______________________________________________________________________________
AGREEMENT AND PLAN OF REORGANIZATION
by and among
BRENEX OIL CORPORATION and
BRENEX ACQUISITION CORPORATION
and
CINEMAELECTRIC, INC. and
XXXXX XXXXXXXX
dated September 11, 2003
______________________________________________________________________________
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is made and
entered into as of September 11, 2003, by and among Brenex Oil Corporation, a
Utah corporation ("Parent"), Brenex Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Parent ("Acquisition Co."),
CinemaElectric, Inc., a Delaware corporation (the "Company"), and Xxxxx
Xxxxxxxx (the "Principal Stockholder").
RECITALS:
A. Upon the terms and subject to the conditions of this Agreement and
in accordance with the General Corporation Law of the State of Utah (the
"UGCL") and the General Corporation Law of the State of Delaware (the "DGCL"),
Parent and the Company will enter into a business combination transaction
pursuant to which Acquisition Co. will merge with and into the Company (the
"Merger") with the Company being the surviving corporation.
B. The Board of Directors of Parent (i) has determined that the
Merger is consistent with and in furtherance of the longterm business strategy
of Parent and fair to, and in the best interests of, Parent and its
stockholders, and (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement.
C. The Board of Directors of the Company (i) has determined that the
Merger is consistent with and in furtherance of the longterm business strategy
of the Company and fair to, and in the best interests of, the Company and its
shareholders, and (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement.
D. A majority of the shareholders of the Company have approved this
Agreement, the Merger and the other transactions contemplated by this
Agreement.
E. The stockholder of Acquisition Co. has approved this Agreement,
the Merger and other transactions contemplated by this Agreement.
F. Parent, Acquisition Co. and the Company desire to make certain
representations and warranties and other agreements in connection with the
Merger.
G. The parties intend, by executing this Agreement, to adopt a plan
of reorganization within the meaning of Section 368 of the Code, and to cause
the Merger to qualify as a reorganization under the provisions of Section
368(a) of the Code.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. In addition to terms defined elsewhere in this
Agreement, the following defined terms have the meanings indicated below:
"Acquisition" shall mean any transaction resulting in the acquisition
by Parent of another entity (including, without limitation, by means of a
stock purchase, reorganization, merger or consolidation).
"Acquisition Co." has the meaning set forth in the first paragraph of
this Agreement.
"Actions or Proceedings" means any action, suit, proceeding,
arbitration, Order, inquiry, hearing, assessment with respect to fines or
penalties or litigation (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or
before, or otherwise involving, any Governmental or Regulatory Authority.
"Affiliate" means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such Person.
"Assets and Properties" and "Assets or Properties" of any Person each
means all assets and properties of every kind, nature, character and
description (whether real, personal or mixed, whether tangible or intangible,
whether absolute, accrued, contingent, fixed or otherwise and wherever
situated), including the goodwill related thereto, operated, owned or leased
by such Person, including, without limitation, cash, cash equivalents,
accounts and notes receivable, chattel paper, documents, instruments, general
intangibles, real estate, equipment, inventory, goods and Intellectual
Property.
"Benefit Plan" means any Plan established, arranged or maintained by the
Company or any corporate group of which the Company is or was a member,
existing at the Closing Date or prior thereto, to which the Company
contributes or has contributed, or under which any employee, officer, director
or former employee, officer or director of the Company or any beneficiary
thereof is covered, is eligible for coverage or has benefit rights.
"Books and Records" of any Person means all files, documents,
instruments, papers, books, computer files (including but not limited to files
stored on a computer's hard drive or on floppy disks), electronic files and
records in any other medium relating to the business, operations or condition
of such Person.
"Breach" means a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement or any other agreement or document will be deemed
to have occurred if there is or has been (a) any inaccuracy in a breach of, or
any failure to perform or comply with, such representation, warranty,
covenant, obligation, or other provision, or (b) any claim (by any Person) or
other occurrence or circumstance that is or was inconsistent with such
representation, warranty, covenant, obligation, or other provision, and the
term "Breach" means any such inaccuracy, breach, failure, claim, occurrence or
circumstance.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Disclosure Schedule" means the disclosure schedule attached
hereto which sets forth the exceptions to the representations and warranties
contained in Article III hereof and certain other information called for by
this Agreement.
"Company Financial Statements" means (i) the unaudited balance sheets of
the Company and the related unaudited statements of income and retained
earnings for the fiscal periods ended December 31, 2002, December 31, 2001 and
December 31, 2000, and (ii) the Interim Financial Statements.
"Company Shares" shall mean the Common Stock of the Company.
"Company Stockholders" means the holders of Outstanding Common Stock,
including the Principal Stockholder.
"Consent" means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions" means all of the transactions contemplated
by this Agreement, including: (a) the Merger; (b) the performance by Parent
and the Company of their respective covenants and obligations under this
Agreement; and (c) Parent's acquisition and ownership of the Company Shares
and exercise of control over the Company.
"Contract" means any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DGCL" shall mean the General Corporation Law of the State of Delaware.
"Copyrights" has the meaning set forth in the definition of
"Intellectual Property."
"Encumbrances" means any mortgage, pledge, assessment, security
interest, deed of trust, lease, lien, adverse claim, equitable interest, levy,
charge, community property interest, right of first refusal or other
encumbrance of any kind, or any conditional sale or title retention agreement
or other agreement to give any of the foregoing in the future.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any entity which is a member of a "controlled
group of corporations" or which is or was under "common control" with the
Company as defined in Section 414 of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means United States generally accepted accounting principles, as
currently defined by the Financial Accounting Standards Board ("FASB") and
other agencies permitted by law to issue such pronouncements.
"Governmental Authorization" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental or Regulatory
Authority or pursuant to any Legal Requirement.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality
of the United States or other country, any state, county, city or other
political subdivision.
"Intellectual Property" means (i) inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications and patent disclosures, together
with all reissuances, continuations, continuations in part, revisions,
extensions and reexaminations thereof (collectively, "Patents"); (ii)
trademarks, service marks, trade dress, logos, trade names and corporate
names, together with all translations, adaptations, derivations and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith
(collectively, "Trademarks"), (iii) copyrightable works, all copyrights and
all applications, registrations and renewals in connection therewith and mask
works and all applications, registrations and renewals in connection therewith
(collectively, "Copyrights"); (iv) trade secrets and confidential business
information (including without limitation, product specifications, data,
knowhow, inventions and ideas, past, current and planned research and
development, customer lists, current and anticipated customer requirements,
price lists, market studies, business plans), however documented; (v)
proprietary computer software and programs (including object code and source
code) and other proprietary rights and copies and tangible embodiments thereof
(in whatever form or medium); (vi) database technologies, systems, structures
and architectures (and related processes, formulae, compositions,
improvements, devices, knowhow, inventions, discoveries, concepts, ideas,
designs, methods and information) and any other related information, however,
documented; (vii) any and all information concerning the business and affairs
of a Person (which includes historical financial statements, financial
projections and budgets, historical and projected sales, capital spending
budgets and plans, the names and backgrounds of key personnel and personnel
training and techniques and materials), however documented; (viii) any and all
notes, analysis, compilations, studies, summaries, and other material prepared
by or for a Person containing or based, in whole or in part, on any
information included in the foregoing, however documented; (ix) all industrial
designs and any registrations and applications therefor; (x) all databases and
data collections and all rights therein; and (xi) any similar or equivalent
rights to any of the foregoing anywhere in the world.
"Interim Financial Statements" means the unaudited balance sheet and the
related unaudited statement of income and retained earnings for the Company,
in each case for the six month period ended June 30, 2003, prepaid in
accordance with GAAP and accompanied by appropriate supporting schedules.
"Knowledge of the Company" or "Known to the Company" means the knowledge
of any officer or director of the Company. An officer or director of the
Company will be deemed to have Knowledge of a particular fact or other matter
if: (i) such individual is actually aware of such fact or other matter; or
(ii) a prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter.
"Legal Requirement" means any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution,
law, ordinance, principle of common law, regulation, statute or treaty.
"Lock-Up/Leak-Out Agreement" has the meaning set forth in Section 6.6
hereto.
"Material Adverse Effect" means, for any Person, a material adverse
effect whether individually or in the aggregate (a) on the business,
operations, financial condition, Assets and Properties, liabilities or
prospects of such Person, or (b) on the ability of such Person to consummate
the transactions contemplated hereby.
