SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) JANUARY 27, 2000
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TELEHUBLINK CORPORATION
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-25002 59-3200879
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
24 NEW ENGLAND EXECUTIVE PARK, BURLINGTON, MASSACHUSETTS 01803
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (781) 229-1102
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 27, 2000, TeleHublink Corporation (THLC), acquired
wirelessEncryption.com, Inc. (WEC). THLC acquired all of the issued and
outstanding shares of capital stock of WEC, a developer of ultra secure signal
processing security incorporated under Massachusetts law, from all of the
shareholders thereof.
The aggregate consideration to be paid by THLC to the Selling
Shareholders consisted of 5,000,000 shares of THLC restricted shares. The THLC
Stock Consideration will be distributed pro ratably among the Selling
Shareholders in accordance with their respective ownership interests in WEC at
the Closing Date. The terms of the Agreement were determined in arm's-length
negotiations between THLC and the Selling Shareholders.
WEC is developing a unique technology that will give users enhanced
quality, and ultra secure end-to-end signal processing security
(encrypting/authenticating) for communication signals. The Company is currently
focused on providing security and signal enhancement to the multibillion-dollar
wireless and cellular industry. Founded in 1999, wirelessEncryption.com, Inc. is
located in Worcester, Massachusetts.
All other information required by Item 2 is set forth in the Agreement
filed as Exhibit 99.1 hereto, and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
In accordance with Item 7(a)(4) of Form 8-K, the financial statements
required by this Item 7(a) of Form 8-K and Rule 3-05(b) of Regulation S-X will
be filed by amendment to this initial report no later than 60 days after the
date of the filing of this report.
(b) PRO FORMA FINANCIAL INFORMATION.
In accordance with Item 7(b)(2) of Form 8-K, the pro forma financial
information required by this Item 7(b) of Form 8-K will be filed by amendment to
this initial report no later than 60 days after the date of the filing of this
report.
(c) EXHIBITS.
Exhibit 99.1 Agreement and Plan of Merger, dated as of January 27,
2000, by and among THLC (a Delaware corporation) and
wirelessEncryption.com, Inc. (Does not include Exhibits
or Disclosure Schedules. THLC will furnish a copy of any
such omitted exhibit or schedule to the Commission upon
request.)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TELEHUBLINK CORPORATION
By: /s/ BRUCE W. YOUNG
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Bruce W. Young
President and Chief Executive Officer
Dated: February 17, 2000
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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99.1 Agreement and Plan of Merger, dated as of January 27, 2000, by and
among THLC (a Delaware corporation) and wirelessEncryption.com,
Inc. (Does not include Exhibits or Disclosure Schedules. THLC will
furnish a copy of any such omitted exhibit or schedule to the
Commission upon request.)
TABLE OF CONTENTS
PAGE
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ARTICLE I TRANSFER OF WEC STOCK
1 TRANSFER OF WEC STOCK...........................................1
ARTICLE II CONSIDERATION.......................................................1
2.1. TRANSFER.........................................................1
2.2. PAYMENT OF TAXES UPON TRANSFER OF BUSINESS.......................1
ARTICLE III REPRESENTATIONS AND WARRANTIES AS TO WEC...........................1
3.1. ORGANIZATIONS, STANDING AND POWER................................2
3.2. CAPITALIZATION...................................................2
3.3. OWNERSHIP OF WEC COMMON STOCK....................................2
3.4. INTERESTS IN OTHER ENTITIES......................................2
3.5. AUTHORITY........................................................3
3.6. NONCONTRAVENTION.................................................3
3.7. ABSENCE OF UNDISCLOSED LIABILITIES...............................3
3.8. ABSENCE OF CHARGES...............................................3
3.9. LITIGATION.......................................................4
3.10. NO VIOLATION OF LAW.............................................4
3.11. PROPERTIES......................................................4
3.12. INTANGIBLES/INVENTIONS..........................................4
3.13. SYSTEMS AND SOFTWARE............................................5
3.14. BANKS; POWERS OF ATTORNEY.......................................5
3.15. EMPLOYEE ARRANGEMENTS...........................................5
3.16. ERISA...........................................................5
3.17. CERTAIN BUSINESS MATTERS........................................5
3.18. CERTAIN CONTRACTS...............................................6
3.19. APPROVELS/CONSENTS..............................................6
3.20. SECURITIES ACT REPRESENTATION...................................6
3.21. INFORMATION AS TO WEC...........................................6
ARTICLE IV REPRESENTATIONS AND WARRANTIES AS TO THLC...........................6
4.1. AUTHORITY........................................................6
4.2. INFORMATION AS TO THLC...........................................7
4.3. ORGANIZATION; GOOD STANDING; POWER; ETC..........................7
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TABLE OF CONTENTS (Cont.)
PAGE
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ARTICLE V INDEMNIFICATION.....................................................11
5.1. INDEMNIFICATION BY THE SELLING STOCKHOLDERS.....................11
5.2. THIRD PARTY CLAIMS..............................................11
5.3. ASSISTANCE......................................................12
ARTICLE VI ADDITIONAL COVENANTS...............................................12
6.1. NONCOMPETE COVENANT.............................................12
6.2. CONSUMMATION OF TRANSACTION.....................................12
6.3. COOPERATION/FURTHER ASSURANCES..................................12
6.4. ACCURACY OF REPRESENTATIONS.....................................13
6.5. NOTIFICATION OF CERTAIN MATTERS.................................13
6.6. BROKER..........................................................13
6.7. EMPLOYMENT AGREEMENT............................................13
ARTICLE VII CONDITIONS OF CLOSING.............................................13
7.1. CONDITIONS TO OBLIGATIONS OF THLC TO CLOSE......................13
7.2. CONDITIONS TO OBLIGATIONS OF WEC AND THE SELLING
STOCKHOLDERS TO CLOSE.........................................14
7.3. EFFECTS OF TERMINATION..........................................15
ARTICLE VIII THE CLOSING......................................................15
8.1. DELIVERIES BY THLC AT THE CLOSING...............................15
8.2. DELIVERIES BY WEC AND/OR THE SELLING STOCKHOLDERS
AT THE CLOSING................................................16
8.3. OTHER DELIVERIES................................................16
ARTICLE IX SURVIVAL OF REPRESENTATIONS AND WARRANTS...........................16
ARTICLE X GENERAL PROVISIONS..................................................16
10.1. FEES AND EXPENSES..............................................16
10.2. PUBLICATIONS...................................................16
10.3. NOTICES........................................................16
10.4. AMENDMENT......................................................17
10.5. WAIVER.........................................................17
10.6. SEVERABILITY...................................................17
10.7. ENTIRE AGREEMENT...............................................17
10.8. NO ASSIGNMENT..................................................17
10.9. HEADINGS.......................................................17
10.10. SCHEDULES.....................................................17
10.11. GOVERNING LAW.................................................18
10.12. COUNTERPARTS..................................................18
10.13. ARBITRATION...................................................18
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EXHIBITS
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2.1 Stock Ownership Interests in WEC
3.12 Intangibles-Intellectual Property Rights of WEC: Exceptions
3.14 Complete List of WEC Banks and Persons Having Access Thereto
3.15 Summary Description of WEC Employment & Compensation
Arrangements
3.17 Certain Business Matters
3.18 List of All WEC Contracts, Commitments, Obligations and
Understandings
3.2 List of Holders of All Outstanding Stock of WEC
4.3(a) Jurisdiction in Which THLC Qualified To Do Business
4.3(b)(i) No Outstanding Rights of Subscription or Warrants
(Exceptions)
4.3(b)(ii) Names of All Subsidiaries of THLC
4.3(c) Delivery and Performance of Agreement Not A Breach,
Exceptions
4.3(d) Consents Required
4.3(h) ERISA-THLC Benefit Plans
4.3(j) Financial Statements as of 10/30/99
4.3.(m) Office Locations of THLC
4.3(o) Company Action Taken Since 10/31/99
4.3(p) Potential Conflicts of Interest
4.3(R) Previously Undisclosed Liabilities
4.3(s) List of Ten Largest Customers of the Company During
Fiscal 1999
4.3(t) Environmental Compliance
4.3(v) Rules, Regulations, Osha
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AGREEMENT
AGREEMENT, dated as of January 27, 2000 (the "Agreement") among
TeleHubLink Corporation, a Delaware corporation ("THLC"),
wirelessEncryption.com, Inc. a Massachusetts corporation ("WEC"), and each of
the stockholders of WEC as identified in Schedule 2.1 including Panos C. Lekkas
("Lekkas"), Stanley A. Young and Young Technology Fund, L.P., (collectively
"Young") each a stockholder of WEC (collectively, the "Selling Stockholders").
