AGREEMENT AND PLAN OF REORGANIZATION
FOR THE ACQUISITION OF ALL OF THE OUTSTANDING SHARES OF
COMMON STOCK OF LIQUITEK CORPORATION
BY VITRISEAL, INC.
TABLE OF CONTENTS
PAGE
RECITALS......................................................................................... 1
ARTICLE I - THE REORGANIZATION................................................................... 3
ARTICLE II - EXCHANGE OF SHARES.................................................................. 6
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF LIQUITEK......................................... 7
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF VITRISEAL......................................... 16
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS....................................... 25
ARTICLE VI - MISCELLANEOUS....................................................................... 27
EXHIBITS:
Schedule of LIQUITEK Stockholders........................................................... "A"
LIQUITEK Resolutions Electing ▇▇▇▇▇......................................................... "B-1"
LIQUITEK Resolutions Electing New Board..................................................... "B-2"
VITRISEAL Resolutions Electing ▇▇▇▇▇▇▇▇..................................................... "B-3"
LIQUITEK Note............................................................................... "C-1"
Wire Transfer Instructions.................................................................. "C-2"
Legal Opinion of VITRISEAL Counsel.......................................................... "D"
Legal Opinions of LIQUITEK Counsel.......................................................... "E"
Declaration and Power of Attorney to Stockholder Representative............................. "F"
Schedule of Exceptions of LIQUITEK.......................................................... "G"
Resolutions of LIQUITEK--Authorization...................................................... "H"
Financial Statements of LIQUITEK............................................................ "I"
Legal Descriptions of Real Property of LIQUITEK ............................................ "J"
List of Personal Property of LIQUITEK ...................................................... "K"
Patents, Trademarks, Service Marks of LIQUITEK ............................................. "L"
LIQUITEK Insurance Policies................................................................. "M"
LIQUITEK Bank Accounts and Signatories Therefor............................................. "N"
Unitek License Assignment................................................................... "O"
Schedule of Exceptions of VITRISEAL......................................................... "P"
Resolutions of VITIRSEAL--Authorization..................................................... "Q"
Financial Statements of VITRISEAL........................................................... "R"
VITRISEAL Annual Report..................................................................... "S"
VITRISEAL Proxy Statement .................................................................. "T"
Patents, Trademarks, Service Marks of VITRISEAL ............................................ "U"
VITRISEAL Insurance Policies ............................................................... "V"
VITRISEAL Bank Accounts and Signatories Therefor............................................ "W"
AGREEMENT AND PLAN OF REORGANIZATION
FOR THE ACQUISITION OF ALL OF THE OUTSTANDING SHARES OF
COMMON STOCK OF LIQUITEK CORPORATION
BY VITRISEAL, INC.
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"), dated as
of the 25th day of May, 2000, by and among only the common stockholders of
LIQUITEK CORPORATION who are signatories to this Agreement and whose names are
listed in Exhibit "A," a copy of which is attached hereto and incorporated
herein by this reference (the "Stockholders"), LIQUITEK CORPORATION
("LIQUITEK"), a Nevada corporation, and VITRISEAL, INC. ("VITRISEAL"), a Nevada
corporation.
RECITALS:
A. WHEREAS, the transactions described in this Agreement are related to
the transactions set forth in that certain "Agreement and Plan of Reorganization
for the Acquisition of All of the Outstanding Shares of Common Stock of
Thermoflow Corporation by VitriSeal, Inc." dated April 3, 2000 (the "Thermoflow
Agreement"); and
B. WHEREAS, the Stockholders together own, beneficially and of record,
the issued and outstanding shares of the common stock of LIQUITEK (hereinafter
the shares of common stock are referred to as the "Liquitek Shares") as set
forth in the schedule attached hereto and incorporated herein by this reference
as Exhibit "A;" and
C. WHEREAS, VITRISEAL desires to acquire from the Stockholders all of
the outstanding Liquitek Shares owned by them solely in exchange for an
aggregate of 5,000,000 shares (the "Vitriseal Shares") of the common stock of
VITRISEAL and the Stockholders desire to exchange their Liquitek Shares for the
Vitriseal Shares, the number of the Liquitek Shares being surrendered and the
number of Vitriseal Shares being received by the Stockholders are as set forth
in Exhibit "A" hereto; and
D. WHEREAS, VITRISEAL is acting through ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"), its
Chief Executive Officer, as authorized by the Board of Directors, and the
Stockholders are acting through ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇"), a member of
the Board of Directors and the President of LIQUITEK, (▇▇▇▇▇▇▇▇▇ is sometimes
referred to as the "Stockholder Representative"); and
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E. WHEREAS, the parties hereto desire to set forth the definitive terms
and conditions upon which the Stockholders shall exchange with VITRISEAL, and
VITRISEAL shall exchange with the Stockholders, the stock owned by each of them;
and
F. WHEREAS, it is intended that LIQUITEK, VITRISEAL, and their
respective stockholders will recognize no gain or loss for U.S. federal income
tax purposes under Section 368 (a)(1)(B) of the Internal Revenue Code of 1986,
as amended (the "Code"), and the regulations promulgated thereunder as a result
of the Reorganization; and
G. WHEREAS, the parties hereto have previously entered into a letter of
intent dated May 3, 2000 (the "LOI") and acknowledge that the terms of this
Agreement are intended to supersede the terms set forth in the LOI; and
H. WHEREAS, VITRISEAL has previously loaned LIQUITEK $200,000 in
accordance with the terms set forth in the LOI; and
I. WHEREAS, VITRISEAL has deposited $1,750,000 in escrow into the
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Money Market Account (the "Escrow Account") to fulfill
its obligations under the LOI and this Agreement; and
J. WHEREAS, the parties hereto have entered into or may enter into
other agreements simultaneously with the execution of this Agreement which are
not intended to influence the tax-free result of exchange of the Liquitek Shares
for the Vitriseal Shares;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements contained herein,
and in accordance with the applicable provisions of state law, the parties
hereto covenant and agree as follows:
ARTICLE I
THE REORGANIZATION
1.1 THE REORGANIZATION. On and as of the Closing (as defined in Section
1.3 below) of this Agreement, the Stockholders shall surrender all of the
Liquitek Shares in exchange for the Vitriseal Shares in the amounts set forth in
Exhibit "A." The transactions contemplated hereby are intended to qualify as a
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tax-free reorganization under Section 368(a)(1)(B) of the Code and the
regulations promulgated thereunder and the parties hereto agree to report them
as such.
1.2 ESCROW. The parties shall establish an escrow (the "Escrow") with
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to VITRISEAL, at ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Escrow Holder") to facilitate the reorganization
as further set forth herein.
1.3 CLOSING. The closing of the Reorganization (the "Closing") shall
take place (i) at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to
VITRISEAL, at ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 2:00 p.m.,
local time, on May 25, 2000; or (ii) at such other time and place and on such
other date as the Stockholder Representative, LIQUITEK, and VITRISEAL agree (the
"Closing Date"). The Closing Date shall be the "Effective Date" of the
Reorganization.
1.4 TAKING OF NECESSARY ACTIONS. The Stockholder Representative (acting
on behalf of the Stockholders), LIQUITEK, and VITRISEAL shall each take all such
actions as may be reasonably necessary or appropriate in order to effectuate the
transactions contemplated hereby and to make the Reorganization effective as of
the Effective Date. If at any time after the Effective Date any further action
is necessary or desirable to carry out the purposes of this Agreement and to
vest VITRISEAL with full title to all of the Liquitek Shares, the Stockholder
Representative, on behalf of the Stockholders, and the officers and directors of
LIQUITEK and VITRISEAL, at the expense of the VITRISEAL, shall take all such
necessary or appropriate action. To effect the intents and purposes of this
Agreement, the following actions shall be taken at the Closing, shall be deemed
to occur simultaneously, and the accomplishment of which actions by the parties
whose duty it is to perform such actions is duly acknowledged by the execution
of this Agreement by the parties hereto:
1.4.1 ELECTION OF NEW LIQUITEK BOARD. The parties acknowledge
that on or about December 31, 1999, ▇▇▇▇▇ was elected a member of the Board of
Directors of LIQUITEK. A copy of the LIQUITEK resolutions evidencing this
election of ▇▇▇▇▇ to the LIQUITEK Board of Directors is attached hereto as
Exhibit "B-1." As a condition to the Closing, the current members of the Board
of Directors of LIQUITEK other than ▇▇▇▇▇ shall resign as members of the Board
of Directors of LIQUITEK and ▇▇▇▇▇, in accordance with the Unanimous Written
Consent attached hereto as Exhibit "B-2" as the sole LIQUITEK Board member,
shall elect the following persons to fill the vacancies on the LIQUITEK Board of
Directors: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇.
