MERGER AGREEMENT
AMONG
XXXXXXX.XXX, INC.,
GREAT WESTERN LAND AND RECREATION, INC.,
GWLAR, INC.,
AND
GWLR, LLC
DATED AS OF AUGUST 6, 2001
TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER............................................................ 1
1.1 THE MERGER....................................................... 1
1.2 CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION........ 2
1.3 BYLAWS OF THE SURVIVING CORPORATION.............................. 2
1.4 BOARD OF DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION..... 2
1.5 EFFECTIVE TIME OF THE MERGER..................................... 2
ARTICLE II THE CONTRIBUTION..................................................... 2
2.1 THE CONTRIBUTION................................................. 2
ARTICLE III CONVERSION OF SHARES; MERGER CONSIDERATION.......................... 2
3.1 CONVERSION OF QUEPASA COMMON STOCK............................... 2
3.2 EXCHANGE PROCEDURES.............................................. 3
3.3 DIVIDENDS; TRANSFER TAXES; WITHHOLDING........................... 4
3.4 FRACTIONAL SHARES................................................ 4
3.5 RETURN OF EXCHANGE FUND.......................................... 5
3.6 DISSENTING SHARES................................................ 5
3.7 STOCK OPTIONS.................................................... 5
3.8 WARRANTS......................................................... 6
3.9 NO FURTHER OWNERSHIP RIGHTS IN QUEPASA........................... 6
3.10 THE CLOSING...................................................... 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF QUEPASA............................ 6
4.1 CORPORATE ORGANIZATION AND AUTHORITY............................. 6
4.2 CAPITALIZATION................................................... 7
4.3 SUBSIDIARIES..................................................... 8
4.4 SEC FILINGS...................................................... 8
4.5 AUTHORITY RELATIVE TO AGREEMENT.................................. 8
4.6 ABSENCE OF CONFLICTS............................................. 9
4.7 QUEPASA FINANCIAL STATEMENTS..................................... 9
4.8 ABSENCE OF CERTAIN CHANGES....................................... 9
4.9 COMPLIANCE WITH LAWS............................................. 9
4.10 TAXES............................................................ 11
4.11 INTELLECTUAL PROPERTY............................................ 12
4.12 LITIGATION....................................................... 13
4.13 CONSENTS......................................................... 13
4.14 EMPLOYEE BENEFIT PLANS........................................... 13
4.15 BROKERS.......................................................... 16
4.16 INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION STATEMENT... 16
4.17 QUEPASA BOARD RECOMMENDATION..................................... 16
4.18 REQUIRED STOCKHOLDER VOTE........................................ 16
4.19 LABOR MATTERS.................................................... 17
4.20 INSURANCE........................................................ 17
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4.21 CERTAIN BUSINESS PRACTICES....................................... 17
4.22 CONTRACTS........................................................ 18
4.23 RELATED PARTY TRANSACTIONS....................................... 19
4.24 ASSETS........................................................... 19
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT, MERGER SUB
AND CONTRIBUTION SUB.................................................. 20
5.1 ORGANIZATION; AUTHORITY.......................................... 20
5.2 CAPITALIZATION................................................... 20
5.3 CONTRIBUTION SUB................................................. 21
5.4 PARENT AND MERGER SUB............................................ 21
5.5 AUTHORITY RELATIVE TO AGREEMENT.................................. 22
5.6 ABSENCE OF CONFLICTS............................................. 22
5.7 PARENT FINANCIAL STATEMENTS...................................... 22
5.8 ABSENCE OF CERTAIN CHANGES....................................... 23
5.9 COMPLIANCE WITH LAWS............................................. 23
5.10 TAXES............................................................ 24
5.11 INTELLECTUAL PROPERTY............................................ 26
5.12 LITIGATION....................................................... 26
5.13 CONSENTS......................................................... 26
5.14 EMPLOYEE BENEFIT PLANS........................................... 27
5.15 BROKERS.......................................................... 29
5.16 INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION STATEMENT... 29
5.17 ABSENCE OF CERTAIN CHANGES OR EVENTS............................. 29
5.18 LABOR MATTERS.................................................... 31
5.19 INSURANCE........................................................ 31
5.20 CERTAIN BUSINESS PRACTICES....................................... 32
5.21 CONTRACTS........................................................ 32
5.22 RELATED PARTY TRANSACTIONS....................................... 33
5.23 ASSETS........................................................... 33
5.24 REGISTRATION RIGHTS.............................................. 35
ARTICLE VI COVENANTS............................................................ 35
6.1 CONDUCT OF BUSINESS OF THE COMPANIES PRIOR TO THE CLOSING DATE... 35
6.2 CONDUCT OF BUSINESS OF PARENT PRIOR TO THE CLOSING DATE.......... 37
6.3 PREPARATION OF PROXY STATEMENT, ETC.; STOCKHOLDERS MEETING....... 39
6.4 COMPLIANCE WITH THE SECURITIES ACT............................... 40
6.5 NON-SOLICITATION BY QUEPASA...................................... 40
6.6 NO SOLICITATION BY PARENT........................................ 42
6.7 CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS............................ 42
6.8 ACCESS TO INFORMATION............................................ 42
6.9 ALL REASONABLE EFFORTS........................................... 42
6.10 NOTIFICATION OF CERTAIN MATTERS.................................. 43
6.11 INDEMNIFICATION AND INSURANCE.................................... 43
6.12 EMPLOYEE BENEFITS................................................ 44
6.13 OPTIONS.......................................................... 44
6.14 DIRECTORS AND OFFICERS........................................... 44
6.15 PARENT REAL PROPERTY APPRAISALS.................................. 44
ARTICLE VII CONDITIONS TO CLOSING............................................... 45
7.1 CONDITIONS TO OBLIGATIONS OF PARENT, MERGER SUB
AND CONTRIBUTION SUB............................................. 45
7.2 CONDITIONS TO OBLIGATIONS OF QUEPASA............................. 47
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ARTICLE VIII TERMINATION AND ABANDONMENT........................................ 48
8.1 METHODS OF TERMINATION........................................... 48
8.2 PROCEDURE UPON TERMINATION....................................... 49
8.3 TERMINATION FEE.................................................. 49
ARTICLE IX MISCELLANEOUS PROVISIONS............................................. 50
9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES................... 50
9.2 SUCCESSORS AND ASSIGNS........................................... 50
9.3 EXPENSES......................................................... 50
9.4 NOTICES.......................................................... 50
9.5 ENTIRE AGREEMENT................................................. 51
9.6 WAIVERS, AMENDMENTS AND REMEDIES................................. 51
9.7 SEVERABILITY..................................................... 52
9.8 HEADING.......................................................... 52
9.9 COUNTERPARTS; TERMS.............................................. 52
9.10 GOVERNING LAW; CONSENT TO JURISDICTION; VENUE.................... 52
9.11 INTERPRETATION................................................... 52
9.12 EXHIBITS AND SCHEDULES........................................... 52
9.13 ARBITRATION...................................................... 52
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SCHEDULES
Schedule 4.1 quepasa Subsidiaries
Schedule 4.2(b) quepasa Options and Warrants
Schedule 4.2(e) quepasa Voting Agreements
Schedule 4.8 quepasa Material Adverse Changes
Schedule 4.10 quepasa Tax Matters
Schedule 4.12 quepasa Litigation
Schedule 4.14 quepasa Employee Benefit Plans
Schedule 4.19 quepasa Employee List
Schedule 4.22 quepasa Contracts
Schedule 4.24 quepasa Leases
Schedule 5.2(a) Parent Common Stock
Schedule 5.2(b) Parent Options and Warrants
Schedule 5.2(e) Parent Voting Agreements
Schedule 5.3 Contribution Sub Subsidiaries
Schedule 5.7 Contribution Sub Financial Statements
Schedule 5.8 Contribution Sub Material Adverse Changes
Schedule 5.9(b) Contribution Sub Hazardous Substances
Schedule 5.10 Contribution Sub Tax Matters
Schedule 5.12 Contribution Sub Litigation
Schedule 5.13 Contribution Sub Consents
Schedule 5.14 Contribution Sub Employee Benefit Plans
Schedule 5.17 Contribution Sub Damages
Schedule 5.18 Contribution Sub Employee List
Schedule 5.21 Contribution Sub Contracts
Schedule 5.22 Contribution Sub Related Party Transactions
Schedule 5.23 Contribution Sub Real Property List
Schedule 6.1(c) quepasa Budget
Schedule 6.11 quepasa Indemnification Agreements
Schedule 6.13 Parent Options
Schedule 6.14 Parent Directors and Officers
Schedule 6.15 Parent Real Property Appraisals
EXHIBITS
Exhibit A Defined Terms
Exhibit B Contribution Sub's List of Membership Interests and
Real Property
Exhibit C Parent Option Plan
Exhibit D Parent Warrant
Exhibit E Parent Registration Rights Agreement
Exhibit F quepasa Affiliates Letter
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MERGER AGREEMENT
MERGER AGREEMENT (the "AGREEMENT"), dated as of August 6, 2001, among
XXXXXXX.XXX, INC., a Nevada corporation ("QUEPASA"), GREAT WESTERN LAND AND
RECREATION, INC., a Delaware corporation ("PARENT"), GWLAR, INC., a Nevada
corporation ("MERGER SUB"), and GWLR, LLC, a Delaware limited liability company
("CONTRIBUTION SUB"). quepasa and Merger Sub are sometimes herein collectively
referred to as the "CONSTITUENT CORPORATIONS." Newco, Contribution Sub and
Merger Sub are sometimes herein collectively referred to as the "BUYER."
Capitalized terms used herein have the definitions referred to, or set forth in,
EXHIBIT A hereto.
R E C I T A L S
A. The respective Boards of Directors and Shareholders of Parent and
Merger Sub and the Board of Directors of quepasa have approved and adopted the
merger of Merger Sub with and into quepasa, as set forth below (the "MERGER")
upon the terms and subject to the conditions provided for in this Agreement.
B. Parent owns all of the issued and outstanding shares of the capital
stock of Merger Sub (the "MERGER SUB SHARES").
C. Parent desires to acquire, for the Merger Consideration and on the
terms and subject to the conditions set forth in this Agreement all of the
shares of quepasa common stock (the "QUEPASA COMMON STOCK") that are issued and
outstanding at the Effective Time, by means of the Merger.
D. Parent owns all of the issued and outstanding membership interests of
Contribution Sub (the "CONTRIBUTION SUB INTERESTS").
E. Contribution Sub owns all of the membership interests in the limited
liability companies and all of the property listed in EXHIBIT B (the
"CONTRIBUTION ASSETS") of Contribution Sub.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows.
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the satisfaction or waiver
of the conditions hereof, and in accordance with the provisions of the Nevada
General Corporation Law, as amended (the "NGCL"), Merger Sub shall be merged
with and into quepasa at the Effective Time. Upon consummation of the Merger,
the separate existence of Merger Sub shall cease, and quepasa shall continue as
the surviving corporation in the Merger (sometimes called the "SURVIVING
CORPORATION"). The Merger shall have the effects set forth in the NGCL.
1.2 CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION. The
Articles of Merger and the other documents referred to in Section 1.5 hereof
shall provide that, at the Effective Time, the certificate of incorporation of
the Surviving Corporation shall be the certificate of incorporation of Merger
Sub, provided that Merger Sub shall change its name to xxxxxxx.xxx, inc.
1.3 BYLAWS OF THE SURVIVING CORPORATION. Immediately after the Effective
Time, the bylaws of Merger Sub shall be the bylaws of the Surviving Corporation.
1.4 BOARD OF DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. At the
Effective Time, the directors and officers of Merger Sub immediately prior to
the Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation, each to hold office until their respective successors are
duly elected and qualified, or their earlier death, resignation or removal.
1.5 EFFECTIVE TIME OF THE MERGER. The Constituent Corporations will cause
articles of merger (the "ARTICLES OF MERGER") executed in accordance with the
NGCL and such other documents as are required by the NGCL to be duly filed with
the Secretary of State of the State of Nevada on the Closing Date. The Merger
shall become effective upon the filing of the Articles of Merger, or at such
other time as is agreed upon by the parties hereto and specified in the Articles
of Merger (the time at which the Merger becomes fully effective is referred to
herein as the "EFFECTIVE TIME"). The Merger shall have the effects set forth in
the NGCL.
ARTICLE II
THE CONTRIBUTION
2.1 THE CONTRIBUTION. As the date hereof and at the Effective Time,
Contribution Sub will own all of the rights, title and interest to the
membership interests and real property listed in EXHIBIT B subject only to the
Parent Liabilities set forth in EXHIBIT B.
ARTICLE III
CONVERSION OF SHARES; MERGER CONSIDERATION
3.1 CONVERSION OF QUEPASA COMMON STOCK.
(a) As of the Effective Time, by virtue of the Merger, each issued
and outstanding share of quepasa Common Stock (other than shares to be cancelled
pursuant to Section 3.1(b) hereof and Dissenting Shares) shall be converted into
and exchanged solely for the right to receive one share of common stock of
Parent ("PARENT COMMON STOCK") (the "PER SHARE MERGER CONSIDERATION") on the
terms and conditions provided herein, at the times described in Section 3.3
hereof.
(b) Each share of quepasa Common Stock held in quepasa's treasury
immediately prior to the Effective Time, if any, shall, by virtue of the Merger,
automatically be cancelled and retired and cease to exist and no consideration
shall be issued in exchange therefor.
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(c) The aggregate of the Per Share Merger Consideration payable to
all of the holders of quepasa Common Stock is called the "MERGER CONSIDERATION."
No holder of shares of quepasa Common Stock shall be entitled to receive any
dividends, in cash or otherwise, on such shares converted into Merger
Consideration as set forth in this Section 3.1 hereof.
(d) Immediately following the Effective Time, after giving effect to
the Merger, the capitalization of Parent will be as set forth on SCHEDULE 3.1.
3.2 EXCHANGE PROCEDURES.
(a) Parent shall designate Corporate Stock Transfer, Inc., the
current stock transfer agent of quepasa, to act as Exchange Agent hereunder (the
"EXCHANGE AGENT"). Immediately prior to the Effective Time, Parent shall
deliver, in trust, to the Exchange Agent, for the benefit of the holders of
shares of quepasa Common Stock, for exchange in accordance with this Article
III, through the Exchange Agent, certificates evidencing the shares of Parent
Common Stock issuable pursuant to Section 3.1 in exchange for outstanding shares
of quepasa Common Stock (the "EXCHANGE FUND").
(b) As soon as practicable after the Effective Time, Parent and the
Surviving Corporation shall cause the Exchange Agent to mail to each holder of
record of a certificate which immediately prior to the Effective Time
represented outstanding shares of quepasa Common Stock (the "CERTIFICATES") (i)
a form of letter of transmittal specifying that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Exchange Agent and (ii) instructions for use in
surrendering such Certificates in exchange for certificates representing shares
of Parent Common Stock. Upon surrender of a Certificate for cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor (A)
certificates representing that number of whole shares of Parent Common Stock
into which the shares of quepasa Common Stock represented by the surrendered
Certificate have been converted at the Effective Time pursuant to Section 3.1
hereof, (B) cash in lieu of any fractional shares of Parent Common Stock to
which such holder is entitled pursuant to Section 3.4 hereof, and the
Certificate so surrendered shall forthwith be canceled. Until surrendered as
contemplated by this Section 3.2(b), each Certificate shall be deemed from and
after the Effective Time to represent only the right to receive upon such
surrender the shares of Parent Common Stock and cash in lieu of any fractional
shares of Parent Common Stock in accordance with Section 3.4 hereof and any
dividends or distributions on Parent Common Stock in accordance with Section 3.3
hereof. In no event shall the holder of any such surrendered Certificates be
entitled to receive interest on any cash for fractional shares to be received in
the Merger. Neither the Exchange Agent nor any party hereto shall be liable to a
holder of shares of quepasa Common Stock for any amount paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
Shares of Parent Common Stock to be issued in the Merger shall be issued as of,
and be deemed to be outstanding as of, the Effective Time. Parent shall cause
all such shares of Parent Common Stock to be duly authorized, validly issued,
fully paid and non-assessable and not subject to preemptive rights.
(c) If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or
3
destroyed and, if required by Parent and the Surviving Corporation, the giving
by such person of an indemnity against any claim that may be made against it
with respect to such Certificate, including, without limitation, the deposit of
a bond, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the applicable certificate representing shares of Parent
Common Stock in accordance with Section 3.1 hereof and any cash in lieu of
fractional shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 3.4 hereof and any dividends or distributions on
Parent Common Stock in accordance with Section 3.3 hereof.
3.3 DIVIDENDS; TRANSFER TAXES; WITHHOLDING. No dividends or other
distributions that are declared on or after the Effective Time on Parent Common
Stock, or are payable to the holders of record thereof who became such on or
after the Effective Time, shall be paid to any person entitled by reason of the
Merger to receive certificates representing shares of Parent Common Stock, and
no distribution of cash consideration and no cash payment in lieu of any
fractional share of Parent Common Stock shall be paid to any person pursuant to
Section 3.4 hereof, until such person shall have surrendered its Certificate(s)
as provided in Section 3.2 hereof (or such person shall have complied with
Section 3.2(c) hereof). Subject to applicable law, Parent shall cause to be paid
to each person receiving a certificate representing such shares of Parent Common
Stock, (i) at the time of such receipt the amount of any dividends or other
distributions theretofore paid with respect to the shares of Parent Common Stock
represented by such certificate and having a record date on or after the
Effective Time, and (ii) at the appropriate payment date the amount of any
dividends or other distributions payable with respect to the shares of Parent
Common Stock represented by such certificate which dividends or other
distributions have a record date on or after the Effective Time and a payment
date on or subsequent to such receipt. In no event shall the person entitled to
receive such dividends or other distributions be entitled to receive interest on
such dividends or other distributions. If any cash or certificate representing
shares of Parent Common Stock is to be paid to or issued in a name other than
that in which the Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the Certificate so surrendered shall
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the issuance of such certificate representing
shares of Parent Common Stock and the distribution of such cash payment in a
name other than that of the registered holder of the Certificate so surrendered,
or shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable. Parent, the Surviving Corporation or the
Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of quepasa Common
Stock such amounts as Parent, the Surviving Corporation or the Exchange Agent
are required to deduct and withhold under the Code, or any provision of state,
local or foreign tax law, with respect to the making of such payment. To the
extent that amounts are so withheld by Parent, the Surviving Corporation or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the quepasa Common Stock in
respect of whom such deduction and withholding was made by Parent, the Surviving
Corporation or the Exchange Agent.
3.4 FRACTIONAL SHARES. No certificates or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to shares shall be
payable on or with respect to any frac-
4
tional share and such fractional share interests shall not entitle the owner
thereof to vote or to any other rights of a stockholder of Parent. In lieu of
any such fractional share of Parent Common Stock, Parent shall pay to each
former stockholder of quepasa who otherwise would be entitled to receive a
fractional share of Parent Common Stock an amount in cash (without interest)
rounded to the nearest whole cent, determined by multiplying (i) the closing
sales price of Parent Common Stock on any principal exchange or market in which
such stock is traded on the first day of trading thereof following the Effective
Time (the "FRACTIONAL SHARE PRICE") by (ii) the fractional interest in a share
of Parent Common Stock to which such holder would otherwise be entitled. Parent
shall make available to the Exchange Agent, and cause to be paid by the Exchange
Agent, cash for this purpose.
