embezzlement by
former directors of the Company. Ogenic was awarded judgement against the
directors in all 10 pleas sought. No benefit for Ogenic arising from the actions
has yet been brought to account.
As there was no operating business in the Company prior to the acquisition of
Ogenic at the end of June, the results for the quarter and six months to June 30
do not reflect the activities of the Company. Operating results for the quarter
ended June 30, 1996 are not necessarily indicative of the results that can be
expected for the year ending December 31, 1996. Results also reflect certain
on-off transactions in connection with the establishment of a Research &
Development syndication which would not be expected to recur.
Deposits received by Ogenic at the end of June point to the recommencement of
operations during the September quarter.
2
<PAGE>
Liquidity and Capital Resources
The Balance Sheet as at June 30 reflects the assets and liabilities following
the acquisition of Ogenic. Current Liabilities are $3.067 million and exceed
Current Assets of $1.548 million. The main item of Current Liabilities comprises
Loans Payable to Related Parties of $948,793 which will be converted to equity
by the exercise of options granted to First Sydney Capital and Chancellor Group,
Inc., or their nominees, at $5.00 per share.
Most of the balance of the Current Liabilities includes an amount of $1,013,247
being Deferred Income. This amount represents funding received pursuant to a
Research & Development syndication entered into on June 29, 1996 for the
development of a Virtual Interactive Radio Station. This contract sum will be
drawn by way of reimbursement for R&D expenditures incurred in strict accordance
with the scheduled timetable for the research program, and is offset by a
corresponding deposit in Current Assets.
Also included in Current Liabilities is a Secured Bank Loan for $657,307,
secured by Property. The subject property has been sold since the end of the
quarter for an amount of $711,000, resulting in a $35,000 book profit, and more
than covering book debts.
The Non Current Liability of $3.872 million described as Deferred Income is also
related to the R&D program, and refers to the sale of the core technology to the
R & D Syndicate. At the end of the commercialization period of up to seven (7)
years, the syndicate may continue with or return the developed product to the
Company at a price. If the syndicate retains the product, the Deferred Income
will be realized as a sale, while if the project is sold back to the Company,
the Deferred Liability will be offset against the security deposit which appears
in the balance sheet as the Non Current Asset, Receivables for $3.565 million.
Ongoing funding of the Company's operations will be by means of the R & D
program and a stand by credit facility of $1.2 million provided by First Sydney
Capital which has been drawn to $720,000. This amount is sufficient to cover the
Company's budgeted operations.
Impact of Inflation
The Company believes that its activities are not materially affected by
inflation.
Foreign Currency Exposure
Income from Ogenic Technology Pty Limited, the Company's operating subsidiary,
will be in the form of Cash received from customers for sales of products,
services, and technology, and the reimbursement of funds expended on Research &
Development. In the main, contracts are negotiated in Australian Dollars, with
liabilities incurred in Australian Dollars.
Exchange Rate
The Exchange Rate at June 30, 1996 was: $US1.00 = $AU1.27
3
<PAGE>
PART II - OTHER INFORMATION
- -------------------------------------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K
- -------------------------------------------------------------------------------
(a) The following exhibits are included in this filing:
Acquisition / Exchange Agreement Page E-1
Financial Data Schedule
(b) Reports on Form 8-K - Not applicable.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ASSOCIATED TECHNOLOGIES
By: s/ Neil Alan Green
Neil Alan Green, President
Dated: July 23, 1996
5
<PAGE>
ASSOCIATED TECHNOLOGIES AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS 6/30/96
(Unaudited) 12/31/95
CURRENT ASSETS
<S> <C> <C>
Cash $ 204,353 $ -0-
Accounts receivable 1,021,791 -0-
Inventories 309,678 -0-
Loan receivable 12,975 -0-
----------------- -----------------
TOTAL CURRENT ASSETS 1,548,797 -0-
PROPERTY, PLANT, AND EQUIPMENT
Buildings 504,566 -0-
Equipment 470,477 -0-
Land 395,000 -0-
Accumulated depreciation and amortization (616,928) -0-
----------------- -----------------
NET PROPERTY, PLANT, AND EQUIPMENT 753,115 -0-
OTHER ASSETS
Receivables 3,564,984 -0-
Licensed technology 3,406,078 -0-
Loans - related parties 387,472 -0-
----------------- -----------------
7,358,534 -0-
$ 9,660,446 $ -0-
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,764 $ -0-
Loans payable - related parties 948,793 -0-
Loans payable 748,157 -0-
Accrued expenses 271,840 -0-
Deposits 83,911 -0-
Deferred income 1,013,247 -0-
----------------- -----------------
TOTAL CURRENT LIABILITIES 3,067,712 -0-
LONG-TERM LIABILITIES
Deferred income 3,872,508 -0-
3,872,508 -0-
TOTAL LIABILITIES 6,940,220 -0-
SHAREHOLDERS' EQUITY Common stock par value $.001:
25,000,000 shares authorized; 1,430,000 shares issued
(1,000,000 at 12/31/95) 1,430 1,000
Additional paid-in capital 10,392,065 -0-
(Deficit) accumulated during development stage (7,673,269) (1,000)
----------------- -----------------
TOTAL SHAREHOLDERS' EQUITY 2,720,226 -0-
----------------- -----------------
$ 9,660,446 $ -0-
================= =================
</TABLE>
See Selected Notes to Consolidated Financial Statements.
F-1
<PAGE>
ASSOCIATED TECHNOLOGIES AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Period from
8/9/90 (date
Three Months Ended Six Months Ended of inception)
6/30/96 6/30/95 6/30/96 6/30/95 to 6/30/96
<S> <C> <C> <C> <C> <C>
Income $ -0- $ -0- $ -0- $ -0- $ -0-
General and administrative expenses 460,000 -0- 460,000 -0- 461,000
------------- ------------- ------------- ------------- -------------
460,000 -0- 460,000 -0- 461,000
------------- ------------- ------------- ------------- -------------
INCOME (LOSS) BEFORE
INCOME TAXES (460,000) -0- (460,000) -0- (461,000)
PROVISION FOR INCOME TAXES -0- -0- -0- -0- -0-
------------- ------------- ------------- ------------- -------------
NET INCOME (LOSS) $ (460,000) $ -0- $ (460,000) $ -0- $ (461,000)
============= ============= ============= ============= =============
INCOME (LOSS) PER COMMON SHARE
Net income (loss) per weighted
average common share
outstanding $ (.45) $ .00 $ (.45) $ .00
============= ============= ============= =============
Weighted average number of
common shares outstanding 1,029,011 1,000,000 1,022,838 1,000,000
============= ============= ============= =============
</TABLE>
See Selected Notes to Consolidated Financial Statements.
F-2
<PAGE>
ASSOCIATED TECHNOLOGIES AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Period from August 9, 1990 (Date of Inception) to June 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During
Common Stock Paid-in Development
Shares Amount Capital Stage
<S> <C> <C> <C> <C>
Balances at 8/9/90 (Date of Inception) -0- $ -0- $ -0- $ -0-
Issuance of common stock (restricted) at
$.001 per share at 8/9/90 1,000,000 1,000 -0-
Net loss for period (1,000)
------------- ------------- ----------------- -----------------
Balances at 12/31/90 1,000,000 1,000 -0- (1,000)
Net income for year -0-
------------- ------------- ----------------- -----------------
Balances at 12/31/91 1,000,000 1,000 -0- (1,000)
Net income for year -0-
------------- ------------- ----------------- -----------------
Balances at 12/31/92 1,000,000 1,000 -0- (1,000)
Net income for year -0-
------------- ------------- ----------------- -----------------
Balances at 12/31/93 1,000,000 1,000 -0- (1,000)
Net income for year -0-
------------- ------------- ----------------- -----------------
Balances at 12/31/94 1,000,000 1,000 -0- (1,000)
Net income for year -0-
------------- ------------- ----------------- -----------------
Balances at 12/31/95 1,000,000 1,000 -0- (1,000)
Issuance of common stock (restricted) at
$5.00 per share for cash at 1/10/96 20,000 20 99,980
Issuance of common stock (Regulation S) at
$42.58 per share to acquire subsidiary at
6/28/96 (Value based on assets received) 80,000 80 6,811,926 (7,212,269)
Issuance of common stock (restricted) at
$30.20 per share to retire subsidiary's
debt at 6/28/96 100,000 100 3,020,389
Issuance of common stock (restricted) at
$2.00 per share for expenses at 6/28/96 230,000 230 459,770
Net loss for period (460,000)
------------- ------------- ----------------- -----------------
Balances at 6/30/96 1,430,000 $ 1,430 $ 10,392,065 $ (7,673,269)
============= ============= ================= =================
</TABLE>
See Selected Notes to Consolidated Financial Statements.
