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EXHIBIT 2.1
EXCHANGE AGREEMENT
Between
▇▇▇▇▇▇ CAPITAL, INC.,
LOANNET, INC.
THE SHAREHOLDERS OF LOANNET, INC.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ NATION TRUST,
REA CAPITAL CORPORATION, INC.
and
THE GM GROUP, INC.
Dated May 13, 1999
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TABLE OF CONTENTS
Articles Page
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ARTICLE I REPRESENTATIONS, COVENANTS, AND WARRANTIES OF
LOANNET..........................................................1
1.01 Due Organization and Qualification..........................1
1.02 Authorization; Non-Contravention; Approvals.................2
1.03 Capitalization..............................................2
1.04 Subsidiaries and Predecessor Corporations...................3
1.05 Financial Statements........................................3
1.06 Liabilities and Obligations.................................3
1.07 Taxes.......................................................3
1.08 Absence of Certain Changes or Events........................4
1.09 Assets......................................................5
1.10 Litigation and Compliance with Law..........................5
1.11 Material Contracts..........................................5
1.12 Material Contract Defaults..................................6
1.13 Labor and Employee Relations................................6
1.14 Insurance...................................................6
1.15 Material Transactions or Affiliations.......................7
1.16 LoanNet Schedules...........................................7
1.17 Disclosure..................................................7
ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE LOANNET
SHAREHOLDERS.....................................................8
2.01 Ownership of LoanNet Shares................................8
ARTICLE III REPRESENTATIONS, COVENANTS, AND
WARRANTIES OF ▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇▇...............................8
3.01 Due Organization and Qualification..........................8
3.02 Authorization; Non-Contravention; Approvals.................8
3.03 Capitalization..............................................9
3.04 Subsidiaries and Predecessor Corporations...................9
3.05 Financial Statements........................................9
3.06 Liabilities and Obligations.................................9
3.07 Taxes......................................................10
3.08 Absence of Certain Changes or Events.......................10
3.09 Assets.....................................................11
3.10 Litigation and Compliance with Law.........................11
3.11 Material Contracts.........................................12
3.12 Labor and Employee Relations...............................12
3.13 ▇▇▇▇▇▇ Schedules...........................................12
3.14 Shareholders' Equity.......................................12
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ARTICLE IV PLAN OF EXCHANGE.................................................12
4.01 The Exchange...............................................12
4.02 Appointment of New Directors...............................13
4.03 Closing....................................................13
4.04 Closing Events.............................................13
ARTICLE V SPECIAL COVENANTS................................................13
5.01 Stockholder Meeting of ▇▇▇▇▇▇..............................13
5.02 Access to Properties and Records...........................14
5.03 Delivery of Books and Records..............................14
5.04 Special Covenants and Representations
Regarding the Exchanged LoanNet Stock......................14
5.05 Third Party Consents and Certificates......................14
5.06 Actions Prior to Closing...................................14
5.07 Indemnification............................................15
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS
OF LOANNET AND THE LOANNET SHAREHOLDERS..........................16
6.01 Accuracy of Representations................................16
6.02 Officer's Certificates.....................................16
6.03 No Material Adverse Change.................................16
6.04 Good Standing..............................................16
6.05 Board of Directors' Approval...............................16
6.06 Other Items................................................16
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF ▇▇▇▇▇▇................... 17
7.01 Accuracy of Representations................................17
7.02 Stockholder Approval.......................................17
7.03 Officer's Certificate......................................17
7.04 No Material Adverse Change.................................17
7.05 Good Standing..............................................17
7.06 Other Items................................................17
ARTICLE VIII MISCELLANEOUS....................................................18
8.01 Brokers....................................................18
8.02 Governing Law..............................................18
8.03 Notices....................................................18
8.04 Attorneys' Fees............................................19
8.05 Confidentiality............................................19
8.06 Schedules; Knowledge.......................................19
8.07 Third Party Beneficiaries..................................19
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8.08 Entire Agreement...........................................19
8.09 Survival; Termination......................................19
8.10 Counterparts...............................................19
8.11 Amendment or Waiver........................................19
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EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement"),
is entered into as of this 12th day of May, 1999, by and among ▇▇▇▇▇▇ Capital,
Inc., a Delaware corporation ("▇▇▇▇▇▇"), LoanNet, Inc., a Texas corporation
("LoanNet"), those persons identified in Schedule A attached hereto who are the
beneficial owners of 1,000,000 shares of common stock of LoanNet ("Common
Stock"), which constitutes 100% of the outstanding capital stock of LoanNet
("LoanNet Shareholders"),▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D., a shareholder of ▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ Nation Trust, a shareholder of LoanNet ("▇▇▇▇▇"), Rea
Capital Corporation, Inc., a shareholder of LoanNet ("Rea") and The GM Group,
Inc., a company in which LoanNet owns a majority interest ("GM"). ▇▇▇▇▇▇ is a
reporting company with the Securities and Exchange Commission; however, ▇▇▇▇▇▇
has never been an operating company. ▇▇▇▇▇, ▇▇▇ and GM are included as part of
this Agreement for the limited purpose of joining in the representations,
covenants and warranties of LoanNet.
PREMISES
This Agreement provides for the acquisition by ▇▇▇▇▇▇ of all of the
issued and outstanding shares of LoanNet solely in exchange for voting shares of
▇▇▇▇▇▇, on the terms and conditions hereinafter provided, all for the purpose of
effecting a so-called "tax-free" reorganization pursuant to Section 368(a)(1)(B)
of the Internal Revenue Code of 1954, as amended.
AGREEMENT
NOW THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF LOANNET
As an inducement to, and to obtain the reliance of ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇, LoanNet, the LoanNet Shareholders, ▇▇▇▇▇, ▇▇▇ and GM each represent
and warrant as follows:
Section 1.01 DUE ORGANIZATION AND QUALIFICATION. LoanNet is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Texas and is duly authorized and qualified to do business
under all applicable laws, regulations, ordinances and orders of public
authorities and to carry on its business in the places and in the manner as now
conducted. LoanNet has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as such business
is currently being conducted. GM is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Texas and is duly
authorized and qualified to do business under all applicable laws, regulations,
ordinances and orders of public authorities and to carry on its business in the
places and in the manner as now conducted. GM has the requisite power and
authority to own, lease and operate its assets and properties and to carry on
its business as such business is currently being conducted. Schedule 1.01
includes true, complete and correct copies of the Articles of Incorporation, as
amended, and Bylaws of LoanNet and GM as in effect on the date hereof.