W I T N E S S E T H
WHEREAS, the Selling Stockholders are the owners of all of the issued
and outstanding shares of the capital stock of WEC (the "WEC Stock"); and
WHEREAS, WEC is developing advanced ultra-secure signal processing
technology for wireless and Internet communications as well as other data
transmissions (the "Business"); and
WHEREAS, THLC wishes to acquire all of the WEC Stock from the Selling
Stockholders in a transaction qualifying as a reorganization under
ss.368(a)(1)(B) of the Internal Revenue Code, upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto do hereby agree as follows:
1. TRANSFER OF WEC STOCK
Subject to the terms and conditions set forth in this Agreement and in
reliance upon the representations, warranties, covenants and conditions herein
contained, on the Closing Date (as defined in Section 8 hereof) the Selling
Stockholders shall sell, convey, assign, transfer and deliver to THLC the WEC
Stock, free and clear of any and all liens, adverse claims, security interests,
pledges, mortgages, charges and encumbrances of any nature whatsoever.
2. CONSIDERATION
2.1 TRANSFER. Subject to Section 2.2 below, the purchase price
(the "Purchase Price") for the purchase of the WEC Stock by THLC shall be an
aggregate of 5,000,000 unregistered shares (the "Stock Consideration") of the
voting common stock, $.01 par value, of THLC ("THLC Common Stock"), which Stock
Consideration shall be distributed pro ratably among the Selling Stockholders in
accordance with their respective ownership interests in WEC at the Closing Date,
as set forth on SCHEDULE 2.1 hereof
2.2 PAYMENT OF TAXES UPON TRANSFER OF BUSINESS. It is the
presumption of the parties that the transfer of the WEC stock for THLC stock
will qualify as a tax-free B reorganization. The Selling Stockholders shall be
responsible for, and shall pay, any and all sales, use, purchase, transfer and
similar taxes and any and all filing, recording, registration and similar fees
arising out of the transactions contemplated by this Agreement. THLC shall pay
all filing, recording, registration and similar fees arising out of the
registration of the THLC Common Stock.
3. REPRESENTATIONS AND WARRANTIES AS TO WEC. Each of the Selling
Stockholders and WEC, severally, represents and warrants to THLC as follows:
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3.1 ORGANIZATIONS, STANDING AND POWER. WEC is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, with full corporate power and corporate authority
to: (a) own, lease and operate its properties; (b) carry on the Business as
currently conducted by it; and (c) execute and deliver, and perform under this
Agreement and each other agreement and instrument to be executed and delivered
by it pursuant to hereto. There are no states or jurisdictions in which the
character and location of any of the properties owned or leased by WEC, or the
conduct of the Business makes it necessary for WEC to qualify to do business as
a foreign corporation. True and complete copies of the Articles of Organization
of WEC and all amendments thereof, and of the by-laws of WEC, as amended to
date, have heretofore been furnished to THLC. WEC's minute books made available
to THLC contain accurate records of all meetings and other corporate actions of
WEC's stockholders and Board of Directors.
3.2 CAPITALIZATION. The authorized capital stock of WEC
consists of: 5,000,000 shares of voting common stock, par value $.01 per share
(the "WEC Common Stock") of which 5,000,000 shares of Common Stock are
outstanding or are subject to issue as the result of the exercise of options,
warrants, convertible debentures, or other rights. All of the WEC Common Stock
is duly authorized, validly issued, fully paid and nonassessable. Schedule 3.2
sets forth a true and complete list of the holders of all outstanding shares of
WEC Common Stock, which shares are held by them in the amounts set forth on
Schedule 3.2. Except as set forth in Schedule 3.2, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of WEC or obligating
WEC to issue or sell any shares of capital stock of or other equity interests in
WEC. There is no personal liability, and there are no preemptive rights with
regard to the capital stock of WEC. There are no outstanding contractual
obligations or other commitments or arrangements of WEC to: (a) repurchase,
redeem or otherwise acquire any shares of WEC Common Stock (or any interest
therein); or (b) to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any other entity; or (c) issue or
distribute to any person any capital stock of WEC; or (d) issue or distribute to
holders of any of the capital stock of WEC any evidences of indebtedness or
assets of WEC. All of the outstanding securities of WEC have been issued and
sold by WEC in full compliance with applicable federal and state securities
laws.
3.3 OWNERSHIP OF WEC COMMON STOCK. The Selling Stockholders
have good and marketable title to all of the issued and outstanding shares of
WEC Common Stock, free and clear of any and all liens, adverse claims, security
interests, pledges, mortgages, charges and encumbrances of any nature whatsoever
(the "Liens"), and on the Closing Date will own all of such WEC Common Stock,
free and clear of any and all Liens, including, but not limited to, any claims
by any present or former stockholders of WEC.
3.4 INTERESTS IN OTHER ENTITIES.
(a) There are no direct or indirect subsidiaries of WEC.
(b) The parties to this Agreement acknowledge that they
are aware of the fact that Young, in addition to his interest in WEC, also owns
3,864,475 shares of THLC stock as set forth in THLC's 10K annual report dated
5/14/99. Otherwise, none of the Selling Stockholders (individually or jointly)
own, directly or indirectly, of record or beneficially, any shares of voting
stock or other equity securities of any other corporation engaged in the same or
similar business to that business engaged in by WEC at the Closing Date: (a)
have any ownership interest, direct or indirect or beneficially, in any
unincorporated entity engaged in the same or similar business to that business
engaged in by WEC at the Closing Date; and (b) have any obligation, direct or
indirect, present or contingent, (A) to purchase or
2.
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subscribe for any interest in, advance or loan monies to, or in any way make
investments in, any other person or entity engaged in the same or similar
business to that business engaged in by WEC at the Closing Date, or (B) to share
any profits or capital investments or both from an entity engaged in the same or
similar business to that business engaged by WEC at the Closing Date.
3.5 AUTHORITY. The execution and delivery by WEC of this
Agreement and of all of the agreements to be executed and delivered by WEC
pursuant hereto (collectively, the "WEC Documents"), the performance by WEC of
its obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of WEC and WEC has all
necessary corporate power and corporate authority with respect thereto. The
Selling Stockholders have all necessary capacity, power and authority to execute
and deliver this Agreement and such other agreements to be executed and
delivered by any of them pursuant hereto (collectively, the "Stockholder
Documents") and to consummate the transactions contemplated hereby and thereby.