F-3
<PAGE>
ASSOCIATED TECHNOLOGIES AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Period from
8/9/90 (date
Three Months Ended Six Months Ended of inception)
6/30/96 6/30/95 6/30/96 6/30/95 to 6/30/96
CASH FLOWS FROM OPERATING
ACTIVITIES
<S> <C> <C> <C> <C> <C>
Net loss $ (460,000) $ -0- $ (230) $ -0- $ (1,230)
Adjustments to reconcile net (loss)
to net cash required by operating
activities:
Stock issued for expenses 460,000 -0- 230 -0- 230
------------- ------------- ------------- ------------- -------------
460,000 -0- 230 -0- 230
------------- ------------- ------------- ------------- -------------
NET CASH REQUIRED BY
OPERATING ACTIVITIES -0- -0- -0- -0- (1,000)
CASH FLOWS FROM INVESTING
ACTIVITIES
Cash acquired from subsidiaries 104,353 -0- 104,353 -0- 104,353
------------- ------------- ------------- ------------- -------------
NET CASH PROVIDED BY
INVESTING ACTIVITIES 104,353 -0- 104,353 -0- 104,353
CASH FLOWS FROM FINANCING
ACTIVITIES
Stock sold -0- -0- 100,000 -0- 101,000
------------- ------------- ------------- ------------- -------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES -0- -0- 100,000 -0- 101,000
------------- ------------- ------------- ------------- -------------
NET INCREASE IN CASH 104,353 -0- 204,353 -0- 204,353
CASH AT BEGINNING OF PERIOD 100,000 -0- -0- -0- -0-
------------- ------------- ------------- ------------- -------------
CASH AT END OF PERIOD $ 204,353 $ -0- $ 204,353 $ -0- $ 204,353
============= ============= ============= ============= =============
</TABLE>
SUPPLEMENTAL FINANCING ACTIVITIES
During the period ended June 30, 1996, the Company issued 80,000 shares of
Regulation S common stock to acquire a subsidiary with net assets of
$2,620,226 at market value. The Company also issued 100,000 shares of its
restricted common stock to retire a debt owed by its subsidiary in the
amount of $3,020,489.
See Selected Notes to Consolidated Financial Statements.
F-4
<PAGE>
ASSOCIATED TECHNOLOGIES AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements as of June 30, 1996 include the accounts
of the Company and its wholly-owned subsidiary Ogenic Technologies Pty Ltd
("Ogenic") and Ogenic's 95% owned inactive subsidiary Ogenic Industries Pty Ltd.
All significant intercompany balances and transactions have been eliminated in
consolidation.
Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Cash and Cash Equivalents
All short term investments purchased with an original maturity of three months
or less are considered to be cash equivalents. Cash and cash equivalents
primarily include cash on hand and amounts on deposit with financial
institutions.
Dividend Policy
The Company has not yet adopted any policy regarding payment of dividends.
Income Taxes
The Company records the income tax effect of transactions in the same year that
the transactions enter into the determination of income, regardless of when the
transactions are recognized for tax purposes. Tax credits are recorded in the
year realized. Since the Company has not yet realized income as of the date of
this report, no provision for income taxes has been made.
In February 1992, the Financial Accounting Standards Board adopted Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes, which
supersedes substantially all existing authoritative literature for accounting
for income taxes and requires deferred tax balances to be adjusted to reflect
the tax rates in effect when those amounts are expected to become payable or
refundable. At June 30, 1996 a deferred tax asset has not been recorded due to
the Company's lack of operations to provide income to use the net operating loss
carryover of $1,000 which will expire December 31, 2006.
Trading Securities
The Company has adopted the reporting requirements of Statement of Financial
Accounting Standards No. 115 whereby trading securities are reported at market
value.
Foreign Currency Translation
Assets and liabilities denominated in foreign currencies are translated to US
dollars at the exchange rate at the balance sheet date. Income statement items
are translated at an average currency exchange rate. The resulting translation
adjustment is recorded as a separate component of stockholders' equity.
NOTE 2: DEVELOPMENT STAGE COMPANY
The Company was incorporated under laws of the State of Nevada on August 9, 1990
and has been in the developmental stage since incorporation. The Company intends
to operate in the industries of manufacturing electronic broadcasting equipment
and precision sheet metal products through its subsidiary Ogenic Technologies
Pty Ltd, an Australian company.
F-5
<PAGE>
ASSOCIATED TECHNOLOGIES AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
June 30, 1996
NOTE 3: CAPITALIZATION
On the date of incorporation, the Company sold 1,000,000 shares of its common
stock to Capital General Corporation for $1,000 cash for average consideration
of $.001 per share. On January 10, 1996, the Company sold 20,000 shares of its
common stock for $100,000 cash for an average consideration of $5.00 per share.
The Company's authorized stock includes 25,000,000 shares of common stock at
$.001 par value.
NOTE 4: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principals for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the Company's management, all
adjustments (consisting of normal accruals) considered necessary for a fair
presentation of these financial statements have been included. Operating results
for the six months ended June 30, 1996 are not necessarily indicative of the
results that can be expected for the year ending December 31, 1996.
NOTE 5: RELATED PARTY TRANSACTIONS
The Company has property in Perth, Australia and also utilizes space on a
rent-free basis in the Sydney and New York offices of its principal shareholder,
Chancellor Australia Pty Ltd. This arrangement is expected to continue. The
Company has no agreements with respect to the maintenance or future acquisition
of office facilities.
NOTE 6: LICENSED TECHNOLOGY
The Company has recorded an asset in the amount of $3,406,078 in connection with
the acquisition of Ogenic Technologies Pty Ltd. Management believes the value
represents a fair value for the technology and is less than the future amount of
revenue which is expected to be received from the sales of the technology and
products developed by the technology. Management believes the technology will
benefit future periods and is properly capitalized.
NOTE 7: ACQUISITION OF SUBSIDIARY
On June 28, 1996 the Company issued 80,000 shares of its Regulation S common
stock to acquire 100% of the outstanding stock of Ogenic Technologies Pty Ltd.,
in a transaction accounted for under the purchase method of accounting.
F-6
<PAGE>
ASSOCIATED TECHNOLOGIES AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
June 30, 1996
NOTE 8: RESEARCH AND DEVELOPMENT
On June 29, 1996, a Research and Development syndicate was entered into by
Ogenic with a joint venture whose participants are Elderberry Holdings Pty
Limited (90%) and CGI Syndicated Investment Pty Limited (10%).
The Joint Venture purchased a Head License of the core technology for the
Virtual Interactive Radio Station for an amount of $3,150,840 and entered into a
research agreement for a contract sum of $1,734,840 over two (2) years.
Pending the satisfaction of certain conditions subsequent, the contract sum is
to be paid in advance in strict accordance with the scheduled timetable for the
research program unless otherwise agreed by the parties.
The Company is required to provide security to Elderberry Holdings Pty Ltd by
way of a deposit account with First Sydney Securities or alternative acceptable
security.
The Company has also entered into a put option agreement which gives the
shareholders of Elderberry Holdings Pty Ltd the right to put their shares back
to the Company at a price of $5,890,500 at the end of seven (7) years.
A marketing agreement has been entered into between the Company and the joint
venture giving the Company an exclusive first right to negotiate a license for
the commercial exploitation of new technology upon its successful development
subject only to the negotiation of a royalty rate.
At the end of the commercialization period (7 years), the joint venture will
decide whether to extend its participation and Elderberry Holdings Pty Ltd will
determine whether to exercise its put option. Subsequent to the put option being
exercised, the Company will subscribe for ordinary shares in Elderberry Holdings
Pty Ltd and the proceeds from the subscription will be applied to the repayment
of Elderberry's outstanding syndicate loan.
The agreement provides for certain events to trigger an exercise of the Put
Option at dates other than the end of the commercialization period or at a price
other than specified in the Put Option. These include the payment of royalties
under the Marketing Agreement, events of default and the cancellation of the R &
D program.
F-7
<PAGE>
ASSOCIATED TECHNOLOGIES AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
Year Six Months
ended ended
6/30/95* 6/30/96
<S> <C> <C>
Operating Revenue $ 2,701,108 $ 625,439
Cost of Sales 4,046,936 720,124
----------------- -----------------
GROSS PROFIT (LOSS) (1,345,828) (94,685)
General and Administrative expenses 341,429 685,613
----------------- -----------------
Loss before other items (1,687,257) (780,298)
Other Items:
Bad debt - subsidiary and write off investment (519,970) (23,700)
Loss on disposal of fixed assets (178,043) -0-
Decline in value of land and buildings (252,826) -0-
Research and design costs (1,188,994) (238,202)
Bankruptcy expenses -0- (112,222)
Debt forgiveness -0- 589,252
----------------- -----------------
(2,139,833) (215,128)
----------------- -----------------
INCOME (LOSS) BEFORE INCOME TAXES (3,827,090) (995,426)
PROVISION FOR INCOME TAXES -0- -0-
----------------- -----------------
NET INCOME (LOSS) $ (3,827,090) $ (995,426)
================= =================
INCOME (LOSS) PER COMMON SHARE
Net income (loss) per weighted average common share
outstanding - ordinary $ (1.56) $ (.71)
Net loss per weighted average common share
outstanding - other (1.98) (.19)
----------------- -----------------
Net income (loss) per weighted average common share
outstanding $ (3.54) $ (.90)
================= =================
Weighted average number of common shares outstanding 1,080,000 1,102,838
================= =================
</TABLE>
* It is not practicable at this time to present a 12 month statement of
operations as of 12/31/95 because Ogenic has a June fiscal year end. This
period reflects the operations of Ogenic, as the Company had no operations
during that period.