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Section 1.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) LoanNet and GM have the requisite power and authority to enter into
this Agreement. The board of directors of LoanNet has authorized the execution,
delivery and performance of this Agreement and has approved the transactions
contemplated hereby, and approved the submission of this Agreement and the
transactions contemplated hereby to the shareholders of LoanNet for their
approval with the recommendation that the reorganization be accepted. No
additional corporate proceedings on the part of LoanNet is necessary to
authorize the execution and delivery of this Agreement and the consummation by
LoanNet of the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by LoanNet, the LoanNet Shareholders, ▇▇▇▇▇,
▇▇▇ and GM and, assuming due authorization, execution and delivery hereof by
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, constitutes a valid and binding agreement of LoanNet, the
LoanNet Shareholders, ▇▇▇▇▇, ▇▇▇ and GM enforceable against each of them in
accordance with its terms.
(b) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not, violate or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any encumbrance upon any of the
properties or assets of LoanNet or GM under any of the terms, conditions or
provisions of (i) the Articles of Incorporation or Bylaws of LoanNet or GM, (ii)
any laws applicable to LoanNet or GM or any of the properties or assets of
LoanNet or GM, or (iii) any material note, bond, indenture, mortgage, deed of
trust, license, franchise, permit, concession, lease or other material
instrument, obligation or agreement of any kind to which LoanNet or GM is now a
party or by which any of their properties or assets may be bound or affected.
(c) LoanNet and GM have all licenses, franchises, permits, and other
governmental authorizations that are legally required to enable them to conduct
their business in all material respects as conducted on the date hereof. Except
for compliance with federal and state securities and corporation laws, as
hereinafter provided, no declaration, filing or registration with, or notice to,
or authorization, consent, approval or order of any governmental authority or
third party is necessary for the execution and delivery of this Agreement by
LoanNet or GM or the consummation by LoanNet or GM of the transactions
contemplated hereby. Except as set forth in Schedule 1.02(c), none of the
contracts or agreements with material customers or contracts providing for
purchases or services or other material agreements, licenses or permits to which
LoanNet or GM is a party requires notice to, or the consent or approval of, any
third party for the execution and delivery of this Agreement by LoanNet and GM
and the consummation of the transactions contemplated hereby.
Section 1.03 CAPITALIZATION. The authorized capitalization of LoanNet
consists of 1,000,000 shares of common stock, $.01 par value per share, of which
1,000,000 shares are currently issued and outstanding. All of the issued and
outstanding shares of LoanNet are owned beneficially and of record by the
shareholders set forth in Schedule 1.03. All of the issued and outstanding
shares of LoanNet have been duly authorized and validly issued, are fully paid
and nonassessable, and were offered, issued, sold and delivered by LoanNet in
compliance with all applicable laws, including, without limitation, those laws
concerning the issuance of securities. None of such shares were issued in
violation of the pre-emptive rights of any past or present shareholder. No
subscription, option, warrant, call, convertible or exchangeable security, other
conversion right or commitment of any kind exists which obligates LoanNet to
issue any of its outstanding capital stock or to purchase any capital stock of
LoanNet.
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Section 1.04 SUBSIDIARIES AND PREDECESSOR CORPORATIONS. Other than GM
stock owned by LoanNet, LoanNet and GM do not own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
or exchangeable for capital stock of any other equity interest in any
corporation, association or other business entity. LoanNet nor GM is, directly
or indirectly, a participant in any joint venture, limited liability company,
partnership or other noncorporate entity.
Section 1.05 FINANCIAL STATEMENTS.
(a) Schedule 1.05(a) includes the audited balance sheet of
LoanNet as of March 31, 1999, together with an audited statement of
operations and cash flow from inception (February 12, 1999) through
March 31, 1999 (to be provided within five days of the Closing Date)
and an unaudited balance sheet as of April 30, 1999.
(b) Schedule 1.05(b) includes the audited financial statements
of GM as of June 30, 1997 and 1998, together with an unaudited balance
sheet as of April 30, 1999.
(c) All such financial statements have been prepared in
accordance with generally accepted accounting principles. The audited
balance sheet presents fairly, as of its date, the financial condition
of LoanNet. The statements of income, stockholders' equity, and changes
in financial condition of LoanNet reflect fairly the information
required to be set forth therein by generally accepted accounting
principles. The audited financials statements and unaudited balance
sheet present fairly, as of their dates, the financial condition of GM.
The books of account of LoanNet and GM have been kept accurately in all
material respects in the ordinary course of business, the transaction
entered therein represent bona fide transactions, and the revenues,
expenses, assets and liabilities of LoanNet and GM have been properly
recorded therein in all material respects.
Section 1.06 LIABILITIES AND OBLIGATIONS. LoanNet and GM did not have,
as of the date of their respective balance sheets, nor has incurred since that
date, except as and to the extent reflected or reserved against therein, any
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
of any nature which should be reflected in a balance sheet or the notes thereto,
prepared in accordance with generally accepted accounting principles.
Section 1.07 TAXES. LoanNet and GM have timely filed all requisite
federal, state, local and other tax returns for all fiscal periods ended on or
before the date hereof, and has duly paid in full or made adequate provision in
the financial statements for the payment of all taxes for all periods ending at
or prior to the date hereof. Schedule 1.07 includes true and correct copies of
the federal income tax returns of LoanNet filed since its date of inception and
of GM for the last three years. There are no examinations in progress or claims
against LoanNet or GM relating to taxes for any period prior to and including
the balance sheet date and no written notice of any claim for taxes, whether
pending or threatened, has been received. Each of such income tax returns
reflects the taxes due for the period covered thereby, except for amounts which,
in the aggregate, are immaterial. LoanNet nor GM owe any unpaid federal, state,
county, local or other taxes (including any deficiencies, interest or penalties)
through the date hereof, for which LoanNet or GM may be liable in their own
right or as a transferee of the assets of, or as a successor to, any other
corporation or entity. Furthermore, except as accruing in the normal course of
business, LoanNet nor GM owe any accrued and unpaid taxes to date of this
Agreement.