1.4.2 RESIGNATION OF ▇▇▇▇▇▇▇▇▇ FROM VITRISEAL BOARD; ELECTION
OF ▇▇▇▇▇▇▇▇; ▇▇▇▇▇▇▇▇▇ TO RESIGN AS PRESIDENT AND CEO OF LIQUITEK; ▇▇▇▇▇▇▇▇ TO
RESIGN AS CFO OF
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LIQUITEK. As a condition to the Closing, ▇▇▇▇▇▇▇▇▇ shall resign as a member of
the VITRISEAL Board of Directors and the VITRISEAL Board of Directors shall
elect ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as a member of the Board of Directors to fill the
vacancy caused by ▇▇▇▇▇▇▇▇▇'▇ resignation in accordance with the Unanimous
Written Consent attached hereto as Exhibit "B-3." As a further condition to the
Closing, ▇▇▇▇▇▇▇▇▇ shall resign as President and CEO of LIQUITEK. As a further
condition to the Closing, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall resign as CFO of LIQUITEK.
1.4.3 CAPITAL CONTRIBUTIONS TO LIQUITEK BY VITRISEAL. The
parties acknowledge that on or about January 12, 2000, VITRISEAL advanced to
LIQUITEK the sum of $200,000.00 (the "Liquitek Advance"). The Liquitek Advance
is evidenced by an unsecured promissory note with interest at a rate of 10% per
annum and with all principal and interest due December 31, 2001 (the "Liquitek
Note"), a copy of which is attached hereto as Exhibit "C-1." Upon the Closing,
the Liquitek Note shall be canceled and accounted for as a contribution to
capital. Upon the Closing, VITRISEAL shall advance to LIQUITEK an additional
capital contribution of $450,000 through a wire transfer from the Escrow Account
to the LIQUITEK bank account. A copy of the wire transfer instructions for the
additional capital contribution of $450,000 is attached hereto as Exhibit "C-2."
1.4.4 DELIVERY OF EXECUTED AGREEMENT AND LIQUITEK SHARES. The
Stockholders, on their own behalf or through the Stockholder Representative,
shall deliver their Liquitek Shares, an executed copy of this Agreement, and an
executed copy of the Power of Attorney attached hereto as Exhibit "F" to the
Escrow Holder prior to the Closing. If the Closing does not occur on or before
May 31, 2000, the Escrow Holder shall return the executed copy of this Agreement
and the Liquitek Shares to the Stockholder Representative. Notwithstanding the
foregoing, the parties agree that as long as 90% of the Liquitek Shares have
been delivered to Escrow Holder prior to the Closing, then the Closing may
proceed and the period for delivering the remaining 10% of the Liquitek Shares
shall be extended for 30 days.
1.4.5 LOCK-UP OF VITRISEAL SHARES. The Stockholders shall have
the option to participate in a registration statement to be filed under the
Securities Act of 1933 within four months of the Closing Date on Form S-3 (the
"Registration Statement"). The Stockholders who include their Vitriseal Shares
in the Registration Statement shall be subject to lock-up agreements between
them and VitriSeal providing that they will be permitted to sell no more than
25% of their Vitriseal Shares in the six months following the effective date of
the Registration Statement (the "Registration Date"), no more than 25% of their
Vitriseal Shares during the period beginning six months after the Registration
Date until 12 months after the Registration Date, and no more than 25% of their
Vitriseal Shares during the period beginning 18 months after the Registration
Date until 24 months after the Registration Date. No further restrictions shall
apply to the Vitriseal Shares held by Stockholders participating in the
Registration Statement 24 months
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after the Registration Date. The Stockholders electing to participate in the
Registration Statement shall so indicate on the signature page of this Agreement
by initialing the space opposite their respective signatures. Any of the
Stockholders who elect not to be included in the Registration Statement shall be
eligible to sell their VitriSeal Shares in accordance with the provisions of
Rule 144 promulgated under the Securities Act of 1933 one year from the Closing
Date.
1.4.6 DUE DILIGENCE BY THE PARTIES. VITRISEAL and its agents,
attorneys, and representatives acknowledge that they have had full and free
access to the properties, books, and records of LIQUITEK for purposes of
conducting investigations of the LIQUITEK business. VITRISEAL and LIQUITEK
acknowledge by their execution of this Agreement the satisfactory results of
their respective due diligence reviews.
1.4.7 LEGAL OPINIONS. At the Closing, counsel to VITRISEAL and
counsel to LIQUITEK shall each deliver an opinion of counsel pertaining to good
standing, authorization and valid issuance of the shares of their respective
clients, the capitalization of their respective clients, the due authorization
of the Reorganization, and such other matters as are customary in transactions
of this type, in the form of Exhibit "D," for VITRISEAL's counsel, and Exhibit
"E," for LIQUITEK's counsel, copies of which are attached hereto.
1.4.8 POWER OF ATTORNEY. ▇▇▇▇▇▇▇▇▇, as Stockholder
Representative, shall deliver to VITRISEAL copies of the power of attorney in
the form attached hereto as Exhibit "F," providing for the appointment of the
Stockholder Representative as attorney-in-fact for the individual Stockholders
to effect the exchange of certificates of the Liquitek Shares for the Vitriseal
Shares and to take such other actions at the Closing as may be necessary to
consummate this Agreement. Each of the Stockholders shall execute and deliver to
the Escrow Holder a copy of Exhibit "F" together with their signature and
delivery of this Agreement to VITRISEAL.
ARTICLE II
EXCHANGE OF SHARES
2.1 EXCHANGE OF SHARES. Subject to the terms and conditions of this
Agreement, and assuming that all actions have been taken as set forth in Section
1.4 above, and subject to the simultaneous closing of the Thermoflow Agreement,
on the Closing Date, by virtue of the Reorganization and without any further
action on the part of the Stockholders, LIQUITEK, or VITRISEAL, all of the
Liquitek Shares, with respect to which the respective Stockholders owning such
Liquitek Shares shall have
Page 5
executed a signature page of this Agreement, shall be exchanged for the
Vitriseal Shares in the amounts set forth in Exhibit "A" for such Stockholders.
Each share of the Vitriseal Shares shall be validly issued, duly authorized,
fully paid, and nonassessable shares of the Common Stock of VITRISEAL as of the
Closing Date.
2.2 EXCHANGE OF CERTIFICATES. In advance of the Closing, VITRISEAL
shall present and deliver to the Escrow Holder the stock certificates
representing all of the Vitriseal Shares. Also in advance of the Closing, the
Stockholders or the Stockholder Representative shall present and deliver to the
Escrow Holder all of the certificates representing the Liquitek Shares, or lost
certificate affidavits in a form acceptable to VITRISEAL. At the Closing, the
Escrow Holder shall present and deliver to the Stockholder Representative the
stock certificates representing all of the Vitriseal Shares. Also at the
Closing, the Escrow Holder shall present and deliver to VITRISEAL all of the
certificates representing the Liquitek Shares, or lost certificate affidavits.
2.3 NO FURTHER RIGHTS. From and after the Closing Date, holders of
certificates formerly evidencing the Liquitek Shares shall cease to have any
rights as stockholders of LIQUITEK, except as provided herein or by applicable
law.