This Agreement is, and when executed and delivered by WEC and the Selling
Stockholders, each of the other agreements to be delivered by any of them
pursuant hereto will be, the valid and binding obligations of WEC and the
Selling Stockholders, to the extent they are parties thereto, in accordance with
their respective terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the rights of
creditors generally and subject to the rules of law governing (and all
limitations on) specific performance, injunctive relief, and other equitable
remedies.
3.6 NONCONTRAVENTION. Neither the execution and delivery by
WEC or the Selling Stockholders of this Agreement or of any other WEC Documents
or Stockholder Documents to be executed and delivered by either or any of them,
nor the consummation of any of the transactions contemplated hereby or thereby,
nor the performance by either or any of them of any of their respective
obligations hereunder or thereunder, will (nor with the giving of notice or the
lapse of time or both would): (a) conflict with or result in a breach of any
provision of the Articles of Organization, by-laws or other constituent
documents of WEC, each as amended to date; or (b) give rise to a default, or any
right of termination, cancellation or acceleration, or otherwise be in conflict
with or result in a loss of contractual benefits to any of them, under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which either or any of
them is a party or by which either or any of them or any of their respective
assets may be bound, or require any consent, approval or notice under the terms
of any such document or instrument; or (c) violate any order, writ, injunction,
decree, law, statute, rule or regulation of any court or governmental authority
which is applicable to either or any of them; or (d) result in the creation or
imposition of any lien, adverse claim, restriction, charge or encumbrance upon
any of the assets of WEC "the "Assets") or the WEC Common Stock; or (e)
interfere with or otherwise adversely affect the ability of THLC or WEC to carry
on the Business after the Closing Date on substantially the same basis as is now
conducted by WEC.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. WEC has no liabilities
or obligations of any nature whatsoever, whether accrued, matured, unmatured,
absolute, contingent, direct or indirect or otherwise (including without
limitation, liabilities or obligations for any taxes, governmental assessments,
duties or any related liabilities, penalties or fines) not previously disclosed
to THLC or adequately reserved for on its balance sheet.
3.8 ABSENCE OF CHARGES. Since June 1, 1999, there have not
been: (a) any adverse change (other than as is normal in the ordinary course of
business) in the condition (financial or otherwise), assets, liabilities,
business, prospects, results of operations or cash flows of WEC (including,
without limitation, any such adverse change resulting from damage, destruction
or other casualty loss, whether or
3.
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not covered by insurance); (b) any waivers by WEC of any right, or cancellation
of any debt or claim, of substantial value; (c) any declarations, set asides or
payments of any dividend or other distributions or payments in respect of the
WEC Common Stock, except for the redemption of WEC stock previously owned by
Roland S. Gerard; or (d) any changes in the accounting principles or methods
which are utilized by WEC.
3.9 LITIGATION. There are no claims, suits or actions, or
administrative, arbitration or other proceedings or governmental investigations,
pending or, to the best knowledge of WEC and the Selling Stockholders,
threatened, against or relating to WEC or the Selling Stockholders, the
transactions contemplated hereby or any of the Assets, and there is no valid
basis for any such matters. There are no judgments, orders, stipulations,
injunctions, decrees, or awards in effect which relate to WEC, this Agreement,
the transactions contemplated, the Business or any of the Assets, the effect of
which is: (a) to limit, restrict, regulate, enjoin or prohibit any business, or
(b) otherwise adverse to the Business, any of the Assets or WEC Common Stock
3.10 NO VIOLATION OF LAW. WEC is not engaging in any activity
or omitting to take any action as a result of which it is in violation of any
law, rule, regulation, zoning or other ordinance, statute, order, injunction or
decree, or any other requirement of any court or governmental or administrative
body or agency, applicable to WEC, the Business or any of the Assets.
3.11 PROPERTIES. All plants, structures and equipment which
are utilized in the Business, or are material to the condition (financial or
otherwise) of WEC are owned or leased by WEC and are in good operating condition
and repair (ordinary wear and tear excepted), and are adequate and suitable for
the purposes for which they are used.
3.12 INTANGIBLES/INVENTIONS. SCHEDULE 3.12 identifies (by a
summary description) the Intangibles (as defined below), the ownership thereof
and, if applicable, WEC's authority for use of the same, which Schedule is
complete and correct and encompasses: (a) all United States and foreign patents,
trademark and trade name registrations, trademarks and trade names, brandmarks
and brand name registrations, servicemarks and servicemark registrations,
assumed names and copy rights and copyright registrations, owned in whole or in
part or used by WEC, and all applications therefor (collectively, the "Marks"),
(b) all inventions, discoveries, improvements, processes, formulae, technology,
know-how, processes and other intellectual property, proprietary rights and
trade secrets relating to the Business (collectively, the "Inventions") and (c)
all licenses and other agreements to which WEC is a party or otherwise bound
which relate to any of the Intangibles or the Inventions or WEC's use thereof in
connection with the Business (collectively, the "Licenses, and together with the
Marks and the Inventions, the "Intangibles"). No violations of the terms of any
of the aforesaid licenses and/or agreements have occurred. Prior to the date
hereof, all of the Selling Stockholders transferred to WEC all of their
respective rights, title and interests in and to the ideas, technology and
inventions relating to the Business, including without limitation, the Marks,
Inventions and Intangibles, and no other party (except WEC) has any rights in
respect thereof. Except as disclosed on SCHEDULE 3.12, (1) WEC owns or is
authorized to use in connection with the Business all of the Intangibles; (2) no
proceedings have been instituted, are pending, or to the best knowledge of the
Selling Stockholders, are threatened which challenge the rights of WEC with
respect to the Intangibles or its use thereof in connection with the Business
and/or the Assets or the validity thereof and, there is no valid basis for any
such proceedings; (3) neither WEC's ownership of the Intangibles nor its use
thereof in connection with the Business and/or the Assets violates any laws,
statutes, ordinances or regulations, or has at any time infringed upon or
violated any rights of others, or is being infringed by others; (4) none of the
Intangibles, or WEC's use thereof in connection with the Business and/or the
Assets is subject to any outstanding order, decree, judgment, stipulation or any
lien, security
4.
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interest or other encumbrance; and (5) WEC has not granted any license to third
parties with regard to its Intangibles.
3.13 SYSTEMS AND SOFTWARE. WEC owns or has the right to use
pursuant to lease, license, sublicense, agreement, or permission all computer
hardware, software and information systems necessary for the operation of the
business of WEC as presently conducted (collectively, "Systems"). Each System
owned or used by WEC immediately prior to the Closing Date will be owned or
available for use by THLC on identical terms and conditions immediately
subsequent to the Closing Date. With respect to each System owned by a third
party and used by WEC pursuant to lease, license, sublicense, agreement or
permission: (a) the lease, license, sublicense, agreement or permission covering
the System is legal, valid, binding, enforceable, and in full force and effect;
(b) the lease, license, sublicense, agreement or permission will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the Closing Date; (c) no party to any such lease, license,
sublicense, agreement or permission is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, and permit termination, modification or acceleration thereunder; (d) no
party to any such lease, license, sublicense, agreement or permission has
repudiated any provision thereof; (e) WEC has not retained any sublicense,
sublease or similar right with respect to any such lease, license, sublicense,
agreement or permission; (f) WEC's use and continued use of such Systems does
not and will not interfere with, infringe upon, misappropriate, or otherwise
come into conflict with, any intellectual property rights of third parties as a
result of the continued operation of the Business.