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Section 1.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31,
1999, except as set forth in this Agreement or in Schedule 1.08, LoanNet and GM
have conducted their operations in the ordinary course of business and there has
not been:
(a) any material adverse change in the business, operations,
properties, condition (financial or otherwise), assets, liabilities
(contingent or otherwise), results of operations or prospects of
LoanNet or GM;
(b) any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets or condition of LoanNet or GM;
(c) any change in the authorized capital stock of LoanNet or in
its outstanding securities or any change in the LoanNet Shareholders'
ownership interests in LoanNet or any grant of any options, warrants,
calls, conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution
in respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of LoanNet or
GM;
(e) any increase in the compensation payable or to become
payable by LoanNet or GM, including any increase in any profit sharing,
bonus, deferred compensation, insurance, pension, retirement, or other
employee benefit plan, payment, or arrangement, to any of their
respective officers, directors, employees, consultants or agents,
except for ordinary and customary bonuses and salary increases for
employees, which bonuses and salary increases are set forth in Schedule
1.08(e);
(f) any significant work interruptions, labor grievances or
claims filed;
(g) except for the Agreement, any sale or transfer, or any
agreement to sell or transfer, any material assets, properties or
rights of LoanNet or GM to any person, including, without limitation,
the LoanNet Shareholders, except assets, properties or rights not used
or useful in its business which, in the aggregate have a value of less
than $1,000;
(h) any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to LoanNet or GM, except debts or claims
which in the aggregate are of a value less than $1,000;
(i) any increase in the indebtedness of LoanNet or GM, other
than accounts payable incurred in the ordinary course of business or
incurred in connection with the transactions contemplated by this
Agreement;
(j) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of the
assets, property or rights of LoanNet or GM or requiring consent of any
party to the transfer and assignment of such assets, property or
rights;
(k) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of any of LoanNet or GM's business;
(l) any waiver of any material rights or claims of LoanNet or
GM;
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(m) any material breach, amendment or termination of any
material contract, agreement, permit or other right to which LoanNet or
GM is a party or any of their property is subject;
(n) any material change in LoanNet or GM's method of
management, operation or accounting; or
(o) any other material transaction by LoanNet or GM outside the
ordinary course of business.
Section 1.09 ASSETS. LoanNet and GM have good and indefeasible title
to all of their properties, inventory, interests in properties, and assets, both
real and personal, which are reflected in the most recent audited balance sheet
or acquired after that date (except properties, interests in properties, and
assets sold or otherwise disposed of since such date in the ordinary course of
business), free and clear of all liens, pledges, charges, or encumbrances except
(a) statutory liens or claims not yet delinquent; (b) such imperfections of
title and easements as do not and will not materially detract from or interfere
with the present or proposed use of the properties subject thereto or affected
thereby or otherwise materially impair present business operations on such
properties; and (c) as described in Schedule 1.09. Except as set forth in
Schedule 1.09, LoanNet and GM own, free and clear of any liens, claims,
encumbrances, royalty interests, or other restrictions or limitations of any
nature whatsoever, any and all products they are currently manufacturing,
including the underlying technology and data, and all procedures, techniques,
marketing plans, business plans, methods of management, or other information
utilized in connection with LoanNet or GM'sbusiness. Except as set forth in
Schedule 1.09, no third party has any right to, and LoanNet and GM have not
received any notice of infringement of or conflict with asserted rights of
others with respect to any product, technology, data, trade secrets, know-how,
proprietary techniques, trademarks, service marks, trade names or copyrights
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a materially adverse affect on the business,
operations, financial condition, income or business prospects of LoanNet or GM
or any material portion of their properties, assets, or rights.
Section 1.10 LITIGATION AND COMPLIANCE WITH LAW. There are no claims,
actions, suits, proceedings or investigations pending or, to the knowledge of
LoanNet or GM, threatened against or affecting LoanNet or GM, at law or in
equity, or before or by any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind. No
written notice of any claim, action, suit, proceeding or investigation, whether
pending or threatened, has been received by LoanNet or GM and, to LoanNet and
GM's knowledge, there is no basis therefor. LoanNet and GM do not have any
knowledge of any default on their part with respect to any judgment, order,
writ, injunction, decree, award, rule, or regulation of any court, arbitrator,
or governmental agency or instrumentality or of any circumstances which, after
reasonable investigation, would result in the discovery of such a default.
LoanNet and GM have conducted and are conducting their business in compliance
with all laws applicable to them, their assets or the operation of their
business, except to the extent that noncompliance would not materially and
adversely affect the business, operations, assets or condition of LoanNet or GM
or except to the extent that noncompliance would not result in the incurrence of
any material liability for LoanNet or GM.
Section 1.11 MATERIAL CONTRACTS.
(a) Except as included or described in Schedule 1.11, there are
no material contracts, agreements, franchises, license agreements or
other commitments to which LoanNet or GM is a party or by which they or
any of their assets, products, technology or properties are bound;
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(b) All contracts, agreements, franchises, license agreements
and other commitments to which LoanNet and GM are a party, or by which
their properties are bound, and which are material to the operations of
LoanNet and GM taken as a whole are valid and enforceable by LoanNet
and GM in all respects, except as limited by bankruptcy and insolvency
laws and by other laws affecting the rights of creditors generally;
(c) LoanNet and GM are not a party to or bound by, and the
properties of LoanNet and GM are not subject to, any contract,
agreement other commitment or instrument; any charter or other
corporate restriction; or any judgment, order, writ, injunction, decree
or award which materially and adversely affects, or in the future may
be foreseeable to materially and adversely affect, the business,
operations, properties, assets or condition of LoanNet or GM; and
(d) Except as included or described in Schedule 1.11 or
reflected in the most recent balance sheet, LoanNet nor GM is a party
to any oral or written (i) agreement, contract or indenture relating to
the borrowing of money; (ii) guaranty of any obligation, other than one
on which LoanNet or GM is a primary obligor, for the borrowing of money
or otherwise, excluding endorsements made for collection and other
guaranties of obligations, which, in the aggregate do not exceed more
than one year or providing for payments in excess of $1,000 in the
aggregate; or (iii) contract, agreement or other commitment involving
payments by them of more than $1,000 in the aggregate.