2.4 STOCKHOLDER APPROVAL. The Closing shall be contingent upon the
agreement of Stockholders holding a minimum of 80% of the outstanding Liquitek
Shares. At such time as Stockholders holding a minimum of 80% of the Liquitek
Shares have entered into this Agreement, the parties shall proceed with the
Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LIQUITEK
Except as set forth in the Schedule of Exceptions attached hereto and
incorporated herein by reference as Exhibit "G," LIQUITEK represents and
warrants to, and covenants with, VITRISEAL, as of the date hereof and as of the
Closing Date, as follows:
3.1 ORGANIZATION AND CORPORATE POWER. LIQUITEK is a corporation duly
organized, in good standing, and validly existing under the laws of Nevada.
LIQUITEK has all requisite corporate power and authority to conduct its business
as now being conducted and to own and lease the properties which it now owns and
leases. The charter documents of LIQUITEK as amended to date and the resolutions
of LIQUITEK's stockholders (if necessary) and directors authorizing the
execution, delivery, and performance
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of this Agreement, all certified by the President and the Secretary, which have
previously been provided to VITRISEAL by LIQUITEK, are true and complete copies
thereof as currently in effect.
3.2 AUTHORIZATION. LIQUITEK has full corporate power, legal capacity,
and authority to enter into this Agreement, to execute all attendant documents
and instruments contemplated hereby, and to perform all of its obligations
hereunder. This Agreement, and each and every other agreement, document and
instrument to be executed by LIQUITEK in connection herewith, has been
effectively authorized by all necessary action on the part of LIQUITEK,
including without limitation the approval of LIQUITEK's Board of Directors (and
stockholders, if necessary), which authorizations remain in full force and
effect, have been duly executed and delivered by LIQUITEK. A copy of the
resolutions of the LIQUITEK Board of Directors and (stockholders, if necessary)
authorizing the execution, delivery, and performance of this Agreement, all
certified by the Secretary of LIQUITEK, are attached hereto as Exhibit "H." No
other authorizations or proceedings on the part of LIQUITEK or Stockholders, or
otherwise, are required to authorize this Agreement and/or the transactions
contemplated hereby. This Agreement constitutes the legal, valid and binding
obligation of LIQUITEK and the Stockholders and is enforceable against each of
them in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, priority or other laws or court
decisions relating to or affecting generally the enforcement of creditors'
rights or affecting generally the availability of equitable remedies.
3.3. NO CONFLICTS; NO CONSENTS. Other than that set forth in the
Schedule of Exceptions, neither the execution and delivery of this Agreement,
nor the consummation by LIQUITEK or the Stockholders of any of the transactions
contemplated hereby, or compliance with any of the provisions hereof, will (i)
conflict with or result in a material breach of, violation of, or default under,
any of the terms, conditions or provisions of any material note, bond, mortgage,
indenture, license, lease, credit agreement or other agreement, document,
instrument, permit, authorization, or obligation (including, without limitation,
any of its charter documents) to which LIQUITEK is a party or by which it or any
of its assets or properties may be bound, or (ii) violate any judgment, order,
injunction, decree, statute, rule or regulation applicable to LIQUITEK or its
assets or properties, the violation of which would have a material adverse
effect upon the business, properties, or assets, or in the condition (financial
or otherwise) of LIQUITEK. No authorization, consent or approval of any public
body or authority was or is necessary for the consummation by LIQUITEK or the
Stockholders of the transactions contemplated by this Agreement.
3.4 CAPITALIZATION. The authorized capital stock of LIQUITEK consists
of 30,000,000 shares of common stock, par value $.001 per share. As of the
Effective Date, there are 20,000,000 shares of common stock issued and
outstanding. No options or warrants to purchase common stock of LIQUITEK have
been granted or are outstanding. LIQUITEK does not have any contracts or
obligations to issue,
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redeem, repurchase, or otherwise reacquire any equity security of LIQUITEK,
provided that all Liquitek Shares owned by Thermoflow Corporation shall be
surrendered and canceled upon the Closing hereunder and Thermoflow Corporation,
as a Stockholder pursuant to this Agreement, shall not receive any of the
Vitriseal Shares given in exchange for the Liquitek Shares. All of the Liquitek
Shares are duly authorized, validly issued and outstanding, fully paid, and
nonassessable and have been issued in conformity with all applicable laws.
3.5 NO PENDING MATERIAL LITIGATION OR PROCEEDINGS. There are no
actions, suits or proceedings pending or, to the best knowledge of LIQUITEK,
threatened against or affecting LIQUITEK affecting the Stockholders' rights in
the Liquitek Shares (including actions, suits or proceedings where liabilities
may be adequately covered by insurance) at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, court,
board, bureau, agency or instrumentality, domestic or foreign, or affecting any
of the officers, directors of LIQUITEK or the Stockholders in connection with
the business, operations or affairs of either of them, which might reasonably be
expected to result in any material adverse change in the business, properties or
assets, or in the condition (financial or otherwise) of LIQUITEK, or which
question or challenge the Reorganization. LIQUITEK is not subject to any
voluntary or involuntary proceeding under federal bankruptcy laws and has not
made an assignment for the benefit of creditors.
3.6 FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED LIABILITIES AND
CERTAIN DEVELOPMENTS. Attached hereto as Exhibit "I" are the unaudited and
internally prepared financial statements of LIQUITEK, for the year ended
December 31, 1999 and the quarter ended March 31, 2000, consisting of LIQUITEK's
balance sheets as of such dates (the "Liquitek Balance Sheets"), the related
statements of profit or loss for the periods then ended, and the respective
notes thereto. Such financial statements (and the notes related thereto) are
herein sometimes collectively referred to as the "Liquitek Financial
Statements." The Liquitek Financial Statements (i) are derived from the books
and records of LIQUITEK, which books and records have been consistently
maintained in a manner which reflects, and such books and records do fairly and
accurately reflect, the assets and liabilities of LIQUITEK, and (ii) fairly
present in all material respects the financial condition of LIQUITEK on the date
of such statements and the results of its operations for the periods indicated,
except as may be disclosed in the notes thereto. Except as and to the extent
reflected or reserved against in the Liquitek Balance Sheets, and as to matters
arising in the ordinary course of its business since the respective date of the
Liquitek Balance Sheets, LIQUITEK has no liability or obligation of a type
required by generally accepted accounting principles to be reflected in the
Liquitek Balance Sheets (whether accrued, to become due, contingent or
otherwise) which individually or in the aggregate could have a materially
adverse effect on the business, assets, condition (financial or otherwise) or
prospects of LIQUITEK. Except as set forth in Exhibit "I," since March 31, 2000,
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there has been (a) no declaration, setting aside or payment of any dividend or
other distribution with respect to the Liquitek Shares or redemption, purchase
or other acquisition of any of the Liquitek Shares or any split-up or other
recapitalization relative to any of the Liquitek Shares or any action
authorizing or obligating LIQUITEK to do any of the foregoing, (b) no material
loss, destruction or damage to any material property or asset of LIQUITEK
whether or not insured, (c) no acquisition or disposition of assets (or any
contract or arrangement therefor), or any other transaction by LIQUITEK
otherwise than for fair value and in the ordinary course of business, (d) no
discharge or satisfaction by LIQUITEK of any lien or encumbrance or payment of
any obligation or liability (absolute or contingent) other than current
liabilities shown on the Liquitek Balance Sheets, or current liabilities
incurred since the date thereof in the ordinary course of business, (e) no sale,
assignment or transfer by LIQUITEK of any of its tangible or intangible assets
except in the ordinary course of business, cancellation by LIQUITEK of any
debts, claims or obligations, or mortgage, pledge, subjection of any assets to
any lien, charge, security interest or other encumbrance, or waiver by LIQUITEK
of any rights of value which, in any such case, is material to the business of
LIQUITEK, (f) no payment of any bonus to or change in the compensation of any
director, officer or employee, whether directly or by means of any bonus,
pension plan, contract or commitment, (g) no write-off or material reduction in
the carrying value of any asset which is material to the business of LIQUITEK,
(h) no disposition or lapse of rights as to any intangible property which is
material to the business of LIQUITEK, (i) except for ordinary travel advances,
no loans or extensions of credit to stockholders, officers, directors or
employees of LIQUITEK, (j) no agreement to do any of the things described in
this Section 3.6, and (k) no material adverse change in the condition (financial
or otherwise) of LIQUITEK or in its assets, liabilities, properties, business,
or prospects. Except as set forth in the Liquitek Financial Statements or in
Exhibit "I," there are no payments, liabilities, or obligations of any kind due
any of the Liquitek Stockholders or EET Corporation.