F-8
<PAGE>
ACQUISITION / EXCHANGE AGREEMENT
THIS ACQUISITION / EXCHANGE AGREEMENT (this "Agreement"), is entered into this
28th day of June,1996.
BETWEEN:
ASSOCIATED TECHNOLOGIES, a Nevada corporation of 1204 Third Avenue, Suite 172,
New York NY 10021 USA ("Associated");
AND:
BELEGGINGSMAATSCHAPPIJ GROEIGARANT A.V.V., (the shareholder of OGENIC
TECHNOLOGIES PTY LIMITED) a corporation incorporated in Aruba, of Dominicanessen
straat 22, Oranjestad, Aruba ("Exchangor")
Premises
A. Associated is a corporation existing under the laws of the state of Nevada,
having been incorporated on August 9, 1990.
B. Ogenic Technologies Pty Limited is a corporation existing under the laws of
Australia having been incorporated on October 7, 1975 ("OTP").
C. BELEGGINGSMAATSCHAPPIJ GROEIGARANTA.V.V., the shareholder of OTP owns the
entire issued and paid up capital of OTP.
D. The parties have negotiated a transaction whereby all of the shares of OTP
owned by Exchangor will be exchanged for similar shares of common stock of
Associated based on the terms and conditions of this Agreement.
E. The parties have reached agreement as to the business terms of the
transaction and desire to set forth in this Agreement the details thereof.
Agreement
NOW, THEREFORE, on the stated premises, which are incorporated herein by
reference, and for and in consideration of the mutual covenants and agreements
hereinafter set forth, the mutual benefits to the parties to be derived
herefrom, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, it is hereby agreed as follows:
ARTICLE 1
Acquisition/Exchange
Section 1.01 The Acquisition/Exchange.
At Closing, as herein defined, and subject to all the terms, covenants, and
conditions set forth in this Agreement, Associated hereby agrees to issue and
deliver to Exchangor a certificate or certificates representing 80,000 shares of
Associated Exchanged Stock, and Exchangor agrees to assign, transfer, and
deliver to Associated, free and clear of any and all liens, pledges,
encumbrances, charges, restrictions, or claims of any kind, nature, or
description, certificates representing shares of the issued and outstanding
capital stock of OTP held by Exchangor, constituting 100% of the issued and
outstanding voting capital stock of OTP prior to the Closing, so that 8,383,727
shares of OTP shall be exchanged for 80,000 shares of Associated Exchanged
Stock, as herein defined.
E-1
<PAGE>
Section 1.02 Adjustments to Exchange Ratio.
For all relevant purposes of the Acquisition/Exchange of OTP Stock, the number
of shares of Associated Exchanged Stock to be issued and delivered pursuant to
this Agreement shall be approximately adjusted to take into account any issue of
Associated Exchanged Stock which may occur between the date of the execution of
this Agreement and the date of delivery of such shares.
Section 1.03 Closing.
The closing ("Closing") of the transactions contemplated by this Agreement shall
be on a date and at such time and place as the parties may agree ("Closing
Date"), within the thirty (30) day period commencing with the last to occur of
the following;
(a) The final date prescribed by any state or federal regulatory agency
pursuant to any state or federal law, rule, or regulation prior to
which the transactions may not be effectuated; and
(b) The satisfaction of all other conditions precedent to Closing.
Section 1.04 Closing Events
(a) Associated Deliveries. Subject to fulfilment or waiver of the
conditions set forth in Article VI, Associated shall deliver to
Exchangor at Closing all the following:
(i) Certificate of good standing from the appropriate authorities,
issued as of a date within sixty days prior to the Closing Date,
certifying that Associated is in good standing as a corporation
in the state of Nevada;
(ii) Incumbency and specimen signature certificates dated the Closing
Date with respect to the officers of Associated executing this
Agreement and any other document delivered pursuant hereto on
behalf of Associated;
(iii)Copies of the resolutions of Associated's board of directors
authorising the execution and performance of this Agreement and
the contemplated transactions, certified by the respective
secretary or an assistant secretary of Associated as of the
Closing Date;
(iv) The certificate contemplated by Section 5.01, duly executed by a
duly authorised officer of Associated;
(v) The certificate contemplated by Section 5.02, dated the Closing
Date, signed by the chief executive officer and principal
accounting and financial officer of Associated; and in addition
to the above deliveries, Associated shall take all steps and
actions as Exchangor may reasonably request or as may otherwise
be necessary to consummate the transactions contemplated hereby.
(b) Exchangor's Deliveries. Subject to fulfilment or waiver of the
conditions set forth in Article V, Exchangor shall deliver to
Associated at Closing the certificate contemplated by Section 6-02,
executed by a duly authorised officer of OTP.
In addition to the above deliveries, Exchangor shall take all steps and actions
as Associated may reasonably request or as may otherwise be necessary to
consummate the transactions contemplated hereby.
Section 1.05 Termination
(a) his Agreement may be terminated by the board of directors of either
Associated or Exchangor at any time prior to the Effective Date if:
E-2
<PAGE>
(i) There shall be any actual or threatened action or proceeding
before any court or any governmental body which shall seek to
restrain, prohibit, or invalidate the transactions contemplated
by this Agreement and which, in the judgement of such board of
directors, made in good faith and based upon the advice of its
legal counsel, makes it inadvisable to proceed with the merger
and consolidation contemplated by this Agreement;
(ii) Any of the transactions contemplated hereby are disapproved by
any regulatory authority whose approval is required to consummate
such transactions or in the judgement of such board of directors,
made in good faith and based on the advise of counsel, there is
substantial likelihood that any such approval will not be
obtained or will be obtained only on a condition or conditions
which would be unduly burdensome, making it inadvisable to
proceed with the merger and exchange;
In the event of termination pursuant to this paragraph (a) of Section 1.05, no
obligation, right, or liability shall arise hereunder, and each party shall bear
all of the expenses incurred by it in connection with the negotiation,
preparation, and execution of this Agreement and the transactions contemplated
hereby.
(b) This Agreement may be terminated at any time prior to the Closing Date
by action of the board of directors of Exchangor, if Associated shall
fail to comply in any material respect with any of its covenants or
agreements contained in this Agreement or if any of the
representations or warranties of Associated contained herein shall be
inaccurate in any material respect. In the event of termination
pursuant to this paragraph (b) of this Section 1.05, no obligation,
right, remedy, or liability shall arise hereunder. Associated and
Exchangor shall each bear their own costs incurred in connection with
the negotiation, preparation, and execution of this Agreement and the
transactions contemplated hereby.
(c) This Agreement may be terminated at any time prior to the Closing Date
by action of the board of directors of Associated if Exchangor shall
fail to comply in any material respect with any of its covenants or
agreements contained in this Agreement of if any of the
representations or warranties of Exchangor contained herein shall be
inaccurate in any material respect. In the event of termination
pursuant to this paragraph (c) of this Section 1.05, no obligation,
right, remedy, or liability shall arise hereunder. Associated and
Exchangor shall each bear their own costs incurred in connection with
the negotiation, preparation, and execution of this Agreement and the
transactions contemplated hereby.
ARTICLE II
Representations, Covenants, and
Warranties of Associated
As an inducement to, and to obtain the reliance of, Exchangor, Associated
represents and warrants as follows:
Section 2.01 Organisation
(a) Associated is, and will be on the Closing Date, a corporation duly
organised, validly existing, and in good standing under the laws of
the state of Nevada and has the corporate power and is and will be
duly authorised, qualified, franchised, and licensed under all
applicable laws, regulations, ordinances, and order of public
authorities to own all of its properties and assets and to carry on
its business in all material respects as it is now being conducted,
and there are no other jurisdictions in which it is not so qualified
in which the character and location of the assets owned by it or the
nature of the material business transacted by it requires
qualification, except where failure to do so would not have a material
adverse effect on its
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business, operations, properties, assets, or condition. The execution
and delivery of this Agreement does not, and the consummation of the
transaction contemplated by this Agreement in accordance with the
terms hereof will not, violate any provision of Associated's articles
of incorporation or bylaws, or other agreement to which it is a party
or by which it is bound.
Section 2.02 Approval of Agreements
Associated has full power, authority, and legal right and has taken, or will
take, all action required by law, its articles of incorporation, bylaws, and
otherwise to execute and deliver this Agreement and to consummate the
transactions herein contemplated. The board of directors of Associated has
authorised and approved the execution, delivery, and performance of this
Agreement and the transactions contemplated hereby. Included in Schedule 2.02 is
a certified copy of a resolution duly adopted by the board of directors of
Associated evidencing such approval. No approval of this transaction by the
shareholders of Associated is required. This Agreement has been duly authorised,
executed, and delivered by Associated and is the legal, valid and binding
obligation of Associated, enforceable in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency, or other laws
affecting enforcement or creditors' rights generally and by general principles
of equity.