Section 1.12 MATERIAL CONTRACT DEFAULTS. LoanNet nor GM is in default
in any material respect under the terms of any outstanding contract, agreement,
lease or other commitment which is material to the business, operations,
properties, assets or condition of LoanNet or GM, and there is no event of
default in any material respect under any such contract, agreement, lease, or
other commitment in respect of which LoanNet, the LoanNet Shareholders or GM
have not taken adequate steps to prevent such a default from occurring.
Section 1.13 LABOR AND EMPLOYEE RELATIONS. LoanNet and GM are not
bound by or subject to any oral or written (i) contract for the employment of
any officer or employee; (ii) profit sharing, bonus, deferred compensation,
stock option, severance pay, pension benefit or retirement plan, agreement, or
arrangement covered by Title IV of the Employee Retirement Income Security Act,
as amended ("ERISA"); (iii) collective bargaining agreement; or (iv) agreement
with any present or former officer or director of LoanNet or GM. There is no
pending or, to LoanNet and GM's knowledge, threatened labor dispute involving
LoanNet or GM and any group of their employees nor has LoanNet or GM experienced
any significant labor interruptions over the past five years. LoanNet nor GM is
bound by or subject to any arrangement with any labor union. No employees of
LoanNet or GM are represented by any labor union or covered by any collective
bargaining agreement nor, to LoanNet or GM's knowledge, is any campaign to
establish such representation in progress. LoanNet and GM have no knowledge of
any significant issues or problems in connection with the relationship with
their employees.
Section 1.14 INSURANCE. All the insurable properties of LoanNet and GM
are insured for their full replacement value against all risks customarily
insured against by persons operating similar properties in localities where such
properties are located and under valid and enforceable policies by insurers of
recognized responsibility. Such policy or policies containing substantially
equivalent coverage will be outstanding on the date of consummation of the
transactions contemplated by this Agreement.
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Section 1.15 MATERIAL TRANSACTIONS OR AFFILIATIONS. Set forth in
Schedule 1.15 is a description of every material contract, agreement, or
arrangement between LoanNet or GM and any predecessor and any person who was at
the time of such contract, agreement, or arrangement an officer, director, or
person owning of record, or known by LoanNet or GM to own beneficially, five
percent (5%) or more of the issued and outstanding common stock of LoanNet or GM
and which is to be performed in whole or in part after the date hereof or which
was entered into not more than three years prior to the date hereof. In all of
such transactions, the amount paid or received, whether in cash, in services, or
in kind, is, had been during the full term thereof, and is required to be during
the unexpired portion of the term thereof, no less favorable to LoanNet and GM
than terms available from otherwise unrelated parties in arm's length
transactions. Except as disclosed in Schedule 1.15 or otherwise disclosed
herein, no officer, director, or five percent (5%) shareholder of LoanNet or GM
has had any interest, direct or indirect, in any material transaction with
LoanNet or GM. There are no commitments by LoanNet or GM, whether written or
oral, to lend any funds to, borrow any money from, or enter into any other
material transaction with, any such affiliated person.
Section 1.16 LOANNET SCHEDULES. LoanNet and GM have delivered to
▇▇▇▇▇▇ as a part of this Agreement the following additional schedules, all
certified by the president of LoanNet as complete, true, and correct:
(a) Schedule 1.16(a)containing a description of all real
property owned by LoanNet and GM, together with a description of every
mortgage, deed of trust, pledge, lien, agreement, encumbrance, claim,
or equity interest of any nature whatsoever in such real property;
(b) Schedule 1.16(b) listing the accounts receivable and notes
and other obligations receivable of LoanNet and GM as of April 30,
1999, or that arose thereafter other than in the ordinary course of
business of LoanNet and GM, indicating the debtor and amount, and
classifying the accounts to show in reasonable detail the length of
time, if any, overdue, and stating the nature and amount of any
refunds, set offs, reimbursements, discounts, or other adjustments
which are in the aggregate material and due to or claimed by such
creditor;
(c) Schedule 1.16(c) listing the accounts payable and notes and
other obligations payable of LoanNet and GM as of April 30, 1999, or
that arose thereafter other than in the ordinary course of the business
of LoanNet and GM, indicating the creditor and amount, classifying the
accounts to show in reasonable detail the length of time, if any,
overdue, and stating the nature and amount of any refunds, set-offs,
reimbursements, discounts, or other adjustments, which in the aggregate
are material and due or payable to LoanNet or GM respecting such
obligations;
(d) Schedule 1.16(d) containing a copy of the board of
directors' and shareholders' minutes of LoanNet since inception.
Section 1.17 DISCLOSURE. The information set forth in this Agreement
and in the Schedules attached hereto is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
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ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF THE LOANNET SHAREHOLDERS
As an inducement to, and to obtain reliance of ▇▇▇▇▇▇, LoanNet
Shareholders represent and warrant as follows:
Section 2.01 OWNERSHIP OF LOANNET SHARES. Each LoanNet Shareholder
hereby represents and warrants with respect to itself that it is the legal and
beneficial owner of the number of LoanNet shares set forth opposite its name at
the foot of this agreement, free and clear of any claims, charges, equities,
liens, security interests, and encumbrances whatsoever, and each such
shareholder has full right, power, and authority to transfer, assign, convey,
and deliver its LoanNet shares; and delivery of such shares at the closing will
convey to LoanNet good and marketable title to such shares free and clear of any
claims, charges, equities, liens, security interests, and encumbrances
whatsoever.