3.5 RETURN OF EXCHANGE FUND. Any portion of the certificates representing
shares of Parent Common Stock together with any cash in lieu of fractional
shares payable pursuant to Section 3.5 hereof and any dividends or distributions
payable pursuant to Section 3.4 hereof, which remains undistributed to the
former holders of quepasa Common Stock for one year after the Effective Time
shall be delivered to Parent, upon its request, and any such former holders who
have not theretofore surrendered to the Exchange Agent their Certificate(s) in
compliance with this Article III shall thereafter look only to Parent for
payment of their claim for shares of Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock and any dividends or distributions with
respect to such shares of Parent Common Stock (in each case, without interest
thereon). The Exchange Agent shall invest any cash included in the Exchange
Fund, as directed by Parent, on a daily basis. Any interest and other income
resulting from such investments shall be paid to Parent.
3.6 DISSENTING SHARES. Notwithstanding Section 3.1 hereof, shares of
quepasa Common Stock outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger and who has demanded
appraisal for such shares in accordance with Sections 92A.300 to 92A.500,
inclusive, of the NGCL ("DISSENTING SHARES") shall not be converted into a right
to receive the Merger Consideration, unless such holder fails to perfect or
withdraws or otherwise loses its right to appraisal. If after the Effective
Time, any such holder fails to perfect or withdraws or loses its right to
appraisal (as provided in Sections 92A.300 to 92A.500, inclusive, of the NGCL),
such Dissenting Shares shall be treated as if they had been converted as of the
Effective Time into the right to receive the Merger Consideration to which such
holder is entitled, without interest or dividends thereon. quepasa shall give
Parent prompt notice of any demands received by quepasa for appraisal of shares
of quepasa Common Stock, and, prior to the Effective Time, Parent shall have the
right to participate in all negotiations and proceedings with respect to such
demands. Prior to the Effective Time, quepasa shall not, except with the prior
written consent of Parent, make any payment with respect to, or settle or offer
to settle, any such demands.
3.7 STOCK OPTIONS.
(a) Prior to the Effective Time, quepasa and Parent shall adopt such
resolutions or take such other actions as are required to adjust the terms of
all outstanding options to purchase quepasa Common Stock set forth on SCHEDULE
4.2(b) ("QUEPASA OPTIONS") to provide that, at the Effective Time, each
outstanding quepasa Option granted under quepasa's Amended and Restated 1998
Stock Option Plan (the "QUEPASA OPTION PLAN"), whether or not
5
then exercisable or vested, shall be converted into an option to purchase common
stock of Parent ("PARENT SUBSTITUTE OPTIONS") on substantially the same terms
pursuant to the Great Western Land and Recreation, Inc. 2001 Stock Option Plan
(the "PARENT OPTION PLAN").
(b) Within 120 days following the Effective Time, Parent shall
register under the Securities Act on Form S-8 or another appropriate form all
shares of Parent Common Stock issuable pursuant to all Parent Substitute Options
with an exercise price of $0.15 or less.
3.8 WARRANTS. quepasa and Parent shall adopt such resolutions or take such
other actions as are required to adjust the terms of all outstanding warrants to
purchase quepasa Common Stock set forth on SCHEDULE 4.2(b) ("QUEPASA WARRANTS")
to provide that, at the Effective Time, the quepasa Warrants shall be converted
into warrants to purchase common stock of Parent on substantially the same
terms.
3.9 NO FURTHER OWNERSHIP RIGHTS IN QUEPASA. At and after the Effective
Time, each holder of quepasa Common Stock shall cease to have any rights as a
stockholder of quepasa, except for the right either (a) to exercise appraisal
rights as permitted under, but subject to the conditions and restrictions
contained in, Sections 92A.300 to 92A.500, inclusive, of the NGCL or (b) to
surrender his, her or its certificates representing quepasa Common Stock in
exchange for the right to receive the Per Share Merger Consideration for each
share of quepasa Common Stock represented by such delivered certificates, at the
time of such surrender. After the Effective Time, no transfer of shares shall be
made on the stock transfer books of quepasa except as contemplated by this
Agreement. Any stock certificates representing quepasa Common Stock presented
after the Effective Time for transfer shall be canceled and exchanged for the
right to receive the amounts as provided in Section 3.1 hereof.
3.10 THE CLOSING. Subject to the terms of this Agreement, the closing of
the transactions contemplated hereby (the "CLOSING") shall take place at 3:00
P.M., Phoenix, AZ time, on a date to be specified by the parties, which shall be
as soon as practicable, but in no event later than the second business day after
the satisfaction or waiver of all of the conditions set forth in Article VII
hereof (the "CLOSING DATE"), at the offices of Xxxxxxxxx & Xxxxxxx P.A., 0000
Xxxx Xxxxxxxxx Xxxx, Xxxxxxx, XX 00000, or at such other time or place as the
parties hereto shall agree in writing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF QUEPASA
quepasa hereby represents and warrants to Buyer, except as set forth by
specific reference to the applicable section of this Article IV in the Schedules
and except for information set forth anywhere in the Schedules that is
sufficiently clear and specific on its face to communicate the specific
representations and warranties which it qualifies, as follows:
4.1 CORPORATE ORGANIZATION AND AUTHORITY. Each of quepasa and its
Subsidiaries (sometimes collectively referred to as the "COMPANIES" and
individually as a "COMPANY") is a corporation or limited liability company duly
incorporated or organized, validly existing and (where applicable) in good
standing under the laws of the jurisdiction of its incorporation or
6
organization and has all requisite corporate power and authority to own, lease
and operate its properties and assets and to conduct its business as now being
conducted, except where the failure to have such power or authority would not,
individually or in the aggregate, have a quepasa Material Adverse Effect. A
complete list of quepasa's Subsidiaries is set forth on SCHEDULE 4.1. Each of
the Companies has qualified as a foreign corporation or limited liability
company and (where applicable) is in good standing under the laws of all
jurisdictions set forth on SCHEDULE 4.1, which are all jurisdictions where the
nature of the quepasa Business or the nature and location of its assets requires
such qualification, except for jurisdictions in which the failure to be so
qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a quepasa Material Adverse Effect.
4.2 CAPITALIZATION.
(a) The authorized capital stock of quepasa consists of (i)
50,000,000 shares of Common Stock, of which 17,763,291 shares are issued and
outstanding, no shares are held in the treasury of quepasa, 6,000,000 shares are
reserved for issuance pursuant to the quepasa Option Plan, and 400,000 shares
are reserved for issuance upon exercise of the quepasa Warrants; and (ii)
5,000,000 shares of preferred stock, none of which are issued and outstanding.
(b) There are outstanding, under the quepasa Option Plan, quepasa
Options to purchase an aggregate of 2,142,500 shares of quepasa Common Stock,
and there are outstanding 400,000 quepasa Warrants, all as set forth on SCHEDULE
4.2(b), which Schedule identifies the time and price at which such quepasa
Options and quepasa Warrants may be exercised. Other than the quepasa Options
and quepasa Warrants disclosed on SCHEDULE 4.2(b), no Person owns, of record or
beneficially, any rights to acquire capital stock of quepasa, whether pursuant
to the exercise of warrants, conversion of securities, exercise of stock options
or otherwise. There are no option plans other than the quepasa Option Plan.
(c) All outstanding shares of quepasa Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
set forth in this Section 4.2 and except for the quepasa Options and the quepasa
Warrants outstanding on the date hereof, there are outstanding (i) no shares of
capital stock or other voting securities of quepasa, (ii) no securities of
quepasa convertible into or exchangeable for shares of capital stock or voting
securities of quepasa and (iii) no options, warrants or other rights to acquire
from quepasa, and no obligation of quepasa to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of quepasa or equity equivalent interests in the ownership or
earnings of quepasa (the items in Sections 4.2(a) and (b) hereof being referred
to collectively as the "QUEPASA SECURITIES"). There are no outstanding
obligations of quepasa or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any quepasa Securities or pay any dividend or make any other
distribution in respect thereof.
(d) There are no outstanding obligations of the Companies to provide
funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any other Person.
(e) No voting securities of quepasa are entitled to vote by class or
have any voting right or preference different, on a per share basis, than the
Common Stock. Except as
7
set forth in SCHEDULE 4.2(e), there are no voting trusts or other agreements
(other than this Agreement) or understandings to which any Company is a party or
of which quepasa has knowledge with respect to the capital stock of any Company.
4.3 SUBSIDIARIES. All of the outstanding capital stock of, or other
ownership interests in, each of quepasa's Subsidiaries is owned by quepasa,
directly or indirectly, free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other ownership interests). There
are no outstanding (i) securities of quepasa or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock or other voting
securities or ownership interests in any Subsidiary of quepasa or (ii) options
or other rights to acquire from quepasa or any of its Subsidiaries, and no other
obligation of quepasa or any of its Subsidiaries to issue, any capital stock,
voting securities or other ownership interests in, or any securities convertible
into or exchangeable for any capital stock, voting securities or ownership
interests in, any Subsidiary of quepasa. There are no outstanding obligations of
quepasa or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any outstanding capital stock or other ownership interest in any Subsidiary of
quepasa or pay any dividend or make any other distribution in respect thereof to
a Person other than quepasa or a Subsidiary of quepasa.
4.4 SEC FILINGS. Except as set forth on SCHEDULE 4.4, quepasa has timely
filed with the United States Securities and Exchange Commission (the "SEC") all
forms, reports, definitive proxy statements, schedules and registration
statements (the "SEC REPORTS") required to be filed by it with the SEC pursuant
to the Exchange Act or the Securities Act since January 1, 1999. No Subsidiary
of quepasa is required to file any report, form or document with the SEC
pursuant to the Exchange Act or the Securities Act. As of their respective
filing dates or, if amended, as of the date of the last amendment, except as
contemplated by the letters dated January 11, 2001, April 9, 2001, May 4, 2001,
June 21, 2001 and July 31, 2001 from the staff of the SEC to quepasa (together,
the "SEC COMMENT LETTER"), none of the SEC Reports contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. The SEC Reports
(including, without limitation, any financial statements and schedules included
therein) when filed or, if amended, as of the date of the last amendment, except
as contemplated by the SEC Comment Letter, complied in all material respects
with the applicable requirements of the Securities Act and the Exchange Act.
4.5 AUTHORITY RELATIVE TO AGREEMENT. quepasa has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the performance by
quepasa of its obligations hereunder have been duly authorized by its Board of
Directors, and no other corporate or stockholder proceedings on the part of
quepasa are necessary to authorize such execution, delivery and performance
other than the requisite approvals of the holders of the quepasa Common Stock.
This Agreement has been duly executed by quepasa and, assuming the due and valid
authorization, execution and delivery of this Agreement by Buyer, constitutes a
valid and legally binding obligation of quepasa enforceable against quepasa in
accordance with its terms, except as enforceability may be limited by
bankruptcy, moratorium, reorganization, fraudulent conveyance, receivership or
similar laws affecting the rights of creditors generally.
8
4.6 ABSENCE OF CONFLICTS. The execution, delivery and performance by
quepasa of this Agreement, and the transactions contemplated hereby, do not
constitute a breach or default, or require Consents under, any agreement, permit
or other instrument to which any Company is a party, or by which any Company is
bound or to which any of the assets of any Company or the quepasa Business is
subject, or any Judgment to which any Company, the assets of any Company or the
quepasa Business is bound or subject or any Rule, and will not result in the
creation of any Lien upon any of the assets of any Company or the quepasa
Business, except for any of the foregoing that could not reasonably be expected
to have a quepasa Material Adverse Effect. The execution, delivery and
performance by quepasa of this Agreement, and the transactions contemplated
hereby, do not and will not conflict with or result in any violation of, or
constitute a breach or default under any term of the Organizational Documents of
any Company.
4.7 QUEPASA FINANCIAL STATEMENTS. Except as contemplated by the SEC
Comment Letter, the audited consolidated financial statements and unaudited
interim financial statements included in the SEC Reports (including any related
notes and schedules) (collectively, the "QUEPASA FINANCIAL STATEMENTS") comply
in all material respects with the applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto and have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis by quepasa during the periods
involved, except as otherwise described in the notes thereto and, in the case of
the unaudited interim financial statements, subject to usual and recurring
year-end adjustments normal in nature and amount. Except as contemplated by the
SEC Comment Letter, the quepasa Financial Statements fairly present in all
material respects the financial position of quepasa and its Subsidiaries as of
the date set forth on each of such quepasa Financial Statements and the results
of operations of quepasa and its Subsidiaries for the periods indicated. Except
(i) as reflected in the SEC Reports, (ii) as reserved against in the balance
sheet of quepasa and its Subsidiaries dated as of September 30, 2000, including
the notes thereto (the "QUEPASA MOST RECENT BALANCE SHEET"), and (iii) for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice, since the date of the quepasa Most Recent Balance
Sheet, as of the date hereof, neither quepasa nor any of its Subsidiaries have
any liabilities of any nature (whether accrued, contingent, absolute,
determined, determinable or otherwise) that would be required to be reflected on
a balance sheet in accordance with GAAP.
4.8 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Item 1 and Item 7
of the May 31, 2001 draft of quepasa's 2000 Form 10-K previously provided to
Parent, and in Notes 3 and 7 and the "Subsequent Events" Note to the financial
statements included in such draft 2000 Form 10-K or as set forth in SCHEDULE
4.8, since the date of the quepasa Most Recent Balance Sheet through the date
hereof there has not been an effect, change or development that has or will have
a quepasa Material Adverse Effect.
4.9 COMPLIANCE WITH LAWS.
(a) GENERAL. Each Company has complied with, and the quepasa Business
is being conducted in accordance with, all federal, state, municipal, foreign
and other laws, regulations, orders and other legal requirements applicable
thereto (collectively, "RULES"), except for such non-compliance that could not
reasonably be expected to constitute a quepasa
9
Material Adverse Effect. No Company is in default with respect to any Judgment
of any Governmental Authority or arbitrator.
(b) HAZARDOUS SUBSTANCES.
(i) Each Company has substantially complied with and is in
substantial compliance with the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, the Federal Water Pollution Control Act,
the Clean Air Act, as amended, and all other Rules relating to
pollution or protection of public health, welfare and the environment,
including laws relating to emissions, discharges, disposal practices,
releases or threatened releases of toxic or hazardous substances or
hazardous wastes, including asbestos and polychlorinated biphenyls, or
other pollutants, contaminants, petroleum products or chemicals
(collectively, "HAZARDOUS SUBSTANCES") into the environment (including
ambient air, indoor air, surface water, ground water, land surface or
sub-surface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Substances (collectively, the "ENVIRONMENTAL
LAWS").
(ii) Each Company has obtained and is in substantial compliance
with all licenses which it is required to obtain and maintain with
respect to the operation of the quepasa Business under the
Environmental Laws.
(iii) There are no polychlorinated biphenyls or asbestos
generated, treated, stored, disposed of, or otherwise deposited in or
located on any of the quepasa Real Property and there are no above
ground or underground storage tanks located on any of the quepasa Real
Property.
(iv) There has been no "release" of a "hazardous substance" as
those terms are defined in Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 ET SEQ. in
excess of a reportable quantity from or under any of the quepasa Real
Property or any other property that is used to conduct.
(v) No notice, demand, request for information, citation,
summons, complaint or order has been received by, or, to the knowledge
of the Company, is pending or threatened by any Person against any
Company nor has any penalty been assessed against any Company with
respect to any alleged violation of any Environmental Law.
(vi) No Company has disposed or arranged for the disposal of
Hazardous Substances on any third party property that has resulted in
or
10
could reasonably be expected to result in a quepasa Material Adverse
Effect.
(vii) No underground tanks, asbestos-containing material or
polychlorinated biphenyls are or have been located on quepasa Real
Property nor were any underground tanks, asbestos-containing material
or polychlorinated biphenyls located on real property formerly owned
or operated by any Company during the period of any Company's
ownership or operations of such real property, or to the knowledge of
the Company, prior to the period of the Company's ownership or
operations of such real property.
(viii) There are no material licenses, permits or other
authorizations ("PERMITS") issued pursuant to or required under any
Environmental Law which require the consent, notification, approval or
other action of any Person to remain in full force and effect
following consummation of the transactions contemplated hereby.
(ix) There has been no written report of any environmental
investigation, study, audit, test, review or other analysis conducted
of which any Company has knowledge or has in its possession or control
relating to the business of any Company or any real property that is
owned or operated by any Company which has not been made available to
Parent.
(x) No Company has agreed to assume, undertake or provide
indemnification for any liability of any other person under any
Environmental Law, including any obligation for corrective or remedial
action.
(xi) To quepasa's knowledge, no environmental assessment or
impact reports exist with respect to the quepasa Real Property.
4.10 TAXES.
(a) There have been properly completed and filed on a timely basis
and in correct form all Returns required to be filed by the Companies (the
"COMPANY RETURNS"). As of the time of filing, the Company Returns correctly
reflected the facts regarding the income, business, assets, operations,
activities, status or other matters of the Companies or any other information
required to be shown thereon. No extension of time within which to file any
Company Return which has not been filed has been requested.
(b) With respect to all amounts in respect of Taxes imposed upon the
Companies, or for which any of the Companies is or could be liable, whether to
taxing authorities (as, for example, under law) or to other persons or entities
(as, for example, under tax allocation agreements), with respect to all taxable
periods or portions of periods ending on or before the Closing Date, all
applicable tax laws and agreements have been fully complied with, and all
amounts required to be paid by any of the Companies, to taxing authorities or
others, on or before the date hereof have been paid.
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(c) No issues have been raised (and are currently pending) by any
taxing authority in connection with any of the Company Returns. No waivers of
statutes of limitation with respect to the Company Returns have been given by or
requested from any of the Companies. SCHEDULE 4.10 sets forth (i) the taxable
years of each of the Companies as to which the respective statutes of
limitations with respect to Taxes have not expired, and (ii) with respect to
such taxable years sets forth those years for which examinations have been
completed, those years for which examinations are presently being conducted,
those years for which examinations have not been initiated, and those years for
which required Returns have not yet been filed. All deficiencies asserted or
assessments made as a result of any examinations have been fully paid, or are
fully reflected as a liability in the quepasa Financial Statements contained in
the SEC Reports or are being contested in good faith and an adequate reserve
therefor has been established and is fully reflected in the financial
statements.
(d) None of the Companies is a party to or bound by any tax
indemnity, tax sharing or tax allocation agreement.
(e) None of the Companies has agreed to make, and is not required to
make, any adjustment under section 481(a) of the Code by reason of a change in
accounting method or otherwise.
(f) None of the Companies is a party to any agreement, contract,
arrangement or plan that has resulted or would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code.
(g) The unpaid Taxes of the Companies do not exceed the reserve for
tax liability with respect to the Companies (excluding any reserve for deferred
Taxes established to reflect timing differences between book and tax income) set
forth or included in the consolidated financial statements included in the SEC
Reports as adjusted for the passage of time through the Closing Date, in
accordance with the past practices of the Companies.
(h) The transactions contemplated herein will not result in
restorations into income of amounts deferred under the consolidated return
regulations, such as those relating to intercompany transactions, excess loss
accounts, and the like.
(i) The transactions contemplated herein are not subject to any tax
withholding provisions of law or regulations.
(j) No event has occurred which would in any way materially adversely
effect the amount or utilization of the Company's net operating loss
carry-forward.