"Merger" has the meaning set forth in the first recital of this
Agreement.
"Order" means any award, decision, writ, judgment, decree, ruling,
subpoena, verdict, injunction or similar order of any Governmental or
Regulatory Authority (in each such case whether preliminary or final).
"Ordinary Course of Business" means the action of a Person that is (i)
consistent with the past practices of such Person and is taken in the ordinary
course of the normal day to day operations of such Person; (ii) not required
to be authorized by the board of directors of the Company; and (iii) similar
in nature and magnitude to actions customarily taken, without the action of
the board of directors or similar body, in the ordinary course of the normal
day to day operations of other Persons that are in the same line of business
as the Company.
"OTCBB" shall mean the National Association of Securities Dealers, Inc.
Over the Counter Bulletin Board.
"Parent" has the meaning set forth in the first paragraph of this
Agreement.
"Parent Common Stock" means the shares of common stock of Parent, $0.001
par value.
"Parent SEC Documents" means each form, report, schedule, statement and
other document required to be filed by the Parent since August 1, 2001 through
the date of this Agreement under the Exchange Act or the Securities Act or by
the rules and regulations of the OTCBB, including any amendment to such
document, whether or not such amendment is required to be so filed.
"Patents" has the meaning set forth in the definition of "Intellectual
Property."
"Permits" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations and similar consents granted or
issued by any Governmental or Regulatory Authority.
"Permitted Encumbrance" means (a) any Encumbrance for taxes not yet due
or delinquent or being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP and (b)
any minor imperfection of title or similar Encumbrance which individually or
in the aggregate with other such Encumbrances does not impair the value of the
property subject to such Encumbrance or the use of such property in the
conduct of the business of the Company.
"Person" means any natural person, corporation, general partnership,
limited partnership, limited liability company, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory
Authority.
"Plan" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workers' compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, including, but not limited to, any
"employee benefit plan" within the meaning of Section 3(3) of ERISA.
"Principal Stockholder" has the meaning set forth in the first paragraph
of this Agreement.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental or Regulatory Authority.
"Qualified Plan" means each Benefit Plan which is intended to qualify
under Section 401 of the Code.
"Related Person" means with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serve as a director, officer,
partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under common control
with such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b)
or (c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse and former spouses,
(iii) any other natural person who is related to the individual or the
individual's spouse within the second degree, and (iv) any other natural
person who resides with such individual, and (b) "Material Interest" means
direct or indirect benefit ownership (as defined in Rule 13d3 under the
Exchange Act) of voting securities or other voting interests representing at
least 10% of the outstanding voting power of a Person or equity securities or
other equity interests representing at least 10% of the outstanding equity
securities or equity interests in a Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax" (and, with correlative meaning, "Taxes," "Taxable" and "Taxing")
means (i) any federal, state, local or foreign income, alternative or addon
minimum tax, gross income, gross) receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any Governmental or
Regulatory Authority responsible for the imposition of any such tax (domestic
or foreign), (ii) any liability for payment of any amounts of the type
described in (i) as a result of being a member of an affiliated, consolidated,
combined, unitary or other group for any Taxable period and (iii) any
liability for the payment of any amounts of the type described in (i) or (ii)
as a result of any express or implied obligation to indemnify any other
person.
"Tax Return" means any return, report, information return, schedule or
other document (including any related or supporting information) filed or
required to be filed with respect to any taxing authority with respect to
Taxes.
"Threatened" means a claim, Proceeding, dispute, action or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in
writing), or if any other event has occurred or any other circumstances exist
that would lead a prudent Person to conclude that such a claim, proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken,
or otherwise pursued in the future.
"Trademarks" has the meaning set forth in the definition of
"Intellectual Property."
"Trade Secrets and Other Proprietary Information" has the meaning set
forth in the definition of "Intellectual Property."
"UGCL" shall mean the General Corporation Law of the State of Utah.
ARTICLE II
THE MERGER
2.1 The Merger. At the Effective Time and subject to and upon the
terms and conditions of this Agreement and the applicable provisions of the
NGCL and the DGCL, Acquisition Co. shall be merged with and into the Company,
the separate corporate existence of Acquisition Co. shall cease and the
Company shall continue as the surviving corporation. The Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
2.2 Effective Time. Subject to the provisions of this Agreement, the
parties hereto shall cause the Merger to be consummated by the filing of a
Delaware Certificate of Merger substantially in the form attached hereto as
Exhibit A (the "Certificate of Merger") with the Secretary of State of the
State of Delaware, in accordance with the relevant provisions of the DGCL (the
time of acceptance by the Secretary of State of the State of Delaware of such
filing, or such later time as may be agreed in writing by the parties and
specified in the Certificate of Merger, being the "Effective Time") as soon as
practicable on the Closing Date. Unless the context otherwise requires, the
term "Agreement" as used herein refers collectively to this Agreement and the
Certificate of Merger.
2.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers
and franchises of the Company and Acquisition Co. shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Acquisition Co. shall become the debts, liabilities and duties of the
Surviving Corporation.
2.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of
Surviving Corporation shall continue to be the Articles of Incorporation of
the Surviving Corporation.
(b) At the Effective Time, the Bylaws of Surviving Corporation
shall continue to be the Bylaws of the Surviving Corporation.
2.5 Directors and Officers. The directors of Surviving Corporation
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, to serve until their respective successors are duly
elected or appointed and qualified. The officers of Surviving Corporation
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, to serve until their successors are duly elected or
appointed or qualified.
2.6 Effect on Capital Stock/Merger Consideration.
(a) Conversion of Company Common Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of any Person, each
share of the Company Common Stock issued and outstanding immediately prior to
the Effective Time (the "Outstanding Company Common Stock"), shall be canceled
and automatically converted into the right to receive, upon surrender of the
certificates representing such shares and a letter of transmittal (which shall
be in such form and have such provisions as Parent may reasonably specify), a
ratable portion of the Stock Consideration as determined in Section
2.6(c)below. At the Effective Time, all rights in respect of such Outstanding
Company Common Stock shall cease to exist, other than the right to receive the
Stock Consideration, and all such shares shall be cancelled and retired.
(b) No Fractional Shares. In lieu of fractional shares that
would otherwise be issued to holders of Outstanding Company Common Stock under
this Agreement, each holder of Outstanding Company Common Stock that would
have been entitled to receive a fractional share shall receive such whole
number of shares of Parent Common Stock as is equal to the precise number of
shares of Parent Common Stock to which such person would be entitled rounded
down to the nearest whole number.
(c) Merger Consideration. The merger consideration shall consist of
16,666,667 number of shares of Parent Common Stock which shall be issued, pro
rata, to the Company Stockholders at Closing (as defined in Section 2.8below).
(d) Actions at the Effective Time. At the Effective Time:
(i) Except for the securities referred to in Section
2.6(d)(ii) below, each share of Outstanding Company Common Stock will
automatically, by virtue of the Merger and without any action on the part of
the holder thereof, be canceled and converted into a right to receive from
Parent the Stock Consideration in the amount as determined pursuant to this
Section 2.6.
(ii) Each share of Company Common Stock held in the
treasury of the Company shall be canceled and retired without payment of any
consideration therefor.
(iii) Each share of common stock of Acquisition Co.
("Acquisition Co. Common Stock") issued and outstanding immediately prior to
the Effective Time shall be converted into and exchanged for one validly
issued, fully paid and nonassessable share of common stock of the Surviving
Corporation and shall constitute the only shares of capital stock of the
Surviving Corporation outstanding immediately after the Effective Time. Each
stock certificate of Acquisition Co. evidencing ownership of any such shares
shall continue to evidence ownership of such shares of capital stock of the
Surviving Corporation.
2.7 Closing.
(a) Time and Place. The consummation of the Merger under this
Agreement (the "Closing") shall take place at the offices of Xxxxx & Xxxxxxx
LLP, 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, at 10:00 a.m. on
September 4, 2003, or at such time and in such manner as the parties mutually
agree (the "Closing Date").
(b) Closing Deliveries by the Company and the Principal
Stockholders. At the Closing, the Company and the Principal Stockholders, as
the case may be, shall have delivered or caused to be delivered to Parent
and/or Acquisition Co., as the case may be:
(i) the Certificate of Merger, duly executed by the Company;
and
(ii) such other documents as Parent may reasonably request for
the purpose of facilitating the consummation of the Contemplated Transactions.