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF ▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇▇
As an inducement to, and to obtain the reliance of LoanNet, the LoanNet
Shareholders, ▇▇▇▇▇, ▇▇▇ and GM, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ represent and warrant as
follows:
Section 3.01 DUE ORGANIZATION AND QUALIFICATION. ▇▇▇▇▇▇ is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and is duly authorized and qualified to do
business under all applicable laws, regulations, ordinances and orders of public
authorities and to carry on its business in the places and in the manner as now
conducted. ▇▇▇▇▇▇ has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as such business
is currently being conducted. Schedule 3.01 includes true, complete and correct
copies of the Articles of Incorporation, as amended, and Bylaws of ▇▇▇▇▇▇ as in
effect on the date hereof.
Section 3.02 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS.
(a) ▇▇▇▇▇▇ has the requisite power and authority to enter into this
Agreement. The board of directors of ▇▇▇▇▇▇ has authorized the execution,
delivery and performance of this Agreement and has approved the transactions
contemplated hereby. No additional corporate proceedings on the part of ▇▇▇▇▇▇
is necessary to authorize the execution and delivery of this Agreement and the
consummation by ▇▇▇▇▇▇ of the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by ▇▇▇▇▇▇, and, assuming due
authorization, execution and delivery hereof by LoanNet and the LoanNet
Shareholders, constitutes a valid and binding agreement of ▇▇▇▇▇▇ and the
▇▇▇▇▇▇▇▇▇, enforceable against each of them in accordance with its terms.
(b) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not, violate or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required
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by, or result in a right of termination or acceleration under, or result in the
creation of any encumbrance upon any of the properties or assets of ▇▇▇▇▇▇ under
any of the terms, conditions or provisions of (i) the Articles of Incorporation
or Bylaws, (ii) any laws applicable to ▇▇▇▇▇▇ or any of the properties or assets
of the ▇▇▇▇▇▇, or (iii) any material note, bond, indenture, mortgage, deed of
trust, license, franchise, permit, concession, lease or other material
instrument, obligation or agreement of any kind to which ▇▇▇▇▇▇ is now a party
or by which any of its properties or assets may be bound or affected.
(c) ▇▇▇▇▇▇ does not and never has conducted any business of any kind
and as of the Closing will not have conducted any business.
Section 3.03 CAPITALIZATION. The authorized capitalization of ▇▇▇▇▇▇
consists of twenty million (20,000,000) shares of common stock, $0.01 par value
per share, of which one million eight hundred seventy-five thousand (1,875,000)
shares are currently issued and outstanding and one million (1,000,000) shares
of preferred stock, $.01 par value per share, of which zero (0)are currently
issued and outstanding. All of the issued and outstanding shares of ▇▇▇▇▇▇ are
owned beneficially and of record by the shareholders set forth in Schedule 3.03.
All of the issued and outstanding shares of ▇▇▇▇▇▇ have been duly authorized and
validly issued, are fully paid and nonassessable, and were offered, issued, sold
and delivered by ▇▇▇▇▇▇ in compliance with all applicable laws, including,
without limitation, those laws concerning the issuance of securities. None of
such shares were issued in violation of the pre-emptive rights of any past or
present shareholder. No subscription, option, warrant, call, convertible or
exchangeable security, other conversion right or commitment of any kind exists
which obligates ▇▇▇▇▇▇ to issue any of its outstanding capital stock or to
purchase any capital stock of ▇▇▇▇▇▇.
Section 3.04 SUBSIDIARIES AND PREDECESSOR CORPORATIONS. ▇▇▇▇▇▇ does
not own, of record or beneficially, or control, directly or indirectly, any
capital stock, securities convertible into or exchangeable for capital stock of
any other equity interest in any corporation, association or other business
entity. ▇▇▇▇▇▇ is not, directly or indirectly, a participant in any joint
venture, limited liability company, partnership or other noncorporate entity.
Section 3.05 FINANCIAL STATEMENTS.
(a) Schedule 3.05(a) includes the unaudited balance sheet of
▇▇▇▇▇▇ as of March 31, 1999, together with an unaudited statement of
operations and cash flow for the nine months ended December 31, 1998.
(b) All such financial statements have been prepared in
accordance with generally accepted accounting principles. The unaudited
balance sheet presents fairly, as of its date, the financial condition
of ▇▇▇▇▇▇. The statements of income, stockholders' equity, and changes
in financial condition reflect fairly the information required to be
set forth therein by generally accepted accounting principles. The
books of account of ▇▇▇▇▇▇ have been kept accurately in all material
respects in the ordinary course of business, the transaction entered
therein represent bona fide transactions, and the revenues, expenses,
assets and liabilities of ▇▇▇▇▇▇ have been properly recorded therein in
all material respects.
Section 3.06 LIABILITIES AND OBLIGATIONS. ▇▇▇▇▇▇ did not have, as of
the date of such balance sheet, nor has incurred since that date, except as and
to the extent reflected or reserved against therein, any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any nature
which should be
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reflected in a balance sheet or the notes thereto, prepared in accordance with
generally accepted accounting principles.
Section 3.07 TAXES. ▇▇▇▇▇▇ has timely filed all requisite federal,
state, local and other tax returns for all fiscal periods ended on or before the
date hereof, and has duly paid in full or made adequate provision in the
financial statements for the payment of all taxes for all periods ending at or
prior to the date hereof. Schedule 3.07 includes true and correct copies of the
federal income tax returns of ▇▇▇▇▇▇ filed since its date of inception. There
are no examinations in progress or claims against ▇▇▇▇▇▇ relating to taxes for
any period prior to and including the balance sheet date and no written notice
of any claim for taxes, whether pending or threatened, has been received. Each
of such income tax returns reflects the taxes due for the period covered
thereby, except for amounts which, in the aggregate, are immaterial. ▇▇▇▇▇▇ does
not owe any unpaid federal, state, county, local, or other taxes (including any
deficiencies, interest, or penalties) through the date hereof, for which ▇▇▇▇▇▇
may be liable in its own right or as a transferee of the assets of, or as a
successor to, any other corporation or entity. Furthermore, except as accruing
in the normal course of business, ▇▇▇▇▇▇ does not owe any accrued and unpaid
taxes to date of this Agreement.