Section 2.03 Capitalisation
The authorised capitalisation of Associated consists of 25,000,000 shares of
Common stock, par value $0.001 per share, 1,020,000 shares of which are issued
and outstanding, (collectively referred to as "Associated Stock"). All issued
and outstanding shares of Associated are legally issued, fully paid, and
non-assessable and not issued in violation of the pre-emptive or other right of
any person. There are no dividends or other amounts due or payable with respect
to any of the shares of capital stock of Associated.
Section 2.04 Subsidiaries and Predecessors
Associated does not own, beneficially or of record, any equity securities in any
other entity. Associated has no "predecessor," as that term is defined under
generally accepted accounting principles or Regulation S-X promulgated by the
Securities and Exchange commission (the "SEC").
Section 2.05 Financial Statements
(a) Included in the information referred to in Section 2.06 are the
audited balance sheets of Associated as of December 31, 1995, and
1994, and the statements of operations, stockholders' equity and cash
flows for the years ended December 31, 1995, 1994, and 1993, including
the notes thereto and the accompanying report of Smith and Company,
Certified Public Accountants.
(b) All such audited and unaudited financial statements have been prepared
in accordance with generally accepted accounting principles
consistently applied throughout the periods involved as explained in
the notes to such financial statements. The Associated balance sheets
present fairly, in all material respects, as of their respective
dates, the financial position of Associated. Associated did not have,
as of the date of any such balance sheets, except as and to the extent
reflected or reserved against therein, any liabilities or obligations
(absolute or contingent) which should be reflected in a balance sheet
or the notes thereto prepared in accordance with generally accepted
accounting principles under which they were prepared, and all assets
reflected therein present fairly the assets of Associated in
accordance with generally accepted accounting principals under which
they were prepared.
(c) All such financial statements have been presented in accordance with
the requirements of Regulation S-X promulgated by the SEC regarding
the form of content of and requirements for financial statements to be
filed with the SEC.
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(d) The books and records, financial and otherwise, of Associated are in
all material respects complete and correct and have been maintained in
accordance with sound business and bookkeeping practices so as to
accurately and fairly reflect, in reasonable detail, the transactions
and dispositions of the assets of Associated. Associated has
maintained a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions have been and are
executed in accordance with management's general or specific
authorisation; (ii) transactions are recorded as necessary to permit
the preparation of financial statements in conformity with generally
accepted accounting principles or any other criteria applicable to
such statements and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's
general or specific authorisation; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals, and appropriate action is taken with respect to
any differences.
(e) Associated has filed or will have filed as of the Closing Date all tax
returns required to be filed by them from inception to the Closing
Date. All such returns and reports are accurate and correct in all
material respects. Associated does not have any liabilities with
respect to the payment of any federal, state, county, local, or other
taxes (including any deficiencies, interest, or penalties) accrued for
or applicable to the period ended on the date of the most recent
audited balance sheet of Associated, except to the extent reflected on
such balance sheet and adequately provided for, and all such dates and
years and periods prior thereto and for which Associated may at said
date have been liable in its own right or as transferee of the assets
of, or as successor to, any other corporation or entity, except for
taxes accrued but not yet due and payable, and no deficiency
assessment or proposed adjustment of any such tax return is pending,
proposed or contemplated. Proper and accurate amounts of taxes have
been withheld by or on behalf of Associated with respect to all
compensation paid to employees of Associated for all periods ending on
or before the date hereof, and all deposits required with respect to
compensation paid to such employees have been made, in complete
compliance with the provisions of all applicable federal, state, and
local tax and other laws. None of such income tax returns has been
examined or is currently being examined by the Internal Revenue
Service, and no deficiency assessment or proposed adjustment of any
such return is pending, proposed or contemplated. Associated has not
made any election pursuant to the provisions of any applicable tax
laws (other than elections that relate solely to methods of
accounting, depreciation, or amortisation) that would have a material
adverse affect on Associated, its financial condition, its business as
presently conducted or proposed to be conducted, or any of its
respective properties or material assets. There are no tax liens upon
any of the assets of Associated. There are no outstanding agreements
or waivers extending the statutory period of limitation applicable to
any tax return of Associated.
Section 2.06 Information
The information concerning Associated set forth in this Agreement; in the
Schedules delivered by Associated pursuant hereto were, as of their respective
dates, complete and accurate in all material respects and did not contain any
untrue statement of a material fact or omit to state a material fact required to
make the statements made, in light of the circumstances under which they were
made, not misleading. Associated shall cause the schedules delivered by it
pursuant hereto and the instruments and data delivered to Exchangor hereunder to
be updated after the date hereof up to and including the Closing Date.
Section 2.07 Absence of Certain Changes or Events
------------------------------------
Except as set forth in this Agreement, since the date of the most recent
Associated balance sheet described in Section 2.05 and included in the
information referred to in Section 2.06:
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(a) There has not been (i) any material adverse change in the business,
operations, properties, level of inventory, assets, or condition of
Associated or (ii) any damage, destruction, or loss to Associated
(whether or not covered by insurance) materially and adversely
affecting the business, operations, properties, assets, or conditions
of Associated;
(b) Associated has not (i) amended its articles or incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets or any kind
whatsoever to stockholders or purchased or redeemed, or agreed to
purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material
considering the business of Associated; (iv) made any material change
in the method of management, operation, or accounting; (v) entered
into any other material transactions; (vi) made any accrual or
arrangement for or payment of bonuses or special compensation of any
kind or any severance or termination pay to any present or former
officer or employee; (vii) increased the rate of compensation payable
or to become payable by it to any of their officers or directors or
any of its employees whose monthly compensation exceeds $1000; or
(viii) made any increase in any profit-sharing, bonus, deferred
compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement made to, for, or with their
officers, directors, or employees;
(c) Associated has not (i) granted or agreed to grant any options,
warrants, or other rights for their stocks, bonds, or other corporate
securities calling for the issuance thereof other than those currently
outstanding, if any; (ii) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability
absolute or contingent) except liabilities incurred in the ordinary
course of business; (iii) paid any material obligation or liability
(absolute or contingent) other than current liabilities reflected in
or shown on the most recent Associated balance sheet and current
liabilities incurred since that date in the ordinary course of
business; (iv) sold or transferred, or agreed to sell or transfer, any
of its assets, properties, or rights (except assets, properties, or
rights not used or useful in its business which, in the aggregate have
a value of less than $5000 or cancelled, or agreed to cancel, any
debts or claims (except debts and claims which in the aggregate are of
a value of less than $5000); (v) made or permitted any amendment or
termination of any contract, agreement, or license to which it is a
party if such amendment or termination is material, considering the
business of Associated; or (vi) issued, delivered, or agreed to issue
or deliver any stock, bonds, or other corporate securities including
debentures (whether authorised and unissued or held as treasury
stock); and
(d) To the best knowledge of Associated, it has not become subject to any
law or regulation which materially and adversely affects, or in the
future may adversely affect, the business, operations, properties,
assets, or condition of Associated.
Section 2.08 Title and Related Matters
Except as disclosed in the most recent audited Associated balance sheet and the
notes thereto, Associated has good and marketable title to all of its
properties, inventory, interests in properties, and assets, which are reflected
in the most recent Associated balance sheet or acquired after that date (except
those sold or otherwise disposed of since such date in the ordinary course of
business), free and clear of all mortgages, security interests, royalties,
liens, pledges, charges, or encumbrances, except (i) statutory liens or claims
not yet delinquent; and (ii) such imperfections of title and easements as do
not, and will not, materially detract from, or interfere with, the present or
proposed use of the properties subject thereto or affected thereby or otherwise
materially impair present business operations on such properties.
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ARTICLE III
Representations, Covenants, and
Warranties of Exchangor on June 28, 1996
As an inducement to, and to obtain the reliance of, Associated, Exchangor
represents and warrants as follows:
Section 3.01 Organisation
OTP is and will be on the Closing Date a corporation duly organised, validly
existing, and in good standing under the laws of Australia and has the corporate
power and is and will be duly authorised, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, and there are no other
jurisdictions in which it is not so qualified in which the character and
location of the assets owned by it or the material business transacted by it
requires qualification, except where failure to do so would not have a material
adverse effect on the business, operations, properties, assets, or condition of
OTP. The execution and delivery of this Agreement does not, and the consummation
of the transactions contemplated by this Agreement in accordance with the terms
hereof will not, violate any provision of OTP's articles of incorporation or
bylaws or other agreement to which it is a party or by which it is bound.
Section 3.02 Capitalisation
The authorised capitalisation of OTP consists of 90,000,000 shares of common
stock, par value $.50 ("OTP Stock"), of which 8,383,727 shares are issued and
outstanding and 10,000,000 non cumulative, non voting, convertible, redeemable,
preference shares of which none have been issued. All issued and outstanding
shares of OTP are legally issued, fully paid, and nonassessable and not issued
in violation of the pre-emptive or other right of any person. There are no
dividends or other amounts due or payable with respect to any of the shares of
capital stock of OTP.
Section 3.03 Subsidiaries or Predecessors
There are no subsidiaries or predecessors as those terms are defined under
generally accepted accounting principles or regulation S-X promulgated by the
SEC, other than Ogenic Industries.