3.7 APPLICABLE PERMITS; COMPLIANCE WITH LAWS. LIQUITEK (i) holds all
licenses, franchises, permits, and authorizations necessary for the lawful
conduct of its business as presently conducted and which the failure to so hold
would have a material adverse effect upon the business, properties, or assets,
or the condition (financial or otherwise) of LIQUITEK, and (ii) has complied
with all applicable statutes, laws, ordinances, rules, and regulations of all
governmental bodies, agencies and subdivisions having, asserting or claiming
jurisdiction over it, which the failure to comply with would have a material
adverse effect upon the business, properties, or assets, or the condition
(financial or otherwise) of LIQUITEK.
3.8 DISCLOSURE. Neither this Agreement, nor any material certificate,
exhibit, or other written document or statement, furnished to VITRISEAL by or on
behalf of LIQUITEK or, to its knowledge, the Stockholders in connection with the
transactions contemplated by this Agreement contained or contains
Page 9
any untrue statement of a material fact or omitted or omits to state a material
fact necessary to be stated in order to make the statements contained herein or
therein, when taken as a whole, not misleading. Neither LIQUITEK nor, to its
knowledge, the Stockholders has any knowledge of any fact which has not been
disclosed in writing to VITRISEAL which may reasonably be expected to materially
and adversely affect the business, properties, or assets, or the condition
(financial or otherwise) of LIQUITEK or title of the Stockholders to the
Liquitek Shares or his ability to perform all of the obligations to be performed
by him under this Agreement and/or any other agreement between LIQUITEK, the
Stockholders, and VITRISEAL to be entered into pursuant to any provision of this
Agreement.
3.9 OWNERSHIP OF LIQUITEK. LIQUITEK issued each Stockholder that number
of Shares set forth opposite the Stockholders' respective names on Exhibit "A,"
which shares, as of the Closing Date, shall constitute issued and outstanding
shares of the capital stock of LIQUITEK. The Shares are duly authorized, validly
issued and outstanding, fully paid and nonassessable and were issued by LIQUITEK
in conformity with all applicable laws.
3.10 SUBSIDIARIES. LIQUITEK has no subsidiaries and no investments,
directly or indirectly, or other financial interest in any other corporation or
business organization, joint venture or partnership of any kind whatsoever
except as reflected in the Liquitek Financial Statements.
3.11 REAL PROPERTY. Exhibit "J," attached hereto and incorporated
herein by this reference, contains a complete and accurate legal description or
street address of each parcel of real property owned by, or leased to and
occupied or subleased by LIQUITEK, and LIQUITEK neither owns or leases, nor
occupies, any other real property. The building and all fixtures and
improvements located on such real property are in good operating condition,
ordinary wear and tear excepted. To the best of its knowledge, LIQUITEK is not
in violation of any material zoning, building or safety ordinance, regulation or
requirement, or other law or regulation applicable to the operation of owned or
leased properties, and LIQUITEK has not received any notice of violation with
which its has not complied. All leases of real property to which LIQUITEK is a
party and which are material to the business of LIQUITEK are fully effective in
accordance with their respective terms and afford LIQUITEK peaceful and
undisturbed possession of the subject matter of the lease, and, to the best
knowledge of LIQUITEK, there exists no default on the part of LIQUITEK or
termination thereof.
3.12 TANGIBLE PERSONAL PROPERTY. Exhibit "K" attached hereto sets forth
a complete list of all items of tangible personal property owned or leased and
used by LIQUITEK in the current conduct of its business, where the original cost
was in excess of $1,000. LIQUITEK has good and marketable title to, or in the
case of leased equipment a valid leasehold interest in, and is in possession of,
all such items of
Page 10
personal property owned or leased by it, free and clear of all title defects,
mortgages, pledges, security interests conditional sales agreements, liens,
restrictions or encumbrances, the presence of which would result in a material
adverse change in the business, properties, or assets, or the condition
(financial or otherwise) of LIQUITEK. Included in Exhibit "K" is a list of all
outstanding equipment leases and maintenance agreements to which LIQUITEK is a
party as lessee and which individually provide for future lease payments in
excess of $1,000 per month, with the identities of the other parties to all such
leases and agreements shown thereon. All leases of tangible personal property to
which LIQUITEK is a party and which are material to the business of LIQUITEK are
fully effective in accordance with their respective terms, and, to the best
knowledge of LIQUITEK, there exists no default on the part of LIQUITEK or
termination thereof, the presence of which would result in a material adverse
change in the business, properties, or assets, or the condition (financial or
otherwise) of LIQUITEK. Each item of capital equipment reflected in the Liquitek
Balance Sheets which is used in the current conduct of LIQUITEK's business is in
good operating and usable condition and repair, ordinary wear and tear excepted,
and is and will be suitable for use in the ordinary course of LIQUITEK's
business and fit for its intended purposes.
3.13 TAX MATTERS. LIQUITEK has, since its inception, duly filed all
material federal, state, municipal, local, and other tax returns required to
have been filed by it in those jurisdictions where the nature or conduct of its
business requires such filing and where the failure to so file would be
materially adverse to LIQUITEK. Copies of all such tax returns have been made
available for inspection by VITRISEAL prior to the execution hereof. All
federal, state, municipal, local, and other taxes shown to be due on such
returns have been paid or will be paid prior to the time they become delinquent.
The amounts reflected in the Liquitek Balance Sheets as liabilities or reserves
for taxes which are due but not yet payable are sufficient for the payment of
all accrued and unpaid taxes of the types referred to hereinabove and LIQUITEK
has no knowledge of any proposed liability for taxes to be imposed upon its
properties or assets for which there is not adequate reserve reflected in the
Liquitek Financial Statements.
3.14 CONTRACTS AND COMMITMENTS. LIQUITEK has no contract, agreement,
obligation or commitment, written or oral, expressed or implied, which involves
a commitment or liability of LIQUITEK in excess of $1,000 (other than
obligations which are included in accounts payable), and no union contracts,
employee or consulting contracts, financing agreements, debtor or creditor
arrangements, licenses, franchise, manufacturing, distributorship or dealership
agreements, leases, or bonus, health or stock option plans, except as described
in Exhibits "G" and "I." True and complete copies of all such contracts and
other agreements listed in Exhibits "G" and "I" which involve a commitment or
liability of LIQUITEK in excess of $1,000 have been made available to VITRISEAL
prior to the execution hereof. As of the date hereof, to the best of their
knowledge, there exist no circumstances that would affect the validity or
enforceability of any of such contracts and other agreements in accordance with
their respective terms.
Page 11
LIQUITEK has performed and complied in all material respects with all
obligations required to be performed by it to date under, and is not in default
(without giving effect to any required notice or grace period) under, or in
breach of, the terms, conditions or provisions of any of such contracts and
other agreements. The validity and enforceability of any contract or other
agreement described herein has not been and shall not be materially and
adversely affected by the execution and delivery of this Agreement without any
further action. LIQUITEK has no contract, agreement, obligation or commitment
which to the best knowledge of LIQUITEK requires or will require future
expenditures (including internal costs and overhead) in excess of reasonably
anticipated receipts, nor which is likely to be materially adverse to LIQUITEK's
business, assets, condition (financial and otherwise), or prospects.