Section 3.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31,
1999, except as set forth in this Agreement or in Schedule 3.08, ▇▇▇▇▇▇ has
conducted its operations in the ordinary course of business and there has not
been:
(a) any material adverse change in the business, operations,
properties, condition (financial or otherwise), assets, liabilities
(contingent or otherwise), results of operations or prospects of
▇▇▇▇▇▇;
(b) any damage, destruction, or loss (whether or not covered by
insurance) materially adversely affecting the business, operations,
properties, assets or condition of ▇▇▇▇▇▇;
(c) any change in the authorized capital stock of ▇▇▇▇▇▇ or in
its outstanding securities or any change in the shareholders' ownership
interests in ▇▇▇▇▇▇ or any grant of any options, warrants, calls,
conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution
in respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of ▇▇▇▇▇▇;
(e) any increase in the compensation payable or to become
payable by ▇▇▇▇▇▇, including any increase in any profit sharing, bonus,
deferred compensation, insurance, pension, retirement, or other
employee benefit plan, payment, or arrangement, to any of its
respective officers, directors, employees, consultants or agents,
except for ordinary and customary bonuses and salary increases for
employees in accordance with past practice, which bonuses and salary
increases are set forth in Schedule 3.08(e);
(f) any significant work interruptions, labor grievances or
claims filed;
(g) except for the Agreement, any sale or transfer, or any
agreement to sell or transfer, any material assets, properties or
rights of ▇▇▇▇▇▇ to any person, including, without limitation, the
▇▇▇▇▇▇ shareholders, except assets, properties or rights not used or
useful in its business which, in the aggregate have a value of less
than $1,000;
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(h) any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to ▇▇▇▇▇▇, except debts or claims which in
the aggregate are of a value less than $1,000;
(i) any increase in the indebtedness of ▇▇▇▇▇▇, other than
accounts payable incurred in the ordinary course of business,
consistent with past practices or incurred in connection with the
transactions contemplated by this Agreement;
(j) any plan, agreement, arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets,
property or rights of ▇▇▇▇▇▇ or requiring consent of any party to the
transfer and assignment of such assets, property or rights;
(k) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of any ▇▇▇▇▇▇'▇ business;
(l) any waiver of any material rights or claims of ▇▇▇▇▇▇;
(m) any material breach, amendment or termination of any
material contract, agreement, permit or other right to which ▇▇▇▇▇▇ is
a party or any of its property is subject;
(n) any material change in ▇▇▇▇▇▇'▇ method of management,
operation or accounting;
(o) any other material transaction by ▇▇▇▇▇▇ outside the
ordinary course of business.
Section 3.09 ASSETS. ▇▇▇▇▇▇ has good and indefeasible title to all of
its properties, inventory, interests in properties, and assets, both real and
personal, which are reflected in the most recent audited balance sheet or
acquired after that date (except properties, interests in properties, and assets
sold or otherwise disposed of since such date in the ordinary course of
business), free and clear of all liens, pledges, charges, or encumbrances except
(a) statutory liens or claims not yet delinquent; (b) such imperfections of
title and easements as do not and will not materially detract from or interfere
with the present or proposed use of the properties subject thereto or affected
thereby or otherwise materially impair present business operations on such
properties; and (c) as described in Schedule 3.09. Except as set forth in
Schedule 3.09, ▇▇▇▇▇▇ owns, free and clear of any liens, claims, encumbrances,
royalty interests, or other restrictions or limitations of any nature
whatsoever, any and all products it is currently manufacturing, including the
underlying technology and data, and all procedures, techniques, marketing plans,
business plans, methods of management, or other information utilized in
connection with ▇▇▇▇▇▇'▇ business. Except as set forth in Schedule 3.09, no
third party has any right to, and ▇▇▇▇▇▇ has not received any notice of
infringement of or conflict with asserted rights of others with respect to any
product, technology, data, trade secrets, know-how, proprietary techniques,
trademarks, service marks, trade names, or copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling, or finding, would
have a materially adverse affect on the business, operations, financial
condition, income, or business prospects of ▇▇▇▇▇▇ or any material portion of
its properties, assets, or rights.
Section 3.10 LITIGATION AND COMPLIANCE WITH LAW. There are no claims,
actions, suits, proceedings or investigations pending or, to the knowledge of
▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇, threatened against or affecting ▇▇▇▇▇▇, at law or in
equity, or before or by any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind. No
written notice of any claim, action, suit, proceeding or investigation, whether
pending or threatened, has been received by ▇▇▇▇▇▇ and, to ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇'▇ knowledge, there is no basis therefor. ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇ do not
have any
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knowledge of any default on its part with respect to any judgment, order, writ,
injunction, decree, award, rule, or regulation of any court, arbitrator, or
governmental agency or instrumentality or of any circumstances which, after
reasonable investigation, would result in the discovery of such a default.
▇▇▇▇▇▇ has conducted and is conducting its business in compliance with all laws
applicable to it, it assets or the operation of its business, except to the
extent that noncompliance would not materially and adversely affect the
business, operations, assets or condition of ▇▇▇▇▇▇ or except to the extent that
noncompliance would not result in the incurrence of any material liability for
▇▇▇▇▇▇.
Section 3.11 MATERIAL CONTRACTS.
Except for this Agreement, ▇▇▇▇▇▇ has not entered into any
contract with any other party.
Section 3.12 LABOR AND EMPLOYEE RELATIONS. ▇▇▇▇▇▇ does not have any
employees.
Section 3.13 ▇▇▇▇▇▇ SCHEDULES. ▇▇▇▇▇▇ has delivered to LoanNet as a
part of this Agreement the following additional schedules, all certified by the
chief executive officer of ▇▇▇▇▇▇ as complete, true, and correct:
(a) Schedule 3.13(a) containing a statement of cash on hand;
(b) Schedule 3.13(c) listing the accounts payable and notes and
other obligations payable of ▇▇▇▇▇▇ as of March 31, 1999, or that arose
thereafter other than in the ordinary course of the business of ▇▇▇▇▇▇,
indicating the creditor and amount, classifying the accounts to show in
reasonable detail the length of time, if any, overdue, and stating the
nature and amount of any refunds, set-offs, reimbursements, discounts,
or other adjustments, which in the aggregate are material and due or
payable to ▇▇▇▇▇▇ respecting such obligations;
(c) Schedule 3.13(d) containing a copy of the board of
directors' and shareholders' minutes approving the transaction
associated with this Agreement.