4.11 INTELLECTUAL PROPERTY. The Companies own or have the right to use all
of the material Intellectual Property that is necessary to conduct the quepasa
Business as currently conducted ("QUEPASA IP"), free and clear of all Liens
other than those rights the absence of which could reasonably be expected to
have a material adverse effect on the value of the quepasa IP. No Company has
given or received any written notice of any pending conflict with, or
infringement of the rights of others with respect to, any quepasa IP or with
respect to any license of the quepasa IP. No quepasa IP owned, used or under
development by any Company conflicts with or infringes upon any Intellectual
Property of any third party in a manner that could
12
reasonably be expected have a material adverse effect on the value of the
quepasa IP. The validity of the quepasa IP and the title thereto is not being
questioned in any pending litigation proceeding to which any Company is a party
nor is any such litigation proceeding threatened, that could reasonably be
expected to have a material adverse effect on the value of the quepasa IP. The
consummation of the transactions contemplated by this Agreement will not result
in the loss or impairment of any quepasa IP that could reasonably be expected to
have a material adverse effect on the value of the quepasa IP.
4.12 LITIGATION. As of the date hereof and except as disclosed in SCHEDULE
4.12, (a) there is no action, suit, investigation, or proceeding (including
arbitration) pending or threatened against any Company, or any director or
officer of any Company in their representative capacities as such, before any
court, arbitrator or other Governmental Authority that could reasonably be
expected to have a quepasa Material Adverse Effect, and (b) to the knowledge of
quepasa, there is no basis for any such action, suit, investigation, or
proceeding. At the Effective Time, except as disclosed in SCHEDULE 4.12, there
will be no action, suit, investigation, or proceeding (including arbitration)
pending or threatened against any Company, or any director or officer of any
Company in their representative capacities as such, before any court, arbitrator
or other Governmental Authority that could, in Parent's sole reasonable
judgment, be expected to have a quepasa Material Adverse Effect.
4.13 CONSENTS. Except (i) for the filing of the Articles of Merger pursuant
to the NGCL, (ii) for compliance with any applicable requirement of the
Securities Act and the Exchange Act, or (iii) where failure to make such filing
or registration, give such notice or receive such permit, consent or approval
could not reasonably be expected to have a quepasa Material Adverse Effect, no
permit, authorization, consent or approval of any Governmental Authority is
necessary for the consummation by quepasa of the transactions contemplated by
this Agreement.
4.14 EMPLOYEE BENEFIT PLANS.
(a) None of the Companies or any Company ERISA Affiliate maintains,
administers or contributes to, or has any liability with respect to, nor do the
employees of the Company, its Subsidiaries or any Company ERISA Affiliate
receive or expect to receive as a condition of employment, benefits pursuant to
the following. For purposes of this Agreement, "COMPANY ERISA AFFILIATE" means
any corporation or trade or business which is, or ever was, treated as a single
employer with the Company under Section 414(b), (c), (m) or (o) of the Code.
(i) any employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
(each such plan, a "COMPANY PLAN"), including, without limitation, any
Multiemployer Plan, as within the meaning of Section 4001(a)(3) of
ERISA, except as set forth on SCHEDULE 4.14; or
(ii) any bonus, deferred compensation, performance compensation,
stock purchase, stock option, stock appreciation, severance, salary
continuation, vacation, sick leave, holiday pay, fringe benefit,
13
personnel policy, reimbursement program, incentive, insurance, welfare
or similar plan, program, policy or arrangement (each such plan, a
"COMPANY BENEFIT PLAN"); other than those Company Plans and Company
Benefit Plans described in SCHEDULE 4.14. Except as required by
Section 4980B of the Code, none of the Companies or any Company ERISA
Affiliate has promised any former employee or other individual medical
or other benefit coverage and none of the Companies or any Company
ERISA Affiliate maintains or contributes to any plan, program, policy
or arrangement providing medical or life insurance benefits to former
employees, their spouses or dependents or any other individual not
employed by the Companies or any Company ERISA Affiliate. No Company
Plan or Company Benefit Plan has any provision which could increase or
accelerate benefits or increase the liability of the Companies as a
result of any transaction contemplated by this Agreement.
(b) All Company Plans and Company Benefit Plans which are not
Multiemployer Plans and any related trust agreements or annuity contracts (or
any related trust instruments) comply with and are and have been operated in
accordance with each applicable provision of ERISA and the Code in all material
respects. Each Company Plan, as amended to date, which is not a Multiemployer
Plan, that is intended to be qualified under Sections 401(a) and 501(a) of the
Code has been determined to be so qualified by the Internal Revenue Service
("IRS"), has been submitted to the IRS for a determination with respect to such
qualified status, or the remedial amendment period with respect to Company Plan
will not have expired prior to the Effective Time, and no event has occurred,
either by reason of any action or failure to act, which would cause the loss of
any such qualification.
(c) Neither any Company Plan fiduciary nor any Company Plan has
engaged in any transaction in violation of Section 406 of ERISA or any
"prohibited transaction" (as defined in Section 4975(c)(1) of the Code) unless
exempt under Section 408 of ERISA or Section 4975 of the Code and there has been
no "reportable event" (as defined in Section 4043 of ERISA), with respect to any
Company Plan which is not a Multiemployer Plan, for which the 30-day notice
requirement has not been waived. None of the Companies or any Company ERISA
Affiliate has incurred or suffered to exist any "accumulated funding deficiency"
(as defined in Section 302 of ERISA) whether or not waived by the IRS, involving
any Company Plan subject to Section 412 of the Code or Part 3 of Subtitle B of
Title I of ERISA. No withdrawals have occurred so as to cause any Company Plan
to become subject to the provisions of Section 4063 of ERISA, and none of the
Companies or any Company ERISA Affiliate has ceased making contributions to any
employee benefit plan subject to Section 4064(a) of ERISA to which any of the
Companies or any Company ERISA Affiliate made contributions during the six years
prior to the date hereof or ceased operations at a facility so as to become
subject to Section 4062(e) of ERISA. Full payment has been made of all amounts
which the Companies or any Company ERISA Affiliate is required or committed to
pay to each of Company Plans and Company Benefit Plans relating to all periods
prior to or as of Effective Time.
(d) True and complete copies of each Company Plan, Company Benefit
Plan, related trust agreements, annuity contracts, determination letters, the
most recent determination letter request, summary plan descriptions, all
communications to employees
14
regarding any Company Plan or Company Benefit Plan, annual reports on Form 5500,
Form 990, actuarial reports and Pension Benefit Guaranty Corporation ("PBGC")
Forms 1 for the most recent three Company Plan years, and each plan, agreement,
instrument and commitment referred to herein has been previously furnished to
the Company. The annual reports on Form 5500 and Form 990 and actuarial
statements furnished to the Company fully and accurately set forth the financial
and actuarial condition of the respective Company Plan or Company Benefit Plan,
as may be applicable.
(e) The aggregate present value of all accrued benefits pursuant to
each Company Plan subject to Title IV of ERISA, determined on the basis of
current participation and projected compensation for active participants, and
including the maximum value of all subsidized benefits, and earnings, mortality
and other actuarial assumptions set forth in the most recent actuarial report
for such Company Plan does not exceed the current fair market value of Company
Plan's assets.
(f) None of the Companies or any Company ERISA Affiliate has incurred
any liability to the PBGC, including as a result of the voluntary or involuntary
termination of any Company Plan which is subject to Title IV of ERISA in excess
of $10,000 in the aggregate. There is currently no active filing by the
Companies or any Company ERISA Affiliate with the PBGC (and no proceeding has
been commenced by the PBGC and no condition exists and no event has occurred
that could constitute grounds for the termination of any Company Plan by the
PBGC) to terminate any Company Plan which is subject to Title IV of ERISA and
which has been maintained or funded, in whole or in part, by the Companies or
any Company ERISA Affiliate.
(g) There are no pending or threatened claims by or on behalf of any
of Company Plans or Company Benefit Plans by any employee or beneficiary covered
under any Company Plans or Company Benefit Plans or otherwise involving any
Company Plan or Company Benefit Plan (other than routine claims for benefits)
that could reasonably be expected to have a quepasa Material Adverse Effect.
(h) With respect to each Company Plan which is a Multiemployer Plan
covering employees of the Companies or any Company ERISA Affiliate: (i) none of
the Companies or such Company ERISA Affiliate would incur any withdrawal
liability on a complete withdrawal from each such Company Plan as of the
Effective Time, under all Rules and conditions of each such Company Plan and the
applicable provisions of law without regard to any limitation, reduction or
adjustment of liability under Title IV of ERISA or any Company Plan provision
based on Title IV of ERISA; (ii) none of the Companies or any Company ERISA
Affiliate has made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of
ERISA; (iii) none of the Companies or any Company ERISA Affiliate has any
contingent liability under Section 4204 of ERISA; and (iv) no such Company Plan
is in reorganization as defined in Section 4241 of ERISA and no circumstances
exist which present a material risk of any such Company Plan going into
reorganization, except for any of the foregoing that in the aggregate would
result in less than $10,000 of liability to the Company.
15
(i) With respect to employees of the Companies, the Companies are and
have been in compliance with all Rules respecting employment and employment
practices, terms and conditions of employment and wages and hours, including,
without limitation, any such laws respecting employment discrimination,
occupational safety and health, and unfair labor practices.
4.15 BROKERS. Except for Xxxxxxxx, Xxxxxxxx & Xxxxxx, Inc. ("FBR"), no
agent, broker, investment banker, financial advisor or other Person is or will
be entitled to any brokerage commission, finder's fee or like payment in
connection with any of the transactions contemplated by this Agreement based
upon such arrangements made by or on behalf of any Company.
4.16 INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION STATEMENT. None
of the information supplied or to be supplied by the Company for inclusion in
(i) the registration statement to be filed with the SEC on Form S-4 under the
Securities Act for the purpose of registering the shares of Parent Common Stock
to be issued in connection with the Merger (the "REGISTRATION STATEMENT") or
(ii) the proxy statement/prospectus (the "PROXY STATEMENT") to be distributed in
connection with the Company's meeting of stockholders (the "STOCKHOLDERS
MEETING") to vote upon this Agreement and the transactions contemplated hereby
will, in the case of the Registration Statement, or any post-effective
amendments thereof, at the time it becomes effective, and in the case of the
Proxy Statement or any amendments thereof or supplements thereto, at the time of
the initial mailing of the Proxy Statement or the mailing of any amendments or
supplements thereto, or at the time of the meeting of stockholders of the
Company to be held in connection with the Merger, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Registration
Statement and any post-effective amendments thereof, as of their effective date,
will comply (with respect to information relating to the Companies) as to form
in all material respects with the requirements of the Securities Act, and the
rules and regulations promulgated thereunder, and as of the date of its initial
mailing and as of the date of quepasa's stockholders' meeting, the Proxy
Statement will comply (with respect to information relating to the Companies) as
to form in all material respects with the applicable requirements of the
Exchange Act, and the rules and regulations promulgated thereunder.
Notwithstanding the foregoing, quepasa makes no representations with respect to
any statement in the foregoing documents based upon information supplied by
Buyer for inclusion therein.
4.17 QUEPASA BOARD RECOMMENDATION. Each member of the Board of Directors of
quepasa present at a meeting duly called and held, has (i) determined that this
Agreement and the transactions contemplated hereby are fair to and in the best
interests of the stockholders of quepasa and (ii) resolved to recommend that the
stockholders of quepasa approve the Merger and this Agreement; PROVIDED that
such recommendation may be withdrawn, modified or amended pursuant to Section
6.5(b) hereof.
4.18 REQUIRED STOCKHOLDER VOTE. The affirmative vote of at least 50% plus
one share of the outstanding shares of quepasa Common Stock, voting as a single
class, is the only votes of the holders of any class or series of quepasa's
securities necessary to approve the Merger.
16
4.19 LABOR MATTERS. With respect to employees of the Companies: (i) there
is no pending or, to the knowledge of the Company, threatened unfair labor
practice charges or employee grievance charges; (ii) there is no request for
union representation, labor strike, dispute, slowdown or stoppage actually
pending or threatened against or affecting the Company, and there has been no
such event during the 18 months preceding the date hereof; (iii) the Company is
not a party to any collective bargaining agreements; and (iv) except as set out
in SCHEDULE 4.19, the employment of each of the Company's employees is
terminable at will without cost to the Company except for payments required
under the Company Plans and Company Benefit Plans and payment of accrued
salaries or wages and vacation pay. No employee or former employee has any right
to be rehired by the Company prior to the Company's hiring a person not
previously employed by the Company. Except as required by Section 4980B of the
Code, neither the Company nor any Company ERISA Affiliate has any liability to
provide now or in the future medical benefits, life insurance or other welfare
benefits to former employees of the Company or any Company ERISA Affiliate or
their spouses or dependents or any other individual not employed by the Company
or any Company ERISA Affiliate. SCHEDULE 4.19 contains a true and complete list
of all employees who are employed by the Company as of the date hereof, and such
list correctly reflects their salaries, wages, other compensation (other than
benefits under the Company Plans), dates of employment and positions. The
Company is in compliance in all with all Rules respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, any such laws respecting employment
discrimination, occupational safety and health, and unfair labor practices
except where such failure to comply would not have a quepasa Material Adverse
Effect. The Company is not delinquent in payments to any of its employees for
any wages, salaries, commissions, bonuses or other direct compensation for any
services performed by them or any amounts required to be reimbursed to such
employees.
4.20 INSURANCE. Each Company maintains insurance policies (the "QUEPASA
INSURANCE POLICIES") against all risks of a character and in such amounts as are
usually insured against by similarly situated companies in the same or similar
businesses. Each quepasa Insurance Policy is in full force and effect and is
valid, outstanding and enforceable, and all premiums due thereon have been paid
in full. None of the quepasa Insurance Policies will terminate or lapse (or be
affected in any other materially adverse manner) by reason of the transactions
contemplated by this Agreement. Each Company has complied in all material
respects with the provisions of each quepasa Insurance Policy under which it is
the insured party. No insurer under any quepasa Insurance Policy has canceled or
generally disclaimed liability under any such policy or, to the Company's
knowledge, indicated any intent to do so or not to renew any such policy. All
material claims under the quepasa Insurance Policies have been filed in a timely
fashion.
4.21 CERTAIN BUSINESS PRACTICES. No Company or any directors, officers,
agents or employees of any Company has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (iii) made any other unlawful payment.
17
4.22 CONTRACTS.
(a) SCHEDULE 4.22 contains a complete and accurate list of all
contracts (written or oral), undertakings, commitments or agreements of the
following categories to which any Company is a party or by which any of them is
bound (the "QUEPASA CONTRACTS"):
(i) quepasa Contracts requiring annual expenditures by or
liabilities of any Company in excess of $50,000 that have a remaining
term in excess of 30 days or are not cancelable (without material
penalty, cost or other liability) within 30 days;
(ii) promissory notes, loans, agreements, indentures, evidences
of indebtedness or other instruments relating to the lending of money,
whether as borrower, lender or guarantor, in excess of $50,000.
(iii) quepasa Contracts containing covenants limiting the freedom
of any Company to engage in any line of business (other than
prohibitions against engaging in business relating to specific product
lines) or compete with any person, in any product line or line of
business, or operate at any location;
(iv) joint venture or partnership agreements or joint development
or similar agreements pursuant to which any third party has been
entitled or is reasonably expected to be entitled to share in profits
or losses of any Company;
(v) quepasa Contracts with any federal, state or local
government which have a remaining term in excess of one year or are
not cancelable (without material penalty, cost or other liability)
within one year;
(vi) other quepasa Contract or commitment in which any Company
has granted manufacturing rights or exclusive marketing rights
relating to any product or service, any group of products or services
or any territory; and
(vii) as of the date hereof any other quepasa Contract the
performance of which could be reasonably expected to require
expenditures by any Company in excess of $50,000 other than those
cancelable (without material penalty, cost or other liability) within
30 days.
(b) Except as set forth on SCHEDULE 4.22, each of the quepasa
Contracts is a valid and binding obligation of the Company and, to the Company's
knowledge, the other parties thereto, enforceable against the applicable Company
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance,
arrangement or similar laws affecting creditors' rights generally and by general
principles of equity. Except as set forth on SCHEDULE 4.22, no event has
18
occurred which would, on notice or lapse of time or both, entitle the holder of
any indebtedness issued pursuant to a quepasa Contract to accelerate, or that
does accelerate, the maturity of any such indebtedness.
(c) No Company is in breach, default or violation (and no event has
occurred or not occurred through the Company's action or inaction or through the
action or inaction of any third parties, which with notice or the lapse of time
or both would constitute a breach, default or violation) of any term, condition
or provision of any quepasa Contract to which any Company is now a party or by
which any of them or any of their respective properties or assets may be bound,
except for violations set forth on SCHEDULE 4.22.
4.23 RELATED PARTY TRANSACTIONS. Except as set forth in the SEC Reports,
(a) no beneficial owner of 5% or more of any Company's outstanding capital
stock, or (b) officer or director of the Company or (c) any Person in which any
such beneficial owner, officer or director owns any beneficial interest (other
than a publicly held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than 1% of the stock of
which is beneficially owned by all such Persons) (collectively, "QUEPASA RELATED
PARTIES") has any interest in: (i) any contract, arrangement or understanding
with, or relating to, the business or operations of, any Company; (ii) any loan,
arrangement, understanding, agreement or contract for or relating to
indebtedness of any Company; or (iii) any property (real, personal or mixed),
tangible or intangible, used in the business or operations of any Company,
excluding any such contract, arrangement, understanding or agreement
constituting a Company Plan or a Company Benefit Plan. Following the Effective
Time, except for obligations set forth in this Agreement, no Company will have
any obligations to any quepasa Related Party except for (i) accrued salary for
the pay period commencing immediately prior to the Effective Time, and (ii) the
obligations set forth in the SEC Reports.
4.24 ASSETS.
(a) The assets and properties of the Companies, considered as a
whole, constitute all of the assets and properties which are reasonably required
for the business and operations of the Companies as presently conducted. The
Companies have good and marketable title to or a valid leasehold estate in (i)
all personal properties and assets reflected on the date of the quepasa Most
Recent Balance Sheet (except for properties or assets subsequently sold in the
ordinary course of business consistent with past practice or as set forth on
SCHEDULE 4.24).
(b) The Company does not own any real property. SCHEDULE 4.24 sets
forth (i) a complete and accurate list of all leases pursuant to which each
Company leases real property or personal property and which require an annual
expenditure by each Company individually in excess of $50,000 or which are not
cancelable (without material penalty, cost or other liability) within 90 days
and (iii) with respect to each lease for real property, the term (including
renewal options) and current fixed rent.
(c) Complete and correct copies of all leases concerning quepasa Real
Property have been made available to Buyer.
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(d) quepasa has previously delivered to Buyer lists of the most
recently issued real and personal (including vehicles) property tax assessments
and tax bills, if any, for the 2000 and 1999 tax years.