3.15 PROPRIETARY INFORMATION. Except as disclosed in Exhibit "L."
LIQUITEK does not have any patents, applications for patents, trademarks,
applications for trademarks, trade names, licenses or service marks relating to
the business of LIQUITEK, nor does any present or former stockholder, officer,
director or employee of LIQUITEK own any patent rights relating to any products
manufactured, rented or sold by LIQUITEK To the best knowledge of LIQUITEK,
LIQUITEK has the unrestricted right to use, free and clear of any claims or
rights of others, all trade secrets, customer lists, and manufacturing and
secret processes reasonably necessary to the manufacture and marketing of all
products made or proposed to be made by LIQUITEK, except for any rights the
presence of which would not result in a material adverse change in the business,
properties, or assets, or the condition (financial or otherwise) of LIQUITEK,
and, to the best knowledge of LIQUITEK, the continued use thereof by VITRISEAL
following the Closing will not conflict with, infringe upon, or otherwise
violate any rights of others. LIQUITEK has not used and is not making use of any
confidential information or trade secrets of any present or past employee of
LIQUITEK.
3.16 ARRANGEMENTS WITH EMPLOYEES; LABOR RELATIONS. No stockholder,
director, officer or employee of LIQUITEK is presently a party to any
transaction with LIQUITEK, including without limitation any contract, loan or
other agreement or arrangement providing for the furnishing of services by, the
rental of real or personal property from or to, or otherwise requiring loans or
payments to, any such stockholder, director, officer or employee, or to any
member of the family of any of the foregoing, or to any corporation,
partnership, trust or other entity in which any stockholder, director, officer
or employee or any member of the family of any of them has a substantial
interest or is an officer, director, trustee, partner or employee. There are no
bonus, pension, profit sharing, commission, deferred compensation or other plans
or arrangements in effect as of the date of this Agreement. LIQUITEK has no
obligations under any collective bargaining agreement or other contract with a
labor union, under any employment contract or consulting agreement, or under any
executive's compensation plan, agreement or arrangement, nor is any union, labor
organization or group of employees of LIQUITEK presently seeking the right to
enter into collective bargaining with LIQUITEK on behalf of any of its
employees. LIQUITEK has furnished VITRISEAL with a
Page 12
copy of all written personnel policies, including without limitation vacation,
severance, bonus, pension, profit sharing, and commissions policies applicable
to any of LIQUITEK's employees.
3.17 BANK ACCOUNTS. All bank and savings accounts, and other accounts
at similar financial institutions, of LIQUITEK existing at date of Closing are
listed on Exhibit "N." Exhibit "N" sets forth the balance(s) of such bank
account(s) as of March 31, 2000 and contains a list of the name of each person
or entity authorized to sign on the bank accounts, borrow money, or incur or
guarantee indebtedness on behalf of LIQUITEK. All expenditures from such bank
accounts after March 31, 2000 to the date of this Agreement are set forth in
Exhibit "N."
3.18 POWERS OF ATTORNEY. Other than that set forth in the Schedule of
Exceptions of LIQUITEK, no valid powers of attorney from LIQUITEK to any person
or entity exist as of the date of this Agreement.
3.19 ABSENCE OF QUESTIONABLE PAYMENTS. To the best of its knowledge,
neither LIQUITEK nor any stockholder, director, officer, agent, employee,
consultant or other person associated with or acting on behalf of any of them,
has (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any direct or indirect unlawful payments to governmental officials or
others from corporate funds, engaged in any payments or activity which would be
deemed a violation of the Foreign Corrupt Practices Act or rules or regulations
promulgated thereunder, or (iii) established or maintained any unlawful or
unrecorded accounts.
3.20 RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS. No present substantial
customer or substantial supplier to LIQUITEK has indicated an intention to
terminate or materially and adversely alter its existing business relationship
therewith, and, to the best knowledge of LIQUITEK, none of the present customers
of or substantial suppliers to LIQUITEK intends to do so.
3.21 UNITEK LICENSE AGREEMENT. On or about November 9, 1998, EET
Corporation ("EET") entered into a License Agreement with Unitek Solvent
Services, Inc. (the "License Agreement"). LIQUITEK represents and warrants that
the License Agreement has been duly assigned to it by EET (the "Assignment"),
that all consideration relating to the Assignment has been paid, except as set
forth in Exhibit "G" hereof, and that EET has no claim, lien, or other rights
for payment by LIQUITEK in connection with the License Agreement except as set
forth in Exhibit "G". A copy of the Assignment is attached as Exhibit "O."
ARTICLE IV
Page 13
REPRESENTATIONS AND WARRANTIES OF VITRISEAL
Except as set forth in the Schedule of Exceptions attached hereto and
incorporated herein by this reference as Exhibit "P," VITRISEAL hereby
represents and warrants to, and covenants with, the Stockholder and LIQUITEK as
follows:
4.1 ORGANIZATION AND CORPORATE POWER. VITRISEAL is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, and is duly qualified and in good standing to do business as a foreign
corporation in each jurisdiction in which such qualification is required and
where the failure to be so qualified would have a materially adverse effect upon
VITRISEAL. VITRISEAL has all requisite corporate power and authority to conduct
its business as now being conducted and to own and lease the properties which it
now owns and leases. The Articles of Incorporation as amended to date, certified
by the Secretary of State of Nevada, the Bylaws of VITRISEAL as amended to date,
and the resolutions of VITRISEAL's stockholders and directors authorizing the
execution, delivery, and performance of this Agreement, all certified by the
President and the Secretary of VITRISEAL, which have previously been provided to
LIQUITEK by VITRISEAL, are true and complete copies thereof as currently in
effect.
4.2 AUTHORIZATION. VITRISEAL has full corporate power, legal capacity
and corporate authority to enter into this Agreement, to execute all attendant
documents and instruments contemplated hereby, to enter into this
Reorganization, and to perform all of its obligations hereunder. This Agreement,
and each and every other agreement, document and instrument to be executed by
VITRISEAL in connection herewith, has been effectively authorized by all
necessary action on the part of VITRISEAL, including without limitation the
approvals of VITRISEAL's Board of Directors (and stockholders, if necessary)
which authorizations remain in full force and effect, have been duly executed
and delivered by VITRISEAL. A copy of the resolutions of the LIQUITEK board of
directors and stockholders authorizing the execution, delivery, and performance
of this Agreement, all certified by the Secretary of LIQUITEK, are attached
hereto as Exhibit "Q." No other authorizations or proceedings on the part of
VITRISEAL, or otherwise, are required to authorize this Agreement and/or the
transactions contemplated hereby. This Agreement constitutes the legal, valid,
and binding obligation of VITRISEAL and is enforceable against VITRISEAL in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, priority or other laws or court decisions relating
to or affecting generally the enforcement of creditors' rights or affecting
generally the availability of equitable remedies.
Page 14
4.3. NO CONFLICTS; NO CONSENTS. Neither the execution and delivery of
this Agreement, nor the consummation by VITRISEAL of any of the transactions
contemplated hereby, or compliance with any of the provisions hereof, will (i)
conflict with or result in a material breach of, violation of, or default under,
any of the terms, conditions or provisions of any material note, bond, mortgage,
indenture, license, lease, credit agreement or other agreement, document,
instrument or obligation (including, without limitation, any of its charter
documents) to which VITRISEAL is a party or by which it or any of its assets or
properties may be bound, or (ii) violate any judgment, order, injunction,
decree, statute, rule or regulation applicable to VITRISEAL or its assets or
properties, the violation of which would have a material adverse effect upon the
business, properties, or assets, or in the condition (financial or otherwise) of
VITRISEAL. No authorization, consent or approval of any public body or authority
was or is necessary for the consummation by VITRISEAL of the transactions
contemplated by this Agreement.
4.4 CAPITALIZATION. The authorized capital stock of VITRISEAL consists
of 100,000,000 shares of common stock, par value $.001. As of the date hereof,
there are 25,501,603 shares of common stock issued and outstanding. All of the
shares of common stock issued and outstanding are duly authorized, validly
issued, fully paid, and nonassessable. Except as disclosed in Exhibit "R," there
are no outstanding contracts or other rights to subscribe for or purchase, or
contracts or obligations to issue or grant any rights to acquire any equity
security of VITRISEAL. VITRISEAL does not have any contracts or obligations to
redeem, repurchase or otherwise reacquire any equity security of VITRISEAL. All
of the Vitriseal Shares, when issued to the Stockholders, will be duly
authorized, validly issued and outstanding, fully paid and nonassessable and
shall have been issued in conformity with all applicable laws.