(c) Closing Deliveries By Parent. At the Closing, Parent and/or
Acquisition Co., as the case may be, shall have delivered or caused to be
delivered to the Company and/or the Company Stockholders, as the case may be:
(i) resignation letter of each of the officers and directors
of the Acquisition Co., dated effective as of the Closing;
(ii) a Promissory Note, substantially in the form to be
mutually agreed upon in good faith by Parent and the Company and to be
attached hereto as Exhibit B prior to the Closing (the "IMI Note"), duly
executed by Parent for the assumption of the Company's payment obligation to
Investment Management, Inc. in the amount of $325,000;
(iii) a Promissory Note, substantially in the form to be
mutually agreed upon in good faith by Parent and the Company and to be
attached hereto as Exhibit C prior to the Closing (the "UCSI Note"), duly
executed by Parent for the assumption of the Company's payment obligation to
Universal Communication Systems, Inc. in the amount of $104,665; and
(iv) such other documents as Company may reasonably request for
the purpose of facilitating the consummation of the Contemplated Transactions.
2.8 Exemption from Registration. The issuance of the Parent Common
Stock issuable as Stock Consideration will be exempt from registration
requirements of the Securities Act pursuant to the private placement exemption
provided by Rule 505 and/or 506 of Regulation D promulgated under the
Securities Act and/or Section 4(2) of the Securities Act, and applicable state
securities laws.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Parent and Acquisition Co. as of
the date hereof and as of the Closing Date, except as set forth on the Company
Disclosure Schedule furnished to Parent specifically identifying the relevant
subparagraph hereof, which exceptions shall be deemed to be representations
and warranties as if made hereunder, as follows:
3.1 Organization of the Company. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware. The Company is duly authorized to conduct business and is in good
standing in Delaware and each jurisdiction where such qualification is
required except for any jurisdiction where failure so to qualify would not
have a Material Adverse Effect upon the Company. The Company has full power
and authority, and holds all Permits and authorizations necessary to carry on
its business and to own and use the Assets and Properties owned and used by
the Company except where the failure to have such power and authority or to
hold such Permit or authorization would not have a Material Adverse Effect on
the Company's business. The Company has delivered to Parent correct and
complete copies of its charter documents and organizational documents, each as
amended to date.
3.2 Capital Stock of the Company.
(a) The authorized capital stock of the Company consists of (i)
15,000,000 shares of Common Stock, par value $0.0001 per share ("Company
Common Stock"), of which 11,087,249 are issued and outstanding as of the date
hereof; (ii) 10,000,000 shares of Preferred Stock, par value $0.0001 per share
("Company Preferred Stock"), of which 9,757,765 are designated as Series A and
none are issued and outstanding as of the date hereof; and (ii) no shares of
capital stock of the Company in treasury. Each share of the issued and
outstanding Company Common Stock is duly authorized, validly issued, fully
paid and nonassessable. Section 3.2(a) of the Company Disclosure Schedule sets
forth a complete and accurate list specifying the number of shares of Company
Common Stock held by each Company Stockholder.
(b) Except as disclosed in Section 3.2(b) of the Company
Disclosure Schedule there are no subscriptions, options, warrants, calls,
commitments and other rights of any kind for the purchase or acquisition of,
and any securities convertible or exchangeable for, any capital stock of the
Company.
(c) There are no agreements to which the Company or the Company
Stockholders are parties or by which they are bound with respect to the voting
(including voting trusts or proxies), registration under the Securities Act,
or sale or transfer (including agreements relating to preemptive rights,
rights of first refusal, cosale rights or "dragalong" rights) of any
securities of the Company.
3.3 Ownership of Shares. Each of the Company Stockholders owns
beneficially and of record that number of shares of Company Common Stock
listed opposite such stockholder's name in Section 3.2(a) of the Company
Disclosure Schedule, free and clear of all Encumbrances, and has good and
valid title to such shares. The delivery of the stock certificate(s)
representing the outstanding Company Common Stock owned by the Company
Stockholders in the manner provided in Section 2.6 will transfer to the Parent
good and valid title thereto free and clear of all Encumbrances.
3.4 Authority of the Company. The Company has all necessary power and
authority and has taken all action necessary to enter into this Agreement, to
consummate the transactions contemplated hereby and to perform its obligations
hereunder and no other proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
3.5 No Affiliates. The Company does not have any Affiliates or
subsidiaries and is not a partner in any partnership or a party to a joint
venture.
3.6 Consents and Governmental Approvals and Filings. No consent,
approval or action of, filing with or notice to any Governmental or Regulatory
Authority on the part of the Company is required in connection with the
execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby.
3.7 Books and Records. The minute books and other corporate records of
the Company as made available to Parent contain a true and complete record of
all actions taken at all meetings and by all written consents in lieu of
meetings of the shareholders, the boards of directors and committees of the
boards of directors of the Company. The Company has delivered or made
available true and complete copies of each document which has been requested
by Parent or its counsel in connection with their legal and accounting review
of the Company. The stock transfer ledgers and other similar records of the
Company accurately reflect all issuances and record transfers in the capital
stock of the Company. The other Books and Records of the Company are true,
correct and complete and have been maintained in accordance with sound
business practices.
3.8 Company Financial Statements. The Company has previously delivered
to Parent the Company Financial Statements. Such Company Financial Statements
(i) are true, correct and complete, (ii) have been prepared in accordance with
the Books and Records of the Company, (iii) have been prepared in conformity
with GAAP, and (iv) fairly present the financial condition and results of
operations of the Company as of the respective dates thereof and for the
periods covered thereby; provided that the Interim Financial Statements are
subject to normal year end adjustments and lack footnotes and certain other
presentation items.
3.9 Absence of Changes. Except for the execution and delivery of this
Agreement and the transactions to take place pursuant hereto on or prior to
the Closing Date, since December 31, 2002, there has not been any material
adverse change, or any event or development which, individually or together
with other such events, could reasonably be expected to result in a Material
Adverse Effect on the Company.
3.10 No Undisclosed Liabilities. Except as disclosed in Section 3.10 of
the Company Disclosure Schedule or in the Company Financial Statements, there
are no liabilities (whether known or unknown, whether asserted or unasserted
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due, including but
not limited to any liability for Taxes), nor any basis for any claim against
the Company for any such liabilities, relating to or affecting the Company or
any of its Assets and Properties, other than such liabilities incurred after
December 31, 2002 in the Ordinary Course of Business which have not had, and
could not reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect on the Company.
3.11 Benefit Plans; ERISA.
(a) Section 3.11 (a) of the Company Disclosure Schedule lists each
Benefit Plan together with a brief description of the type of plan and benefit
provided thereunder. The Company has no commitment, proposal, or communication
to employees regarding the creation of an additional Plan or any increase in
benefits under any Benefit Plan. The Company has provided to Parent (i) a copy
of each Benefit Plan (including amendments) or, where substantially similar
arrangements exist, a sample copy and a list of persons participating in such
arrangement, (ii) the three most recent annual reports on the Form 5500 series
for each Benefit Plan required to file such report and (iii) the most recent
trustee's report for each Benefit Plan funded through a trust.
(b) Each Benefit Plan has been operated and administered in all
material respects in accordance with its terms and, as of the Closing Date,
will be in full compliance, in form and operation, with all applicable laws
(including but not limited to ERISA and the Code). The reserves reflected in
the Company Financial Statements for the obligations of the Company under all
Benefit Plans are adequate and were determined in accordance with GAAP.
(c) The consummation of the transactions contemplated by this
Agreement will not, either immediately or upon the occurrence of any event
thereafter, (i) entitle any current or former employee or officer or director
of the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation otherwise due any such
individual.
3.12 Real Property. The Company does not own any real property. Section
3.12 of the Company Disclosure Schedule contains a complete and accurate legal
description of each parcel of real property leased by the Company (as lessee
or lessor) (the "Real Property") and all Encumbrances (other than Permitted
Encumbrances) relating to or affecting the Real Property. The Company has a
valid leasehold interest in, all real property used in or relating to the
conduct of the Company's business, free and clear of all Encumbrances other
than Permitted Encumbrances.
3.13 Intellectual Property Rights.
(a) Section 3.13(a) of the Company Disclosure Schedule sets
forth, for the Intellectual Property owned, in whole or in part, including
jointly with others (such schedule specifies if such Intellectual Property is
owned jointly), by the Company, a complete and accurate list of all United
States and foreign (a) Patents and Patent applications; (b) Trademark
registrations and applications and unregistered Trademarks; (c) copyright
registrations and applications, indicating for each, the applicable
jurisdiction, registration number (or application number) and date issued (or
date filed); and (d) all other Intellectual Property to which the Company has
any ownership rights (including common law rights).