Section 3.04 Financial Statements
(a) Included in Schedule 3.05 are the audited balance sheets of OTP as of
31 December, 1995, and the related statements of operations,
stockholders' equity, and cash flows for the year then ended including
the notes thereto and the accompanying report of Stanton and Partners,
Chartered Accountants.
(b) All such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved. The balance sheets of OTP present
fairly, as of their respective dates, the financial position of OTP.
OTP did not have, as of the date of any such balance sheets, except as
and to the extent reflected or reserved against therein, any
liabilities or obligations (absolute or contingent) which should be
reflected in a balance sheet or the notes thereto prepared in
accordance with generally accepted accounting principles, and all
assets reflected therein present fairly the assets of OTP, in
accordance with generally accepted accounting principles. The
statements of operations, stockholders' equity, and cash flows present
fairly the financial position and results of operations of OTP as of
their respective dates and for the respective periods covered thereby.
OTP maintains and will continue to maintain a standard system of
accounting established and maintained in a manner permitting the
preparation of financial statements in accordance with generally
accepted accounting principles.
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(c) All such financial statements have been presented in accordance with
the requirements of Regulation S-X promulgated by the SEC regarding
the form and content of and requirements for financial statements to
be filed with the SEC.
(d) The books and records, financial and otherwise, of OTP are in all
material respects complete and correct and have been maintained in
accordance with sound business and bookkeeping practices so as to
accurately and fairly reflect, in reasonable detail, the transactions
and dispositions of the assets of OTP. OTP has maintained a system of
internal accounting controls sufficient to provide reasonable
assurances that (i) transactions have been and are executed in
accordance with management's general or specific authorisation; (ii)
transactions are recorded as necessary to permit the preparation of
financial statements in conformity with generally accepted accounting
principles or any other criteria applicable to such statements and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorisation; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals, and
appropriate action is taken with respect to any differences.
(e) OTP has filed or will have filed as of the Closing Date all tax
returns required to be filed by it from inception to the Closing Date.
All such returns and reports are accurate and correct in all material
respects. OTP has no liabilities with respect to the payment of any
federal, sate, county, local, or other taxes (including any
deficiencies, interest or penalties) accrued for or applicable to the
period ended on the date of the most recent unaudited balance sheet of
OTP except to the extent reflected on such balance sheet and
adequately provided for, and all such dates and years and periods
prior thereto and for which OTP may at said date have been liable in
its own right or as transferee of the assets of, or as successor to,
any other corporation or entity, except for taxes accrued but not yet
due and payable, and no deficiency assessment or proposed adjustment
of any such tax return is pending, proposed or contemplated. Proper
and accurate amounts of taxes have been withheld by or on behalf of
OTP with respect to all compensation paid to employees of OTP for all
periods ending on or before the date hereof, and all deposits required
with respect to compensation paid to such employees have been made, in
complete compliance with the provisions of all applicable federal,
state, and local tax and other laws. None of such income tax returns
has been examined or is currently being examined by the Australian Tax
Department, and no deficiency assessment or proposed adjustment of any
such return is pending, proposed, or contemplated. OTP has not made
any election pursuant to the provisions of any applicable tax laws
(other than elections that relate solely to methods of accounting,
depreciation, or amortisation) that would have a material adverse
affect on OTP, its financial condition, its business as presently
conducted or proposed to be conducted, or any of its properties or
material assets. There are no tax liens upon any of the assets of OTP.
There are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any tax return of OTP.
Section 3.05 Information
The information concerning OTP set forth in this Agreement and in the schedules
delivered by OTP pursuant hereto is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading. OTP shall cause the
schedules delivered by OTP pursuant hereto and the instruments and data
delivered to Associated hereunder to be updated after the date hereof up to and
including the Closing Date.
Section 3.06 Options or Warrants
There are no existing options, warrants, calls, or commitments of any character
relating to the authorised and unissued OTP common stock.
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Section 3.07 Absence of Certain Changes or Events
------------------------------------
Except as set forth in this Agreement since the date of the most recent 31
December, 1995 balance sheet described in Section 3.04 and included in Schedule
3.05:
(a) There has not been (i) any material adverse change in the business,
operations, properties, level of inventory, assets, or condition of
OTP or (ii) and damage, destruction, or loss to OTP (whether or not
covered by insurance) materially and adversely affecting the business,
operations, properties, assets, or conditions of OTP;
(b) OTP has not (i) amended its articles of incorporation or bylaws; (ii)
declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed, or agreed to purchase or
redeem, any of its capital stock; (ii) waived any rights of value
which in the aggregate are extraordinary or material considering the
business of OTP; (iv) made any material change in its method of
management, operation, or accounting which is material to OTP; (v)
entered into any other material transactions; (vi) made any accrual or
arrangement for or payment of bonuses or special compensation of any
kind or any severance or termination pay to any present or former
officer or employee; (vii) increased the rate of compensation payable
or to become payable by it to any of its officers or directors or any
of its employees whose monthly compensation exceed $1,000; or (viii)
made any increase in any profit sharing, bonus, deferred compensation,
insurance, pension, retirement, or other employee benefit plan,
payment, or arrangement made to, for, or with its officers, directors,
or employees;
(c) OTP has not (i) granted or agreed to grant any options, warrants, or
other rights for its stocks, bonds, or other corporate securities
calling for the issuance thereof; (ii) borrowed or agreed to borrow
any funds or incurred, or become subject to, any material obligation
or liability (absolute or contingent) except liabilities incurred in
the ordinary course of business; (iii) paid any material obligation or
liability (absolute or contingent) other than current liabilities
reflected in or shown on the most recent OTP balance sheet and current
liabilities incurred since that date in the ordinary course of
business; (iv) sold or transferred, or agreed to sell or transfer, any
of its assets, properties, or rights (except assets, properties, or
rights not used or useful in its business which , in the aggregate
have a value of less than $5,000) or cancelled, or agreed to cancel,
any debts or claims (except debts and claims which in the aggregate
are of a value of less than $5,000); (v) made or permitted any
amendment or termination of any contract, agreement, or license to
which it is a party if such amendment or termination is material,
considering the business of OTP; or (vi) issued, delivered, or agreed
to issue or deliver any stock, bonds, or other corporate securities
including debentures (whether authorised and unissued or held as
treasury stock); and
(d) To the best knowledge of Exchangor, OTP has not become subject to any
law or regulation which materially and adversely affects, or in the
future may adversely affect, the business, operations, properties,
assets, or condition of OTP.
Section 3.08 Litigation and Proceedings
There are no actions, suits, or proceedings pending or, to the knowledge of
Exchangor threatened by or against OTP or affecting domestic or foreign, or
before any arbitrator of any kind. OTP does not have any knowledge of any
default on its part with respect to any judgment, order, writ, injunction,
decree, award, rule, or regulation of any court, arbitrator, or governmental
agency or instrumentality.
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ARTICLE IV
SPECIAL COVENANTS TO BE SATISFIED PRIOR TO CLOSING
Section 4.01 Activities of Associated, and OTP
---------------------------------
(a) From and after the date of this Agreement until the Closing Date and
except as set forth in the respective schedules to be delivered by
Associated and OTP pursuant hereto or as permitted or contemplated by
this Agreement, Associated and OTP will each:
(i) Carry on its business in substantially the same manner as it has
heretofore;
(ii) Maintain in full force and effect insurance comparable in amount
and in scope of coverage to that now maintained by it;
(iii)Perform in all material respects all of its obligations under
material contracts, leases, and instruments relating to or
affecting its assets, properties, and business;
(iv) Use its best efforts to maintain and preserve its business
organisation intact, to retain its key employees, and to maintain
its relationships with its material suppliers and customers;
(v) Duly and timely file for all taxable periods ending on or prior
to the Closing Date all federal, state, county, and local tax
returns required to be filed by or on behalf of such entity or
any of its subsidiaries or for which such entity or any of its
subsidiaries may be held responsible and shall pay, or cause to
pay, all taxes required to be shown as due and payable on such
returns, as well as all instalments of tax due and payable during
the period commencing on the date of this Agreement and ending on
the Closing Date. All such tax returns shall be prepared in a
manner consistent with the preparation of prior years' tax
returns except as required by law or as agreed to by the parties
hereto prior to the filing thereof;
(vi) Withhold from each payment made on or prior to the Closing Date
to each employee of such corporation the amount of all taxes
required to be withheld therefrom and will pay the same, before
becoming delinquent, to the proper tax receiving officers; and
(vii)Fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal, state,
county and local laws and all rules, regulations, and orders
imposed by federal, state, county and local governmental
authorities.
(b) From and after the date of this Agreement and except as provided
herein until the Closing Date, Associated and OTP will not:
(i) Make any change in its articles of incorporation or bylaws;
(ii) Take any action described in Section 2.07 in the case of
Associated, or Section 3.07 in the case of OTP;
(iii)Enter into or amend any contract, agreement, or other instrument
of any of the types described in such party's schedules, except
that a party may enter into or amend any contract, agreement, or
other instrument in the ordinary course of business; and
(iv) Enter into any agreement, waiver, or other arrangement providing
for an extension of time with respect to payment by, or
assessment against, such entity or any of its subsidiaries of any
tax due and payable with respect to the period commencing on the
date of this Agreement and ending on the Closing Date.