4.5 FINANCIAL STATEMENTS OF VITRISEAL; ABSENCE OF UNDISCLOSED
LIABILITIES; NO ADVERSE CHANGES. Attached hereto as Exhibit "R" are the audited
financial statements of VITRISEAL for the years ended December 31, 1999 and
1998, consisting of VITRISEAL's balance sheet as of such dates (the "VitriSeal
Balance Sheets"), the related statements of profit or loss for the periods then
ended, and the respective notes thereto. Such financial statements (and the
notes related thereto) are herein sometimes collectively referred to as the
"VITRISEAL Financial Statements." The VITRISEAL Financial Statements (i) are
derived from the books and records of VITRISEAL, which books and records have
been consistently maintained in a manner which reflects, and such books and
records do fairly and accurately reflect, the assets and liabilities of
VITRISEAL, (ii) fairly and accurately present the financial condition of
VITRISEAL on the date of such statements and the results of its operations for
the periods indicated, except as may be disclosed in the notes thereto, and
(iii) have been prepared in all material respects in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved (except as otherwise disclosed in the notes thereto). Except as and to
the extent reflected or reserved against in the VitriSeal Balance Sheets, and as
to matters arising in the ordinary course of its business since the
Page 15
respective dates of the VitriSeal Balance Sheets, VITRISEAL has no liability or
obligation (whether accrued, to become due, contingent or otherwise) which
individually or in the aggregate could have a materially adverse effect on the
business, assets, condition (financial or otherwise) or prospects of VITRISEAL.
Except as set forth in Exhibit "R," since the dates of the respective VitriSeal
Balance Sheets, there has been (a) no declaration, setting aside or payment of
any dividend or other distribution with respect to the common stock of VITRISEAL
or redemption, purchase or other acquisition of any of the common stock of
VITRISEAL or any split-up or other recapitalization relative to any of the
common stock of VITRISEAL or any action authorizing or obligating VITRISEAL to
do any of the foregoing, (b) no loss, destruction or damage to any material
property or asset of VITRISEAL, whether or not insured, (c) no acquisition or
disposition of assets (or any contract or arrangement therefor), or any other
transaction by VITRISEAL otherwise than for fair value and in the ordinary
course of business, (d) no discharge or satisfaction by VITRISEAL of any lien or
encumbrance or payment of any obligation or liability (absolute or contingent)
other than current liabilities shown on the VitriSeal Balance Sheets, or current
liabilities incurred since the date thereof in the ordinary course of business,
(e) no sale, assignment or transfer by VITRISEAL of any of its tangible or
intangible assets except in the ordinary course of business, cancellation by
VITRISEAL of any debts, claims or obligations, or mortgage, pledge, subjection
of any assets to any lien, charge, security interest or other encumbrance, or
waiver by VITRISEAL of any rights of value which, in any such case, is material
to the business of VITRISEAL, (f) no payment of any material bonus to or
material change in the compensation of any director, officer or employee,
whether directly or by means of any bonus, pension plan, contract or commitment,
(g) no write-off or material reduction in the carrying value of any asset which
is material to the business of VITRISEAL, (h) no disposition or lapse of rights
as to any intangible property which is material to the business of VITRISEAL,
(i) except for ordinary travel advances, no loans or extensions of credit to
stockholders, officers, directors or employees of VITRISEAL, (j) no agreement to
do any of the things described in this Section 4.5, and (k) no material adverse
change in the condition (financial or otherwise) of VITRISEAL or in its assets,
liabilities, properties, business, or prospects.
4.6 TAX MATTERS. VITRISEAL has, since its inception, accurately
prepared and duly filed all federal, state, county and local tax returns
required to have been filed by it in those jurisdictions where the nature or
conduct of its business requires such filing and where the failure to so file
would be materially adverse to VITRISEAL. Copies of all such tax returns have
been made available for inspection by LIQUITEK and the Stockholders prior to the
execution hereof. All federal, state, county and local taxes, including but not
limited to those taxes due with respect to VITRISEAL's properties, income, gross
receipts, excise, occupation, franchise, permit, licenses, sales, payroll, and
inventory due and payable as of the date of the Closing by VITRISEAL have been
paid or will be paid prior to the time they become delinquent. The amount
reflected in the VitriSeal Balance Sheets of VITRISEAL as liabilities or
reserves for taxes which are
Page 16
due but not yet payable is sufficient for the payment of all accrued and unpaid
taxes of the types referred to hereinabove.
4.7 NO PENDING MATERIAL LITIGATION OR PROCEEDINGS. There are no
actions, suits or proceedings pending or, to the best knowledge of VITRISEAL,
threatened against or affecting VITRISEAL (including actions, suits or
proceedings where liabilities may be adequately covered by insurance) at law or
in equity or before or by any federal, state, municipal or other governmental
department, commission, court, board, bureau, agency or instrumentality,
domestic or foreign, or affecting any of the Stockholders, officers or directors
of VITRISEAL in connection with the business, operations or affairs of
VITRISEAL, which might result in any material adverse change in the business,
properties or assets, or in the condition (financial or otherwise) of VITRISEAL,
or which question or challenge the Reorganization. VITRISEAL is not subject to
any voluntary or involuntary proceeding under applicable bankruptcy laws and has
not made an assignment for the benefit of creditors.
4.8 COMPLIANCE WITH LAWS. VITRISEAL (i) holds all licenses, franchises,
permits and authorizations necessary for the lawful conduct of its business as
presently conducted and which the failure to so hold would have a material
adverse effect upon the business, properties, or assets, or the condition
(financial or otherwise) of VITRISEAL, and (ii) has complied with all applicable
statutes, laws, ordinances, rules and regulations of all governmental bodies,
agencies and subdivisions having, asserting or claiming jurisdiction over it,
which the failure to comply with would have a material adverse effect upon the
business, properties, or assets, or the condition (financial or otherwise) of
VITRISEAL.
4.9 DISCLOSURE. Neither this Agreement, nor any certificate, exhibit,
or other written document or statement, furnished to LIQUITEK or the
Stockholders by or on behalf of VITRISEAL in connection with the transactions
contemplated by this Agreement contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary to be
stated in order to make the statements contained herein or therein, when taken
as a whole, not misleading. VITRISEAL has no knowledge of any fact which has not
been disclosed in writing to LIQUITEK or the Stockholders which may reasonably
be expected to materially and adversely affect the business, properties,
operations, and/or prospects of VITRISEAL or the ability of VITRISEAL to perform
all of the obligations to be performed by VITRISEAL under this Agreement and/or
any other agreement between LIQUITEK and VITRISEAL to be entered into pursuant
to any provision of this Agreement. A copy of VITRISEAL's Annual Report on Form
10-KSB for the year ended December 31, 1999 (the "Annual Report") and Proxy
Statement for its annual stockholders meeting on March 18, 2000 are attached
hereto as Exhibits "S" and "T."
Page 17
4.10 SUBSIDIARIES. VITRISEAL has no subsidiaries other than Dancor,
Inc. and no investments, directly or indirectly, or other financial interest in
any other corporation or business organization, joint venture or partnership of
any kind whatsoever except as reflected in the VITRISEAL Financial Statements.
4.11 OFFERING. Subject to the accuracy of the Stockholders'
representations in Section 5.4 hereof, the offer, sale, and issuance of the
Vitriseal Shares to be issued in conformity with the terms of this Agreement and
the transactions contemplated hereby, constitute transactions exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended, and from all applicable state registration or qualification
requirements.