Section 3.14 SHAREHOLDERS' EQUITY. At or prior to Closing, there shall
be at least $54,000 of cash in ▇▇▇▇▇▇ and no liabilities.
ARTICLE IV
PLAN OF EXCHANGE
Section 4.01 THE EXCHANGE. On the terms and subject to the conditions
set forth in this Agreement, on the Closing Date (as defined in Section 4.05),
each of the LoanNet Shareholders hereby agrees to assign, transfer, and deliver
to ▇▇▇▇▇▇, free and clear of all liens, pledges, encumbrances, charges,
restrictions, or known claims of any kind, nature, or description, the number of
shares of common stock of LoanNet set after his signature at the foot of this
Agreement, in the aggregate constituting all of the issued and outstanding
shares of common stock of LoanNet, or one million (1,000,000) shares, and ▇▇▇▇▇▇
agrees to acquire such shares on such date by issuing and delivering in exchange
therefor solely shares of ▇▇▇▇▇▇ restricted common stock, par value $0.01 per
share, in the amount of nine (9) shares of ▇▇▇▇▇▇ for each outstanding share of
LoanNet, or an aggregate amount of nine million (9,000,000) shares of ▇▇▇▇▇▇
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common stock, or approximately eighty five percent (85%) of the outstanding
shares of ▇▇▇▇▇▇ common stock (the "Exchanged ▇▇▇▇▇▇ Stock"). At the Closing,
each of the LoanNet Shareholders shall, on surrender of his certificate or
certificates representing such LoanNet shares to the registrar and transfer
agent, be entitled to receive a certificate or certificates evidencing shares of
the Exchanged ▇▇▇▇▇▇ Stock as provided herein. Upon the consummation of the
transaction contemplated herein, all shares of capital stock of LoanNet shall be
held by ▇▇▇▇▇▇.
Section 4.02 APPOINTMENT OF NEW DIRECTORS. In connection with the
Closing of the transactions contemplated by this Agreement, the existing
directors of ▇▇▇▇▇▇ shall resign, seriatim, and shall appoint ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as directors to fill the vacancies created
thereby, to serve until the next annual stockholders' meeting of ▇▇▇▇▇▇ and
their successors shall have been elected and qualified.
Section 4.03 CLOSING. The closing ("Closing") of the transactions
contemplated by this Agreement shall be on a date and at such time as the
parties may agree ("Closing Date"), within the ten-day period commencing with
the last to occur of the following: the ▇▇▇▇▇▇ shareholders' meeting or such
date as may be prescribed by any federal or state regulatory agency or authority
prior to which the transactions contemplated hereby may not be effectuated. Such
Closing shall take place on May 13, 1999, at the offices of Gardere & ▇▇▇▇▇,
L.L.P..
Section 4.04 CLOSING EVENTS. At the Closing, each of the respective
parties hereto shall execute, acknowledge, and deliver (or shall cause to be
executed, acknowledged, and delivered) any and all certificates, opinions,
financial statements, schedules, agreements, resolutions, rulings, or other
instruments required by this Agreement to be so delivered at or prior to the
Closing, together with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby.
ARTICLE V
SPECIAL COVENANTS
Section 5.01 STOCKHOLDER MEETING OF ▇▇▇▇▇▇. As soon as practicable
following the execution of this Agreement, and prior to the Closing, a majority
interest of the Sarkis shareholders shall approve the following proposals:
(a) the authorization and approval of this Agreement and the
transactions contemplated thereby;
(b) the election of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as directors of ▇▇▇▇▇▇;
(c) the amendment to the certificate of incorporation of ▇▇▇▇▇▇
to change its name to "LoanNet Corporation," or such name as may be
deemed appropriate; and
(d) to take such other actions as the directors may determine
are appropriate.
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Section 5.02 ACCESS TO PROPERTIES AND RECORDS. ▇▇▇▇▇▇ and LoanNet will
each afford to the officers and authorized representatives of the other full
access to the properties, books, and records of each other as the case may be,
in order that each may have full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of the other, and each
will furnish the other with such additional financial and operating data and
other information as to the business and properties of each other, as the case
may be, as the other shall from time to time reasonably request.
Section 5.03 DELIVERY OF BOOKS AND RECORDS. At the Closing, each
company shall deliver each other the originals of the corporate minute books,
books of account, contracts, records, and all other books or documents now in
each company's possession or its representatives.
Section 5.04 SPECIAL COVENANTS AND REPRESENTATIONS REGARDING THE
EXCHANGED STOCK. The consummation of this Agreement and the transactions herein
contemplated, including the issuance of the Exchanged ▇▇▇▇▇▇ Stock to the
shareholders of LoanNet as contemplated hereby, constitutes the offer and sale
of securities under the Securities Act and applicable state statutes. Such
transaction shall be consummated in reliance on exemptions from the registration
and prospectus delivery requirements of such statutes which depend, inter alia,
upon the circumstances under which the LoanNet Shareholders acquire such
securities. In connection with reliance upon exemptions from the registration
and prospectus delivery requirements for such transactions, at the Closing the
LoanNet Shareholders shall deliver to ▇▇▇▇▇▇ letters of representation in the
form attached hereto as Schedule 5.04.
Section 5.05 THIRD PARTY CONSENTS AND CERTIFICATES. ▇▇▇▇▇▇ and LoanNet
agree to cooperate with each other in order to obtain any required third party
consents to this Agreement and the transactions herein and therein contemplated.
Section 5.06 ACTIONS PRIOR TO CLOSING.