Each Company holds a valid leasehold estate for each leased property, and
enjoys peaceful and undisturbed possession thereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT,
MERGER SUB AND CONTRIBUTION SUB
Parent, Merger Sub and Contribution Sub, jointly and severally, hereby
represent and warrant to quepasa, except as set forth by specific reference to
the applicable section of this Article V in the Schedules and except for
information set forth anywhere in the Schedules that is sufficiently clear and
specific on its face to communicate the specific representations and warranties
which it qualifies, as follows:
5.1 ORGANIZATION; AUTHORITY. Each of Parent, Merger Sub and Contribution
Sub is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization. Each of Parent, Merger Sub and
Contribution Sub has all requisite corporate power and authority to own, lease
and operate its properties and assets and to conduct its business as now being
conducted, except where the failure to have such power or authority would not
reasonably be expected to prevent or materially delay consummation of the
transactions contemplated hereby. Each of Parent, Merger Sub and Contribution
Sub has qualified as a foreign corporation or other entity and (where
applicable) is in good standing under the laws of all jurisdictions where the
nature of its business or the nature and location of its assets requires such
qualifications, except for jurisdictions in which the failure to be so qualified
or in good standing would not reasonably be expected to prevent or materially
delay consummation of the transactions contemplated hereby. Each of Parent,
Merger Sub and Contribution Sub has the corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution
and delivery of this Agreement and the performance by Parent, Merger Sub and
Contribution Sub have been approved by the Board of Directors of Parent, Merger
Sub and Contribution Sub, and no other proceedings on their part are necessary
to authorize such execution, delivery and performance. This Agreement has been
duly executed by Parent, Merger Sub and Contribution Sub and, assuming the due
and valid authorization, execution and delivery of this Agreement by quepasa,
constitutes the valid and legally binding obligation of Parent, Merger Sub and
Contribution Sub enforceable against each of Parent, Merger Sub and Contribution
Sub in accordance with its terms, except as enforceability may be limited by
bankruptcy, moratorium, reorganization, fraudulent conveyance, receivership or
similar laws affecting the rights of creditors generally.
5.2 CAPITALIZATION.
(a) The authorized capital stock of Parent consists of (i) 50,000,000
shares of Parent Common Stock, of which 18,904,649 shares are issued and
outstanding and owned beneficially by Amortibanc Management, L.C., a Texas
limited liability company, no
20
shares are held in the treasury of Parent, 3,500,000 shares are reserved for
issuance pursuant to the Parent Option Plan, and 14,827,175 shares are reserved
for issuance pursuant to warrants to purchase Parent Common Stock (the "PARENT
WARRANTS") and (ii) 20,000,000 shares of preferred stock, none of which are
issued and outstanding. The Parent Option Plan and the Parent Warrants are in
the forms of EXHIBIT C and EXHIBIT D, respectively.
(b) As of the date hereof and immediately prior to the Effective
Time, except as contemplated by SCHEDULE 6.13, there are outstanding, under the
Parent Option Plan, no options to purchase shares of Parent Common Stock
("PARENT OPTIONS"). As of the date hereof and immediately prior to the Effective
Time, other than the Parent Warrants, no Person owns, of record or beneficially,
any rights to acquire capital stock of Parent, whether pursuant to the exercise
of warrants, conversion of securities, exercise of stock options or otherwise.
There are no option plans other than the Parent Option Plan.
(c) All outstanding shares of Parent Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
set forth in this Section 5.2 and except for the Parent Options to be issued at
the Effective Time as contemplated by Section 6.13, there are outstanding (i) no
shares of capital stock or other voting securities of Parent, (ii) no securities
of Parent convertible into or exchangeable for shares of capital stock or voting
securities of Parent and (iii) no options, warrants or other rights to acquire
from Parent, and no obligation of Parent to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of Parent or equity equivalent interests in the ownership or
earnings of Parent (the items in Sections 5.2(a) and (b) hereof being referred
to collectively as the "PARENT SECURITIES"). There are no outstanding
obligations of Parent or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any Parent Securities or pay any dividend or make any other
distribution in respect thereof.
(d) There are no outstanding obligations of Parent and its
Subsidiaries to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any other Person.
(e) No voting securities of Parent are entitled to vote by class or
have any voting right or preference different, on a per share basis, than the
Parent Common Stock. There are no voting trusts or other agreements (other than
this Agreement) or understandings to which Parent is a party or of which Parent
has knowledge with respect to the capital stock of Parent.
5.3 CONTRIBUTION SUB. Parent owns all of the issued and outstanding equity
interests of Contribution Sub. Since its date of formation, other than acquiring
and holding the membership interests, real property and related assets set forth
in EXHIBIT B, Contribution Sub has conducted no other business prior to the date
hereof. Contribution Sub owns all of the assets set forth in EXHIBIT B, subject
only to the Parent Liabilities set forth in EXHIBIT B.
5.4 PARENT AND MERGER SUB. Since their date of incorporation, neither
Parent nor Merger Sub has carried on any business or conducted any operations
other than the execution of this Agreement, the performance of its obligations
hereunder and matters ancillary thereto. Merger Sub is a wholly-owned subsidiary
of Parent. As of the date hereof, and as of
21
immediately prior to the Effective Time, there are 100 shares of Merger Sub
Common Stock issued and outstanding, all of which are duly authorized, fully
paid and nonassessable and owned beneficially and of record by Parent.
5.5 AUTHORITY RELATIVE TO AGREEMENT. Each of Parent, Merger Sub and
Contribution Sub has the power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the performance by each of Parent, Merger Sub and Contribution Sub
of its obligations hereunder have been duly authorized by its boards of
directors and shareholders and no other corporate, trust or member proceedings
on the part of each of Parent, Merger Sub and Contribution Sub are necessary to
authorize such execution, delivery and performance. This Agreement has been duly
executed by each of Parent, Merger Sub and Contribution Sub and, assuming the
due and valid authorization, execution and delivery of this Agreement by
quepasa, constitutes a valid and legally binding obligation of each of Parent,
Merger Sub and Contribution Sub enforceable against each of Parent, Merger Sub
and Contribution Sub in accordance with its terms, except as enforceability may
be limited by bankruptcy, moratorium, reorganization, fraudulent conveyance,
receivership or similar laws affecting the rights of creditors generally.
Parent's shareholders shall have taken all action necessary to authorize
Parent's board of directors to effect a reverse stock split of up to one for 20
shares of Parent Common Stock at any time during the 24 month period commencing
at the Effective Time.
5.6 ABSENCE OF CONFLICTS. The execution, delivery and performance by each
of Parent, Merger Sub and Contribution Sub of this Agreement, and the
transactions contemplated hereby, do not and will not (i) conflict with or
result in any violation of, or constitute a breach or default under any term of
the Organizational Documents of each of Parent, Merger Sub and Contribution Sub
or (ii) constitute a material breach or default, or require Consents under, any
agreement, permit or other instrument to which any of Parent, Merger Sub and
Contribution Sub and Merger Sub is a party, or by which any of Parent, Merger
Sub and Contribution Sub is bound or to which any of the assets of Parent,
Merger Sub and Contribution Sub business is subject, or any Judgment to which
the assets of Parent, Merger Sub and Contribution Sub is bound or subject or any
Rule, and will not result in the creation of any Lien upon any of the assets of
Parent, Merger Sub and Contribution Sub or its business, except in the case of
(ii) for any of the foregoing that would not reasonably be expected to prevent
or materially delay consummation of the transactions contemplated hereby.
5.7 PARENT FINANCIAL STATEMENTS. The audited consolidated financial
statements and unaudited interim financial statements attached hereto as
SCHEDULE 5.7 (including any related notes and schedules) (collectively, the
"PARENT FINANCIAL STATEMENTS") comply in all material respects with the
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto and have been prepared in accordance with GAAP
applied on a consistent basis by Parent during the periods involved, except as
otherwise described in the notes thereto and, in the case of the unaudited
interim financial statements, subject to usual and recurring year-end
adjustments normal in nature and amount. The Parent Financial Statements fairly
present in all material respects the financial position of Parent and its
Subsidiaries as of the date set forth on each of such Parent Financial
Statements and the results of operations of Parent and its Subsidiaries for the
periods indicated. Except as (i) reflected on SCHEDULE 5.7, (ii) reserved
against in the balance sheet of Parent and its Subsidiaries dated as of
22
June 30, 2001, including the notes thereto (the "PARENT MOST RECENT BALANCE
SHEET"), and (iii) except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice, since the date of the
Parent Most Recent Balance Sheet, as of the date hereof, neither Parent nor any
of its Subsidiaries have any liabilities of any nature (whether accrued,
contingent, absolute, determined, determinable or otherwise) that would be
required to be reflected on a balance sheet in accordance with GAAP.
5.8 ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 5.8, since
the date of the Parent Most Recent Balance Sheet through the date hereof there
has not been an effect, change or development that has or will have a Parent
Material Adverse Effect.
5.9 COMPLIANCE WITH LAWS.
(a) GENERAL. Parent and each of its Subsidiaries and predecessors has
complied with, and the Parent Business is being conducted in accordance with,
all Rules, except for such non-compliance that could not reasonably be expected
to constitute a Parent Material Adverse Effect. None of Parent or any of its
Subsidiaries is in default with respect to any Judgment of any Governmental
Authority or arbitrator.
(b) HAZARDOUS SUBSTANCES. Except as set forth in SCHEDULE 5.9(b) and
except with respect to the real property owned by Houston Greenwich, L.L.C. and
Houston Wheatstone, L.L.C. for which the following are qualified as to the
knowledge of Parent, its Subsidiaries and its predecessors:
(i) Each of Parent, its Subsidiaries and its predecessors has
substantially complied with and is in substantial compliance with all
Environmental Laws.
(ii) Each of Parent, its Subsidiaries and its predecessors has
obtained and is in substantial compliance with all licenses which it
is required to obtain and maintain with respect to the operation of
the Parent Business under the Environmental Laws.
(iii) There are no polychlorinated biphenyls or asbestos
generated, treated, stored, disposed of, or otherwise deposited in or
located on any of the Parent Real Property and there are no above
ground or underground storage tanks located on any of the Parent Real
Property.
(iv) There has been no "release" of a "hazardous substance" as
those terms are defined in Comprehensive Environmental Response,
Compensation and Liability Act , 42 U.S.C. Section 9601 ET SEQ. in
excess of a reportable quantity from or under any of the Parent Real
Property or any other property that is used to conduct.
(v) No notice, demand, request for information, citation,
summons, complaint or order has been received by, or, to the knowledge
of Parent, is pending or threatened by any Person against any of
Parent, its Subsidiaries and its predecessors, nor has any penalty
been assessed
23
against any of Parent, its Subsidiaries and its predecessors with
respect to any alleged violation of any Environmental Law.
(vi) None of Parent, its Subsidiaries or its predecessors has
disposed or arranged for the disposal of Hazardous Substances on any
third party property that has resulted in or may reasonably be
expected to result in a Parent Material Adverse Effect.
(vii) No underground tanks, asbestos-containing material or
polychlorinated biphenyls are or have been located on real property
that is owned or operated by any of Parent, its Subsidiaries and its
predecessors, nor were any underground tanks, asbestos-containing
material or polychlorinated biphenyls located on real property
formerly owned or operated by any of Parent, its Subsidiaries and its
predecessors during the period of any of Parent, its Subsidiaries' and
its predecessors' ownership or operations of such real property, or to
the knowledge of Parent, prior to the period of Parent, its
Subsidiaries' and its predecessors' ownership or operations of such
real property.
(viii) There are no material Permits issued pursuant to or
required under any Environmental Law which require the consent,
notification, approval or other action of any Person to remain in full
force and effect following consummation of the transactions
contemplated hereby. A true and complete list of all material Permits
issued pursuant to or required under Environmental Laws is set forth
on SCHEDULE 5.9(b).
(ix) There has been no written report of any environmental
investigation, study, audit, test, review or other analysis conducted
of which any of Parent, its Subsidiaries and its predecessors has
knowledge or has in its possession or control relating to the business
of any of Parent, its Subsidiaries and its predecessors or any real
property that is owned or operated by any Affiliate of that has not
been made available to Parent.
(x) None of Parent, its Subsidiaries or its predecessors has
agreed to assume, undertake or provide indemnification for any
liability of any other person under any Environmental Law, including
any obligation for corrective or remedial action.
(xi) Parent has provided quepasa with all material environmental
assessment or impact reports on the Parent Real Property done for or
on behalf of each of Parent, its Subsidiaries and its predecessors
within the last five years of the date of this Agreement which are in
its possession or under its reasonable control.
5.10 TAXES.
(a) There have been properly completed and filed on a timely basis
and in correct form all Returns required to be filed by Parent, its Subsidiaries
and its
24
predecessors (the "PARENT RETURNS"). As of the time of filing, the Parent
Returns correctly reflected the facts regarding the income, business, assets,
operations, activities, status or other matters of the Person filing such Parent
Returns, or any other information required to be shown thereon. No extension of
time within which to file any Parent Return which has not been filed has been
requested.
(b) With respect to all amounts in respect of Taxes imposed upon
Parent, its Subsidiaries and its predecessors, or for which any of Parent, its
Subsidiaries and its predecessors is or could be liable, whether to taxing
authorities (as, for example, under law) or to other persons or entities (as,
for example, under tax allocation agreements), with respect to all taxable
periods or portions of periods ending on or before the Closing Date, all
applicable tax laws and agreements have been fully complied with, and all
amounts required to be paid by any of Parent, its Subsidiaries and its
predecessors, to taxing authorities or others, on or before the date hereof have
been paid.
(c) No issues have been raised (and are currently pending) by any
taxing authority in connection with any of the Parent Returns. No waivers of
statutes of limitation with respect to the Parent Returns have been given by or
requested from any of Parent, its Subsidiaries and its predecessors. SCHEDULE
5.10 sets forth (i) the taxable years of each of Parent, its Subsidiaries and
its predecessors as to which the respective statutes of limitations with respect
to Taxes have not expired, and (ii) with respect to such taxable years sets
forth those years for which examinations have been completed, those years for
which examinations are presently being conducted, those years for which
examinations have not been initiated, and those years for which required Parent
Returns have not yet been filed. All deficiencies asserted or assessments made
as a result of any examinations have been fully paid, or are fully reflected as
a liability in the Parent Financial Statements or are being contested in good
faith and an adequate reserve therefor has been established and is fully
reflected in the financial statements.
(d) None of Parent, its Subsidiaries and its predecessors is a party
to or bound by any tax indemnity, tax sharing or tax allocation agreement.
(e) None of Parent, its Subsidiaries and its predecessors has agreed
to make, and is not required to make, any adjustment under section 481(a) of the
Code by reason of a change in accounting method or otherwise.
(f) None of Parent, its Subsidiaries and its predecessors is a party
to any agreement, contract, arrangement or plan that has resulted or would
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(g) The unpaid Taxes of Parent, its Subsidiaries and its predecessors
do not exceed the reserve for tax liability with respect to Parent and its
Subsidiaries (excluding any reserve for deferred Taxes established to reflect
timing differences between book and tax income) set forth or included in the
Parent Financial Statements as adjusted for the passage of time through the
Closing Date, in accordance with the past practices of Parent, its Subsidiaries
and its predecessors.
25
(h) The transactions contemplated herein will not result in
restorations into income of amounts deferred under the consolidated return
regulations, such as those relating to intercompany transactions, excess loss
accounts, and the like.
(i) The transactions contemplated herein are not subject to any tax
withholding provisions of law or regulations.
5.11 INTELLECTUAL PROPERTY. Except as set forth on SCHEDULE 5.11, Parent
owns or has the right to use all of the material Intellectual Property that is
necessary to conduct the Parent Business as currently conducted ("PARENT IP"),
free and clear of all Liens other than those rights the absence of which could
reasonably be expected to have a material adverse effect on the value of the
Parent IP. None of Parent, its Subsidiaries or its predecessors has given or
received any written notice of any pending conflict with, or infringement of the
rights of others with respect to, any Parent IP or with respect to any license
of the Parent IP. No Parent IP owned, used or under development by any of
Parent, its Subsidiaries or its predecessors conflicts with or infringes upon
any Intellectual Property of any third party in a manner that could reasonably
be expected have a Parent Material Adverse Effect. The validity of the Parent IP
and the title thereto is not being questioned in any pending litigation
proceeding to which any of Parent, its Subsidiaries and its predecessors is a
party nor is any such litigation proceeding threatened, that could reasonably be
expected to have a material adverse effect on the value of the Parent IP. The
consummation of the transactions contemplated by this Agreement will not result
in the loss or impairment of any Parent IP that could reasonably be expected to
have a material adverse effect on the value of the Parent IP.
5.12 LITIGATION. As of the date hereof, (a) there is no action, suit,
investigation, or proceeding (including arbitration) pending or threatened
against any of Parent, its Subsidiaries and its predecessors (or any director or
officer of any of Parent, its Subsidiaries and its predecessors in their
respective capacities as such) before any court, arbitrator or other
Governmental Authority, which could reasonably be expected to have a Parent
Material Adverse Effect and (b) to the knowledge of Parent, there is no basis
for any such action, suit, investigation, or proceeding.
5.13 CONSENTS. Except (i) for the filing of the Articles of Merger pursuant
to the NGCL, (ii) for compliance with any applicable requirement of the Exchange
Act, (iii) for such consents as set forth in SCHEDULE 5.13 or (iv) where failure
to make such filing or registration, give such notice or receive such permit,
consent or approval could not reasonably be expected to have a Parent Material
Adverse Effect, no permit, authorization, consent or approval of any
Governmental Authority is necessary for the consummation by Parent, Merger Sub
or Contribution Sub of the transactions contemplated by this Agreement.
26
5.14 EMPLOYEE BENEFIT PLANS.
(a) None of Parent, its Subsidiaries its predecessors, or any Parent
ERISA Affiliate maintains, administers or contributes to, or has any liability
with respect to, nor do the employees of Parent, its Subsidiaries, its
subsidiaries or any Parent ERISA Affiliate receive or expect to receive as a
condition of employment, benefits pursuant to the following. For purposes of
this Agreement, "PARENT ERISA AFFILIATE" means any corporation or trade or
business which is, or ever was, treated as a single employer with Parent under
Section 414(b), (c), (m) or (o) of the Code.
(i) any employee benefit plan (as defined in Section 3(3) of
ERISA) (each such plan, a "PARENT PLAN"), including, without
limitation, any Multiemployer Plan, as within the meaning of Section
4001(a)(3) of ERISA, except as set forth on SCHEDULE 5.14; or
(ii) any bonus, deferred compensation, performance compensation,
stock purchase, stock option, stock appreciation, severance, salary
continuation, vacation, sick leave, holiday pay, fringe benefit,
personnel policy, reimbursement program, incentive, insurance, welfare
or similar plan, program, policy or arrangement (each such plan, a
"PARENT BENEFIT PLAN"); other than those Parent Plans and Parent
Benefit Plans described in SCHEDULE 5.14. Except as required by
Section 4980B of the Code, none of Parent, its Subsidiaries, its
predecessors or any Parent ERISA Affiliate has promised any former
employee or other individual medical or other benefit coverage and
none of Parent, its Subsidiaries, its predecessors or any Parent ERISA
Affiliate maintains or contributes to any plan, program, policy or
arrangement providing medical or life insurance benefits to former
employees, their spouses or dependents or any other individual not
employed by Parent, its Subsidiaries, its predecessors or any Parent
ERISA Affiliate. No Parent Plan or Parent Benefit Plan has any
provision which could increase or accelerate benefits or increase the
liability of Parent or its Subsidiaries as a result of any transaction
contemplated by this Agreement.
(b) All Parent Plans and Parent Benefit Plans which are not
Multiemployer Plans and any related trust agreements or annuity contracts (or
any related trust instruments) comply with and are and have been operated in
accordance with each applicable provision of ERISA and the Code in all material
respects. Each Parent Plan, as amended to date, which is not a Multiemployer
Plan, that is intended to be qualified under Sections 401(a) and 501(a) of the
Code has been determined to be so qualified by the IRS, has been submitted to
the IRS for a determination with respect to such qualified status, or the
remedial amendment period with respect to Parent Plan will not have expired
prior to the Effective Time, and no event has occurred, either by reason of any
action or failure to act, which would cause the loss of any such qualification.