3.14 BANKS; POWERS OF ATTORNEY. SCHEDULE 3.14 is a complete
and correct list showing: (a) the names of each bank in which WEC has an account
or safe deposit box and the names of all persons authorized to draw thereon or
who have access thereto; and (b) the names of all persons, if any, holding
powers of attorney from WEC.
3.15 EMPLOYEE ARRANGEMENTS. SCHEDULE 3.15 is a complete and
correct list and summary description of all: (a) employment, management,
termination and consulting agreements to which WEC is a party or otherwise
bound; and (b) compensation plans and arrangements; bonus and incentive plans
and arrangements; deferred compensation plans and arrangements; pension and
retirement plans and arrangements; profit-sharing and thrift plans and
arrangements; stock purchase and stock option plans and arrangements;
hospitalization and other life, health or disability insurance or reimbursement
programs; holiday, sick leave, severance, vacation and personal loan policies
and arrangements; and also lists the names and compensation of all employees of
WEC whose earnings are at an annual rate of $25,000 or more (including bonuses
and other incentive compensation), and all employees who are expected to receive
at least said amount in respect of the current fiscal year.
3.16 ERISA. WEC neither maintains nor is obligated to
contribute to an "employee pension benefit plan", as such term is defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or WEC's "welfare benefit plan" as such term is defined in Section
3(1) of ERISA.
3.17 CERTAIN BUSINESS MATTERS. Neither WEC nor the Selling
Stockholders is a party to or bound by any agreement which limits its or his, as
the case may be, freedom to compete in any line of business or with any person,
or which is otherwise materially burdensome to WEC or the Selling Stockholders,
and WEC is not a party to or bound by any agreements in which any officer,
director or stockholder of WEC (or any affiliate of any such person) has, or had
when made, a direct or indirect material interest except as set forth in
SCHEDULE 3.17.
5.
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3.18 CERTAIN CONTRACTS. SCHEDULE 3.18 is a complete and
correct list of all material contracts, commitments, obligations and
understandings to which WEC is a party. Except a expressly stated on such
Schedule: (1) each of the agreements listed on Schedule 3.18 is in full force
and effect, no person or entity which is a party thereto or otherwise bound
thereby is in material default thereunder, and no event occurrence, condition or
act exists which does (or which with the giving of notice or the lapse of time
or both would) give rise to a material default or right of cancellation,
acceleration or loss of contractual benefits thereunder; (2) there has been no
threatened cancellations thereof, and there are no outstanding disputes
thereunder; (3) none of them is materially burdensome to WEC; and (4) each of
them is fully assignable without the consent, approval, order or any waiver by,
or any other action of or with any individual or individuals, without the
payment of any penalty, the incurrence of any additional debt, liability or
obligation of any nature whatsoever or the change of any term.
3.19 APPROVALS/CONSENTS. WEC currently holds all governmental
and administrative consents, permits, appointments, approvals, licenses,
certificates and franchises which are necessary for the operation of the
Business, all of which are in full force and effect and are transferable
pursuant to the transaction contemplated hereby without the payment of any
penalty or the incurrence of any additional debt, liability or obligation of any
nature whatsoever or the change of any term. No material violations of the terms
thereof have heretofore occurred or are known by the Selling Stockholders to
exist s of the date of this Agreement.
3. 20 SECURITIES ACT REPRESENTATION. Each of the Selling
Stockholders is acquiring the Stock Consideration solely for investment
purposes, with no intention of distributing or reselling any such stock or any
interest therein. Each of the respective Selling Stockholders is aware that the
Stock Consideration will not be registered under the Securities Act of 1933, as
amended (the "Securities Act"), and that neither the Stock Consideration nor any
respective interests therein, may be sold, pledged, or otherwise transferred
unless the Stock Consideration is registered under the Securities Act or
qualifies for an exemption under the Securities Act.
3.21 INFORMATION AS TO WEC. None of the representations or
warranties made by WEC or the Selling Stockholders in this Agreement is, or
contained in any of the WEC Documents to be executed and delivered hereto will
be, false or misleading with respect to any material fact, or omits to state any
material fact necessary in order to make the statements therein contained not
misleading.
4. REPRESENTATIONS AND WARRANTIES AS TO THLC. THLC represents and
arrants to WEC and the Selling Stockholders, as follows:
4.1 AUTHORITY. The execution and delivery of THLC of this
Agreement and of each agreement to be executed and delivered by it pursuant
hereto (collectively, the "Purchase Documents"), the performance by THLC of its
obligations hereunder and thereunder, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary corporate action on the part of THLC, and THLC has all necessary
corporate action on the part of THLC, and THLC has all necessary corporate power
and corporate authority with respect thereto. This Agreement is, and when
executed and delivered by THLC each other Purchase document will be, the valid
and binding obligation of THLC in accordance with the respective terms thereof,
except as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the rights of creditors generally and subject
to the rules of law governing (and all limitations on) specific performance,
injunctive relief, and other equitable remedies.
6.
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4.2 INFORMATION AS TO THLC. None of the representations or
warranties made by THLC in this Agreement, or contained in any of the Purchase
Documents, to be executed and delivered hereto, is or will be false or
misleading with respect to any material fact, or omits to state any material
fact necessary in order to make the statements therein contained not misleading.
4.3 (a) ORGANIZATION; GOOD STANDING; POWER; ETC. THLC is a
duly organized, validly existing corporation in good standing under the laws of
the State of Delaware. THLC has the corporate power, authority and capacity to
own, lease and operate its properties, and to carry on its business as and where
the same is now being conducted. THLC is qualified as a foreign corporation, is
in good standing and licensed in all such other jurisdictions, set forth on
Schedule 4.3(a) hereto, where the business conducted or the assets owned by THLC
requires such qualification, except in the jurisdictions identified in Schedule
4.3 (a) hereto and in such other jurisdictions where the failure to so qualify
does not have a material adverse effect on the business, properties, or
financial condition (hereinafter, collectively, "business conditions") of THLC.
THLC has no equity interest, direct or indirect, in any corporation,
partnership, joint venture or other entity.
(b) CAPITALIZATION. i) The authorized capital stock of THLC
consists of no more than 50,000,000 shares of voting common stock, with par
value of $0.01 per share, of which no more than 20,000,000 shares are issued and
outstanding prior to this Agreement. There are no other classes or series of
capital stock of THLC authorized, issued or outstanding. All of the issued and
outstanding shares of capital stock of THLC are validly issued, fully paid and
non-assessable. Except as set forth in Schedule 4.3 (b) (i) hereto, there are no
outstanding rights of subscription, warrants, call options, contracts or other
agreements of any kind issued or granted by THLC to acquire securities of THLC.
(ii) Schedule 4.3 (b) (ii) correctly sets forth the
names of all Subsidiaries of THLC. All of the outstanding shares of capital
stock, or all of the units of equity interest, as the case may be, of each
subsidiary are owned of record and beneficially by THLC or a Subsidiary of THLC,
as disclosed on said Schedule; there are no outstanding options, warrants or
other rights to purchase capital stock of any such Subsidiary; and all shares or
equity interests so owned are duly authorized, validly issued, fully paid,
non-assessable, and were issued in compliance with all applicable state and
federal securities and other laws, and are free and clear of all liens, except
as may be permitted hereunder,
(iii) Each Subsidiary of THLC is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, had the power and authority to own its assets and
to transact he business in which it is now engaged, and is duly qualified as a
foreign corporation in good standing in the laws of each other jurisdiction in
which such qualification is required, except where the failure to be so
qualified would not have a materially adverse effect.