4.12 REAL PROPERTY. The Annual Report attached hereto as Exhibit "S"
contains a description of the real property leased to and occupied by VITRISEAL,
and except as set forth in Exhibit "P," VITRISEAL neither owns or leases, nor
occupies, any other real property. The building and all fixtures and
improvements located on such real property are in good operating condition,
ordinary wear and tear excepted. To the best of its knowledge, VITRISEAL is not
in violation of any material zoning, building or safety ordinance, regulation or
requirement, or other law or regulation applicable to the operation of owned or
leased properties, and VITRISEAL has not received any notice of violation with
which its has not complied. All leases of real property to which VITRISEAL is a
party and which are material to the business of VITRISEAL are fully effective in
accordance with their respective terms and afford VITRISEAL peaceful and
undisturbed possession of the subject matter of the lease, and, to the best
knowledge of VITRISEAL, there exists no default on the part of VITRISEAL or
termination thereof.
4.13 TANGIBLE PERSONAL PROPERTY. VITRISEAL has good and marketable
title to, or in the case of leased equipment a valid leasehold interest in, and
is in possession of, all such items of personal property owned or leased by it,
free and clear of all title defects, mortgages, pledges, security interests
conditional sales agreements, liens, restrictions or encumbrances, the presence
of which would result in a material adverse change in the business, properties,
or assets, or the condition (financial or otherwise) of VITRISEAL. All leases of
tangible personal property to which VITRISEAL is a party and which are material
to the business of VITRISEAL are fully effective in accordance with their
respective terms, and, to the best knowledge of VITRISEAL, there exists no
default on the part of VITRISEAL or termination thereof, the presence of which
would result in a material adverse change in the business, properties, or
assets, or the condition (financial or otherwise) of VITRISEAL. Each item of
capital equipment reflected in the VitriSeal Balance Sheets which is used in the
current conduct of VITRISEAL's business is in good operating and usable
condition and repair, ordinary wear and tear excepted, and is and will be
suitable for use in the ordinary course of VITRISEAL's business and fit for its
intended purposes.
Page 18
4.14 CONTRACTS AND COMMITMENTS. VITRISEAL has no contract, agreement,
obligation or commitment, written or oral, expressed or implied, which involves
a commitment or liability of VITRISEAL in excess of $10,000, and no union
contracts, employee or consulting contracts, financing agreements, debtor or
creditor arrangements, licenses, franchise, manufacturing, distributorship or
dealership agreements, leases, or bonus, health or stock option plans, except as
described in Exhibit "P." True and complete copies of all such contracts and
other agreements listed in Exhibit "P" have been made available to LIQUITEK
prior to the execution hereof. VITRISEAL has performed and complied in all
material respects with all obligations required to be performed by it to date
under, and is not in default (without giving effect to any required notice or
grace period) under, or in breach of, the terms, conditions or provisions of any
of such contracts and other agreements. The validity and enforceability of any
contract or other agreement described herein has not been and shall not be
materially and adversely affected by the execution and delivery of this
Agreement without any further action. VITRISEAL has no contract, agreement,
obligation or commitment which requires or will require future expenditures
(including internal costs and overhead) in excess of reasonably anticipated
receipts, nor which is likely to be materially adverse to VITRISEAL's business,
assets, condition (financial and otherwise), or prospects.
4.15 PROPRIETARY INFORMATION. VITRISEAL does not have any patents,
applications for patents, trademarks, applications for trademarks, trade names,
licenses or service marks relating to the business of VITRISEAL, nor does any
present or former stockholder, officer, director or employee of VITRISEAL own
any patent rights relating to any products manufactured, rented or sold by
VITRISEAL except as disclosed in Exhibit "U." To the best knowledge of
VITRISEAL, VITRISEAL has the unrestricted right to use, free and clear of any
claims or rights of others, all trade secrets, customer lists, and manufacturing
and secret processes reasonably necessary to the manufacture and marketing of
all products made or proposed to be made by VITRISEAL, except for any rights the
presence of which would not result in a material adverse change in the business,
properties, or assets, or the condition (financial or otherwise) of VITRISEAL,
and, to the best knowledge of VITRISEAL, the continued use thereof by VITRISEAL
following the Closing will not conflict with, infringe upon, or otherwise
violate any rights of others. VITRISEAL has not used and is not making use of
any confidential information or trade secrets of any present or past employee of
VITRISEAL.
4.16 INSURANCE. VITRISEAL maintains workers' compensation, disability
and directors' and officers' insurance with reputable insurance companies as are
usually insured by companies similarly situated and to the extent customarily
insured. A true and complete listing and general description of each of
VITRISEAL's insurance policies as currently in force is set forth in Exhibit "V"
attached hereto. All such insurance policies currently are in full force and
effect.
Page 19
4.17 ARRANGEMENTS WITH EMPLOYEES; LABOR RELATIONS. Except as set forth
in Exhibit "P," no stockholder, director, officer or employee of VITRISEAL is
presently a party to any transaction with VITRISEAL, including without
limitation any contract, loan or other agreement or arrangement providing for
the furnishing of services by, the rental of real or personal property from or
to, or otherwise requiring loans or payments to, any such stockholder, director,
officer or employee, or to any member of the family of any of the foregoing, or
to any corporation, partnership, trust or other entity in which any stockholder,
director, officer or employee or any member of the family of any of them has a
substantial interest or is an officer, director, trustee, partner or employee.
There are no bonus, pension, profit sharing, commission, deferred compensation
or other plans or arrangements in effect as of the date of this Agreement.
VITRISEAL has no obligations under any collective bargaining agreement or other
contract with a labor union, under any employment contract or consulting
agreement, or under any executive's compensation plan, agreement or arrangement,
nor is any union, labor organization or group of employees of VITRISEAL
presently seeking the right to enter into collective bargaining with VITRISEAL
on behalf of any of its employees. VITRISEAL has furnished VITRISEAL with a copy
of all written personnel policies, including without limitation vacation,
severance, bonus, pension, profit sharing, and commissions policies applicable
to any of VITRISEAL's employees.
4.18 BANK ACCOUNTS. All bank and savings accounts, and other accounts
at similar financial institutions, of VITRISEAL existing at date of Closing are
listed on Exhibit "W." Exhibit "W" contains a list of the name of each person or
entity authorized to sign on the bank accounts, borrow money, or incur or
guarantee indebtedness on behalf of VITRISEAL.
4.19 POWERS OF ATTORNEY. Other than that set forth in the Schedule of
Exceptions of VITRISEAL, no valid powers of attorney from VITRISEAL to any
person or entity exist as of the date of this Agreement.
4.20 ABSENCE OF QUESTIONABLE PAYMENTS. To the best of its knowledge,
neither VITRISEAL nor any stockholder, director, officer, agent, employee,
consultant or other person associated with or acting on behalf of any of them,
has (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any direct or indirect unlawful payments to governmental officials or
others from corporate funds, engaged in any payments or activity which would be
deemed a violation of the Foreign Corrupt Practices Act or rules or regulations
promulgated thereunder, or (iii) established or maintained any unlawful or
unrecorded accounts.
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4.21 REPORTING REQUIREMENTS. VITRISEAL has complied with and will
maintain its compliance with all of the reporting requirements under the Act and
the Securities Exchange Act of 1934, as amended, through the Closing Date.
4.22 RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS. No present substantial
customer or substantial supplier to VITRISEAL has indicated an intention to
terminate or materially and adversely alter its existing business relationship
therewith, and, to the best knowledge of VITRISEAL, none of the present
customers of or substantial suppliers to VITRISEAL intends to do so.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
Each of the Stockholders, severally and not jointly, represents and
warrants to and covenants with VITRISEAL, as of the date hereof, as follows:
5.1 AUTHORITY. Each Stockholder has full rights, power, and authority
to enter into this Agreement; the execution, delivery, and performance of this
Agreement by the Stockholder and the consummation by the Stockholder of the
transactions contemplated hereby will not conflict with or result in a breach of
any agreement to which the Stockholder is a party and which a conflict or breach
thereof would have a material adverse effect upon the Stockholder or the
Stockholder's properties or assets.