(b) The Company owns or possesses adequate licenses, remarketing
or sublicensing rights, or other rights to use, free and clear of
Encumbrances, orders and arbitration awards, all of its Intellectual Property
used in its business. The products used, manufactured, marketed, sold or
licensed by the Company, and all Intellectual Property used in the conduct of
the Company's business as currently conducted, do not infringe upon, violate
or constitute the unauthorized use of any rights owned or controlled by any
third party, including any Intellectual Property of any third party.
(c) No litigation is now or, within the three years prior to the
date of this Agreement, was pending and no notice or other claim in writing
has been received by the Company, (A) alleging that the Company has engaged in
any activity or conduct that infringes upon, violates or constitutes the
unauthorized use of the Intellectual Property rights of any third party or (B)
challenging the ownership, use, validity or enforceability of any Intellectual
Property owned or exclusively licensed by or to the Company.
(d) To the Knowledge of the Company, no third party is
misappropriating, infringing, diluting or violating any Intellectual Property
owned or licensed by the Company, and no such claims have been brought against
any third party by the Company.
3.14 Compliance with Legal Requirements; Governmental Authorizations.
(a) Except as set forth in Section 3.14 (a) of the Company
Disclosure Schedule:
(i) the Company is, and at all times since its incorporation
has been, in full compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or the
ownership or use of any of its Assets;
(ii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) may constitute or result in a violation
by the Company of, or failure on the part of the Company to comply with, any
Legal Requirement, or (B) may give rise to any obligation on the part of the
Company to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature; and
(iii) the Company has not received any notice or other
communication (whether oral or written) from any Governmental or Regulatory
Authority or any other Person regarding (A) any actual, alleged, possible, or
potential violation of, or failure to comply with, any Legal Requirement, or
(B) any actual, alleged, possible, or potential obligation on the part of the
Company to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
(b) Section 3.14(b) of the Company Disclosure Schedule contains
a complete and accurate list of each Governmental Authorization that is held
by the Company or that otherwise relates to the business of, or to any of the
assets owned or used by, the Company. Each Governmental Authorization listed
or required to be listed in Section 3.14(b) of the Company Disclosure Schedule
is valid and is in full force and effect. Except as set forth on Section
3.14(b) of the Company Disclosure Schedule:
(i) the Company is, and at all times has been, in full
compliance with all of the terms and requirements of each Governmental
Authorization identified or required to be identified in Section 3.14(b) of
the Company Disclosure Schedule;
(ii) no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure to comply with any term or
requirement of any Governmental Authorization listed or required to be listed
in Section 3.14(b) of the Company Disclosure Schedule, or (B) result directly
or indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any Governmental Authorization listed
or required to be listed in Section 3.14(b) of the Company Disclosure
Schedule;
(iii) the Company has not received any notice or other
communication (whether oral or written) from any Governmental or Regulatory
Authority or any other Person regarding (A) any actual, alleged, possible, or
potential violation of or failure to comply with any term or requirement of
any Governmental Authorization, or (B) any actual, proposed, possible, or
potential revocation, withdrawal, suspension, cancellation, termination of, or
modification to any Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
Section 3.14(b)of the Company Disclosure Schedule have been duly filed on a
timely basis with the appropriate Governmental or Regulatory Authority, and
all other filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the appropriate
Governmental or Regulatory Authority.
The Governmental Authorizations listed in Section 3.14(b) of the Company
Disclosure Schedule collectively constitute all of the Governmental
Authorizations necessary to permit the company to lawfully conduct and operate
its business in the manner it currently conducts and
operates such business and to permit the Company to own and use its assets in
the manner in which it currently owns and uses such assets.
3.15 Legal Proceedings; Orders.
(a) Except as set forth in Section 3.15(a) of the Company
Disclosure Schedule, there is no pending Proceeding:
(i) that has been commenced by or against the Company or that
otherwise relates to or may affect the business of, or any of the assets owned
or used by the Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of
the Contemplated Transactions.
To the Knowledge of the Company, (1) no such Proceeding has been
Threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding. The
Company has delivered to Parent copies of all pleadings, correspondence, and
other documents relating to each Proceeding listed in Section 3.15(a) of the
Company Disclosure Schedule. The Proceedings listed in Section 3.15(a) of the
Company Disclosure Schedule will not have a material adverse effect on the
business, operations, assets, condition, or prospects of the Company.
3.16 Contracts.
(a) Section 3.16 of the Company Disclosure Schedule contains a
true and complete list of each of the following contracts, agreements or other
arrangements to which the Company is a party or by which any of its Assets and
Properties is bound (and, to the extent oral, accurately describes the terms
of such contracts, agreements and arrangements):
(i) all collective bargaining or similar labor agreements;
(ii) all contracts for the employment of any officer, employee
or other person or entity on a full time, part time, consulting or other
basis;
(iii) all loan agreements, indentures, debentures, notes or
letters of credit relating to the borrowing of money or to mortgaging,
pledging or otherwise placing a lien on any material asset or material group
of assets of the Company;
(iv) each written warranty, guaranty, or other similar
undertaking with respect to contractual performance extended by the Company;
(v) all leases or agreements under which the Company is lessee
or lessor of, or holds, or operates, any property, real or personal, owned by
any other party;
(vi) all commitments, contracts, sales contracts, purchase
orders, mortgage agreements or groups of related agreements with the same
party or any group or affiliated parties which require or may in the future
require payment of any consideration by the Company;
(vii) each Contract for capital expenditures in excess of
$10,000;
(viii) all contracts or commitments that in any way restrict
the Company from carrying on its business anywhere in the world;
(ix) all other contracts and agreements that (A) involve
the payment or potential payment in excess of $10,000, pursuant to the terms
of any such contract or agreement, by the Company and (B) cannot be terminated
within 30 days after giving notice of termination without resulting in any
cost or penalty to the Company; and
(x) each amendment, supplement, and modification (whether
oral or written) in respect to any of the foregoing.
(b) A correct and complete copy of each Contract disclosed in
the Company Disclosure Schedule has been previously provided to Parent. Each
contract, agreement or other arrangement disclosed in the Company Disclosure
Schedule is in full force and effect and constitutes a legal, valid and
binding agreement, enforceable in accordance with its terms, of the Company,
and to the Knowledge of the Company, the other parties thereto; and the
Company has performed all of its required obligations under, and is not in
violation or breach of or default under, any such contract, agreement or
arrangement. There are no renegotiations of, attempts to renegotiate or
outstanding rights to renegotiate any material amounts paid or payable to the
Company under current or complete Contract with any Person and, to the
Knowledge of the Company, no such Person has made written demand for such
renegotiation. The Contracts relating to the provision services by the Company
have been entered into in the Ordinary Course of Business and have been
entered into without the commission of any act alone or in concert with any
other Person, or any consideration having been paid or promised, that would be
in violation of any Legal Requirement.
3.17 Environmental Matters.
(a) The Company is in compliance with all applicable "Environmental
Laws" (as defined below) and there are no circumstances which may materially
prevent or interfere with such compliance in the future. The Company has not
received any communication (whether written or oral), whether from a
Governmental or Regulatory Authority, citizen group, employee or otherwise,
that alleges that the Company or any of the Assets or Properties used in the
Company's business is not in full compliance with Environmental Laws.
(b) There are no past or present actions, activities,
circumstances, conditions, events or incidents arising from the operation,
ownership or use of any property currently or formerly owned, operated or used
by the Company (or any entity formerly an Affiliate of the Company),
including, without limitation, the release, emission, discharge or disposal of
any "Material" (as defined below) into the "Environment" (as defined below),
that could reasonably be expected to result in the incurrence of costs under
Environmental Laws.
(c) For purposes of this Section 3.17:
(i) "Environment" means any surface water, ground water,
drinking water supply, land surface or subsurface strata, ambient air and any
indoor workplace.
(ii) "Environmental Laws" means all national, state, local
and foreign laws, codes, regulations, common law, requirements, directives,
Orders, and administrative or judicial interpretations thereof, all as in
effect on the date hereof or on the Closing Date, that may be enforced by any
Governmental or Regulatory Authority, relating to pollution, the protection of
the Environment or the emission, discharge, disposal, release or threatened
release of Materials in or into the Environment.