(iv) Each Subsidiary of THLC is in compliance with
all laws and other requirements applicable to its business and has obtained all
authorizations, consents, approvals, orders, licenses, and permits from, any
governmental or public agency that are necessary for the transaction of its
business, except where the failure to be in such compliance, obtain such
authorizations, consents, approvals, orders, licenses, and permits, accomplish
such filings, registrations, and qualifications, or obtain such exemptions,
would not have materially adverse effects.
(c) AUTHORIZATION, EFFECTIVE AGREEMENT. THLC has the requisite
corporate power, authority and capacity to enter into this Agreement and to
perform all of its obligations hereunder. All corporate proceedings required to
be taken by THLC to authorize the execution and delivery of this Agreement and
the performance of THLC's obligations hereunder have been duly taken, and this
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Agreement constitutes the legal, valid and binding obligation of THLC,
enforceable against it in accordance with its terms. Except as set forth on
Schedule 4.3 (c) hereto, the execution, delivery and performance of this
Agreement by THLC do not and will not conflict with, violate or result in the
breach of any of the terms or conditions of, or constitute a default under, the
Articles of Incorporation or by-laws of THLC or, to the knowledge of THLC, any
law, rule, regulation, order, judgment, writ, indenture, mortgage, pledge, note,
bond, license, permit or other agreement, commitment or lease to which THLC is a
party or by which THLC or its assets are subject, except for requirements for
consents of governmental authorities or persons, or such violations of any law,
regulation, ordinance or decrees, which are referred to in Section 6(d) hereof
or which would not have a material adverse effect on the business conditions of
THLC.
(d) CONSENTS. No permit, consent, approval, order, license,
permit or authorization from any filing, registration or qualification with any
governmental authority or any other person or entity on the part of THLC is
required in connection with the execution or delivery by THLC of this Agreement
or the consummation of the transactions contemplated hereby, other than those
specified in Schedule 4.3 (d) hereto.
There is no agreement or contract which would materially
adversely affect the rights of THLC (A) to receive the benefits under such
agreements to which they are entitled if performed in accordance with the terms
thereof; (B) there are no agreements in effect which permit THLC to incur debt
for borrowed money to any bank, insurance company or other financial
institution; (C) none of the rights or obligations of THLC under any indenture,
mortgage, instrument, or material agreement or contract will be materially
adversely affected, individually or in the aggregate with other such agreements,
by the transactions contemplated by this Agreement (assuming execution and
delivery of all necessary consents and applicable assumption agreements); and
(D) there is no default, and no event has occurred which with notice or lapse of
time or both would constitute a default, on the part of THLC under any
indenture, mortgage, agreement or contract.
(h) ERISA. Schedule 4.3 (h) lists all the employee benefit
plans, programs and arrangements (the "Plans") maintained for the benefit of any
current or former employee, officer or director of THLC, and the Selling
Stockholders has been furnished with a copy of each Plan and each material
document prepared in connection with each Plan.
(i) Each Employee Pension Benefit Plan (as defined in section
3(2) of ERISA) (and each related trust or insurance contract) complies in form
and in operation in all material respects with the applicable requirements of
ERISA, and the Internal Revenue Code of 1986, as amended (the "Code").
(j) FINANCIAL STATEMENTS. The Financial Statements reflected
in the filed 10K's and 10Q's: (i) present fairly the financial position and
results of operations of THLC, as of the dates and for the periods indicated;
and (ii) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis.
(k) LITIGATION, ETC. Reference filed 10K's and 10Q's included
herein. There is no suit, action or litigation, administrative hearing,
arbitration, labor controversy, warranty claim, governmental inquiry,
investigation or other proceeding or claim (including environmental or land use
proceedings) pending or, to THLC's knowledge, threatened against or relating to
THLC. There are no judgments, consent decrees or injunctions against, affecting
or binding upon THLC. To the best of THLC's knowledge, THLC is in compliance
with all laws, ordinances, requirements, orders and regulations applicable to
it, the violation of which would have a material adverse effect on the business
conditions of THLC or on the ability of THLC to consummate the transactions
contemplated hereby.
8.
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(l) TAXES. Reference filed 10K's and 10Q's included herein.
THLC has duly filed all federal, state, local and foreign tax returns that are
required to be filed by it, and all such returns are true and correct. THLC has
paid all taxes when due pursuant to such returns or pursuant to any assessments
received by it or which it is obligated to withhold from amounts owing to any
employee, creditor or third party, The tax returns of THLC have not been audited
by the relevant taxing authorities in any of the six consecutive years
immediately preceding the Closing Date, no returns of THLC are currently being
audited by any local, state or federal authority, and THLC has not been notified
by any such authority of a forthcoming audit. All monies required to be withheld
by THLC from employees for income taxes, Social Security and unemployment
insurance taxes have been collected or withheld, and either paid to the
respective governmental agencies or set aside in accounts for such purpose, or
accrued, reserved against, and entered upon the books of THLC and, if not paid
to date, shall be paid by THLC on a timely basis.
(m) NO MATERIAL ADVERSE CHANGE. Reference filed 10K's and
10Q's included herein. Since October 31, 1999, there has been no material
adverse change in the business conditions of THLC. To the best of THLC's
knowledge, there is no fact or condition that exists which is reasonably likely
to materially adversely affect THLC (other than general economic conditions or
facts or conditions affecting the industry of THLC as a whole).
(n) OFFICES. THLC maintains principal executive offices and
other offices at the locations set forth on Schedule 4.3 (n) hereto, and the
books and records of THLC are kept at the locations set forth on such Schedule.
(o) COMPANY ACTIONS. Since October 31, 1999, except as
otherwise contemplated by this Agreement or on Schedule 4.3 (o) hereto, THLC has
not:
(i) borrowed any amount in excess of $50,000.00 or,
to THLC's knowledge, incurred or become subject to any liability in excess of
$50,000.00 (absolute or contingent), except current liabilities incurred, and
liabilities under contracts or arrangements entered into, in the ordinary course
of business;
(ii) discharged or satisfied any lien or encumbrance
or paid any material obligation or liability (absolute or contingent) other than
in accordance with the terms thereof or other than current liabilities shown on
its balance sheet as of October 31, 1999, or current liabilities incurred since
October 30, 1998 in the ordinary course of business;
(iii) mortgaged, pledged, or subjected to lien,
charge or any other encumbrance any of its assets, tangible or intangible,
except possible mechanics' liens or liens for real or personal property taxes
not yet due and payable;
(iv) sold, assigned, or transferred any of the
Purchased Assets having a value in excess of $25,000 or canceled any debts or
obligations of any person or entity to THLC (except in the ordinary course of
business);
(v) sold, assigned or transferred any Business
Property Rights;
(vi) suffered any extraordinary losses, or waived any
rights of substantial value (whether or not in the ordinary course of business);
(vii) made any investment in, advanced any money to,
or guaranteed any obligation of any Person;
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(viii) made any material changes in employee
compensation, except in the ordinary course of business consistent with past
practice;
(ix) made any distributions to the Shareholder other
than amounts representing salary, bonus and benefit payments consistent with
past practice;
(x) entered into any transaction, other than in the
ordinary course of business; or
(xi) entered into any agreement to do any of the
foregoing.