(c) Neither any Parent Plan fiduciary nor any Parent Plan has engaged
in any transaction in violation of Section 406 of ERISA or any "prohibited
transaction" (as
27
defined in Section 4975(c)(1) of the Code) unless exempt under Section 408 of
ERISA or Section 4975 of the Code and there has been no "reportable event" (as
defined in Section 4043 of ERISA), with respect to any Parent Plan which is not
a Multiemployer Plan, for which the 30-day notice requirement has not been
waived. None of Parent, its Subsidiaries, its predecessors or any Parent ERISA
Affiliate has incurred or suffered to exist any "accumulated funding deficiency"
(as defined in Section 302 of ERISA) whether or not waived by the IRS, involving
any Parent Plan subject to Section 412 of the Code or Part 3 of Subtitle B of
Title I of ERISA. No withdrawals have occurred so as to cause any Parent Plan to
become subject to the provisions of Section 4063 of ERISA, and none of Parent,
its Subsidiaries, its predecessors or any Parent ERISA Affiliate has ceased
making contributions to any employee benefit plan subject to Section 4064(a) of
ERISA to which any of Parent, its Subsidiaries, its predecessors or any Parent
ERISA Affiliate made contributions during the six years prior to the date hereof
or ceased operations at a facility so as to become subject to Section 4062(e) of
ERISA. Full payment has been made of all amounts which Parent, its Subsidiaries,
its predecessors or any Parent ERISA Affiliate is required or committed to pay
to each of Parent Plans and Parent Benefit Plans relating to all periods prior
to or as of Effective Time.
(d) True and complete copies of each Parent Plan, Parent Benefit
Plan, related trust agreements, annuity contracts, determination letters, the
most recent determination letter request, summary plan descriptions, all
communications to employees regarding any Parent Plan or Parent Benefit Plan,
annual reports on Form 5500, Form 990, actuarial reports and PBGC Forms 1 for
the most recent three Parent Plan years, and each plan, agreement, instrument
and commitment referred to herein has been previously furnished to quepasa. The
annual reports on Form 5500 and Form 990 and actuarial statements furnished to
Parent fully and accurately set forth the financial and actuarial condition of
the respective Parent Plan or Parent Benefit Plan, as may be applicable.
(e) The aggregate present value of all accrued benefits pursuant to
each Parent Plan subject to Title IV of ERISA, determined on the basis of
current participation and projected compensation for active participants, and
including the maximum value of all subsidized benefits, and earnings, mortality
and other actuarial assumptions set forth in the most recent actuarial report
for such Parent Plan does not exceed the current fair market value of Parent
Plan's assets.
(f) None of Parent, its Subsidiaries, its predecessors or any Parent
ERISA Affiliate has incurred any liability to the PBGC, including as a result of
the voluntary or involuntary termination of any Parent Plan which is subject to
Title IV of ERISA in excess of $10,000 in the aggregate. There is currently no
active filing by Parent, its Subsidiaries, its predecessors or any Parent ERISA
Affiliate with the PBGC (and no proceeding has been commenced by the PBGC and no
condition exists and no event has occurred that could constitute grounds for the
termination of any Parent Plan by the PBGC) to terminate any Parent Plan which
is subject to Title IV of ERISA and which has been maintained or funded, in
whole or in part, by Parent, its Subsidiaries, its predecessors or any Parent
ERISA Affiliate.
(g) There are no pending or threatened claims by or on behalf of any
of Parent Plans or Parent Benefit Plans by any employee or beneficiary covered
under any Parent Plans or Parent Benefit Plans or otherwise involving any Parent
Plan or Parent Benefit Plan
28
(other than routine claims for benefits) that could reasonably be expected to
have a Parent Material Adverse Effect.
(h) With respect to employees of Parent, its Subsidiaries and its
predecessors, Parent, its Subsidiaries and its predecessors are and have been in
compliance with all Rules respecting employment and employment practices, terms
and conditions of employment and wages and hours, including, without limitation,
any such laws respecting employment discrimination, occupational safety and
health, and unfair labor practices.
5.15 BROKERS. No agent, broker, investment banker, financial advisor or
other Person is or will be entitled to any brokerage commission, finder's fee or
like payment in connection with any of the transactions contemplated by this
Agreement based upon such arrangements made by or on behalf of any of Parent,
Merger Sub and Contribution Sub.
5.16 INFORMATION IN DISCLOSURE DOCUMENTS AND REGISTRATION STATEMENT. None
of the information supplied or to be supplied by Parent, Merger Sub and
Contribution Sub for inclusion in (i) the Registration Statement or (ii) the
Proxy Statement will, in the case of the Registration Statement, and any
post-effective amendments thereof, at the time it becomes effective, and in the
case of the Proxy Statement or any amendments thereof or supplements thereto, at
the time of the initial mailing of the Proxy Statement or the mailing of any
amendments or supplements thereto, or at the time of the meeting of stockholders
of quepasa be held in connection with the Merger, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Registration
Statement and any post-effective amendments thereof, as of their effective date,
will comply (with respect to information relating to Parent) as to form in all
material respects with the requirements of the Securities Act, and the rules and
regulations promulgated thereunder, and as of the date of its initial mailing
and as of the date of quepasa's stockholders' meeting, the Proxy Statement will
comply (with respect to information relating to Parent) as to form in all
material respects with the applicable requirements of the Exchange Act, and the
rules and regulations promulgated thereunder. Notwithstanding the foregoing,
each of Parent, Merger Sub and Contribution Sub makes no representations with
respect to any statement in the foregoing documents based upon information
supplied by quepasa for inclusion therein.
5.17 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Since the date of the Parent Most Recent Balance Sheet, the
business of the Parent and its Subsidiaries has been conducted in all material
respects in the ordinary course consistent with past practice, none of Parent
and its Subsidiaries has engaged in any transaction or series of related
transactions material to Parent and its Subsidiaries other than in the ordinary
course consistent with past practice, and there has not been any event,
occurrence or development, alone or taken together with all other existing
facts, that, individually or in the aggregate, has had, or could reasonably be
expected to have, a Parent Material Adverse Effect.
(b) Without limiting the generality of the foregoing Section 5.17(a),
since the date of the Parent Most Recent Balance Sheet and except as disclosed
in SCHEDULE 5.17, there has not been:
29
(i) any damage, destruction or loss to any of the assets or
properties of Parent and its Subsidiaries that, individually or in the
aggregate, has a Parent Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend or
distribution or capital return in respect of any interest in Parent
and its Subsidiaries or any redemption, purchase or other acquisition
by any of Parent and its Subsidiaries of any membership or other
equity interests or any repurchase, redemption or other purchase by
any of Parent and its Subsidiaries of any membership or other equity
interests in, any of Parent and its Subsidiaries, or any amendment of
any material term of any outstanding security of any of Parent and its
Subsidiaries;
(iii) any sale, assignment, transfer, lease or other disposition
or agreement to sell, assign, transfer, lease or otherwise dispose of
any of the assets of any of Parent and its Subsidiaries for
consideration in the aggregate in excess of $100,000 or other than in
the ordinary course of business consistent with past practices;
(iv) any acquisition (by merger, consolidation, or acquisition of
stock or assets) by any of Parent and its Subsidiaries of any
corporation, partnership or other business organization or division
thereof or any equity interest therein for consideration, or any loans
or advances to any Person in excess of $100,000 in the aggregate;
(v) any incurrence of or guarantee with respect to any
indebtedness for borrowed money by any of Parent and its Subsidiaries
other than pursuant to Parent and its Subsidiaries' existing credit
facilities in the ordinary course of business or any creation or
assumption by any of Parent and its Subsidiaries of any material Lien
on any material asset;
(vi) any material change in any method of accounting or
accounting practice used by any of Parent and its Subsidiaries, other
than such changes required by a change in law or generally accepted
accounting principles;
(vii) (A) any employment, deferred compensation, severance or
similar agreement entered into or amended by any of Parent and its
Subsidiaries and any employee, (B) any increase in the compensation
payable or to become payable by it to any of its directors, officers
or managers or generally applicable to all or any category of any of
Parent and its Subsidiaries' employees, (C) any increase in the
coverage or benefits available under any vacation pay, company awards,
salary continuation or disability, sick leave, deferred compensation,
bonus or other incentive compensation, insurance, pension or other
plan, payment or arrangement made to, for or with any of the
directors, officers or managers of any of Parent and its Subsidiaries
or generally applicable to
30
all or any category of any of Parent's and its Subsidiaries' employees
or (D) severance pay arrangements made to, for or with such directors,
officers, managers or employees other than, in the case of (B) and (C)
above, increases in the ordinary course of business consistent with
past practice and that in the aggregate have not resulted in a
material increase in the benefits or compensation expense of any of
Parent and its Subsidiaries;
(viii) any revaluing in any material respect any of the assets of
any of Parent and its Subsidiaries, including without limitation
writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business;
(ix) any loan, advance or capital contribution made by any of
Parent and its Subsidiaries to, or investment in, any person other
than loans, advances or capital contributions, or investments of any
of Parent and its Subsidiaries made in the ordinary course of business
consistent with past practices; or
(x) any agreement to take any actions specified in this Section
5.17, except for this Agreement.
5.18 LABOR MATTERS. With respect to employees of Parent and its
Subsidiaries: (i) there is no pending or, to the knowledge of Parent, threatened
unfair labor practice charges or employee grievance charges; (ii) there is not
request for union representation, labor strike, dispute, slowdown or stoppage
actually pending or, to the knowledge of Parent, threatened against or affecting
Parent and its Subsidiaries, and there has been no such event during the 18
months preceding the date hereof; and (iii) None of Parent or any of its
Subsidiaries is a party to any collective bargaining agreements. SCHEDULE 5.18
contains a true and complete list of all employees who are employed by Parent
and its Subsidiaries as of the date hereof. Parent, each of its Subsidiaries and
each of its predecessors is in compliance in all with all Rules respecting
employment and employment practices, terms and conditions of employment and
wages and hours, including, without limitation, any such laws respecting
employment discrimination, occupational safety and health, and unfair labor
practices, except where such failure to comply would not have a Parent Material
Adverse Effect. Each of Parent, its Subsidiaries and its predecessors is not
delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed by
them or any amounts required to be reimbursed to such employees.
5.19 INSURANCE. Each of Parent and its Subsidiaries maintains insurance
policies (the "PARENT INSURANCE POLICIES") against all risks of a character and
in such amounts as are usually insured against by similarly situated companies
in the same or similar businesses. Each Parent Insurance Policy is in full force
and effect and is valid, outstanding and enforceable, and all premiums due
thereon have been paid in full. None of the Parent Insurance Policies will
terminate or lapse (or be affected in any other materially adverse manner) by
reason of the transactions contemplated by this Agreement. Each of Parent, its
Subsidiaries and its predecessors has complied in all material respects with the
provisions of each Parent Insurance
31
Policy under which it is or has been the insured party. No insurer under any
Parent Insurance Policy has canceled or generally disclaimed liability under any
such policy or, to Parent's knowledge, indicated any intent to do so or not to
renew any such policy. All material claims under the Parent Insurance Policies
have been filed in a timely fashion.
5.20 CERTAIN BUSINESS PRACTICES. None of Parent, its Subsidiaries, its
predecessors or any directors, officers, managers, agents or employees of any of
them, has (i) used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses related to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other
unlawful payment.
5.21 CONTRACTS.
(a) SCHEDULE 5.21 contains a complete and accurate list of all
contracts (written or oral), undertakings, commitments or agreements of the
following categories to which any of Parent and its Subsidiaries is a party or
by which any of them or their assets is bound (the "PARENT CONTRACTS"):
(i) Parent Contracts requiring annual expenditures by or
liabilities of any of Parent and its Subsidiaries in excess of $50,000
that have a remaining term in excess of 30 days or are not cancelable
(without material penalty, cost or other liability) within 30 days;
(ii) promissory notes, loans, agreements, indentures, evidences
of indebtedness or other instruments relating to the lending of money,
whether as borrower, lender or guarantor, in excess of $50,000.
(iii) Parent Contracts containing covenants limiting the freedom
of any of Parent and its Subsidiaries to engage in any line of
business (other than prohibitions against engaging in business
relating to specific product lines) or compete with any person, in any
product line or line of business, or operate at any location;
(iv) joint venture or partnership agreements or joint development
or similar agreements pursuant to which any third party has been
entitled or is reasonably expected to be entitled to share in profits
or losses of any of Parent and its Subsidiaries;
(v) Parent Contracts with any federal, state or local government
which have a remaining term in excess of one year or are not
cancelable (without material penalty, cost or other liability) within
one year;
(vi) other Parent Contracts or commitment in which any of Parent
and its Subsidiaries has granted manufacturing rights or exclusive
32
marketing rights relating to any product or service, any group of
products or services or any territory; and
(vii) as of the date hereof any other Parent Contract the
performance of which could be reasonably expected to require
expenditures by any of Parent and its Subsidiaries in excess of
$50,000.
(b) Each of the Parent Contracts is a valid and binding obligation of
Parent and its Subsidiaries, to the extent a party thereto and, to Parent's
knowledge without any investigation, the other parties thereto, enforceable
against the applicable Parent and its Subsidiaries in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium,
reorganization, arrangement or similar laws affecting creditors' rights
generally and by general principles of equity. Except as set forth on SCHEDULE
5.21, no event has occurred which would, on notice or lapse of time or both,
entitle the holder of any indebtedness issued pursuant to a Parent Contract to
accelerate, or that does accelerate, the maturity of any such indebtedness.
(c) None of Parent and its Subsidiaries is in breach, default or
violation (and no event has occurred or not occurred through Parent's or its
Subsidiaries' action or inaction or through the action or inaction of any third
parties, which with notice or the lapse of time or both would constitute a
breach, default or violation) of any term, condition or provision of any Parent
Contract to which any of Parent or its Subsidiaries is now a party or by which
any of them or any of their respective properties or assets may be bound, except
for violations set forth on SCHEDULE 5.21.
5.22 RELATED PARTY TRANSACTIONS. Except as set forth in the on SCHEDULE
5.22, (a) no beneficial owner of 5% or more of Parent, its Subsidiaries' or its
predecessors' equity interests, or (b) officer or director of Parent, its
Subsidiaries or its predecessors or (c) any Person in which any such beneficial
owner, officer or director owns any beneficial interest (other than a publicly
held corporation whose stock is traded on a national securities exchange or in
the over-the-counter market and less than 1% of the stock of which is
beneficially owned by all such Persons) (collectively, "PARENT RELATED PARTIES")
has any interest in: (i) any contract, arrangement or understanding with, or
relating to, the business or operations of, any of Parent and its Subsidiaries;
(ii) any loan, arrangement, understanding, agreement or contract for or relating
to indebtedness of any of Parent and its Subsidiaries; or (iii) any property
(real, personal or mixed), tangible or intangible, used in the business or
operations of any of Parent and its Subsidiaries, excluding any such contract,
arrangement, understanding or agreement constituting a Parent Plan or Parent
Benefit Plan. Following the Effective Time, except for obligations set forth in
this Agreement, none of Parent and its Subsidiaries will have any obligations to
any Parent Related Party except for (i) accrued salary for the pay period
commencing immediately prior to the Effective Time, and (ii) the obligations set
forth in SCHEDULE 5.22.
5.23 ASSETS.
(a) The assets and properties of Parent and its Subsidiaries,
considered as a whole, constitute all of the material assets and properties
which are reasonably required for the operation of the Parent Business as
presently conducted and as conducted by Parent's
33
predecessors, including, at the Effective Time, the business formerly conducted
by Amortibanc Management, L.C. of providing management services with respect to
the Parent Real Property. Parent and its Subsidiaries have good title to or a
valid leasehold estate in (i) all personal properties and assets reflected on
the date of the Parent Most Recent Balance Sheet (except for properties or
assets subsequently sold in the ordinary course of business consistent with past
practice), except as could not, individually or in the aggregate, reasonably to
be expected to have a Parent Material Adverse Effect.
(b) SCHEDULE 5.23 sets forth (i) a complete and accurate list of each
improved and unimproved real property owned or leased by any of Parent or its
Subsidiaries, and the current use of such Parent Real Property and indicating
whether the Parent Real Property is owned or leased; (ii) a complete and
accurate list of all leases pursuant to which any of Parent and its Subsidiaries
leases personal property and which require an annual expenditure by any of
Parent and its Subsidiaries individually in excess of $50,000 or which are not
cancelable (without material penalty, cost or other liability) within 90 days;
and (iii) with respect to each lease for real property, the term (including
renewal options) and current fixed rent.
(c) Except as set forth in SCHEDULE 5.23, there are no pending or, to
the knowledge of Parent, threatened condemnation or similar proceedings relating
to any of the Parent Properties, except for such proceedings which could not,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
(d) The Parent Real Property constitutes all the real properties
occupied by any of Parent and its Subsidiaries. Complete and correct copies of
all leases concerning Parent Real Property have been made available to quepasa.
(e) Parent has previously delivered to quepasa lists of the most
recently issued real and personal (including vehicles) property tax assessments
and tax bills, if any, for the 2000, 1999 and 1998 tax years.
(f) To the knowledge of Parent, the Parent Real Property is currently
zoned in the zoning category which permits operation of said properties as now
used, operated and maintained for the operation of Parent. The consummation of
the transactions contemplated herein will not result in a violation of any
applicable zoning ordinance or the termination of any applicable zoning variance
now existing.
(g) Each of Parent and its Subsidiaries holds good, valid and
marketable fee simple title to its owned property.
(h) Each of Parent and its Subsidiaries holds a valid leasehold
estate for each leased property, and enjoys peaceful and undisturbed possession
thereunder.
(i) With respect to the Parent Real Property, each of Parent and its
Subsidiaries holds good, valid and marketable fee simple title to all
adjudicated and unadjudicated water and water rights, whether absolute or
conditional, and all underground water and water rights, and the priorities
therefore, whether or not appurtenant to or underlying the parent Real Property,
and whether tributary, nontributary, or not nontributary, including, without
limitation, the right title and interest in and to all ditches and ditch rights,
reservoirs and reservoir
34
rights, xxxxx, well rights and drill holes, whether or not permitted or
completed, well permits and applications, exchanges and exchange rights,
contractual or otherwise, plans for augmentation, and the right to use all water
attributable thereto, including the right to use, reuse, and discharge of the
effluent and return flows from all such waters and water rights, together with
all personalty and fixtures associated therewith, including without limitation,
all improvements, pumps and equipment, meters, pipelines, conduits, collection
or storage ponds, tanks or other facilities, and together with all xxxxx sites
and related easements and rights of way, and the right to consent or withhold
consent to be served with water from underground sources underlying the Parent
Real Property.
5.24 REGISTRATION RIGHTS. Except as contemplated by the Registration Rights
Agreement in the form of EXHIBIT E, Parent has not granted any rights to
registration of any Parent Securities under the Securities Act.
ARTICLE VI
COVENANTS
6.1 CONDUCT OF BUSINESS OF THE COMPANIES PRIOR TO THE CLOSING DATE. During
the period from the date of this Agreement and continuing through the Closing
Date, quepasa agrees that except as expressly contemplated or permitted by this
Agreement or to the extent that Parent shall otherwise consent in writing,
quepasa shall use its reasonable commercial efforts to carry on the quepasa
Business and the affairs of the Companies in such a manner so that the
representations and warranties contained in Article IV shall continue to be
accurate and correct in all material respects throughout such period, and the
Companies shall carry on the quepasa Business as being conducted on the date
hereof and use their respective reasonable commercial efforts (i) to preserve
intact their business organizations, (ii) keep available the services of their
officers and employees and (iii) preserve their relationships with customers,
suppliers, Governmental Authorities and others having business dealings with it.