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Section 4.02 Stockholder Approval
If required by the jurisdiction of incorporation of OTP subsequent to the
execution and delivery of this Agreement, OTP shall, at a meeting of its
stockholders duly called by the board of directors of OTP to be held as soon as
practicable, present for the authorisation and approval of the stockholders of
OTP, in accordance with the applicable provisions of the laws of the United
States of America of OTP and all applicable federal and state securities laws,
this Agreement.
Section 4.03 Access to Properties and Records
--------------------------------
OTP will afford to the officers and authorised representatives of Associated
full access to the properties, books, and records of OTP in order that
Associated may have full opportunity to make such reasonable investigation as it
shall desire to make of the affairs of OTP and will furnish Associated with such
additional financial and operating data and other information as to the business
and properties of OTP as Associated shall from time to time reasonably request.
Section 4.04 Additional Financial Statements
In connection with the information to be provided pursuant to this Article IV,
OTP shall provide additional audited and unaudited financial statements as soon
as reasonably practicable for inclusion by Associated in any application or
disclosure document required to be prepared in connection with this Agreement
and the transactions contemplated hereby or in connection with a future
registration statement.
(a) All such financial information referred to herein shall be
prepared in accordance with the uniform accounting rules with
respect to the form and content for financial statements filed
under the Securities Act or the Exchange Act of 1934, as amended
(the "Exchange Act"), as contained in Regulation S-X promulgated
by the SEC. All financial statements furnished for an interim
period shall be accompanied by a statement that all adjustments
necessary to make it a fair statement of the results of
operations for such interim period or periods have been included.
(b) To the extent required, Associated and OTP shall utilise their
best efforts and cooperate to provide the information necessary
to present the pro forma consolidated and consolidating financial
statements and pro forma consolidated and consolidating summary
information, including a pro forma consolidated and consolidating
balance sheet, pro forma consolidated and consolidating income
statements, pro forma summaries of earnings (with aggregate an
per-share earnings), and pro forma (combined basis) earnings date
for all periods required to be presented and in the form and
manner required for use in the form 8-k and proxy statement or
any other document required to be field with the SEC or state
securities agency, including the presentation of Associated
financial statements under generally accepted accounting
principles.
(c) OTP represents and warrants to Associated that the financial
statements delivered or to be delivered pursuant to this section
will be, when delivered, prepared in accordance with the
generally accepted accounting principles consistently applied
throughout the periods involved. The balance sheets included in
such financial statements shall present fairly the financial
condition of OTP as of their respective dates. As of the date of
any such balance sheets, except as and to the extent reflected or
reserved against in such balance sheets, there will not be any
liabilities or obligations (absolute or contingent) which should
be reflected in a balance sheet or the notes thereto prepared in
accordance with generally accepted accounting principles. The
income statements included in such financial statements prepared
and delivered pursuant to this section shall present fairly the
results of operations of OTP for the respective periods
indicated. The statements of changes in financial position or
cash flows prepared and delivered in accordance with this section
shall present fairly the information which should be presented
therein in
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accordance with generally accepted accounting principles, except
as otherwise indicated in the notes thereto. Such financial
statements shall not be materially and adversely different from
the financial statements of OTP included in the Schedules.
Section 4.05 Transactions With Affiliates
Exchangor will prove that OTP shall provide to Associated, for possible
inclusion in SEC fillings, a description of every material contract, agreement,
or arrangement between OTP and any person who is or has ever been an officer of
director of OTP or person owning of record, or known by OTP to own beneficially,
5% or more of the issued and outstanding OTP Stock and which is to be performed
in whole or in part after the date hereof or was entered into within three years
before the date hereof. OTP represents and warrants that, in all of such
circumstances, the contract, agreement, or arrangement was for a bona fide
business purpose of OTP and the amount paid or received, whether in cash, in
services, or in kind, is, has been during the full term thereof, and is required
to be during the unexpired portion of the term there of, no less favourable to
OTP than terms available from otherwise unrelated parties in arm's-length
transactions. Except as disclosed in such description, no officer or director of
OTP, or 10% shareholder of OTP has, or has had during the preceding three years,
any interest, directly or indirectly, in any material transaction with OTP. The
description shall also include a description of any commitment by OTP, whether
written or oral, to lend any funds to, borrow any money from, or enter into any
other material transaction with, any such affiliated person.
Section 4.06 Indemnification by Exchangor.
Exchangor will indemnify and hold harmless Associated and its directors and
officers, and each person, if any, who controls Associated within the meaning of
the Securities Act, from and against any and all loses, claims, damages,
expenses, liabilities, or actions to which any of them may become subject under
applicable law (including the Securities Act and the Exchange Act) and will
reimburse them for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any claims or actions, whether or not
resulting in liability, insofar as such losses, claims, damages, expenses,
liabilities, or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any application or
statement filed with a governmental body or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary in order to make the statements therein not
misleading, but only insofar as any such statement or omission was made in
reliance upon and in conformity with information furnished in writing by
Exchangor expressly for use therein. Exchangor agrees at any time upon the
request of Associated to furnish to them a written letter or statement
confirming the accuracy of the information with respect to OTP contained in any
report or other application or statement referred to in this Article IV, or in
any draft of any such documents, and confirming that the information with
respect to OTP contained in such document or draft was furnished by Exchangor,
indicating the inaccuracies or omissions contained in such document or draft or
indicating the information not furnished by Exchangor expressly for use therein.
The indemnity agreement contained in this Section 4.06 shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of Associated and shall survive the consummation of the transactions
contemplated by this Agreement.
Section 4.07 Indemnification by Associated
Associated will indemnify and hold harmless Exchangor, its directors and
officers, and each person, if any, who controls Exchangor within the meaning of
the Securities Act, from and against any and all losses, claims, damages,
expenses, liabilities, or actions to which any of them may become subject under
applicable law (including the Securities Act and the Exchange Act) and will
reimburse them for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any claims, damages, expenses,
liabilities, or actions arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any alleged omission to
state therein a material fact required to be stated therein, or necessary in
order to make the statements therein not misleading, but only insofar as any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing by Associated expressly for use therein.
Associated agrees at any time upon the request of Exchangor to
E-12
<PAGE>
furnish to it a written letter or statement confirming the accuracy of the
information with respect to Associated and its subsidiaries contained in any
information / proxy statement, report, or other application or statement
referred to in this Article IV, or in any draft of any such document, and
confirming that the information with respect to Associated contained in such
document or draft was furnished by Associated, indicating the inaccuracies or
omissions contained in such document or draft or indicating the information not
furnished by Associated expressly for use therein. The indemnity agreement
contained in this Section 4.07 shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of Exchangor and
shall survive the consummation of the transactions contemplated by this
Agreement.
Section 4.08 Sales Under Regulation S
(a) Associated will use its best efforts to comply with the reporting
requirements of the Exchange Act.
(b) Upon being informed in writing by any Affiliated Associated
Stockholder or Restricted Transferee that such person intends to
sell any acquired Shares under Regulation S promulgated under the
Securities Act (including any rule adopted in substitution or
replacement thereof), Associated will certify in writing to such
person that it has filed all of the reports required to be filed
by it under the Exchange Act to enable such person to sell such
person's Acquired Shares under Regulation S or will inform such
person in writing that it has not filed any such report or
reports.
(c) If any certificate representing any Acquired Shares is presented
to Associated's transfer agent for registration of transfer in
connection with any sale theretofore made under Regulation S,
provided, that such certificate is duly endorsed for transfer by
the appropriate person(s) or accompanied by a separate stock
power duly executed by the appropriate person(s), in each case
accomplished by reasonable assurances that such endorsements are
genuine and effective, and is accompanied by an opinion of
counsel satisfactory to Associated and its counsel that such
transfer has complied with the requirements of Regulation S,
Associated will promptly instruct its transfer agent to register
such transfer and to issue one or more new certificates free of
any stop-transfer order or restrictive legend.
Section 4.09 The Acquisition of Associated Exchanged Stock
---------------------------------------------
The consummation of this Agreement and the merger contemplated herein, including
the issuance of the Associated Exchanged Stock to Exchangor in exchange for all
of the issued and outstanding OTP Stock as contemplated hereby, constitutes the
offer and sale of securities under the Securities Act and applicable state
statutes. Such transactions shall be consummated in reliance on exemptions from
the registration and prospectus delivery requirements of such statures which
depend, among other items, on the circumstances under which such securities are
acquired.
(a) In order to provide documentation for reliance upon exemptions
from the registration and prospectus delivery requirements for
such transactions, the approval by Exchangor and Associated of
this Agreement and the transactions contemplated hereby and/or
the delivery of appropriate separate representations shall
constitute the parties acceptance of, and concurrence in, the
following representations and warranties:
(i) Exchangor acknowledges that neither the SEC nor the
securities commission of any state or other federal agency
has made any determination as to the merits of acquiring the
Associated Exchanged Stock, and that this transaction
involves certain risks.
(ii) Exchangor has received and read the Agreement and understand
the risks related to the consummation of the transactions
herein contemplated.