(p) RELATED PARTY TRANSACTIONS; POTENTIAL CONFLICTS OF INTEREST. Except
as set forth in Schedule 4.3 (p) hereto, none of the shareholders,
officers, directors or employees of THLC or any Affiliate thereof:
(i) is an officer, director, employee or consultant
of, or owns or otherwise controls any person or entity which is, or is engaged
in business as a competitor, customer or supplier of THLC;
(ii) owns, directly or indirectly, in whole or in
part, any tangible or intangible property which THLC is using in connection with
its business or the use of which is necessary for its business; or
(iii) to the best knowledge of THLC, has any cause of
action or other claim whatsoever against, or accrued vacation pay, accrued
benefits under employee benefit plans and similar matters and agreements
existing on the date hereof.
(q) DELIVERIES. THLC has delivered or made available to the
Selling Stockholders true, correct and complete copies of the by-laws, articles
of incorporation and organization documents of THLC and if embodied in written
form, all leases, licenses, agreements, the Plans, financial statements, tax
returns, Business Property Rights, insurance policies and other information or
data referred to in Sections 4.3 (i), and 4.3 (k) hereof.
(r) UNDISCLOSED LIABILITIES. Except as set forth on Schedule
4.3 (r) hereto or reflected or reserved against on the Financial Statements or
incurred since October 30, 1999 in the ordinary course of business, as of the
date hereof, there are no material liabilities or obligations of THLC of a type
that would be required to be set forth on a balance sheet prepared in accordance
with GAAP (or in the notes thereto).
(s) CUSTOMERS. Attached as Schedule 4.3 (s) hereto is a list
of the ten-(10) largest customers of the Company during the fiscal year ending
October 30, 1999. To the best knowledge of THLC, except as set forth on Schedule
4.3 (s) hereto, since October 30, 1999, no customer listed on Schedule 4.3 (s)
hereto has at any time on or after October 30, 1999 made any written claim that
any material item sold by THLC failed to meet any specification with respect
thereto or was otherwise materially defective.
(t) ENVIRONMENTAL COMPLIANCE. THLC is in compliance with all
applicable federal, state and local laws and regulations relating to pollution
control and environmental contamination, including, without limitation, all laws
and regulations governing the generation, use, collection, treatment, storage,
transportation, recovery, removal, discharge or disposal of oil and hazardous
materials (as defined
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below) and all laws and regulations with regard to record keeping, notification,
and reporting requirements respecting oil and hazardous materials. THLC has not
received any notice of, or been subject to, any administrative or judicial
proceeding pursuant to such laws or regulations either now or at any time during
the past three years. Except as set forth in Schedule 4.3 (t) hereto or in the
Environmental Reports, there are no present facts or circumstances that could
form the basis for the assertion of any claim against THLC relating to
environmental matters, including, without limitation, any claim arising from
past or present environmental practices asserted under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the
Resource Conservation and Recovery Act ("RCRA") or any other federal, state or
local environmental statute. For purposes of this Section 4.3 (t), the term
"hazardous materials" means materials defined as "hazardous substances,"
"hazardous wastes" or "solid wastes" in CERCLA, RCRA and in any similar federal,
state or local environmental statute.
(u) BROKERS. There is no broker or finder or other person or
entity who would have any valid claim against THLC for a fee, commission or
brokerage in connection with this Agreement or the transactions contemplated
hereby as a result of any agreement, understanding, arrangement or action by
THLC. THLC hereby agree to save the Selling Stockholders harmless and agree to
indemnify the Selling Stockholders from any Loss or Litigation Expense incurred
by the Selling Stockholders on account of a claim by a broker, finder, or any
other Person arising out of this Agreement or the transactions contemplated
hereby as a result of any agreement, understanding, arrangement, or action by
THLC.
(v) RULES, REGULATIONS, OSHA Except as set forth in Schedule
4.3 (v), THLC is not in violation of any order, judgment, injunction, award,
determination, award, or decree binding upon it. THLC is not in violation of any
federal, state, local or foreign law, ordinance or regulation or any other
requirement of any governmental or regulatory body or court applicable to its
business or assets, and laws, ordinances, regulations and other requirements
respecting labor, employment and employment practices, terms and conditions of
employment and wages and hours. THLC has never received notice of, and there has
never been, any citation, fine or penalty imposed or asserted against THLC for
any such violation.
5. INDEMNIFICATION.
5.1 INDEMNIFICATION BY THE SELLING STOCKHOLDERS. Each of the
Selling Stockholders severally indemnifies and agrees to defend and hold
harmless THLC and it officers, directors, employees, agents and representatives
from and against any and all losses, obligations, deficiencies, liabilities,
claims, damages, costs and expenses (including, without limitation, the amount
of any settlement entered into pursuant hereto, and all reasonable legal and
other expenses incurred in connection with the investigation, prosecution or
defense of any matter indemnified pursuant hereto) which THLC may sustain,
suffer or incur and which arise out of, are caused by, relate to, or result or
occur from or in connection any misrepresentation of a material fact contained
in any representation of WEC and/or the Selling Stockholder contained in, or the
breach by WEC or the Selling Stockholder or any warranty or covenant made by all
of them in any WEC Document and/or any Stockholder Document. The foregoing
indemnification shall also apply to direct claims by THLC against the Selling
Stockholders.
5.2 THIRD PARTY CLAIMS. If a claim by a third party is made
against any party or parties hereto and the party or parties against whom said
claim is made intends to seek indemnification with respect thereto under
Subsections 5.1, the party or parties seeking such indemnification shall
promptly notify the indemnifying party or parties, in writing, of such claim;
provided, however, that the failure to give such notice shall not affect the
rights of the indemnified party or parties hereunder except to the extent
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that such failure materially and adversely affects the indemnifying party or
parties due to the inability to timely defend such action. The indemnifying
party or parties shall have 10 business days after said notice is given to
elect, by written notice given to the indemnified party or parties, to
undertake, conduct and control, through counsel of their own choosing (subject
to the consent of the indemnified party or parties, such consent not to be
unreasonably withheld) and at their sole risk and expense, the good faith
settlement or defense of such claim, and the indemnified party or parties shall
cooperate with the indemnifying parties in connection therewith; provided: a)
all settlements require the prior reasonable consultation with the indemnified
party or parties and the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld, and (b) the indemnified party or
parties shall be entitled to participate in such settlement or defense through
counsel chosen by the indemnified party or parties, provided that the fees and
expenses of such counsel shall be borne by the indemnified party or parties. So
long as the indemnifying party or parties are contesting any such claim in good
faith, the indemnified party or parties shall not pay or settle any such claim;
provided, however, that notwithstanding the foregoing, the indemnified party or
parties shall have the right to pay or settle any such claim at any time,
provided that in such event they shall waive any right of indemnification
thereof by the indemnifying party or parties. If the indemnifying party or
parties do not make a timely election to undertake the good faith defense or
settlement of the claim as aforesaid, or if the indemnifying parties fail then,
in either such event, the indemnified party or parties shall have the right to
contest, settle or compromise (provided that all settlements or compromises
require the prior reasonable consultation with the indemnifying party and the
prior written consent of the indemnifying party, which consent shall not be
unreasonably withheld) the claim at their exclusive discretion, at the risk and
expense of the indemnifying parties.
5.3 ASSISTANCE. Regardless of which party is controlling the
defense of any claim, each party shall act in good faith and shall provide
reasonable documents and cooperation to the party handling the defense.