(iii) "Material" means pollutants, contaminants or chemical,
industrial, hazardous or toxic materials or wastes, including, without
limitation, petroleum and petroleum products.
3.18 Accounts Receivable. All accounts receivable of the Company that are
reflected on the Company Financial Statements or the accounting records of the
Company as of the Closing (collectively, the "Accounts Receivable") represent
or will represent valid obligations arising from sales actually made or
services actually performed in the Ordinary Course of Business. Unless paid
prior to the Closing, the Accounts Receivable are or will be as of the Closing
current and collectible, net of the respective reserves shown on the Company
Financial Statements or on the accounting records of the Company as of the
Closing (which reserves are adequate and calculated consistent with past
practice and, in the case of the reserve as of the Closing, will not represent
a greater percentage of the Accounts Receivable as of the Closing than the
reserve reflected in the Company Financial Statements and will not represent a
material adverse change in the composition of such Accounts Receivable in
terms of aging). Subject to such reserves, each of the Accounts Receivable
either has been or will be collected in full, without any setoff, within 90
days after the date on which it first becomes due and payable.
3.19 Insurance. Set forth in Section 3.19 of the Company Disclosure
Schedule is a complete and accurate list of all primary, excess and umbrella
policies, bonds and other forms of insurance currently owned or held by or on
behalf of and/or providing insurance coverage to the Company or the Assets and
Properties of the Company (or any of the Company's directors, officers,
salespersons, agents or employees), including the following information for
each such policy: type(s) of insurance coverage provided; name of insurer;
effective dates; policy number; per occurrence and annual aggregate
deductibles or self-insured retentions; per occurrence and annual aggregate
limits of liability and the extent, if any, to which the limits of liability
have been exhausted. All policies set forth on the Company Disclosure Schedule
are in full force and effect, and with respect to such policies, all premiums
currently payable or previously due have been paid, and no notice of
cancellation or termination has been received with respect to any such policy.
3.20 Tax Matters.
(a) Except as set forth in Section 3.20 of the Company Disclosure
Schedule, the Company has filed on a timely basis all Tax Returns that it was
required to file, and all such Tax Returns were complete and accurate in all
material respects. The Company is not and has never been a member of a group
of corporations with which it has filed (or been required to file)
consolidated, combined or unitary Tax Returns. The Company has paid on a
timely basis all Taxes that were due and payable including, without
limitation, employment taxes and any fines, interest and penalties thereon.
The unpaid Taxes of the Company for tax periods through December 31, 2002 do
not exceed the accruals and reserves for Taxes (excluding accruals and
reserves for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the Company's most recent balance sheet. The
Company has no actual or potential liability for any Tax obligation of any
other taxpayer (including any affiliated group of corporations or other
entities that included the Company during a prior period). All Taxes that the
Company is or was required by law to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the
proper Governmental or Regulatory Authority.
(b) The Company has delivered to Parent complete and accurate
copies of all federal income Tax Returns, examination reports and statements
of deficiencies assessed against or agreed to by the Company. The federal
income Tax Returns of the Company have been audited by the Internal Revenue
Service or are closed by the applicable statute of limitations for all taxable
years through the taxable year specified in Section 3.20(b) of the Company
Disclosure Schedule. The Company has delivered or made available to Parent
complete and accurate copies of all other Tax Returns of the Company, together
with all related examination reports and statements of deficiency for all
periods from and after incorporation. No examination or audit of any Tax
Return of the Company by any Governmental or Regulatory Authority is currently
in progress or, to the Knowledge of the Company, threatened or contemplated.
The Company has not been informed by any jurisdiction that the jurisdiction
believes that the Company was required to file any Tax Return that was not
filed. The Company has not waived any statute of limitations with respect to
Taxes or agreed to an extension of time with respect to a Tax assessment or
deficiency.
3.21 Labor and Employment Relations. To the Knowledge of the Company, no
officer, executive or group of five or more employees of the Company has or
have any plans to terminate his, her or their employment with the Company. The
Company is not a party to or bound by any collective bargaining agreement with
any labor organization, group or association covering any of its employees,
and to the Knowledge of the Company, there are no attempts to organize any of
the Company's employees by any person, unit or group seeking to act as their
bargaining agent. The Company has complied with all applicable laws relating
to the employment of labor, including provisions thereof relating to wages,
hours, equal opportunity, collective bargaining, discrimination against race,
color, national origin, religious creed, physical or mental disability, sex,
age, ancestry, medical condition, marital status or sexual orientation,
occupational health and safety and the withholding and payment of social
security and other Taxes. The Company is not liable for the payment of any
compensation, damages, taxes, fines, penalties or other amounts, however
designated, for the failure to comply with any of the foregoing Legal
Requirements.
3.22 Customers. The Company has previously provided to Parent a true and
correct list of the Company's current customers and the Company's customers
during the 2001 and 2002 fiscal years related to the Company business. Since
January 1, 2003, no single customer or group of affiliated customers
contributing more than $10,000 per annum to the gross revenues of the
Company's business has stopped doing business with the Company, and no such
customer has given notice to the Company of an intention to discontinue doing
business or reduce the level of gross revenues from that in fiscal year 2002
with the Company.
3.23 Bank Accounts. Section 3.23 of the Company Disclosure Schedule
contains a complete and accurate list of each deposit account or asset
maintained by or on behalf of the Company with any bank, brokerage house or
other financial institution, specifying with respect to each the name and
address of the institution, the name under which the account is maintained,
the account number, and the name and title or capacity of each Person
authorized to have access thereto.
3.24 Third Party Consents. No consent, approval or authorization of any
third party on the part of the Company is required in connection with the
consummation of the transactions contemplated hereunder except as otherwise
provided in Section 3.24 of the Company Disclosure Schedule.
3.25 Relationships with Related Persons. Neither the Principal
Stockholder or any Related Person of the Company has or since December 31,
2001 has had, any interest in the property, whether real, personal or mixed,
or whether tangible or intangible, used in or pertaining to the Company's
businesses. Neither the Principal Stockholder or any Related Person of the
Company owns, or since December 31, 2001 has owned (of record or as beneficial
owner) an equity interest or any other financial or profit interest in a
Person that has (i) had business dealings or a material financial interest in
any transaction with the Company or (ii) engaged in competition with the
Company with respect to any line of the products or services of the Company.
Except as set forth in Section 3.25 of the Company Disclosure Schedule,
neither the Principal Stockholder nor any Related Person of the Company is a
party to any Contract with or has any right or claim against the Company.
3.26 Brokers. Except as set forth in Section 3.26 of the Company
Disclosure Schedule, neither the Principal Stockholder nor the Company have
retained any broker in connection with the transactions contemplated
hereunder. Parent has, and will have, no obligation to pay any broker's,
finder's, investment banker's, financial advisor's or similar fee in
connection with this Agreement or the transactions contemplated hereby by
reason of any action taken by or on behalf of the Principal Stockholder or the
Company.
3.27 Material Misstatements and Omissions. The statements,
representations and warranties of the Company contained in this Agreement
(including the exhibits and schedules hereto) and in each document, statement,
certificate or exhibit furnished or to be furnished by or on behalf of the
Company pursuant hereto, or in connection with the transactions contemplated
hereby, taken together, do not contain and will not contain any untrue
statement of a material fact and do not or will not omit to state a material
fact necessary to make the statements or facts contained herein or therein, in
light of the circumstances made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION CO.
Parent and Acquisition Co., jointly and severally, represent and warrant
to the Company as of the date hereof and as of the Closing Date, as follows:
4.1 Organization: Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of the Utah.
Acquisition Co. is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware. Each of Parent and
Acquisition Co. is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required
except for any jurisdiction where failure so to qualify would not have a
Material Adverse Effect upon Parent or Acquisition Co., as the case may be.
4.2 Authority. Each of Parent and Acquisition Co. has all necessary
corporate power and corporate authority and has taken all corporate actions
necessary to enter into this Agreement, to consummate the transactions
contemplated hereby and to perform its respective obligations hereunder and no
other proceedings on the part of Parent or Acquisition Co. are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
each of Parent and Acquisition Co. and constitutes a legal, valid and binding
obligation of Parent and Acquisition Co., respectively, enforceable against
each of Parent and Acquisition Co. in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
4.3 Litigation. There are no Actions or Proceedings pending or, to the
Knowledge of Parent or Acquisition Co., threatened or anticipated against,
relating to or affecting the transactions contemplated by this Agreement, and,
to the Knowledge of Parent or Acquisition Co., there is no basis for any such
Action or Proceeding.