Without limiting the generality of the foregoing, and except as otherwise
contemplated by or specifically provided in this Agreement, without the prior
written consent of Parent (which shall not be unreasonably withheld), prior to
the Effective Time, no Company shall:
(a) adopt any change in its amended and restated certificate of
incorporation or bylaws or comparable organizational documents;
(b) except pursuant to existing agreements or arrangements (i)
acquire (by merger, consolidation, acquisition of stock or assets, joint venture
or otherwise of a direct or indirect ownership interest or investment) any
corporation, partnership or other business organization or division thereof, or
sell, lease or otherwise dispose of a material amount of assets (excluding sales
of inventory or other assets in the ordinary course of business) or securities;
(ii) waive, release, grant, or transfer any rights of material value; (iii)
modify or change in any material respect any material Permit; (iv) incur, assume
or prepay any indebtedness for borrowed money except in the ordinary course of
business, consistent with past practice; (v) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
35
otherwise) for any indebtedness for borrowed money or trade payables of any
other Person; (vi) make any loans, advances or capital contributions to, or
investments in, any other Person, except in the ordinary course of business,
consistent with past practice; (vii) pledge or otherwise encumber shares of
capital stock of any Company; (viii) mortgage or pledge any of its material
assets, tangible or intangible, or create or suffer to exist any material Lien
thereupon; (ix) enter into any Contract other than in the ordinary course of
business consistent with past practice that would be material to any Company; or
(x) amend, modify or waive in any material respects any right under any material
Contract;
(c) notwithstanding anything in this Section 6.1 to the contrary,
except as set forth in the budget attached hereto as SCHEDULE 6.1(c), authorize
any expenditures in excess of $5,000 individually or $15,000 in the aggregate;
(d) take any action that would result in any representation and
warranty of any Company hereunder becoming untrue in any material respects as of
the Effective Time;
(e) split, combine or reclassify any shares of, declare, set aside or
pay any dividend (including, without limitation, an extraordinary dividend) or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of quepasa Common Stock or redeem, repurchase or otherwise
acquire or offer to redeem, repurchase, or otherwise acquire any quepasa Common
Stock;
(f) adopt or amend any Plan or other arrangement for the benefit and
welfare of any director, officer or employee, or increase in any manner the
compensation or fringe benefits of any director, officer or any class of
employees (or support any portion thereof) or pay any benefit not required by
any existing Plan (including, without limitation, the granting of stock options
or stock appreciation rights or the removal of existing restrictions in any
benefit plans or agreements);
(g) revalue in any material respect any of its assets, including
writing down the value of inventory in any material manner or write-off of notes
or accounts receivable in any material manner;
(h) pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent or
otherwise) other than the payment, discharge or satisfaction in the ordinary
course of business, consistent with past practices, or as otherwise required by
the terms thereof;
(i) make any material Tax election or settle or compromise any
material Tax liability;
(j) make any change in accounting methods, principles or practices
materially affecting the reported consolidated assets, liabilities or results of
operations of any Company, except insofar as may have been required by a change
in GAAP;
(k) authorize for issuance, issue, sell, deliver or agree or commit
to issue sell or deliver (whether through the issuance or granting of options,
warrants,
36
commitments, subscriptions, rights to purchase or otherwise) any quepasa Common
Stock or equity equivalents;
(l) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of any Company (other than the Merger);
(m) alter through merger, liquidation, reorganization, restructuring
or any other fashion the corporate structure of ownership of the Companies;
(n) Settle, compromise or take any significant action with respect to
the arbitrations disclosed on SCHEDULE 4.12;
(o) take any action that would cause any award or judgment received
by quepasa pursuant to either such arbitration to be excluded in any way from
the assets of quepasa to be acquired at the Effective Time; and
(p) agree or commit to do any of the foregoing.
6.2 CONDUCT OF BUSINESS OF PARENT PRIOR TO THE CLOSING DATE. During the
period from the date of this Agreement and continuing through the Closing Date,
Parent agrees that except as expressly contemplated or permitted by this
Agreement or to the extent that quepasa shall otherwise consent in writing,
Parent shall use its reasonable commercial efforts to carry on the business of
Parent and the affairs of Parent and its Subsidiaries in such a manner so that
the representations and warranties contained in Article V shall continue to be
accurate and correct in all material respects throughout such period, and Parent
shall carry on their business in the ordinary course consistent with past
practices and use their respective reasonable commercial efforts (i) to preserve
intact their business organizations, (ii) keep available the services of their
officers and employees and (iii) preserve their relationships with customers,
suppliers, Governmental Authorities and others having business dealings with it.
Without limiting the generality of the foregoing, and except as otherwise
contemplated by or specifically provided in this Agreement, without the prior
written consent of quepasa (which shall not be unreasonably withheld), prior to
the Effective Time, none of Parent and its Subsidiaries shall:
(a) adopt any change in its articles of formation or operating
agreement or comparable organizational documents;
(b) except pursuant to existing agreements or arrangements (i)
acquire (by merger, consolidation, acquisition of stock or assets, joint venture
or otherwise of a direct or indirect ownership interest or investment) any
corporation, partnership or other business organization or division thereof, or
sell, lease or otherwise dispose of a material amount of assets (excluding sales
of inventory or other assets in the ordinary course of business) or securities;
(ii) waive, release, grant, or transfer any rights of material value; (iii)
modify or change in any material respect any material Permit; (iv) incur, assume
or prepay any indebtedness for borrowed money except in the ordinary course of
business, consistent with past practice; (v) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
37
otherwise) for any indebtedness for borrowed money or trade payables of any
other Person; (vi) make any loans, advances or capital contributions to, or
investments in, any other Person, except in the ordinary course of business,
consistent with past practice; (vii) authorize any capital expenditure or
expenditures not in the ordinary course of business that have not been
authorized and approved prior to the date hereof or in the aggregate which
individually is in excess of $100,000 or in excess of $250,000 in the aggregate;
(viii) pledge or otherwise encumber the equity interests of the members of
Parent and its Subsidiaries; (ix) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any material Lien
thereupon; (x) enter into any Parent Contract other than in the ordinary course
of business consistent with past practice that would be material to any of
Parent and its Subsidiaries; or (xi) amend, modify or waive in any material
respects any right under any material Parent Contract;
(c) take any action that would result in any representation and
warranty of Parent hereunder becoming untrue in any material respects as of the
Effective Time;
(d) split, combine or reclassify any shares or units of, declare, set
aside or pay any dividend (including, without limitation, an extraordinary
dividend) or other distribution (whether in cash, stock or property or any
combination thereof) in respect of the Parent Common Stock or redeem, repurchase
or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any of
the Parent Common Stock;
(e) adopt or amend any Parent Plan or Parent Benefit Plan or other
arrangement for the benefit and welfare of any director, officer or employee, or
increase in any manner the compensation or fringe benefits of any director,
officer or any class of employees (or support any portion thereof) or pay any
benefit not required by any existing Plan (including, without limitation, the
granting of stock options or stock appreciation rights or the removal of
existing restrictions in any benefit plans or agreements);
(f) revalue in any material respect any of its assets, including
writing down the value of inventory in any material manner or write-off of notes
or accounts receivable in any material manner;
(g) pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent or
otherwise) other than the payment, discharge or satisfaction in the ordinary
course of business, consistent with past practices, or as otherwise required by
the terms thereof;
(h) make any material Tax election or settle or compromise any
material Tax liability;
(i) make any change in accounting methods, principles or practices
materially affecting the reported consolidated assets, liabilities or results of
operations of any of Parent and its Subsidiaries, except insofar as may have
been required by a change in GAAP;
(j) authorize for issuance, issue, sell, deliver or agree or commit
to issue sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any of
the Parent Common Stock;
38
(k) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of Parent or any of its Subsidiaries (other than the Contribution);
(l) alter through merger, liquidation, reorganization, restructuring
or any other fashion the corporate structure of ownership of Parent and its
Subsidiaries; or
(m) agree or commit to do any of the foregoing.
6.3 PREPARATION OF PROXY STATEMENT, ETC.; STOCKHOLDERS MEETING.
(a) REGISTRATION STATEMENT. As promptly as practicable, (i) Parent
will provide quepasa with its audited financial statements for the year ended
December 31, 1998, prepared on the same basis as the Parent Financial
Statements, and complying with Section 5.7 as if such financial statements were
Parent Financial Statements, and (ii) Parent and quepasa shall in consultation
with each other prepare and file with the SEC the Proxy Statement and the
Registration Statement in preliminary form; provided, that the Proxy Statement
and the Registration Statement shall not be filed with the SEC until quepasa's
Board of Directors has received the Fairness Opinion. Parent will prepare Parent
and quepasa shall use their best efforts to have the Proxy Statement cleared by
the SEC and the Registration Statement declared effective as soon as
practicable. Parent and quepasa shall furnish each other with all information
concerning itself and the holders of its capital stock and shall take such other
action as the other party may reasonably request in connection with the Proxy
Statement and the Registration Statement and the issuance of shares of Parent
Common Stock. If at any time prior to the Effective Time any event or
circumstance relating to quepasa, any Subsidiary of quepasa, Parent, any
Subsidiaries of Parent, or any of their respective officers or directors, should
be discovered by such party which should be set forth in an amendment or a
supplement to the Registration Statement or Proxy Statement, such party shall
promptly inform the other thereof and take appropriate action in respect
thereof.
(b) PROXY STATEMENT; STOCKHOLDER APPROVAL.
(i) quepasa, acting through its Board of Directors, shall,
subject to and in accordance with all Rules and its Articles of
Incorporation, as amended, and its Bylaws, promptly and duly call,
give notice of, convene and hold as soon as practicable following the
date upon which the Registration Statement becomes effective a meeting
of its shareholders for the purpose of voting to approve and adopt
this Agreement and the transactions contemplated hereby, and to
delegate to Parent's Board of Directors the authority to effect a
reverse stock split of up to one for 20 shares of Parent Common Stock
at any time prior to or during the 24 month period after the Effective
Time, and (x) except as the Board of Directors of quepasa determines,
in good faith after consultation with outside counsel, may be
inconsistent with its fiduciary duties under all Rules, and subject to
Section 6.5, recommend approval and adoption of this Agreement and the
transactions contemplated hereby, by its stockholders and include in
the Proxy Statement such recommendation
39
and (y) except as quepasa's Board of Directors determines, in good
faith after consultation with outside counsel, may be inconsistent
with its fiduciary duties under all Rules, take all reasonable action
to solicit and obtain such approval.
(ii) quepasa shall, as promptly as practicable (or with such
other timing as quepasa and Parent mutually agree), cause the
definitive Proxy Statement to be mailed to the stockholders of
quepasa.
6.4 COMPLIANCE WITH THE SECURITIES ACT.
(a) At least 30 days prior to the Effective Time, quepasa shall cause
to be delivered to Parent a list identifying all persons who may be deemed, in
quepasa's reasonable judgment, at the time this Agreement is submitted for
approval and adoption to the shareholders of the Company, to be "Affiliates" of
the Company for the purposes of Rule 145 under the Securities Act.
(b) quepasa shall use its reasonable best efforts to cause each
person who is identified as one of its Affiliates in its list referred to in
Section 6.4(a) above to deliver to the Company, at least ten days prior to the
Effective Time, a written agreement, in the form attached hereto as EXHIBIT F.
6.5 NON-SOLICITATION BY QUEPASA.
(a) quepasa shall not, nor shall it authorize or permit any of its
Subsidiaries to, nor shall it authorize or permit any executive officer,
director or employee of, or any investment banker, attorney, accountant or other
advisor or representative (collectively, "REPRESENTATIVES") of, quepasa or any
Subsidiary of quepasa to, (i) directly or indirectly solicit, initiate or
knowingly encourage the submission of, any Takeover Proposal (as defined in
Section 6.5(f) hereof), (ii) enter into any agreement providing for any Takeover
Proposal or (iii) directly or indirectly participate in any discussions or
negotiations regarding, or furnish to any person any non-public information with
respect to, or take any other action to knowingly facilitate any inquiries or
the making of any proposal that constitutes, or may reasonably be expected to
lead to, any Takeover Proposal; PROVIDED, HOWEVER, that quepasa may, in response
to an unsolicited bona fide Takeover Proposal that did not result from a breach
of this Section 6.5(a), which the quepasa Board determines, in good faith, after
consultation with its legal counsel and financial advisors, may reasonably be
expected to lead to a Superior Proposal (as defined in Section 6.5(f) hereof),
subject to compliance with Section 6.5(c) hereof, (x) furnish information with
respect to the Companies to the Person making such Takeover Proposal and its
Representatives pursuant to a confidentiality agreement substantially similar to
the Confidentiality Agreement, and (y) participate in discussions or
negotiations with such Person and its Representatives regarding such Takeover
Proposal.
(b) The Board of Directors of quepasa shall not (i) withdraw or
modify in a manner adverse to Buyer, or publicly propose to withdraw or modify
in a manner adverse to Buyer, the approval or recommendation by the Board of
Directors of quepasa of this Agreement and the Merger, (ii) approve any letter
of intent, agreement in principle, acquisition agreement or
40
similar agreement providing for any Takeover Proposal or (iii) approve or
recommend, or publicly propose to approve or recommend, any Takeover Proposal,
in each case, except as set forth in the next succeeding sentence, unless this
Agreement is terminated in accordance with Article VIII hereof. If the Board of
Directors of quepasa determines in good faith, after consultation with outside
counsel, that failure to do so could reasonably be expected to cause such Board
of Directors to violate its fiduciary duties to quepasa's stockholders, the
Board of Directors of quepasa may withdraw or modify its approval or
recommendation of this Agreement and the Merger without terminating this
Agreement.
(c) quepasa shall, promptly following receipt of any Takeover
Proposal, notify Parent of the receipt thereof and any stated material terms
(other than the identity of the person making such Takeover Proposal).
(d) Nothing contained in this Section 6.3 shall prohibit quepasa from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any required
disclosure to quepasa's stockholders if the Board of Directors of quepasa
determines in good faith, after consultation with outside counsel, that such
disclosure is necessary or advisable to comply with its obligations under
applicable law.
(e) Notwithstanding the foregoing provisions of this Section 6.3, it
is agreed that quepasa (i) shall include in the press release announcing this
Agreement a statement to the effect that, consistent with its fiduciary
obligations and subject to the terms of this Agreement, the Board of Directors
of quepasa has preserved its ability to respond to third parties, where
appropriate, (ii) may file this Agreement and such press release as exhibits to
a Current Report on Form 8-K, and (iii) may repeat such statements in other
public disclosures and in private communications with financial analysts, its
stockholders, such third parties or their Representatives.
(f) For purposes of this Agreement:
"TAKEOVER PROPOSAL" means (i) any proposal or offer for a merger,
consolidation, recapitalization or other business combination involving quepasa,
(ii) any proposal for the issuance of 35% or more of the equity securities of
quepasa as consideration for the assets or securities of another person, (iii)
any proposal or offer to acquire in any manner, directly or indirectly, 35% or
more of the equity securities of the Company or assets that represent 20% or
more of the consolidated total assets of quepasa or (iv) an expression of
interest believed by the Board of Directors of quepasa in good faith to be a
bona fide indication of a third party's interest in pursuing the making any of
the foregoing proposals, after consulting with its financial advisors as to such
third party's financial capability to consummate such proposal (including
through obtaining financing), in each case other than the Merger.
"SUPERIOR PROPOSAL" means a written Takeover Proposal made by a third party
on terms that the Board of Directors of quepasa determines in good faith (after
consultation with its financial advisors) to be superior from a financial point
of view to quepasa's stockholders than the Merger, taking into account all the
terms and conditions of such proposal and this
41
Agreement, and to be reasonably capable of being completed, taking into account
all financial, legal and other aspects of such proposal, including its proposed
financing.
6.6 NO SOLICITATION BY PARENT. Unless this Agreement shall have been
terminated pursuant to Section 8.1, Parent shall not, and shall not permit its
Subsidiaries to, directly or indirectly through any officer, director, member,
manager, employee, agent, affiliate or otherwise, enter into any agreement,
agreement in principle or other commitment (whether or not legally binding)
relating to a Competing Transaction or solicit, initiate or encourage the
submission of any proposal or offer from any person or entity (including
quepasa's officers, partners, employees and agents) relating to any Competing
Transaction, nor participate in any discussions or negotiations regarding, or
furnish to any other person or entity any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person or entity to effect a
Competing Transaction. Parent shall immediately cease any and all contacts,
discussions and negotiations with third parties regarding any Competing
Transaction. Parent shall, and shall cause its Subsidiaries to, notify quepasa
if any proposal regarding a Competing Transaction (or any inquiry or contact
with any person or entity with respect thereto) is made and shall advise quepasa
of the contents thereof (and, if in written form, provide quepasa with copies
thereof).
For purposes hereof, "COMPETING TRANSACTION" means any business combination
or recapitalization involving the Parent Business of or any acquisition or
purchase of all or a significant portion of the assets of the Parent Business,
or any material equity interest in the Parent Business or any other similar
transaction with respect to Parent involving any Person or entity other than
quepasa or its Affiliates.
6.7 CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS. The initial press release with
respect to the execution of this Agreement shall be a joint press release
subject to Section 6.5(e) hereof and otherwise acceptable to Parent and quepasa.
Thereafter, except as provided in Section 6.5(e) hereof, Parent and quepasa
agree not to make any additional public disclosures without the prior consent of
the other (which consent shall not be unreasonably withheld) as to the content
and timing of such disclosure; PROVIDED, HOWEVER, that either party may make
such disclosures as may be required to comply with applicable law, regulations
or Nasdaq requirements, as long as the other party is afforded (to the extent
practicable) prior notice thereof.
6.8 ACCESS TO INFORMATION. Between the date of this Agreement and the
Closing Date, upon reasonable notice and at reasonable times without undue
disruption to the quepasa Business, quepasa will give Parent and its authorized
representatives full access to the offices and other facilities and to all books
and records of the Companies (including Tax returns and accounting work papers)
and will fully cooperate with regard to such inspections as Parent may from time
to time reasonably request. If the transactions contemplated by this Agreement
are not consummated, Parent and each of its employees, accountants, counsel and
other authorized representatives shall keep any information obtained in
accordance with this Section 6.9 confidential and not use such information for
any other purpose.
6.9 ALL REASONABLE EFFORTS. Subject to the terms and conditions herein
provided (including the limitations provided herein regarding the fiduciary
duties of the Board of
42
Directors of quepasa) each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done as promptly as practicable, all things necessary, proper and advisable
under applicable laws and regulations to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement and to
cause the conditions to the Closing set forth in Article VII to be satisfied.
6.10 NOTIFICATION OF CERTAIN MATTERS. From time to time prior to the
Closing, quepasa and Parent will promptly notify the other party in writing of
(i) the occurrence or non-occurrence of any fact or event that could (x) cause
any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect or (y) cause any material covenant or
condition hereunder not to be complied with or satisfied in a material respect
and (ii) any failure of quepasa or Parent, as the case may be, to comply with or
satisfy any covenant or condition to be complied with or satisfied by it
hereunder in any material respect; PROVIDED, HOWEVER, that such notification
shall not be deemed to be a modification or update of the Schedules and shall
not affect the representations or warranties of any party or the conditions to
the obligations of any parties hereunder. quepasa shall furnish to Parent copies
of all reports of the type referred to in Section 4.4 hereof that it files with
the SEC on or after the date hereof promptly after the filing thereof.