6. ADDITIONAL COVENANTS
6.1 NONCOMPETE COVENANT. Noncompetition provisions shall be
set forth in the Employment Agreements, as hereafter defined, to be signed by
the Selling Stockholders. Any non-competition provisions contained in any
Agreement between THLC and any of the Selling Stockholders shall be null and
void if the Company shall breach its obligations under any agreement between it
and the Selling Stockholders or any one of them.
6.2 CONSUMMATION OF TRANSACTION. Each of the parties hereto
hereby agrees to use its best efforts to cause all conditions precedent to his
or its obligations (and to the obligations of the other parties hereto to
consummate the transactions contemplated hereby) to be satisfied, including, but
not limited to, using all reasonable efforts to obtain all required (if so
required by this Agreement) consents, waivers, amendments, modifications,
approvals, authorizations, innovations and licenses; provided, however, that
nothing herein contained shall be deemed to modify any of the absolute
obligations imposed upon any of the parties hereto under this Agreement or any
agreement executed and delivered pursuant hereto.
6.3 COOPERATION/FURTHER ASSURANCES. Each of the parties hereto
hereby agrees (I) to fully cooperate with the other parties hereto in preparing
and filing any notices, applications, reports and other instructions and
documents and (ii) to execute, acknowledge, deliver, file and/or record, or
cause such other parties to the extent permitted by law to execute, acknowledge,
deliver, file and/or record such other documents, which may be required by this
Agreement or which are desirable in the reasonable opinion of any of the parties
hereto, or their respective legal counsel, in respect of, any statute, rule,
regulation or
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order of any governmental or administrative body in connection with the
transactions contemplated by this Agreement.
6.4 ACCURACY OF REPRESENTATIONS. Each party hereto agrees that
prior to the Closing Date he or it will not enter into any transaction and or
take any action, and will use his or its best efforts to prevent occurrence of
any event (but excluding events which occur in the ordinary course of business
and events over which such party has no control), which would result in any of
his or its representations, warranties or covenants contained in this Agreement
or in any agreement, document or instruction executed and delivered by him or it
pursuant hereto not to be true and correct, or not to be performed as
contemplated, at and as of the time immediately after the occurrence of such
transaction or event.
6.5 NOTIFICATION OF CERTAIN MATTERS. WEC and the Selling
Stockholders shall give prompt notice to THLC, and THLC shall give prompt notice
to WEC and the Selling Stockholders, as the case may be, of: (a) the occurrence,
or nonoccurrence, or any event the occurrence, or nonoccurrence, of which would
be likely to cause any representation contained in this Agreement to be untrue
or inaccurate in any material respect at or prior to the Closing Date; and (b)
any material failure of WEC and/or the Selling Stockholders, on the one hand,
and of THLC, on the other, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by him or it hereunder; provided,
however, that the delivery of any notice pursuant to this Subsection 6.5 shall
not limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
6.6 BROKER. Each of THLC, WEC, and the Selling Stockholders
represents and warrants to the other parties that no broker or finder was
engaged or dealt with in connection with any of the transactions contemplated by
this Agreement, and each of the parties shall indemnify and hold the other
harmless from and against any and all claims or liabilities asserted by or on
behalf of any alleged broker or finder for broker's fees, finder's fees,
commissions or like payments.
6.7 EMPLOYMENT AGREEMENT. At the Closing Date, Lekkas shall
finalize and enter into an employment arrangement with THLC, (the "Employment
Agreement"), such Employment Agreement to be in the form of Exhibit X, attached
hereto and incorporated herein by reference.
7. CONDITIONS OF CLOSING.
7.1 CONDITIONS TO OBLIGATIONS OF THLC TO CLOSE. The
obligations of THLC to consummate the transactions contemplated herein shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of each of WEC and the Selling Stockholders
contained in any Selling Stockholders Document or WEC Document delivered by any
of them shall have been true when made, and, in addition, shall be true in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date.
(b) PERFORMANCE OF AGREEMENTS. Each of WEC and the
Selling Stockholder, as the case may be, shall have performed, observed and
complied in all material respects with all of their respective obligations,
covenants and agreements, and shall have satisfied or fulfilled in all material
respects conditions contained in any Selling Stockholders Document or WEC
Document and required to be performed, observed or complied with, or to be
satisfied or fulfilled, by WEC or the Selling Stockholders at or prior to the
Closing Date.
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(c) DUE DILIGENCE. THLC is satisfied with the results
of its "due diligence" investigation of WEC's business, liabilities, assets and
prospects.
(d) LITIGATION. No order of any court or
administrative agency shall be in effect which restrains or prohibits the
transactions contemplated hereby, and no claim, suit, action, inquiry,
investigation or proceeding in which it will be, or it is, sought to restrain,
prohibit or change the terms of or obtain damages or other relief in connection
with this Agreement or any of the transactions contemplated hereby, shall have
been instituted or threatened by any person or entity, and which, in the
reasonable judgment of THLC (based on the likelihood of success and material
consequences of such claim, suit, action, inquiry or proceeding), makes it
inadvisable in proceed with the consummation of such transactions.
(e) CONSENTS AND APPROVALS. All consents, waivers,
approvals, licenses and authorizations by third parties and government and
administrative authorities (and all amendments or modifications to existing
agreements with third parties) required as a precondition to the performance by
WEC and the Selling Stockholders of their respective obligations hereunder and
under any agreement delivered pursuant hereto, or which in THLC's reasonable
judgment are necessary to continue unimpaired, subsequent to the Closing Date,
any rights in and to the Assets and/or the Business which could be impaired by
the consummation of this transaction, shall have been duly obtained and shall be
in full force and effect.
(f) DATE OF CONSUMMATION. The transactions
contemplated herein shall have been consummated on or prior to January 31, 2000,
or such later date as the parties shall agree by a written instrument signed by
all of them.
(g) VALIDITY OF TRANSACTIONS. The validity of all
transactions contemplated hereby, as well as the form and substance of all
agreements, instruments, opinions, certificates and other documents delivered by
WEC and the Selling Stockholders pursuant hereto, shall be satisfactory in all
material respects to THLC and its counsel.
(h) NO MATERIAL ADVERSE CHANGE. Except as otherwise
provided by this Agreement, there shall not have occurred after the date hereof,
in the reasonable judgment of THLC, a material adverse change in the financial
or business condition of WEC and its subsidiaries, taken as a whole.
(i) EMPLOYMENT AGREEMENT. Lekkas shall have executed
the Employment Agreement.
(j) CLOSING CERTIFICATE. Each of the Selling
Stockholders shall have furnished THLC with certificates, all dated the Closing
Date, to the effect that all the representations and warranties of WEC and the
Selling Stockholders are true and complete and all covenants to be performed by
WEC or the Selling Stockholders at or as of the Closing have been performed and
conditions to be satisfied at or as of the Closing have been waived or
satisfied.
(k) BOARD AUTHORIZATION. The approval of this
Agreement and all of the transactions contemplated hereby by the Board of
Directors of THLC.
7.2 CONDITIONS TO OBLIGATIONS OF WEC AND THE SELLING
STOCKHOLDERS TO CLOSE. The obligations of WEC and the Selling Stockholders to
consummate the transactions contemplated herein shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions.
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(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of THLC contained in any Purchase Documents
delivered by THLC shall have been true when made, and, in addition, shall be
true in all material respects, on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date.