E-13
<PAGE>
(iii)Exchangor has such knowledge and experience in business and
financial matters that it is capable of evaluating
Associated and its business operations.
(iv) Exchangor has been provided with a copy of this Agreement
and the related disclosure schedules of the parties hereto
plus all materials and information requested by Exchangor or
its representative, including any information requested to
verify any information furnished (to the extent such
information is available or can be obtained without
unreasonable effort or expense), and the parties have been
provided the opportunity for direct communication regarding
the transactions contemplated hereby.
(v) All information which Exchangor has provided to Associated
or its agents or representatives concerning their
suitability and intent to hold shares in Associated
following the transactions contemplated hereby is complete,
accurate, and correct.
(vi) Exchangor has not offered or sold any securities of OTP or
interest in this Agreement and have no present intention of
dividing the Associated Exchanged Stock to be received or
the rights under this Agreement with others or of reselling
or otherwise disposing of any portion of such stock or
rights, either currently or after the passage of a fixed or
determinable period of time or on the occurrence of
non-occurrence of any predetermined event or circumstance.
(vii)Exchangor understands that the Associated Exchanged Stock
has not been registered, but is being acquired by reason of
a specific exemption under the Securities Act as well as
under certain state statutes for transactions by an issuer
not involving any public offering and that any disposition
of the subject Associated Exchanged Stock may, under certain
circumstances, be inconsistent with this exemption and may
make the undersigned an "underwriter" within the meaning of
the Securities Act. It is understood that the definition of
"underwriter" focuses upon the concept of "distribution" and
that any subsequent disposition of the subject Associated
Exchanged Stock can only be effected in transactions which
are not considered distributions. Generally, the term
"distribution" is considered synonymous with "public
offering" or any other offer or sale involving general
solicitation or general advertising. Under present law, in
determining whether a distribution occurs when securities
are sold into the public market, under certain circumstances
one must consider the availability of public information
regarding the issuer, a holding period for the securities
sufficient to assure that the persons desiring to sell the
securities without registration first bear the economic risk
of their investment, and a limitation on the number of
securities which the stockholder is permitted to sell and on
the manner of sale, thereby reducing the potential impact of
the sale on the trading markets. These criteria are set
forth specifically in Regulation S promulgated under the
Securities Act, which allows sales of securities in reliance
upon Regulation S only in limited amounts in accordance with
the terms and conditions of that rule, after 41 days after
the date the Associated Exchanged Stock is acquired from
Associated and the Associated Exchanged Stock is fully paid
for, as calculated in accordance with Regulation S. After 41
days from the date the securities acquired from Associated
and are fully paid for, as calculated in accordance with
Regulation S, they can generally be sold without meeting
those conditions, provided the holder is not (and has not
been for the preceding three months) an affiliate of the
issuer.
(viii) Exchangor acknowledges that the shares of Associated
Exchanged Stock must be held and may not be sold,
transferred, or otherwise disposed of for value
E-14
<PAGE>
unless they are subsequently registered under the Securities
Act or an exemption from such registration is available.
Associated is under no obligation to register the Associated
Exchanged Stock under the Securities Act, except as may be
expressly agreed to by it in writing. If Regulation S is
available (and no assurance is given that it will be except
as expressly set forth in this Agreement), after 41 days
following the date the shares are fully paid for, only
routine sales of such Associated Exchanged Stock in limited
amounts can be made in reliance upon Regulation S in
accordance with the terms and conditions of that rule.
Associated is under no obligation to the parties to make
Regulation S available, except as may be expressly agreed to
by it in writing in this Agreement, and in the event
Regulation S is not available, compliance with regulation A
or some other disclosure exemption may be required before
Exchangor can sell, transfer, or otherwise dispose of such
Associated Exchanged Stock without registration under the
Securities Act. Associated registrar and transfer agent will
maintain a stop transfer order against the registration or
transfer of the Associated Exchanged Stock, and the
certificate representing the Associated Exchanged Stock will
bear a legend in substantially the following form so
restricting the sale of such securities:
THE SHARES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S.
PERSON: (i) AS PART OF THEIR DISTRIBUTION AT ANY TIME; OR
(ii) OTHERWISE UNTIL FORTY DAYS AFTER THE DATE ("THE
RESTRICTED PERIOD"), EXCEPT IN EITHER CASE IN ACCORDANCE
WITH REGULATION S UNDER THE SECURITIES ACT. PURCHASER
ACKNOWLEDGES THAT THE SHARES REPRESENTED HEREBY HAVE BEEN
SOLD IN COMPLIANCE WITH REGULATION S.
(ix) Associated may refuse to register further transfers, or
resales of the Associated Exchanged Stock in the absence of
compliance with Regulation S unless the undersigned
furnishes the issuer with a "no-action" or interpretive
letter from the SEC or an opinion of counsel reasonably
acceptable to Associated stating that the transfer is
proper. Further, unless such letter or opinion states that
the shares of Associated Exchanged Stock are free of any
restrictions under the Securities Act, Associated may refuse
to transfer the Associated Exchanged Stock to any transferee
who does not furnish in writing to it the same
representations and agree to the same conditions with
respect to such Associated Exchanged Stock as set forth
herein. Associated may also refuse to transfer the
Associated Exchanged Stock if any circumstances are present
reasonably indicating that the transferee's representations
are not accurate.
(b) In connection with the transaction contemplated by this
Agreement, OTP and Associated shall each file, with the
assistance of the other and their respective legal counsel, such
notices, applications, reports, or other instruments as may be
deemed by them to be necessary or appropriate in an effort to
document reliance on such exemptions, including a notice on form
D to be filed with the SEC and the appropriate regulatory
authority in the state or country where Exchangor reside unless
an exemption requiring no filing is available in such
jurisdiction, all to the extent and in the manner as may be
deemed by such parties to be appropriate.
(c) In order to more fully document reliance on the exemptions as
provided herein, Exchangor shall execute and deliver to
Associated, at or prior to the Closing, such further letters of
representation, acknowledgment, suitability or the like as
Associated and its
E-15
<PAGE>
counsel may reasonably request in connection with reliance on
exemptions from registration under such securities laws.
(d) Associated and Exchangor acknowledge that the basis for relying
on exemptions from registration or qualifications are factual,
depending on the conduct of the various parties, and that no
legal opinion or other assurance will be required or given to the
effect that the transactions contemplated hereby are in fact
exempt from registration or qualification.
Section 4.10 Third Party Consents
Associated and Exchangor agree to cooperate with each other in order to obtain
any third party consents to this Agreement and the transactions herein
contemplated that are required.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF Exchangor
The obligations of Exchangor under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.01 Accuracy of Representations
The representations and warranties made by Associated in this Agreement were
true when made and shall be true at the Closing Date with the same force and
affect as if such representations and warranties were made at and as of the
Closing Date (except for changes therein permitted by this Agreement ), and
Associated shall have performed or complied with all covenants and conditions
required by this Agreement to be performed or complied with by Associated prior
to or at the Closing. Exchangor shall be furnished with certificates, signed by
duly authorised officers of Associated and dated the Closing Date, to the
foregoing effect.
Section 5.02 Officer's Certificates
Exchangor shall have been furnished with certificates dated the Closing Date and
signed by the duly authorised chief executive officer and principal accounting
and financial officer of Associated to the effect that no litigation,
proceeding, investigation or inquiry is pending or, to the best knowledge of
Associated threatened, which might result in an action to enjoin or prevent the
consummation of the transaction contemplated by this Agreement. Furthermore,
based on certificates of good standing, representations of government agencies,
and Associated's own documents, the certificate shall represent that:
(a) This Agreement has been duly approved by Associated's board of
Directors and has been duly executed and delivered in the name
and on behalf of Associated by its duly authorised officers
pursuant to, and in compliance with, authority granted by the
board of directors of Associated pursuant to a unanimous consent.
(b) The representations and warranties of Associated set forth in
this Agreement are true and correct as of the date of the
certificate.
(c) There have been no material adverse changes in Associated up to
and including the date of the certificate.
(d) All conditions required by this Agreement to have been met,
satisfied, or performed by Associated have been met.
E-16
<PAGE>
(e) The consummation of the transactions contemplated by this
Agreement does not violate any law, regulation, order, writ,
injunction or decree of any court or governmental body or result
in the creation or imposition of any mortgage, lien, charge or
encumbrance of any nature upon any of the properties of
Associated pursuant to any mortgage, resolution agreement or
instrument to which Associated is a party.
(f) All authorisations, consents, approvals, registrations, and/or
filings with any governmental body, agency or court required in
connection with the execution and delivery of the documents by
Associated have been obtained and are in full force and effect
or, if not required to have been obtained, will be in full force
and effect by such time as may be required.
(g) There is no action, suit, proceeding, inquiry or investigation at
law or in equity by any public board or body pending or
threatened against Associated wherein an unfavourable decision
ruling, or finding would have an adverse affect on the financial
condition of Associated the operation of Associated, or the
acquisition and reorganisation contemplated herein, or any
material agreement or instrument by which Associated is bound or
would in any way contest the existence of Associated.