4.4 Reports and Financial Statements. As of the date hereof, the
Parent has furnished or made available to the Company true and complete copies
of all Parent SEC Documents. As of their respective filing dates, all such
Parent SEC Documents complied in all material respects with the requirements
of the Securities Act, the Exchange Act and the rules and regulations of the
OTCBB, as the case may be, and none of such Parent SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not
misleading, except to the extent corrected by a document subsequently filed
with the SEC or OTCBB. The Parent Financial Statements comply as to form in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC and OTCBB with respect thereto,
have been prepared in accordance with GAAP consistently applied (except as may
be indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10QSB of the SEC) and present fairly the consolidated
financial position of the Parent at the dates thereof and the consolidated
results of its operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal audit adjustments). As of the
date hereof, there has been no change in the Parent accounting policies except
as described in the notes to Parent Financial Statements.
4.5 Environmental Matters.
(a) Parent and Acquisition Co. are in compliance with all
applicable "Environmental Laws" (as defined below) and there are no
circumstances which may materially prevent or interfere with such compliance
in the future. Parent and Acquisition Co. have not received any communication
(whether written or oral), whether from a Governmental or Regulatory
Authority, citizen group, employee or otherwise, that alleges that Parent
and/or Acquisition Co. or any of the Assets or Properties used in their
respective businesses is not in full compliance with Environmental Laws.
(b) There are no past or present actions, activities,
circumstances, conditions, events or incidents arising from the operation,
ownership or use of any property currently or formerly owned, operated or used
by the Parent and/or Acquisition Co. (or any entity formerly an Affiliate of
the Parent and/or Acquisition Co.), including, without limitation, the
release, emission, discharge or disposal of any "Material" (as defined below)
into the "Environment" (as defined below), that could reasonably be expected
to result in the incurrence of costs under Environmental Laws.
(c) For purposes of this Section 4.5:
(i) "Environment" means any surface water, ground water,
drinking water supply, land surface or subsurface strata, ambient air and any
indoor workplace.
(ii) "Environmental Laws" means all national, state, local and
foreign laws, codes, regulations, common law, requirements, directives,
Orders, and administrative or judicial interpretations thereof, all as in
effect on the date hereof or on the Closing Date, that may be enforced by any
Governmental or Regulatory Authority, relating to pollution, the protection of
the Environment or the emission, discharge, disposal, release or threatened
release of Materials in or into the Environment.
(iii) "Material" means pollutants, contaminants or chemical,
industrial, hazardous or toxic materials or wastes, including, without
limitation, petroleum and petroleum products.
4.6 Brokers. Neither Parent nor Acquisition Co. has retained any broker
in connection with the transactions contemplated hereunder. Neither the
Company nor the Principal Stockholder has, and will have, any obligation to
pay any broker's, finder's investment banker's, financial advisor's or similar
fee in connection with this Agreement or the transactions contemplated hereby
by reason of any action taken by or on behalf of Parent or Acquisition Co.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE PRINCIPAL STOCKHOLDER
The Principal Stockholder hereby represents and warrants to Parent and
Acquisition Co. as follows (such representations and warranties do not lessen
or obviate the representations and warranties of the Company and the
Stockholders set forth in Article III above):
5.1 Requisite Power and Authority. The Principal Stockholder has all
necessary power and authority under all applicable provisions of law to
execute and deliver this Agreement and to carry out its provisions. All action
on the Principal Stockholder's part required for the lawful execution and
delivery of this Agreement has been or will be effectively taken prior to the
Closing. Upon execution and delivery, this Agreement will be the valid and
binding obligation of the Principal Stockholder, enforceable in accordance
with its terms.
5.2 Investment Representations. The Principal Stockholder understands
that the shares of the Parent Common Stock have not been registered under the
Securities Act. The Principal Stockholder also understands that the shares of
Parent Common Stock are being offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part upon the Principal
Stockholder's representations and warranties contained in this Agreement. The
Principal Stockholder hereby represents and warrants as follows:
(a) The Principal Stockholder is an "accredited investor" as
defined in Rule 501 (a) of the Securities Act.
(b) The Principal Stockholder has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to Parent so that he, she or it is capable of evaluating the
merits and risks of his, her or its investment in Parent and has the capacity
to protect his, her or its own interests. The Principal Stockholder must bear
the economic risk of this investment indefinitely unless the shares of Parent
Common Stock are registered pursuant to the Securities Act, or an exemption
from registration is available. The Principal Stockholder also understands
that there is no assurance that any exemption from registration under the
Securities Act will be available and that, even if available, such exemption
may not allow the Principal Stockholder to transfer all or any portion of the
shares of Parent Common Stock under the circumstances, in the amounts or at
the times the Principal Stockholder might propose.
(c) The Principal Stockholder is acquiring the shares of Parent
Common Stock for the Principal Stockholder's own account for investment only,
and not with a view towards their distribution.
(d) The Principal Stockholder represents that by reason of his, her
or its business or financial experience, the Principal Stockholder has the
capacity to protect his, her or its own interests in connection with the
transactions contemplated in this Agreement. Further, the Principal
Stockholder is aware of no publication of any advertisement in connection with
the transactions contemplated in the Agreement.
(e) The Principal Stockholder has received and read the Parent SEC
Filings and has had an opportunity to discuss Parent's business, management
and financial affairs with directors, officers and management of Parent and
has had the opportunity to review Parent's operations and facilities. The
Principal Stockholder has also had the opportunity to ask questions of and
receive answers from Parent and its management regarding the terms and
conditions of this investment.
(f) The Principal Stockholder acknowledges and agrees that the
shares of Parent Common Stock must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. The Principal Stockholder has been advised or is
aware of the provisions of Rule 144 promulgated under the Securities Act as in
effect from time to time, which permits limited resale of shares purchased in
a private placement subject to the satisfaction of certain conditions,
including, among other things, the availability of certain current public
information about Parent, the resale occurring not less than one year after a
party has purchased and paid for the security to be sold, the sale being
through an unsolicited "broker's transaction" or in transactions directly with
a market (as said term is defined under the Exchange Act) and the number of
shares being sold during any three month period not exceeding specified
limitations.
(g) The Principal Stockholder resides in the state or province
identified in the address of the Principal Stockholder set forth on the
signature page to this Agreement.
5.3 Transfer Restrictions. The Principal Stockholder acknowledges and
agrees that the shares of Parent Common Stock are subject to restrictions on
transfer set forth in this Section 5.3. The Principal Stockholder agrees not
to make any disposition of all or any portion of the shares of Parent Common
Stock unless and until: (i) there is then in effect a registration statement
under the Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement; or (ii)
the transferee (except for transfers in compliance with Rule 144) has agreed
in writing to be bound by the terms of this Agreement, the Principal
Stockholder shall have notified Parent of the proposed disposition and shall
have furnished Parent with a detailed statement of the circumstances
surrounding the proposed disposition and if reasonably requested by Parent,
the Principal Stockholder shall have furnished Parent with an opinion of
counsel, reasonably satisfactory to Parent, that such disposition will not
require registration of the shares under the Securities Act. Notwithstanding
the provisions of clauses (i) and (ii) above, no such registration statement
or opinion of counsel shall be necessary for a transfer by the Principal
Stockholder to a family member of such Stockholder or trust for the benefit of
the Principal Stockholder; provided, however, that in each case the transferee
will be subject to the terms of this Agreement to the same extent as if he,
she or it were an original Principal Stockholder hereunder.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Operation of Business Prior to Effective Time. Between the date
hereof and the Effective Time, the Company will operate its business in the
Ordinary Course of Business and, to the extent consistent therewith, with no
less diligence and effort than would be applied in the absence of this
Agreement, use all commercially reasonable efforts to seek to preserve intact
its current business organizations, keep available the service of its current
officers and employees and preserve its relationships with customers,
suppliers, distributors, lessors, creditors, employees, contractors and others
having business dealings with it with the intention that its goodwill and
ongoing businesses shall be unimpaired at the Effective Time.