6.11 INDEMNIFICATION AND INSURANCE.
(a) Parent and quepasa agree that all rights to indemnification,
exculpation, advancement of expenses and the like now existing in favor of any
employee, agent, director or officer of the Company and its Subsidiaries (each,
an "INDEMNIFIED PARTY" and together, the "INDEMNIFIED PARTIES") as provided in
their respective charters or by-laws, or in an agreement between an Indemnified
Party and quepasa or one of its Subsidiaries set forth in SCHEDULE 6.11 are
contract rights and shall survive the Merger. In addition, and without limiting
the foregoing, the Surviving Corporation shall indemnify all Indemnified Parties
to the fullest extent permitted by all Rules with respect to all acts and
omissions arising out of such individuals' services as officers, directors,
employees or agents of quepasa or any of its Subsidiaries or as trustees or
fiduciaries of any plan for the benefit of employees, or otherwise on behalf of,
quepasa or any of its Subsidiaries, occurring at or prior to the Effective Time
including, without limitation, the transactions contemplated by this Agreement.
Without limiting the foregoing, in the event any such Indemnified Party is or
becomes involved in any capacity in any action, proceeding or investigation in
connection with any matter, including, without limitation, the transactions
contemplated by this Agreement, occurring at or prior to, and including, the
Effective Time, the Surviving Corporation will pay as incurred such Indemnified
Party's legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith so long as such party shall enter
into an undertaking with the Surviving Corporation to reimburse the Surviving
Corporation, to the extent required by all Rules, for all amounts advanced if a
court of competent jurisdiction shall ultimately determine, in a judgment which
is not subject to appeal or review, that indemnification of such officer or
director is prohibited by all Rules. The Surviving Corporation shall pay all
expenses, including reasonable attorneys' fees, that may be incurred by any
Indemnified Party in enforcing the indemnity and other obligations provided for
in this Section 6.11.
43
(b) The Surviving Corporation shall cause to be maintained in effect
for six years from the Effective Time the current policies of the directors' and
officers' liability insurance maintained by quepasa; provided that the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions which are no less advantageous to the
Indemnified Parties and provided that such substitution shall not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time.
6.12 EMPLOYEE BENEFITS. Parent acknowledges that, after the Effective Time,
the Surviving Corporation and its subsidiaries will continue to be obligated
under the employee benefit plans and employment agreements in effect as of the
Effective Time in accordance with the terms of those plans. Parent may take
action to cause the Surviving Corporation and its subsidiaries to amend, modify,
alter or terminate those plans only in accordance with their terms.
6.13 OPTIONS. Prior to the Effective Time, Parent agrees to grant options
to purchase Parent Common Stock at a price to be agreed upon by Parent and
quepasa (but in no event less than the fair market value on the date of grant)
to the individuals, in the amounts and on the terms set forth on SCHEDULE 6.13
hereto. In addition, prior to the Effective Time, Parent may grant additional
options, or award shares of Parent Common Stock, to individual officers and
directors, provided, that such grants or awards are approved by Parent's board
of directors consistent with its fiduciary duties after the Effective Time, and
provided further that (a) any such grants of options must be at no less than the
fair market value on the date of grant and (b) any such awards of shares of
Parent Common Stock must consist solely of shares of Parent Common Stock that
are outstanding as of the date of this Agreement or are acquired pursuant to the
Merger from the conversion of shares of quepasa Common Stock and may not be
newly issued shares of Parent Common Stock.
6.14 DIRECTORS AND OFFICERS.
(a) At the Effective Time, Parent shall take all action necessary to
elect and appoint the individuals set forth on SCHEDULE 6.14 to the Board of
Directors of Parent; provided that if any such individual declines or is unable
to serve in the position indicated on SCHEDULE 6.14, the party designating such
individual (as indicated on SCHEDULE 6.14) shall be entitled to designate
another individual reasonably acceptable to the other parties to this Agreement
to serve on the Board of Directors.
(b) For not less than the one year period following the Effective
Time, Parent agrees to pay the non-employee Directors of Parent as set forth on
SCHEDULE 6.14.
(c) Prior to the Effective Time, Parent agrees to use its best
commercially reasonable efforts to have in effect at the Effective Time
directors' and officers' liability insurance with coverage comparable to that
currently maintained by quepasa.
6.15 PARENT REAL PROPERTY APPRAISALS. Parent has delivered to quepasa
appraisals that comply with the Uniform Standards of Professional Appraisal
Practices as a complete appraisal for the real properties set forth on SCHEDULE
6.15, and will deliver an appraisal prepared on the same basis for the Willow
Springs Ranch property located in Xxxxxxx, New Mexico no later than August 22,
2001.
44
6.16 MANAGEMENT OF PARENT AND ITS SUBSIDIARIES. After the Effective Time,
Parent covenants and agrees that none of Parent or its employees, including each
of the individuals set forth on Schedule 5.18, shall conduct any business on
behalf of, provide any services for, or share any assets of Parent or its
Subsidiaries with, Amortibanc Management, L.C. or its affiliates (other than
Parent and its Subsidiaries) unless Parent receives compensation equal to at
least the fair market value of the services provided.
6.17 TRANSFER OF WAGON BOW RANCH. Parent shall cause Amortibanc Management,
L.C. to complete the transfer of the property known as the Wagon Bow Ranch to
Parent prior to the commencement of mailing the Proxy Statement to quepasa's
shareholders.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 CONDITIONS TO OBLIGATIONS OF PARENT, MERGER SUB AND CONTRIBUTION SUB.
All obligations of each of Parent, Merger Sub and Contribution Sub to consummate
the Merger under this Agreement are subject to the satisfaction, at or prior to
the Closing, of the following conditions, any one or more of which may be waived
by Parent for itself and on behalf of Merger Sub and Contribution Sub (to the
extent permitted by applicable law):
(a) REPRESENTATIONS AND WARRANTIES OF QUEPASA. The representations
and warranties of quepasa that are qualified with reference to a quepasa
Material Adverse Effect shall be true and correct and the representations and
warranties that are not so qualified shall be true and correct except where in
the aggregate the failure to be true and correct would not have a quepasa
Material Adverse Effect, in each case as of the date hereof and as of the
Effective Time as though made at and as of the Effective Time, and Buyer shall
have received a certificate signed on behalf of quepasa by the chief executive
officer or the chief financial officer of quepasa to that effect.
(b) PERFORMANCE OF QUEPASA'S OBLIGATIONS. quepasa shall have
performed in all material respects all of its covenants under this Agreement,
including without limitation, compliance with its obligations pursuant to
Section 6.10, to be performed by it on or prior to the Closing Date, and Buyer
shall have received a certificate signed on behalf of quepasa by the chief
executive officer or the chief financial officer of quepasa to that effect.
(c) CONSENTS AND APPROVALS. All consents, waivers, authorizations and
approvals required to be filed or obtained by quepasa prior to Closing in
connection with the execution, delivery and performance of this Agreement and
the consummation of the Merger as contemplated hereby shall have been duly
obtained and all notices or filings required prior to Closing in connection with
the execution, delivery and performance of this Agreement and the consummation
of the Merger as contemplated hereby shall have been given or made.
(d) INJUNCTIONS. There shall not be pending (i) any action or
proceeding by any Governmental Authority or (ii) any action or proceeding by any
other Person, in any case referred to in clauses (i) and (ii), before any court
or Governmental Authority that has reasonable likelihood of success seeking to
(w) make illegal, to delay materially or otherwise
45
directly or indirectly to restrain or prohibit the consummation of the Merger or
seeking to obtain material damages, (x) restrain or prohibit Merger Sub's
(including its affiliates) ownership or operation of all or any material portion
of the business or assets of the Surviving Corporation or the Companies, or to
compel Merger Sub or any of its Affiliates to dispose of or hold separate all or
any material portion of the business or assets of the Surviving Corporation or
the Companies, (y) impose or confirm material limitations on the ability of
Merger Sub or any of its Affiliates to effectively control the business or
operations of the Surviving Corporation or the Companies or effectively to
exercise full rights of ownership of the quepasa Common Stock, including,
without limitation, the right to vote any quepasa Common Stock acquired or owned
by Merger Sub or any of its Affiliates on all matters properly presented to
quepasa's stockholders, or (z) require divestiture by Merger Sub or any of its
Affiliates of any material amount of quepasa Common Stock, and no court,
arbitrator or Governmental Authority shall have issued any judgment, order,
decree or injunction, and there shall not be any statute, rule or regulation,
that, in the sole judgment of Merger Sub is likely, directly or indirectly, to
result in any of the consequences referred to in the preceding clauses (w)
through (z); provided, however, that Merger Sub shall use its reasonable best
efforts to have any such judgment, order, decree or injunction vacated;
(e) NO MATERIAL ADVERSE CHANGE. During the period from the date of
the quepasa Most Recent Balance Sheet to the Closing, there shall have been no
quepasa Material Adverse Effect.
(f) DISSENTERS RIGHTS. Holders of not more than 20% of quepasa Common
Stock outstanding at the close of business on the record date relating to the
Stockholders Meeting, shall have demanded appraisal for such shares in
accordance with Sections 92A.300 to 92A.500, inclusive, of NGCL.
(g) CASH ON HAND. quepasa and its Subsidiaries shall have not less
than $2,500,000 in cash on hand in its bank accounts net of all liabilities of
any kind or nature whatsoever on the Closing Date and, after giving effect to
any expenses or payments made or required to be made to any party in connection
with the arbitration disclosed on SCHEDULE 4.12.
(h) CORPORATE APPROVALS. The stockholders of quepasa shall have duly
approved the Merger, this Agreement and the transactions contemplated hereby in
accordance with the Organizational Documents of quepasa and the NGCL.
(i) SEC COMMENT LETTER. Parent shall be satisfied, in its sole
reasonable judgment, that all issues raised in the SEC Comment Letter shall have
been resolved with the SEC to Parent's satisfaction and quepasa shall have made
all filings and any amendments with the SEC required to comply with such
resolutions in connection with the SEC Comment Letter; provided that those
changes contained in quepasa's informal submission of responses to the SEC staff
dated July 12, 2001 and August 6, 2001 shall not be grounds for Parent's
dissatisfaction with the resolution of the SEC Comment Letter.
(j) DIRECTORS' AND OFFICERS' INSURANCE. Parent shall have in effect
directors' and officers' liability insurance with coverage comparable to that
maintained by quepasa prior to the Effective Time.
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7.2 CONDITIONS TO OBLIGATIONS OF QUEPASA. Obligations of quepasa under
this Agreement are subject to the satisfaction, at or prior to the Closing, of
the following conditions, any one or more of which may be waived by quepasa (to
the extent permitted by applicable law and only with the approval of the Board
of Directors):
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer that are qualified with reference to a Parent Material
Adverse Effect shall be true and correct and the representations and warranties
that are not so qualified shall be true and correct except where in the
aggregate the failure to be true and correct would not have a Parent Material
Adverse Effect, in each case as of the date hereof and as of the Effective Time
as though made at and as of the Effective Time, and quepasa shall have received
a certificate signed on behalf of Parent by the chief executive officer or the
chief financial officer of Parent to that effect.
(b) PERFORMANCE OF OBLIGATIONS. Buyer shall have performed in all
material respects all obligations required under this Agreement to be performed
by Buyer, including without limitation, compliance with its obligations pursuant
to Section 6.10, on or prior to the Closing Date , and quepasa shall have
received a certificate signed on behalf of Parent by the chief executive officer
or the chief financial officer of Parent to that effect.
(c) INJUNCTIONS. The consummation of the Merger or the Contribution
shall not be restrained, enjoined or prohibited by any order, judgment, decree
or ruling of a court of competent jurisdiction or any Governmental Authority
entered after the parties have used reasonable best efforts to prevent such
entry and there shall not have been any statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger or the Contribution by any
Governmental Authority which prevents the consummation of the Merger or the
Contribution.
(d) PARENT REAL PROPERTY APPRAISAL. The aggregate value of the owned
Parent Real Property, as determined by the appraisals required by Section 6.15,
and the notes receivable set forth on EXHIBIT B, less any Parent Liabilities,
shall not be less than $10,000,000.
(e) CORPORATE APPROVALS. The stockholders of quepasa shall have
approved the Merger, this Agreement and the transactions contemplated hereby in
accordance with the Organizational Documents of quepasa and the NGCL.
(f) DIRECTORS. Parent shall deliver documents demonstrating that all
action necessary to elect and appoint the individuals set forth on SCHEDULE 6.14
to the Board of Directors of Parents has taken place.
(g) DIRECTORS' AND OFFICERS' INSURANCE. Parent shall have in effect
directors' and officers' liability insurance with coverage comparable to that
maintained by quepasa prior to the Effective Time.
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ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1 METHODS OF TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by the mutual written consent of Parent, for itself and on behalf
of Merger Sub and Contribution Sub, and quepasa (with the approval of the Board
of Directors); or
(b) by Parent, for itself and on behalf of Merger Sub and
Contribution Sub, if all of the conditions set forth in Section 7.1 hereof shall
not have been satisfied or waived on or prior to December 31, 2001 (the
"TERMINATION DATE"); PROVIDED, HOWEVER, that Parent shall not have the right to
terminate this Agreement pursuant to this subsection if such conditions have not
been satisfied due to any of Parent's, Merger Sub's or Contribution Sub's
willful failure to fulfill or willful breach of any of its obligations under
this Agreement;
(c) by quepasa, if all of the conditions set forth in Section 7.2
hereof shall not have been satisfied or waived on or prior to the Termination
Date; PROVIDED, HOWEVER, that quepasa shall not have the right to terminate this
Agreement pursuant to this subsection if such conditions have not been satisfied
due to quepasa's willful failure to fulfill or willful breach of any of its
obligations under this Agreement;
(d) by Parent, for itself and on behalf of Merger Sub and
Contribution Sub, if (i) there has been a breach by quepasa of any of its
representation or warranties, or covenants or agreements set forth in this
Agreement the effect of which is a quepasa Material Adverse Effect, which breach
is not curable; PROVIDED that if such breach is curable by quepasa through the
exercise of their reasonable best efforts and for so long as quepasa continues
to exercise such reasonable best efforts, Parent shall not have the right to
terminate this Agreement pursuant to this subsection, or (ii) the Board of
Directors of quepasa (x) fails to recommend the approval and adoption of this
Agreement and the transactions contemplated hereby to quepasa's stockholders in
accordance with Section 6.3(b) hereof, or (y) withdraws or amends or modifies in
a manner adverse to Parent its recommendation or approval in respect of this
Agreement or the transactions contemplated hereby;
(e) by quepasa, if there has been a breach by Parent, Merger Sub or
Contribution Sub of any of its representations or warranties, covenants or
agreements set forth in this Agreement the effect of which is a Parent Material
Adverse Effect, which breach is not curable; PROVIDED that if such breach is
curable by Parent, Merger Sub or Contribution Sub through the exercise of their
reasonable best efforts and for so long as Parent, Merger Sub or Contribution
Sub continues to exercise such reasonable best efforts, quepasa shall not have
the right to terminate this Agreement pursuant to this subsection;
(f) by Parent, for itself and on behalf of Merger Sub and
Contribution Sub, if a Stockholders Meeting contemplated by Section 6.2(c)
hereof (including any adjournment or postponement thereof) shall have been held
and the stockholders of quepasa shall
48
have failed to approve the Merger in accordance with the Organizational
Documents of quepasa and the NGCL;
(g) by quepasa in connection with entering into a definitive
agreement concerning a Superior Proposal, subject to and in accordance with
quepasa's compliance with Section 6.5 hereof (including the notice provisions
therein); or
(h) by quepasa if the Fairness Opinion is not delivered to quepasa's
Board of Directors by September 15, 2001, or if it is withdrawn by FBR at any
time after its issuance and prior to the Effective Time.
8.2 PROCEDURE UPON TERMINATION. In the event of termination of this
Agreement by quepasa or Parent pursuant to this Article VIII, written notice
thereof shall promptly be given to the other parties and (if such termination is
proper under the terms of this Article VIII) this Agreement shall terminate and
the transactions contemplated hereby shall be abandoned, without further action
by any party to this Agreement. If this Agreement is so terminated, no party to
this Agreement shall have any right or claim against another party on account of
such termination unless this Agreement is terminated by a party on account of a
willful or knowing breach of any representation, warranty or covenant herein by
the other party or parties (in which case the terminating party or parties shall
be entitled to all of its rights and remedies at law or in equity), or on
account of circumstances that give rise to payment obligations under Section 8.3
hereof. The agreements set forth in this Section 8.2, Section 8.3 and Article
VIII hereof shall survive the termination of this Agreement.
8.3 TERMINATION FEE.
(a) In the event that Parent, for itself and on behalf of Merger Sub
and Contribution Sub, or quepasa terminates this Agreement pursuant to Section
8.1(d), (e) or (f), the non-terminating party to shall be entitled to receive a
fee in cash (the "TERMINATION FEE") in an amount equal to $500,000, payable in
immediately available funds, the next business day following the termination of
this Agreement as liquidated damages incurred by the non-terminating party in
connection with the transactions contemplated hereby. Notwithstanding the
foregoing, no Termination Fee shall be payable to the non-terminating party if
the terminating party was in material breach of its representations, warranties
or covenants under this Agreement at the time of its termination.
(b) In the event that quepasa terminates this Agreement pursuant to
Section 8.1(g), Parent shall be entitled to receive $500,000 plus an amount
equal to the aggregate amount of fees and expenses (including all attorney's
fees, accountants' fees, and financial advisory fees) incurred by Buyer in
connection with the transactions contemplated hereby, payable in immediately
available funds, the next business day following the termination of this
Agreement as liquidated damages incurred by Buyer in connection with the
transactions contemplated hereby.
(c) In the event that quepasa terminates this Agreement pursuant to
Section 8.1(h), Parent shall be entitled to receive a sum equal to the amount of
its actual expenses incurred for attorneys, accountants and appraisers incurred
in connection with this
49
Agreement and the transactions contemplated hereby, up to a maximum of $250,000,
as liquidated damages incurred by Buyer in connection with the transactions
contemplated hereby.
(d) If the terminating party fails to pay when due any amount payable
under this Section 8.3, then (i) the terminating party shall reimburse the
non-terminating party for all costs and expenses (including fees and
disbursements of counsel) incurred in connection with the collection of such
overdue amount and the enforcement by the non-terminating party of its rights
under this Section 8.3, and (ii) the terminating party shall pay to the
non-terminating party interest on such overdue amount (for the period commencing
as of the date such overdue amount was originally required to be paid and ending
on the date such overdue amount is actually paid to the non-terminating party in
full) at an annual rate of 12%.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained herein shall not survive beyond the Effective Time.
9.2 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their respective successors, heirs,
representatives and assigns, as the case may be; PROVIDED, HOWEVER, that no
party shall assign or delegate this Agreement or any of the rights or
obligations created hereunder without the prior written consent of the other
party. Except as set forth in Section 6.11 and Section 6.12 hereof, and except
as expressly set forth elsewhere in this Agreement, nothing in this Agreement
shall confer upon any Person not a party to this Agreement, or the legal
representatives of such Person, any rights (including rights as a third party
beneficiary) or remedies of any nature or kind whatsoever under or by reason of
this Agreement.