5.2 TITLE. Each Stockholder has valid and marketable title to the
number of shares set forth opposite the Stockholder's name on Exhibit "A," free
and clear of any pledge, lien, security interest, or encumbrance other than
pursuant to this Agreement; provided, however, that Thermoflow Corporation, as a
Stockholder of LIQUITEK, specifically acknowledges that all of its Liquitek
Shares shall be surrendered and canceled upon the closing hereunder, and
Thermoflow Corporation shall have no right or interest in any Vitriseal Shares
to be exchanged for shares of LIQUITEK pursuant to this Agreement. As of the
Closing Date and to the knowledge of the Stockholder, there is no lien, charge,
mortgage, pledge, conditional sale agreement, or other encumbrance of any kind
or nature recorded in the book of registry of stockholders of LIQUITEK with
respect to any of the Liquitek Shares owned by the Stockholder and the Liquitek
Shares set forth in Exhibit "A" are duly registered in the name of the
Stockholder as set forth in Exhibit "A."
5.3 RESTRICTED STOCK. Each Stockholder acknowledges that the VitriSeal
Shares being issued to the Stockholder hereunder will be issued by VITRISEAL
without registration or qualification or other filings being made under the Act,
or the securities or "blue sky" laws of any state, in reliance upon
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specific exemptions therefrom, and in furtherance thereof the Stockholder
represents that he or she is acquiring and will hold the shares to be delivered
hereunder for his or her own account, for investment only, and not for
distribution within the meaning of the U.S. federal securities laws. The
Stockholder acknowledges that a legend, substantially in the following form,
shall be placed upon the face of each certificate representing any of Vitriseal
Shares being delivered to the Stockholder hereunder:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
ARE RESTRICTED SECURITIES, AND NO OFFER, SALE, TRANSFER OR OTHER
DISPOSITION OF THIS CERTIFICATE OR THE SECURITIES REPRESENTED HEREBY,
OR OF ANY INTEREST HEREIN, MAY BE MADE WITHOUT SUCH REGISTRATION
UNLESS, IN THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, AN
EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE.
5.4 LOCK-UP AGREEMENT. The Stockholders electing to participate in the
Registration Statement, as evidenced by their having initialed the space
opposite their respective signatures on the signature page of this Agreement,
agree to be subject to a lock-up agreement between them and VitriSeal providing
that they will be permitted to sell no more than 25% of their Vitriseal Shares
in the six months following the effective date of the Registration Statement
(the "Registration Date"), no more than 25% of their Vitriseal Shares during the
period beginning six months after the Registration Date until 12 months after
the Registration Date, and no more than 25% of their Vitriseal Shares during the
period beginning 18 months after the Registration Date until 24 months after the
Registration Date. The certificates evidencing the VitriSeal Shares owned by
Stockholders who elect to be included in the Registration Statement shall bear
the following additional legend:
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
RESTRICTED IN ACCORDANCE WITH AN AGREEMENT BETWEEN THE STOCKHOLDER AND
THE COMPANY, AND NO OFFER, SALE, TRANSFER OR OTHER DISPOSITION OF THIS
CERTIFICATE OR THE SECURITIES REPRESENTED HEREBY, OR OF ANY INTEREST
HEREIN, MAY BE MADE WITHOUT AN OPINION OF COUNSEL TO THE COMPANY
EVIDENCING COMPLIANCE WITH SUCH AGREEMENT.
ARTICLE VI
MISCELLANEOUS
6.1 TAXES AND EXPENSES.
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6.1.1 Except as otherwise expressly provided in 6.1.2
immediately below, each of VITRISEAL and LIQUITEK shall pay all of their own
respective taxes due prior to the Closing, attorneys' fees and other costs and
expenses payable in connection with or as a result of the transactions
contemplated hereby and the performance and compliance with all agreements and
conditions contained in this Agreement respectively to be performed or observed
by each of them. The parties represent and warrant that no brokerage, finders'
or other similar fees are being paid by any of the parties in connection with
this Agreement.
6.1.2 The representations and warranties of LIQUITEK, the
Stockholders, and VITRISEAL contained herein and in any other document or
instrument delivered by or on behalf of LIQUITEK and/or the Stockholders or on
behalf of VITRISEAL pursuant hereto, as such may be qualified in Exhibits "G" or
"P," respectively, shall survive the Closing and any investigations made by or
on behalf of VITRISEAL made prior to the Closing, and shall remain in full force
and effect for a period of two full years from the date of the Closing the
("Warranty Period"), and thereupon expire.
6.2 OTHER DOCUMENTS. Each of the parties hereto shall execute and
deliver such other and further documents and instruments, and take such other
and further actions, as may be reasonably requested of them for the
implementation and consummation of this Agreement and the transactions herein
contemplated.
6.3 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, the heirs, personal representatives,
successors and assigns of VITRISEAL, the Stockholder, and LIQUITEK, but shall
not confer, expressly or by implication, any rights or remedies upon any other
party.
6.4 GOVERNING LAW. This Agreement is made and shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Nevada.
6.5 NOTICES. Any notice or the delivery of any item to be delivered by
a party hereto shall be delivered personally, by U.S. mail, return receipt
requested, or by Federal Express, next-day delivery. Any personal delivery made
shall be deemed to have been made upon the execution of a receipt for the item
to be delivered by the party to whom delivery is made. Delivery by U.S. mail or
Federal Express shall be deemed to have been made when delivered by Federal
Express to the party to whom addressed. All such deliveries shall be made to the
following addresses, or such other addresses as the parties may have instructed
the others in accordance with the provisions of this Paragraph:
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(a) If to VITRISEAL: VITRISEAL, INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
With copies to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) If to LIQUITEK
or the Stockholders: LIQUITEK CORPORATION
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With copies to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., Attorneys
Riverview Tower, Suite 2102
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Any party hereto may change its address by written notice to the other party
given in accordance with this Section 6.5.
6.6 ENTIRE AGREEMENT. This Agreement and the exhibits attached hereto
contains the entire agreement between the parties and supersede all prior
agreements, understandings and writings between the parties with respect to the
subject matter hereof and thereof. Each party hereto acknowledges that no
representations, inducements, promises or agreements, oral or otherwise, have
been made by any party, or anyone acting with authority on behalf of any party,
which are not embodied herein or in an exhibit hereto, and that no other
agreement, statement or promise may be relied upon or shall be valid or binding.
Neither this Agreement nor any term hereof may be changed, waived, discharged or
terminated orally. This Agreement may be amended or any term hereof may be
changed, waived, discharged or terminated by an agreement in writing signed by
VITRISEAL, LIQUITEK, and Stockholder.
6.7 SEVERABILITY. If any provision of this Agreement is determined to
be invalid, illegal or unenforceable by any court, department, official,
political subdivision, agency or other instrumentality of any government,
whether state, local or federal, the remaining provisions of this Agreement to
the extent permitted by law shall remain in full force and effect. To the extent
permitted by law, the parties hereto waive any provision of law that renders any
provision hereof invalid or unenforceable in any respect.
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6.8 HEADINGS. The captions and headings used herein are for convenience
only and shall not be construed as a part of this Agreement.
6.9 ATTORNEYS' FEES. In the event of any litigation between VITRISEAL
and LIQUITEK, the non-prevailing party shall pay the reasonable expenses,
including the attorneys' fees, of the prevailing party in connection therewith.
6.10 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which taken together shall
constitute but one and the same document.
6.11 GENDER. Whenever the content of this Agreement requires, the
masculine gender shall include the feminine or neuter, and the singular number
shall include the plural.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
VITRISEAL, INC. LIQUITEK CORPORATION
a Nevada corporation a Nevada corporation
By: By:
------------------------------ ----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Chief Executive Officer President
STOCKHOLDERS: AGREEMENT TO PARTICIPATE IN
THE REGISTRATION STATEMENT
--------------------------------- AND LOCK-UP PROVISIONS OF
(Signature) SECTIONS 1.4.5 AND 5.4:
--------------------------------- ----------
(Print Name) (Initials)
AGREEMENT TO PARTICIPATE IN
THE REGISTRATION STATEMENT
--------------------------------- AND LOCK-UP PROVISIONS OF
(Signature) SECTIONS 1.4.5 AND 5.4:
--------------------------------- ----------
(Print Name) (Initials)
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