(b) PERFORMANCE OF AGREEMENTS. THLC shall have
performed, observed and complied, in all material respects, with all
obligations, covenants and agreements, and shall have satisfied or fulfilled in
all material respects all conditions contained in any Purchase Document and
required to be performed, observed or complied with, or satisfied or fulfilled,
by any of them at or prior to the Closing Date.
(c) CONSENTS AND APPROVALS. All consents, waivers,
approvals, licenses and authorizations by third parties and government and
administrative authorities (and all amendments and modifications to existing
agreements with third parties) required as a precondition to the performance by
THLC of its obligations hereunder and under any agreement delivered pursuant
hereto, shall have been duly obtained and shall be in full force and effect.
(d) VALIDITY OF TRANSACTIONS. The validity of all
transactions contemplated hereby, as well as the form and substance of all
agreements, instruments, opinions, certificates and other documents delivered by
THLC pursuant hereto, shall be satisfactory in all material respects to the
Selling Stockholder and its counsel.
(e) CLOSING CERTIFICATE. THLC shall have furnished
WEC with certificates executed by its executive officer, dated the Closing Date,
to the effect that all the representations and warranties of THLC are true and
complete in all material respects and all covenants to be performed by THLC at
or as of the Closing have been performed in all material respects and conditions
to be satisfied at or as of the Closing have been waived or satisfied in all
material respects.
(f) THLC shall have entered into the Employment
Agreement.
7.3 EFFECTS OF TERMINATION. In the event that this Agreement
is terminated and the transactions contemplated hereby are abandoned pursuant to
the terms of this Article 7, this Agreement shall, forthwith become null and
void and of no force and effect, except as to Section 10.1 hereof and the
obligations of the parties with respect to the Confidential Information;
provided, however, that nothing herein shall relieve any party from liability
for any breach hereof prior to termination and provided further that if this
Agreement is terminated as a result of THLC's breach of its obligations
hereunder, then THLC shall pay to Lekkas, in addition to any other damages which
may be due, three month's base salary under the Employment Agreement in
recognition of Lekkas' efforts made on behalf of THLC in anticipation of the
consummation of this Agreement.
8. THE CLOSING. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7, the closing of the transactions contemplated by this Agreement (the
"Closing") will take place at the offices of THLC in Burlington, Massachusetts
as promptly as practicable (and in any event within five business days) after
satisfaction or waiver of the conditions set forth in Section 7 but in no event
later than January 31, 2000 (the "Closing Date"), or such date as shall have
been fixed by a written instrument signed by the parties.
8.1 DELIVERIES BY THLC AT THE CLOSING. At the Closing, or
within thirty (30) days thereafter for the THLC stock certificates, THLC shall
deliver the following:
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(a) stock certificate(s), representing the Stock
Consideration, registered in the names of the Selling Stockholders; and
(b) the Employment Agreement.
8.2 DELIVERIES BY WEC AND/OR THE SELLING STOCKHOLDERS AT THE
CLOSING. At the Closing, WEC and/or the Selling Stockholders, as applicable,
shall deliver to THLC, the following:
(a) stock certificates representing the WEC Common
Stock, together with stock powers duly executed by the Selling Stockholders; and
(b) The Employment Agreement.
8.3 OTHER DELIVERIES. In addition, the parties shall execute
and deliver such other documents as may be required by this Agreement and as
either of them or their respective counsel may reasonably require in order to
document and carry out the transactions contemplated by this Agreement.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Each of the parties hereto hereby agrees that representations
and warranties made by or on behalf of him or it in this Agreement or in any
document or instrument delivered pursuant hereto shall survive the Closing Date
for a period of six (6) months.
10. GENERAL PROVISIONS:
10.1 FEES AND EXPENSES. THLC, on the one hand, and the Selling
Stockholders, on the other hand, shall bear their own expenses in connection
with the transactions contemplated hereby.
10.2 PUBLICATIONS. No party hereto shall issue any press
release or otherwise divulge or disclose the existence of this Agreement, the
terms hereof, or the transactions contemplated hereby without the prior written
approval of the other parties hereto, except (i) as may be required by
applicable law or the applicable rules or regulations of any stock exchange, or
(ii) to THLC's representatives, agents, financing sources, lenders and/or
investors.
10.3 NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the earlier of the date delivered or mailed if delivered
personally, by overnight courier or mailed by express, registered or certified
mail (postage prepaid, return receipt requested) or by facsimile transmittal,
confirmed by express, certified or registered mail, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice, except that notices of changes of address shall be effective
upon receipt):
If to THLC: TeleHubLink Corporation
24 New England Executive Park
Burlington, MA 01803
Attn: Mr. Bruce Young, President/CEO
with a copy to: Tenzer Greenblatt LLP
405 Lexington Avenue
New York, NY 10174
Attn: James Martin Kaplan, Esq.
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If to WEC or
the Selling Stockholders: Stanley A. Young
24 New England Executive Park
Burlington, MA 01803 and
Panos C. Lekkas
83 Bjorklund Avenue
Worcester, MA 01605
with copies to: Robert F. Dore, Jr., Esquire
Fletcher, Tilton & Whipple, P.C.
370 Main Street
Worcester, MA 01608
10.4 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
10.5 WAIVER. At any time prior to the Closing Date, any party
hereto may: (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto; (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto; and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
hereby.
10.6 SEVERABILITY. If any term or other provisions of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
in invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the greatest extent
possible.
10.7 ENTIRE AGREEMENT. This Agreement (together with the
Schedules annexed hereto and incorporated herewith) and the agreements referred
to herein constitute the entire agreement, and supersede all prior agreements
and undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
10.8 NO ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise, and any assignment shall be null and void.
10.9 HEADINGS. Headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
10.10 SCHEDULES. All references in this Agreement to Schedules
shall mean the schedules identified in this Agreement, which are incorporated
into this Agreement and shall be deemed a part of the representations and
warranties to which they relate.
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10.11 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the Commonwealth of Massachusetts
without regard to its choice of law principles. Each of THLC, WEC and the
Selling Stockholders hereby irrevocably and unconditionally consents to submit
to the jurisdiction of the courts of the Commonwealth of Massachusetts and of
the United States located in the County of Worcester, Commonwealth of
Massachusetts for any litigation arising out of or relating to this Agreement
and the transactions contemplated hereby (and agrees not to commence any
litigation relating thereto except in such courts), waives any objection to the
laying of venue of any such litigation in such courts and agrees not to plead or
claim that such litigation brought in any such courts has been brought in any
inconvenience forum.
10.12 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original, but all of
which taken together shall constitute one and the same agreement.
10.13 ARBITRATION. The parties agree that any legal disputes
that arise out of or are related in any way to this Agreement, its
interpretation or issues regarding compliance or breach of any of its
provisions, which disputes cannot be resolved informally, shall be resolved
exclusively through final and binding arbitration before an arbitrator appointed
by the American Arbitration Association, with each party to bear its own costs
and legal fees. All arbitration hearings shall be conducted in Worcester,
Massachusetts according to the AAA rules in effect at the time of such hearing.
IN WITNESS WHEREOF, each of THLC and WEC, by their respective officers
thereunto duly authorized, and the Selling Stockholders, individually, have
caused this Agreement to be executed as of the date first written above.
TeleHubLink Corporation
By:
-------------------------------
Name:
Title:
wirelessEncryption.com.Inc.
By:
-------------------------------
Name:
Title:
-----------------------------------
Panos C. Lekkas
-----------------------------------
Stanley A. Young
Young Technology Fund, L.P.
By:
-------------------------------
Stanley A. Young
General Partner
18.