9.3 EXPENSES. Except as otherwise specifically provided in this Agreement,
quepasa shall bear all expenses incurred on its behalf or on behalf of any
Company in connection with the preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby, and
Parent shall bear all expenses of such nature incurred on its own behalf.
9.4 NOTICES. All notices, requests and other communications to any party
hereunder shall be in writing, shall be given to such party at its address set
forth below or at such other address as shall be furnished by any party by like
notice to the others. Each such notice, request or other communication shall be
deemed to have been duly given (i) as of the date of delivery, if delivered
personally, (ii) upon the next business day when delivered during normal
business hours to a recognized overnight courier service, such as Federal
Express for next business day delivery, or (iii) on the business day of receipt
if sent by facsimile (with confirmation of receipt).
(a) if to Parent, Merger Sub or Contribution Sub, to:
0000 X. Xxxxxxxxxx Xx., Xxxxx 000
Xxxxxxxxxx, XX 00000
50
Attn: Xxx Xxxxx
Fax: (000) 000-0000
with copies to:
Xxxxxxxxx & Xxxxxxx P.A.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxx
Fax: (000) 000-0000
(b) if to quepasa, to:
xxxxxxx.xxx, inc.
000 X. Xxx Xxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
Fax: (000) 000-0000
with copies to:
Xxxxxxxxxx Xxxxx & Xxxxx, P.C.
000 Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
or such other address or persons as the parties may from time to time designate
in writing in the manner provided in this Section 9.4.
9.5 ENTIRE AGREEMENT. This Agreement, together with the Exhibits and the
Schedules and the Confidentiality Agreement entered into on March 2, 2001
between Amortibanc and quepasa (the "CONFIDENTIALITY AGREEMENT"), represents the
entire agreement and understanding of the parties hereto with reference to the
transactions contemplated herein. This Agreement supersedes all prior
negotiations, discussions, correspondence, communications, understandings and
agreements among the parties relating to the subject matter of this Agreement
(except for the Confidentiality Agreement) and all prior drafts thereof, all of
which are merged into this Agreement or such other agreements, as the case may
be.
9.6 WAIVERS, AMENDMENTS AND REMEDIES. This Agreement may be amended and
the terms hereof may be waived, and consents may be provided, only by a written
instrument signed by Parent and quepasa (with the approval of the Board of
Directors) or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof; nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other
51
such right, power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.
9.7 SEVERABILITY. This Agreement shall be deemed severable, and the
invalidity or unenforceability of any term or provision hereof shall not affect
the validity or enforceability of this Agreement or of any other term or
provision hereof. To the extent such invalidity or unenforceability has a
material impact upon the expectations of the parties hereto, the parties agree
to make appropriate modifications to this Agreement to take such impact into
account.
9.8 HEADING. The article and section headings contained in this Agreement
are solely for convenience of reference and shall not affect the meaning or
interpretation of this Agreement or of any term or provision hereof.
9.9 COUNTERPARTS; TERMS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement. All references herein
to Articles, Sections, Exhibits and Schedules shall be deemed references to such
parts of this Agreement, unless the context shall otherwise require. All
references to singular or plural or masculine or feminine shall include the
other as the context may require.
9.10 GOVERNING LAW; CONSENT TO JURISDICTION; VENUE. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
Arizona. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the state courts located within Phoenix,
Arizona over any action
or proceeding relating to, or arising under or in connection with this Agreement
and consents to personal jurisdiction of such courts and waives any objection to
such courts' jurisdiction. The parties hereto agree that any claim or suit
between or among any of the parties hereto relating to or arising under or in
connection with this Agreement may only be brought in and decided by the state
courts located in Phoenix,
Arizona, such courts being a proper forum in which to
adjudicate such claim or suit, and each party hereby waives any objection to
each such venue and waives any claim that such claim or suit has been brought in
an inconvenient forum.
9.11 INTERPRETATION. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
9.12 EXHIBITS AND SCHEDULES. The Exhibits and Schedules attached hereto are
a part of this Agreement as if fully set forth herein.
9.13 ARBITRATION. Any dispute or controversy arising among the parties to
this Agreement involving the construction or application of any of the terms,
provisions or conditions of this Agreement shall, on the written request of any
party served on the other parties in accordance with Section 9.4, be submitted
to binding arbitration. EACH PARTY, BY SIGNING THIS AGREEMENT, VOLUNTARILY,
KNOWINGLY AND INTELLIGENTLY WAIVES
52
ANY RIGHTS SUCH PARTY MAY OTHERWISE HAVE TO SEEK REMEDIES IN COURT OR OTHER
FORUMS, INCLUDING THE RIGHT TO A JURY TRIAL. Arbitration shall comply with and
be governed in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA"). The arbitration will be conducted only in
Phoenix,
Arizona, before a panel of three arbitrators selected by the parties
or, if they are unable to agree on an arbitrator, before three arbitrators
selected by the AAA. The arbitrator shall have full authority to order specific
performance and award damages and other relief available under this Agreement or
applicable law but shall have no authority to add to, detract from, change or
amend the terms of this Agreement or existing law. All arbitration proceedings,
including settlements and awards, shall be confidential. The decision of the
arbitrator will be final and binding, and judgment on the award by the
arbitrator may be entered in any court of competent jurisdiction. THIS
SUBMISSION AND AGREEMENT TO ARBITRATE WILL BE SPECIFICALLY ENFORCEABLE. The
prevailing party in any such arbitration shall receive its costs of arbitration,
including reasonable attorneys' fees and costs, from the losing party.
* * * * * * *
53
IN WITNESS WHEREOF, Buyer and quepasa have caused this
Merger Agreement to
be signed as of the date first written above.
xxxxxxx.xxx, inc.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Xxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
GREAT WESTERN LAND AND RECREATION, INC.
By: /s/ Xxx X. Xxxxx
------------------------------------
Xxx X. Xxxxx
President
GWLAR, INC.
By: /s/ Xxx X. Xxxxx
------------------------------------
Xxx X. Xxxxx
President
GWLR, LLC
By: /s/ Xxx X. Xxxxx
------------------------------------
Xxx X. Xxxxx
President
54
EXHIBIT A
DEFINED TERMS
The following terms shall have the meanings set forth or referenced below:
AAA shall have the meaning set forth in Section 9.13.
AFFILIATES shall mean a person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, another Person.
AGREEMENT shall have the meaning set forth in the Preamble.
ANTITRUST AUTHORITIES shall have the meaning set forth in Section 6.8.
ARTICLES OF MERGER shall have the meaning set forth in Section 1.5.
BUYER shall have the meaning set forth in the Preamble.
CERTIFICATES shall have the meaning set forth in Section 3.2(b).
CLOSING shall have the meaning set forth in Section 3.10.
CLOSING DATE shall have the meaning set forth in Section 1.5.
CODE shall mean the Internal Revenue Code of 1986, as amended.
COMPANY or COMPANIES shall have the meaning set forth in Section 4.1.
COMPANY BENEFIT PLAN shall have the meaning set forth in Section
4.14(a)(ii).
COMPANY ERISA AFFILIATE shall have the meaning set forth in Section
4.14(a).
COMPANY PLAN shall have the meaning set forth in Section 4.14(a)(i).
COMPANY RETURNS shall have the meaning set forth in Section 4.10(a).
COMPETING TRANSACTION shall have the meaning set forth in Section 6.6.
CONFIDENTIALITY AGREEMENT shall have the meaning set forth in Section 9.5
CONSENTS shall mean all consents or approvals of third parties necessary to
permit the Merger to be consummated in accordance with this Agreement, without
breach of any material contract, permit or other agreement.
CONSTITUENT CORPORATIONS shall have the meaning set forth in the Preamble.
CONTRIBUTION shall have the meaning set forth in Section 2.1.
CONTRIBUTION SUB shall have the meaning set forth in the Preamble.
DISSENTING SHARES shall have the meaning set forth in Section 3.5.
EFFECTIVE TIME shall have the meaning set forth in Section 1.5.
ENVIRONMENTAL LAWS shall have the meaning set forth in Section 4.9(b)(i).
ERISA shall have the meaning set forth in Section 4.14(a)(i).
EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
EXCHANGE AGENT shall have the meaning set forth in Section 3.2(a).
EXCHANGE FUND shall have the meaning set forth in Section 3.2(a).
EXHIBITS shall mean the exhibits attached to this Agreement and referred to
in Section 8.12.
FAIRNESS OPINION shall mean the opinion of FBR, the financial advisor to
the Board of Directors of quepasa, to the effect that, as of the date hereof,
the consideration to be received in the Merger by quepasa's stockholders is fair
to the stockholders of quepasa from a financial point of view.
FBR shall have the meaning set forth in Section 4.15.
FRACTIONAL SHARE PRICE shall have the meaning set forth in Section 3.4.
GAAP shall have the meaning set forth in Section 4.7.
GOVERNMENTAL AUTHORITY shall mean foreign, domestic, federal, territorial,
state, provincial, local or municipal governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department, bureau, official or
branch of any of the foregoing.
HAZARDOUS SUBSTANCES shall have the meaning set forth in Section 4.9(b)(i).
INDEMNIFIED PARTY or INDEMNIFIED PARTIES shall have the meaning set forth
in Section 6.11.
INTELLECTUAL PROPERTY means all (i) Patents, (ii) Trademarks, (iii) Trade
Names, (iv) web sites, (v) domain names, (vi) copyrights, and (vii) trade
secrets (as defined in the Uniform Trade Secrets Act), in each case whether
registered or not.
IRS shall have the meaning set forth in Section 4.14(b).
JUDGMENT shall mean any order, decree, writ, injunction, award or judgment
or any court or other Governmental Authority or any arbitrator.
KNOWLEDGE -- an individual will be deemed to have "knowledge" of a
particular fact or matter if such individual is actually aware of such fact or
matter or would reasonably be expected to be aware of such fact or matter. A
Person (other than an individual) will be deemed to have "knowledge" of a
particular fact or other matter if any individual who is serving as a director
or executive officer (or in a similar capacity) of such Person has actual
knowledge of such fact or matter or would reasonably be expected to be aware of
such fact or matter.
LIEN shall mean, with respect to any asset (real, personal or mixed): (a)
any lien, claim, option, charge, security interest, pledge, mortgage or other
encumbrance whether imposed by Rule or contract; and (b) the interest of a
vendor or lessor under any conditional sale agreement, financing lease or other
title retention agreement relating to such asset.
MERGER shall have the meaning set forth in the Recitals.
MERGER CONSIDERATION shall have the meaning set forth in Section 3.1(c).
MERGER SUB shall have the meaning set forth in the Preamble.
MERGER SUB SHARES shall have the meaning set forth in the Recitals.
NGCL shall have the meaning set forth in Section 1.1.
OPTION shall have the meaning set forth in Section 3.7.
ORGANIZATIONAL DOCUMENTS shall mean (i) the articles or certificate of
incorporation and the bylaws of a corporation; (ii) the partnership agreement
and any statement of partnership of a general partnership; (iii) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (iv) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (v) any amendment
to any of the foregoing.
PARENT shall have the meaning set forth in the Preamble.
PARENT BENEFIT PLAN shall have the meaning set forth in Section
5.14(a)(ii).
PARENT BUSINESS shall mean the business and operations of Parent and its
Subsidiaries.
PARENT COMMON STOCK shall have the meaning set forth in Section 3.1(a).
PARENT CONTRACTS shall have the meaning set forth in Section 5.21.
PARENT ERISA AFFILIATE shall have the meaning set forth in Section 5.14(a).
PARENT FINANCIAL STATEMENTS shall have the meaning set forth in Section
5.7.
PARENT INTERESTS shall have the meaning set forth in the Recitals.
PARENT IP shall have the meaning set forth in Section 5.11.
PARENT INSURANCE POLICIES shall have the meaning set forth in Section 5.19.
PARENT LIABILITIES shall mean all liabilities or obligations of Parent and
its Subsidiaries of whatever nature, whether known or unknown, absolute or
contingent, including without limitation (i) any liabilities or obligations of
Parent and its Subsidiaries with respect to any debt, liability or trade payable
for any period prior to the Effective Time, (ii) any liabilities or obligations
of any officer or employee of Parent and its Subsidiaries resulting in a
liability or obligation of Parent and its Subsidiaries, and (iii) any
liabilities arising under environmental and safety requirements related to any
condition in existence prior to the Effective Time.
PARENT MATERIAL ADVERSE EFFECT shall mean a material adverse effect on the
financial condition, assets, profits, liabilities, results of operations or
business of Parent and its Subsidiaries taken as a whole, excluding adverse
changes in general economic or industry conditions or in the financial or
capital markets.
PARENT MOST RECENT BALANCE Sheet shall have the meaning set forth in
Section 5.7.
PARENT OPTION PLAN shall have the meaning set forth in Section 3.7.
PARENT PLAN shall have the meaning set forth in Section 5.14(a)(i).
PARENT REAL PROPERTY shall mean all real property owned or leased by Parent
and its Subsidiaries.
PARENT RELATED PARTIES shall have the meaning set forth in Section 5.22.
PARENT RETURNS shall have the meaning set forth in Section 5.10(a).
PARENT SECURITIES shall have the meaning set forth in Section 5.2(c).
PARENT WARRANTS shall have the meaning set forth in Section 5.2.
PATENTS shall mean patents (including all reissues, reexaminations,
divisions, continuations in part and extensions thereof), utility models, patent
applications and disclosures docketed.
PENSION BENEFIT GUARANTY CORPORATION shall have the meaning set forth in
Section 4.14(d).
PER SHARE MERGER CONSIDERATION shall have the meaning set forth in Section
3.1(a).
PERMITS shall have the meaning set forth in Section 4.9(b)(viii).
PERSON shall mean any individual, corporation, association, partnership
(general or limited), joint venture, trust, estate, limited liability company or
other legal entity or organization, including a Governmental Authority.
PROXY STATEMENT shall have the meaning set forth in Section 4.16.
QUEPASA shall have the meaning set forth in the Preamble.
QUEPASA BUSINESS shall mean the business and operations of quepasa.
QUEPASA COMMON STOCK shall mean the common stock, par value $.0001 per
share, of quepasa.
QUEPASA CONTRACTS shall have the meaning set forth in Section 4.23.
QUEPASA FINANCIAL STATEMENTS shall have the meaning set forth in Section
4.7.
QUEPASA INSURANCE POLICY shall have the meaning set forth in Section 4.21.
QUEPASA IP shall have the meaning set forth in Section 4.11.
QUEPASA MATERIAL ADVERSE EFFECT shall mean a material adverse effect on the
financial condition, assets, profits, liabilities, results of operations or
business of quepasa and its Subsidiaries taken as a whole, excluding adverse
changes in general economic or industry conditions or in the financial or
capital markets.
QUEPASA MOST RECENT BALANCE SHEET shall have the meaning set forth in
Section 4.7.
QUEPASA OPTION PLAN shall have the meaning set forth in Section 3.7.
QUEPASA REAL PROPERTY shall mean all real property leased by quepasa and
its Subsidiaries.
QUEPASA RELATED PARTIES shall have the meaning set forth in Section 4.24.
QUEPASA SECURITIES shall have the meaning set forth in Section 4.2(c).
QUEPASA WARRANTS shall have the meaning set forth in Section 3.8.
REGISTRATION STATEMENT shall have the meaning set forth in Section 4.16.
REPRESENTATIVE shall have the meaning set forth in Section 7.5(a).
RETURN or RETURNS means all returns, declarations, reports, statements and
other documents required to be filed in respect of Taxes. All citations to the
Code, or to the Treasury Regulations promulgated thereunder, shall include any
amendments or any substitute or successor provisions thereto.
RULES shall have the meaning set forth in Section 4.9(a).
SCHEDULES shall mean the schedules attached to this Agreement.
SEC shall have the meaning set forth in Section 4.4.
SEC COMMENT LETTER shall have the meaning set forth in Section 4.4.
SEC REPORTS shall have the meaning set forth in Section 4.4.
SECURITIES ACT shall mean the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
STOCKHOLDERS MEETING shall have the meaning set forth in Section 4.16.
SUBSIDIARY shall mean any corporation or entity, at least a majority of the
outstanding capital stock, membership interest or other equity interests of
which (or any class or classes, however designated, having ordinary voting power
for the election of at least a majority of the board of directors or similar
governing body of such corporation or entity) shall at the time owned by the
relevant Person directly through one or more corporations or other entities
which are themselves Subsidiaries.
SUPERIOR PROPOSAL shall have the meaning set forth in Section 6.5(f).
SURVIVING CORPORATION shall have the meaning set forth in Section 1.1.
TAKEOVER PROPOSAL shall have the meaning set forth in Section 6.5(f).
TAX or TAXES means all federal, state, local, foreign and other net income,
gross income, gross receipts, sales use, AD VALOREM, transfer, franchise,
profits, license, lease, service, service use, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, windfall profits,
customs, duties or other taxes, fees, assessments or charges of any kind
whatever, together with any interest any penalties, additions to tax or
additional amounts with respect thereto.
TERMINATION DATE shall have the meaning set forth in Section 8.1(b).
TERMINATION FEE shall have the meaning set forth in Section 9.3.
TITLE IV PLAN shall mean a Plan that is subject to Section 302 or Title IV
of ERISA or Section 412 of the Code.
TRADE NAMES shall mean (i) trade names, (ii) brand names, and (iii) logos
used in the quepasa Business or the Parent Business, as the case may be.
TRADEMARKS shall mean trademarks, service marks, brand marks, registrations
thereof, pending applications for registration thereof, and such unregistered
rights which are used in the quepasa Business or the Parent Business, as the
case may be.
EXHIBIT B
PARENT'S LIST OF MEMBERSHIP INTERESTS AND REAL PROPERTY
See attached.
CONTRIBUTION SUB SUBSIDIARIES %TO C SUB %MINORITY
----------------------------- --------- ---------
Exhibit B Houston Coventry, L.L.C. 100%
Houston Greenwich, L.L.C. 100%
Morningside Farms, L.L.C. 100%
Houston Promenade, L.L.C. 100%
Houston Promenade Xxxx, L.L.C. 100%
Houston Wheatstone, L.L.C. 100%
Houston Wheatstone III, L.L.C. 100%
Willow Springs Ranch, L.L.C. 85% 15%
Phoenix Monterrey, L.L.C. 100%
45th /47th Avenue & Glendale, L.L.C. 100%
North Scottsdale 106, L.L.C. 100%
Barnstorm, L.L.C. 100%
Walthingham, L.L.C. 100%
Phoenix Xxxxxx Place, L.L.C. 80% 20%
Antelope Hills, L.L.C. * 100%*
Amortibanc Land & Cattle, L.L.C. 100%
REAL PROPERTY HELD DIRECTLY BY CONTRIBUTION SUB
Wagon Bow Ranch 100%
OTHER ASSETS
All furniture, vehicles and equipment used
in the operation of the Parent Business.
Note receivable First Realty Investors, Inc. to
Amortibanc Management, L.C. in the approximate
amount of $700,000.
* held indirectly through Willow Springs Ranch, L.L.C.
Contribution Sub Liabilities are reflected on the Parent Most Recent Balance
Sheet.
EXHIBIT C
PARENT OPTION PLAN
EXHIBIT D
PARENT WARRANT
EXHIBIT E
PARENT REGISTRATION RIGHTS AGREEMENT