6.2 No Solicitation or Negotiation. Between the date hereof and the
earlier of the termination of this Agreement and September 30, 2003, the
Company will not (nor will the Company permit any of the Company's officers,
directors, employees, agents, representatives or affiliates to) directly or
indirectly, take any of the following actions with any person other than
Parent and Acquisition Co.: (i) solicit, initiate, entertain or encourage any
proposals or offers from, or conduct discussions with or engage in
negotiations with any person relating to any possible acquisition of the
Company or any of its subsidiaries (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise), any material portion of its
or their capital stock or assets or any equity interest in the Company; (ii)
provide information with respect to it or any of its subsidiaries to any
person, other than Parent and Acquisition Co., relating to, or otherwise
cooperate with, facilitate or encourage any effort or attempt by any such
person with regard to, any possible acquisition of the Company (whether by way
of merger, purchase of capital stock, purchase of assets or otherwise), any
portion of its or their capital stock or assets or any equity interest in the
Company; or (iii) enter into any agreement with any person providing for the
possible acquisition of the Company or any of its subsidiaries (whether by way
of merger, purchase of capital stock, purchase of assets or otherwise), any
portion of its or their capital stock or assets or any equity interest in the
Company.
6.3 Access to Information. Between the date hereof and the Effective
Time, the Company shall give Parent and its authorized representatives
(including, without limitation, its attorneys and accountants), upon
reasonable notice from Parent, reasonable access to all employees, customers,
plants, offices, warehouses and other facilities, to (and where necessary,
provide copies of) all books and records, contracts and all personnel files of
current employees of the Company and its subsidiaries as Parent may reasonably
require, and will cause its officers and those of its subsidiaries to furnish
Parent with such financial and operating data and other information with
respect to the business and properties of the Company and its subsidiaries as
Parent may from time to time reasonably request.
6.4 Notification of Certain Matters. The Company shall give prompt
notice to Parent of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which has caused or would be likely to cause
any representation or warranty contained in this Agreement by the Company to
be untrue or inaccurate at or prior to the Effective Time; or
(ii) any failure by the Company to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant
to this Section 6.4 shall not cure such breach or noncompliance by the
Company, limit or otherwise affect the remedies available hereunder to Parent,
or constitute an amendment of any representation, warranty or statement in
this Agreement or the Company Disclosure Schedules.
6.5 Fees and Expenses. Whether or not the Merger is consummated, all
fees, costs and expenses incurred in connection with the Merger, this
Agreement and the other agreements and transactions contemplated hereby and
thereby, including all legal, accounting, financial advisory, broker's
consulting and other fees and expenses of third parties incurred by a party in
connection with the negotiation, documentation and effectuation of the terms
and conditions of the Merger, this Agreement and the other agreements and
transactions contemplated hereby and thereby ("Third Party Expenses"), shall
be the obligation of the respective party incurring such Third Party Expenses.
6.6 Lock-up/Leak-out Agreements. The pre-closing officers, directors,
and the holders of 5% or more of the Parent Company Stock shall execute a
Lock-Up/Leak-Out Agreement to the effect that they will not sell or otherwise
dispose of any equity securities of Parent for a period of 1 year (the "Lock-
up Period") following the Closing Date except in accordance with the Lock-
Up/Leak-Out Agreement. The certificates representing the Shares of Parent
Common Stock beneficially owned by such officers, directors and 5%
shareholders shall be held by a mutually acceptable escrow agent during the
Lock-up Period.
6.7 Employment Agreement. At Closing, Xxxxx Xxxxxxxx ("Xxxxxxxx") shall
execute a 5 year employment agreement, substantially in the form to be
mutually agreed upon in good faith by Parent and Xxxxxxxx and to be attached
hereto as Exhibit B prior to the Closing, to serve as Chief Executive Officer
of Parent and in addition to any other consideration therein shall receive an
option to purchase 2,500,000 shares of Parent Common Stock at an exercise
price of $0.01/share.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 Conditions to the Obligations of the Company. The obligation of the
Company to effect the Merger is subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) the representations and warranties of Parent and Acquisition
Co. contained in this Agreement shall be true and correct in all material
respects at and as of the Effective Time with the same effect as if made at
and as of the Effective Time (except to the extent such representations
specifically relate to an earlier date, in which case such representations
shall be true and correct in all material respects as of such earlier date,
and in any event, subject to the foregoing materiality qualification) and, at
the Closing, Parent and Acquisition Co. shall have delivered to the Company a
certificate to that effect, executed by an officer of Parent and Acquisition
Co.;
(b) each of the covenants and obligations of Parent and Acquisition
Co. to be performed at or before the Effective Time pursuant to the terms of
this Agreement shall have been duly performed in all material respects at or
before the Effective Time and, at the Closing, Parent and Acquisition Co.
shall have delivered to the Company a certificate to that effect, executed by
an officer of Parent and Acquisition Co.; and
(c) Parent shall have delivered all of Closing deliveries set forth
in Section 2.8(c) above.
7.2 Conditions to the Obligations of Parent and Acquisition Co. The
respective obligations of Parent and Acquisition Co. to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) the representations and warranties of the Company contained
in this Agreement shall be true and correct in all material respects at and as
of the Effective Time with the same effect as if made at and as of the
Effective Time (except to the extent such representations specifically relate
to an earlier date, in which case such representations shall be true and
correct in all material respects as of such earlier date) and, at the Closing,
the Company shall have delivered to Parent and Acquisition Co. a certificate
to that effect, executed by an executive officer of the Company;
(b) each of the covenants and obligations of the Company to be
performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or before
the Effective Time and, at the Closing, the Company shall have delivered to
Parent and Acquisition Co. a certificate to that effect, executed by an
executive officer of the Company;
(c) the consents specified on Section 3.24 of the Company
Disclosure Schedule and any other material third party consents necessary to
consummate the transactions contemplated hereby shall have been given,
obtained or complied with as applicable;
(d) the Company and the Company Stockholders, as the case may
be, shall have delivered all of the Closing deliveries set forth in Section
2.8(b) above; and
(e) all proceedings taken by the Company and the Company
Stockholders and all instruments executed and delivered by the Company and the
Company Stockholders on or prior to the Closing in connection with the
Contemplated Transactions shall be reasonably satisfactory in form and
substance to counsel for the Parent and Acquisition Co.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
8.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time whether before or after
approval and adoption of this Agreement:
(a) by written consent of Parent, Acquisition Co., and the
Company;
(b) by Parent and Acquisition Co. or the Company if (i) any
court of competent jurisdiction in the United States or other United States
federal or state governmental entity shall have issued a final order, decree
or ruling, or taken any other final action, restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other
action is or shall have become nonappealable, or (ii) the Merger has not been
consummated by September 30, 2003; provided that no party may terminate this
Agreement pursuant to this clause (ii) if such party's failure to fulfill any
of its obligations under this Agreement shall have been a principal reason
that the Effective Time shall not have occurred on or before said date;
(c) by the Company if (i) there shall have been a material
breach of any representations or warranties on the part of Parent or
Acquisition Co. set forth in this Agreement or if any representations or
warranties of Parent or Acquisition Co. shall have become untrue in any
material respect, provided that the Company has not breached any of its
obligations hereunder in any material respect; or (ii) there shall have been a
breach by Parent or Acquisition Co. of any of their respective covenants or
agreements hereunder in any material respect or materially adversely affecting
(or materially delaying) the ability of Parent, Acquisition Co. or the Company
to consummate the Merger, and Parent or Acquisition Co., as the case may be,
has not cured such breach within ten business days after notice by the Company
thereof, provided that the Company has not breached any of its obligations
hereunder in any material respect; or
(d) by Parent and Acquisition Co. if (i) there shall have been a
material breach of any representations or warranties on the part of the
Company set forth in this Agreement or if any representations or warranties of
the Company shall have become untrue in any material respect, provided that
neither Parent nor Acquisition Co. has breached any of their respective
obligations hereunder in any material respect; (ii) there shall have been a
breach by the Company of one or more of its covenants or agreements hereunder
in any material respect or materially adversely affecting (or materially
delaying) the ability of Parent, Acquisition Co. or the Company to consummate
the Merger, and the Company has not cured such breach within ten business days
after notice by Parent or Acquisition Co. thereof, provided that neither
Parent nor Acquisition has breached any of their respective obligations
hereunder in any material respect; or (iii) the results of Parent's due
diligence investigations are not satisfactory to Parent for any reason in its
sole discretion.
8.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1 above, this Agreement
shall forthwith become void and have no effect without liability on the part
of any party hereto or its Affiliates, directors, officers or stockholders
other than the provisions of this Section 8.2 and Sections 6.2, 6.5, 8.3,
10.7, and 10.10.