Section 5.03 No Material Adverse Change
Prior to the Closing Date, there shall not have occurred any material adverse
change in the financial condition, business or operations of Associated, nor
shall any event have occurred which, with the lapse of time or the giving of
notice, may cause or create any material adverse change in the financial
condition, business or operations of Associated.
Section 5.04 Good Standing
Exchangor shall have received certificates of good standing from the appropriate
authorities, dated as of a date within five days prior to the Closing Date,
certifying that Associated is in good standing as a corporation in the state of
Nevada.
Section 5.05 Other Items
Exchangor shall have received such further documents , certificates, or
instruments relating to the transaction contemplated hereby as Exchangor may
reasonably request.
ARTICLE V1
CONDITIONS PRECEDENT TO OBLIGATIONS OF
Associated
The obligations of Associated under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 6.01 Accuracy of Representations
The representation and warranties made by Exchangor regarding its stock
ownership and OTP in this Agreement were true when made and shall be true at the
Closing Date with the same force and affect as if such representations and
warranties were made at and as of the Closing Date (except for changes therein
permitted by this Agreement ), and OTP shall have performed or complied with all
covenants and conditions required by this Agreement to be performed or complied
with by OTP prior to or at the Closing. Associated shall be furnished with a
certificate, signed by a duly authorised officer of OTP and dated the Closing
Date, to the foregoing effect.
E-17
<PAGE>
Section 6.02 Officer's Certificates
Associated shall have been furnished with certificates dated the Closing date
and signed by a duly authorised chief executive officer and principal accounting
and financial officer of OTP or by Exchangor to the effect that no litigation,
proceeding, investigation, or inquiry is pending, or to the best knowledge of
OTP or Exchangor, threatened which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Agreement.
Furthermore, based on certificates of good standing, representation of
government agencies, and OTP's and/or Exchangor's own documents, the certificate
shall represent that:
(a) This Agreement has been duly approved by OTP's and/or Exchangor's
board of directors and has been duly executed and delivered in
the name and on behalf of OTP by its duly authorised officers
pursuant to , and in compliance with, authority granted by the
board of directors of OTP.
(b) The representations and warranties of Exchangor set forth in this
Agreement are true and correct as of the date of the certificate:
(c) Except as provided or permitted herein, there have been no
material adverse changes in OTP up to and including the date of
the certificate:
(d) All conditions required by this Agreement to have been met,
satisfied or performed by OTP and Exchangor have been met.
(e) The consummation of the transactions contemplated by this
Agreement does not violate any law, regulation order, writ
injunction or decree of any court or governmental body or result
in the creation or imposition of any mortgage, lien, charge or
encumbrance of any nature upon any of the properties of OTP,
pursuant to any mortgage, resolution, agreement, or instrument to
which OTP or Exchangor is a party.
(f) All authorisations, consents, approvals, registrations and/or
filings with any governmental body, agency or court required in
connection with the execution and delivery of the documents by
OTP have been obtained and are in full force and effect or, if
not required to have been obtained will be in full force and
effect by such time as may be required; and
(g) There is no action, suit, proceeding, inquiry or investigation at
law or in equity by any public board or body pending or
threatened against OTP wherein an unfavourable decision, ruling
or finding would have an adverse affect on the financial
condition of OTP, the operation of OTP or the acquisition and
reorganisation contemplated herein, or any material agreement or
instrument by which OTP is bound or would in any way contest the
existence of OTP.
Section 6.03 No Material Adverse Change
Except as provided or permitted herein, prior to the Closing Date, there shall
not have occurred any material adverse change in the financial condition,
business or operations of OTP, nor shall any event have occurred which, with the
lapse of time or the giving of notice may cause or create any material adverse
change in the financial condition, business, or operations of OTP.
Section 6.04 Other Items
Associated shall have received such further documents, certificates, or
instruments relating to the transactions contemplated hereby as Associated may
reasonably request.
E-18
<PAGE>
ARTICLE V11
MISCELLANEOUS
Section 7.01 No Representation Regarding Tax Treatment
------------------------------------------
No representation or warranty is being made by any party to any other regarding
the treatment of this transaction for federal or state income taxation. Each
party has relied exclusively on its own legal, accounting and other tax adviser
regarding the treatment of this transaction for federal and stage income taxes
and on no representations, warranty or assurance from any other party or such
other party's legal, accounting or other adviser.
Section 7.02 Governing Law
This Agreement shall be governed by, enforced and construed under and in
accordance with the laws of the United States of America and, with respect to
matters of state law, with the laws of the state of Nevada and with respect to
matters governing corporations organised under the laws of such state.
Section 7.03 Notices
All notices, demands, requests or other communications required or authorised
hereunder shall be deemed given sufficiently if in writing and if personally
delivered, if sent by facsimile transmission, confirmed with a written copy
thereof sent by overnight express delivery, if sent by registered mail or
certified mail, return receipt requested and postage prepaid; or if sent by
overnight express delivery:
If to Associated to: 1204 Third Avenue, Suite 172
New York, NY USA 10021
With Copy to: David S. Stevens
Level 2, 55 Hunter Street,
Sydney NSW 2000 Australia Fax: 612-233 3860
If to Exchangor to: Stanley Looman
Dominicanessen straat 22,
Oranjestad, Arub Telecopy No: 0011-2978 36546
or such other addresses and facsimile numbers as shall be furnished by any party
in the manner for giving notices hereunder and any such notice demand, request
or other communication shall be deemed to have been given as of the date so
delivered or sent by facsimile transmission three days after the date so mailed
or one day after the date so sent by overnight delivery.
Section 7.04 Attorney's Fees
In the event that any party institutes any action or suit to enforce this
Agreement or to secure relief from any default hereunder or breach hereof, the
breaching party or parties shall reimburse the nonbreaching party or parties for
all costs, including reasonable attorney's fees, incurred in connection
therewith and in enforcing or collecting any judgement rendered therein.
Section 7.05 Schedules: Knowledge
Whenever in any section of this Agreement reference is made to information set
forth in the schedules provided by Associated, or Exchangor, such reference is
to information specifically set forth in such schedules and clearly marked to
identify the information specifically set forth in such schedules and clearly
marked to identify the section of this Agreement to which the information
relates. Whenever any representation is made to the "knowledge" of any party, it
shall be deemed to be a representation that no officer or director of such
party, after reasonable investigation, has any knowledge of such matters.
E-19
<PAGE>
Section 7.06 Third Party Beneficiaries
This contract is solely between Associated and Exchangor, and, except as
specifically provided, no director, officer, stockholder, employee, agent,
independent contractor, or any other person or entity shall be deemed to be a
third party beneficiary of this Agreement.
Section 7.07 Entire Agreement
This Agreement represents the entire agreement between the parties relating to
the subject matter hereof. All previous agreements between the parties whether
written or oral, have been merged into this Agreement. This Agreement alone
fully and completely expresses the agreement of the parties relating to the
subject matter hereof. There are no other course of dealing, understandings,
agreements, representations, or warranties, written or oral except as set forth
herein.
Section 7.08 Survival: Termination
The representations, warranties, and covenants of the respective parties shall
service the Closing Date and the consummation of the transactions herein
contemplated.
Section 7.9 Counterparts
This Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which taken together shall be but a single
instrument.
Section 7.10 Amendment or Waiver
Every right and remedy provided herein shall be cumulative with every other
right and remedy, whether conferred herein, at law, or in equity and such
remedies may be enforced concurrently and no waiver by any party of the
performance of any obligation by the other shall be construed as a waiver of the
same or any other default then theretofore, or thereafter occurring or existing.
At any time prior to the Closing Date, this Agreement may be amended by a
writing signed by all parties hereto, with respect to any of the terms contained
herein , and any term or condition of this Agreement may be waived or the time
for performance thereof may be extended by a writing signed by the party or
parties for whose benefit the provision is intended.
E-20
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officer, hereunto duly authorised as of the date first above
written.
For and on behalf of Exchangor:
By: Stanley Looman
S\- Stanley Looman
Associated Technologies,
a Nevada Corporation
By: David S. Stevens
S/- David S. Stevens
E-21
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Associated
Technologies and Subsidiaries June 30, 1996 financial statements and is
qualified in its entirely by reference to such financial statements.
</LEGEND>
<CIK> 0000894565
<NAME> Associated Technologies
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Jun-30-1996
<CASH> 204,353
<SECURITIES> 0
<RECEIVABLES> 1,034,766
<ALLOWANCES> 0
<INVENTORY> 309,678
<CURRENT-ASSETS> 1,548,797
<PP&E> 1,370,046
<DEPRECIATION> (616,928)
<TOTAL-ASSETS> 9,660,446
<CURRENT-LIABILITIES> 3,067,712
<BONDS> 0
0
0
<COMMON> 1,430
<OTHER-SE> 2,718,796
<TOTAL-LIABILITY-AND-EQUITY> 9,660,446
<SALES> 0
<TOTAL-REVENUES> ^ 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 160,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 300,000
<INCOME-PRETAX> (460,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (460,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (460,000)
<EPS-PRIMARY> (.45)
<EPS-DILUTED> (.45)
</TABLE>