8.3 Amendment. This Agreement may be amended by action taken by the
Company, Parent and Acquisition Co. at any time before or after approval of
the Merger by the stockholders of the Company but after any such approval no
amendment shall be made that requires the approval of such stockholders under
applicable law without such approval. This Agreement (including the Company
Disclosure Schedule) may be amended only by an instrument in writing signed on
behalf of the parties hereto.
ARTICLE IX
ACTIONS BY THE PARTIES AFTER THE CLOSING
9.1 Survival of Representations, Warranties, Etc. The representations,
warranties and covenants contained in or made pursuant to this Agreement or
any certificate, document or instrument delivered pursuant to or in connection
with this Agreement in the transactions contemplated hereby shall survive the
execution and delivery of this Agreement and the Closing hereunder
(notwithstanding any investigation, analysis or evaluation by any party hereto
or their designees of the Assets and Properties, business, operations or
condition (financial or otherwise) of the other party), and thereafter the
representations and warranties of the parties herein shall continue to survive
in full force and effect.
9.2 Indemnification.
(a) By the Company and Principal Stockholder. The Company and
the Principal Stockholder shall, jointly and severally, indemnify, defend and
hold harmless Parent, Acquisition Co. and their respective officers,
directors, employees, affiliates, agents, successors, subsidiaries and assigns
(collectively the "Parent Group") from and against any and all costs, losses,
liabilities, damages, lawsuits, deficiencies, claims and expenses
(collectively, the "Damages"), incurred in connection with, arising out of,
resulting from or incident to (i) any breach of any covenant, representation,
warranty or agreement or the inaccuracy of any representation, made by the
Company or the Principal Stockholder in or pursuant to this Agreement, or in
the other documents delivered in connection with the transactions contemplated
in this Agreement.
(b) By the Parent and Acquisition Co. The Parent and Acquisition
Co. shall, jointly and severally, indemnify, defend and hold harmless Company
(and its officers, directors, employees, affiliates, agents, successors,
subsidiaries and assigns) and the Principal Stockholder from and against any
and all costs, losses, liabilities, damages, lawsuits, deficiencies, claims
and expenses (collectively, the "Damages") incurred in connection with,
arising out of, resulting from or incident to (i) any breach of any covenant,
representation, warranty or agreement or the inaccuracy of any representation,
made by the Parent or the Acquisition Co. in or pursuant to this Agreement, or
in the other documents delivered in connection with the transactions
contemplated in this Agreement.
(c) Limitation of Liability. The limitation of the Principal
Stockholder for indemnification under this Article IX shall be limited to the
fair market value of his ratable portion of the Parent Common Stock issued as
Stock Consideration. This limitation of liability shall not apply to any
intentional or fraudulent breach by any party of any representation, warranty,
covenant or obligation.
9.3 Articles of Incorporation and Bylaws. Notwithstanding anything to
the contrary contained in the Company's Articles of Incorporation or Bylaws,
the indemnification provisions of this Article IX shall take precedence over
such Articles of Incorporation or Bylaws. Neither the Principal Company
Stockholder nor any other director or officer incumbent at any time prior to
the Closing shall be entitled to indemnification directly or indirectly under
the Company's Articles of Incorporation or Bylaws or otherwise for any matter
upon which the Company or the Principal Stockholder has or might have an
indemnification obligation hereunder and the Articles of Incorporation and
Bylaws shall be deemed amended accordingly. However, the provisions of this
Section 9.3 are intended only for the regulation of relations between the
Company and the Principal Stockholder and any indemnified party. This Section
9.3 is not intended for the benefit of creditors or other third parties and
does not grant any rights to creditors or other third parties.
9.4 Non-Exclusivity. The parties hereto acknowledge and agree that the
indemnity obligations set forth above shall not be the exclusive remedy of the
indemnified parties with respect to the Contemplated Transactions.
ARTICLE X
MISCELLANEOUS
10.1 Further Assurances. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action (including the
execution and delivery of such further instruments and documents) as the other
party reasonably may request, all the sole cost and expense of the requesting
party (unless the requesting party is entitled to indemnification therefor
under Article IX).
10.2 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission with
answer back confirmation or mailed (postage prepaid by certified or registered
mail, return receipt requested) or by overnight courier to the parties at the
following addresses or facsimile numbers:
If to Parent or Acquisition Co.:
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Chief Executive Officer
with copies to:
Xxxxxxx X. Xxxxxxxxxx, Esq.
455 East 000 Xxxxx
Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
If to Company:
0000 X. Xxxxx Xxxxxx
Xxxxx X-000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
If to Principal Stockholder:
0000 X. Xxxxx Xxxxxx
Xxxxx X-000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
with copies for the Company and the Principal Stockholders to:
Xxxxx & Schloss LLP
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 10.2, be deemed given
upon delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided in this Section 10.2, be deemed given upon receipt, and
(iii) if delivered by mail in the manner described above to the address as
provided in this Section 10.2, be deemed given upon receipt (in each case
regardless of whether such notice, request or other communication is received
by any other Person to whom a copy of such notice, request or other
communication is to be delivered pursuant to this Section). Any party from
time to time may change its address, facsimile number or other information for
the purpose of notices to that party by giving notice specifying such change
to the other parties hereto.
10.3 Entire Agreement. This Agreement (and all exhibits and schedules
attached hereto, all other documents delivered in connection herewith)
supersede all prior discussions and agreements among the parties with respect
to the subject matter hereof and contains the sole and entire agreement among
the parties hereto with respect thereto.
10.4 Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by
or on behalf of the party waiving such term or condition. No waiver by any
party hereto of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by law or otherwise afforded, will be
cumulative and not alternative.
10.5 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third party beneficiary rights upon any other Person other
than any Person entitled to indemnity under Article IX.
10.6 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto without
the prior written consent of the other parties hereto and any attempt to do so
will be void, except that any party's rights to indemnification under Article
IX may be freely assigned. This Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
10.7 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a
part of this Agreement a legal, valid and enforceable provision as similar in
terms to such illegal, invalid or unenforceable provision as may be possible
and mutually acceptable to the parties herein.
10.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to contracts
executed and performed in such State, without giving effect to conflicts of
laws principles.
10.9 Consent to Jurisdiction and Forum Selection. Each of the Parent,
Acquisition Co. and the Company irrevocably agrees that any legal action or
proceeding with respect to this Agreement or for the recognition and
enforcement of any judgment in respect hereof brought by the other party
hereto or its successors or assigns will be brought and determined in either
Los Angeles County Superior Court or the United States District Court for the
South District of California, and each of the Parent, Acquisition Co., the
Principal Stockholder and the Company hereby irrevocably submits with regard
to any such action or proceeding for itself and in respect to its property,
generally and unconditionally, to the exclusive jurisdiction of the aforesaid
courts. Each of the Parent, Acquisition Co., the Principal Stockholder and the
Company hereby irrevocably waives, and agrees not to assert, by way of motion,
as a defense, counterclaim or otherwise, in any action or proceeding with
respect to this Agreement, (a) any claim that it is not personally subject to
the jurisdiction of the above named courts for any reason other than the
failure to lawfully serve process, (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), (c) to the fullest extent permitted by applicable law, that (i)
the suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such suit, action, or proceeding is improper and
(iii) this Agreement, or the subject matter hereof, may not be enforced in or
by such courts and (d) any right to trial by jury.
10.10 Construction. No provision of this Agreement shall be construed in
favor of or against any party on the ground that such party or its counsel
drafted the provision. Any remedies provided for herein are not exclusive of
any other lawful remedies which may be available to either party. This
Agreement shall at all times be construed so as to carry out the purposes
stated herein.
10.11 Counterparts. This Agreement may be executed in any number of
counterparts and by facsimile, each of which will be deemed an original, but
all of which together will constitute one and the same instrument.
10.12 Attorney's Fees. In the event any action is brought for enforcement
or interpretation of this Agreement, the prevailing party shall be entitled to
recover reasonable attorney's fees and costs incurred in said action.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto, or their duly authorized officer, as of the date first
above written.
BRENEX OIL CORPORATION., a Utah corporation
By:
Name: ______________________
Title: Chief Executive Officer
BRENEX ACQUISITION CORPORATION, a Nevada
corporation
By:
Name: ______________________
Title: Chief Executive Officer
CINEMAELECTRIC, INC.,
a Delaware corporation
By:_______________________________
Name: ____________________________
Title: _____________________________
PRINCIPAL STOCKHOLDER:
/s/Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
State of Residence:
________________________
[SIGNATURE PAGE TO THE AGREEMENT AND PLAN OF REORGANIZATION]