(a) From and after the date of this Agreement until the Closing
Date and except as set forth in the Agreement or Schedules attached
hereto or as permitted or contemplated by this Agreement, ▇▇▇▇▇▇ and
LoanNet respectively, will each:
(i) carry on its business in substantially the same
manner as it has heretofore;
(ii) maintain and keep its properties in states of good
repair and condition as at present, except for depreciation due
to ordinary wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance
comparable in amount and in scope of coverage to that now
maintained by it;
(iv) perform in all material respects all of its
obligation under material contracts, leases, and instruments
relating to or affecting its assets, properties, and business;
(v) use its best efforts to maintain and preserve its
business organization intact, to retain its key employees, and
to maintain its relationship with its material suppliers and
customers; and
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(vi) fully comply with and perform in all material
respects all obligations and duties imposed on it by all
federal and state laws and all rules, regulations, and orders
imposed by federal or state governmental authorities.
(b) From and after the date of this Agreement until the Closing
Date, neither ▇▇▇▇▇▇ nor LoanNet will:
(i) make any change in their Articles or Certificate of
Incorporation (except as provided for in Section 5.01) or
Bylaws;
(ii) take any action described in Section 1.08 in the case
of LoanNet , or in Section 3.08, in the case of ▇▇▇▇▇▇ (except
as permitted therein or as disclosed in the applicable party's
schedules); or
(iii) enter into or amend any contract, agreement, or
other instrument of any of the types described in such party's
schedules, except that a party may enter into or amend any
contract, agreement, or other instrument in the ordinary
course of business involving the sale of goods or services.
(c) ▇▇▇▇▇▇ shall have issued warrants to purchase 200,000
shares to ▇▇▇▇▇▇▇▇▇ at $0.18 per share for an aggregate strike price of
$36,000.
Section 5.08 INDEMNIFICATION.
(a) LoanNet and the LoanNet Shareholders hereby agree to
indemnify ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and each of the officers, agents and
directors of ▇▇▇▇▇▇ as of the date of execution of this Agreement
against any loss, liability, claim, damage, or expense (including, but
not limited to, any and all expense whatsoever reasonably incurred in
investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever), to which it or they
may become subject arising out of or based on any inaccuracy appearing
in or misrepresentation made under Article I of this Agreement. The
indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and
termination of this Agreement. Indemnification shall include the right
of the indemnified party to set-off with prior notice.
(b) ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ hereby agree to indemnify LoanNet, the
LoanNet Shareholders, ▇▇▇▇▇, ▇▇▇ and each of the officers, agents and
directors of LoanNet as of the date of execution of this Agreement
against any loss, liability, claim, damage, or expense (including, but
not limited to, any and all expense whatsoever reasonably incurred in
investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever), to which it or they
may become subject arising out of or based on any inaccuracy appearing
in or misrepresentation made under Article III of this Agreement. The
indemnification provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and
termination of this Agreement. Indemnification shall include the right
of the indemnified party to set-off with prior notice.
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ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF LOANNET
AND THE LOANNET SHAREHOLDERS
The obligations of LoanNet and the LoanNet Shareholders under this
Agreement are subject to the satisfaction, at or before the Closing Date, of the
following conditions:
Section 6.01 ACCURACY OF REPRESENTATIONS. The representations and
warranties made by ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ in this Agreement were true when made
and shall be true at the Closing Date with the same force and effect as if such
representations and warranties were made at and as of the Closing Date (except
for changes therein permitted by this Agreement), and ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ shall
have performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ prior to or
at the Closing. LoanNet shall be furnished with a certificate, signed by a duly
authorized officer of ▇▇▇▇▇▇ and dated the Closing Date, to the foregoing
effect.
Section 6.02 OFFICER'S CERTIFICATES. LoanNet shall have been furnished
with a certificate dated the Closing Date and signed by a duly authorized
officer of ▇▇▇▇▇▇ to the effect that no litigation, proceeding, investigation,
or inquiry is pending or, to the knowledge of ▇▇▇▇▇▇ threatened, which might
result in an action to enjoin or prevent the consummation of the transactions
contemplated by this Agreement.
Section 6.03 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business, or operations of ▇▇▇▇▇▇ nor shall any event have occurred
which, with the lapse of time or the giving of notice, may cause or create any
material adverse change in the financial condition, business, or operations of
▇▇▇▇▇▇.
Section 6.04 GOOD STANDING. LoanNet shall have received a certificate
of good standing from the Secretary of State of the state of Delaware or other
appropriate office, dated as of a date within ten days prior to the Closing Date
certifying that ▇▇▇▇▇▇ is in good standing as a corporation in the state of
Delaware and has filed all tax returns required to have been filed by it to date
and has paid all taxes reported as due thereon.
Section 6.05 BOARD OF DIRECTORS APPROVAL. The Board of Directors of
▇▇▇▇▇▇ shall have approved this Agreement, the transactions contemplated hereby,
and the other matters described in Section 4.01.
Section 6.06 OTHER ITEMS.
(a) LoanNet shall have received Uniform Commercial Code
certificates from the appropriate state of local authority or agency
for each county and state in which any personal property of ▇▇▇▇▇▇ with
a value in excess $1,000 is situated, dated as of the Closing Date, to
the effect that there are no liens on such personal property, other
than those disclosed in a Schedule attached hereto.
(b) ▇▇▇▇▇▇ shall have received such further documents,
certificates, or instruments relating to the transactions contemplated
hereby as ▇▇▇▇▇▇ may reasonably request.
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(c) LoanNet shall have received bank confirmation evidencing
compliance with Section 3.17 and bank cards appointing ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ as sole signatory.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF ▇▇▇▇▇▇
The obligations of ▇▇▇▇▇▇ under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 7.01 ACCURACY OF REPRESENTATIONS. The representations and
warranties made by LoanNet and the LoanNet Shareholders in this Agreement were
true when made and shall be true as of the Closing Date (except for changes
therein permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing Date, and
LoanNet and the LoanNet Shareholders shall have performed and complied with all
covenants and conditions required by this Agreement to be performed or complied
with by LoanNet and the LoanNet Shareholders prior to or at the Closing. ▇▇▇▇▇▇
shall have been furnished with a certificate, signed by a duly authorized
executive officer of LoanNet and dated the Closing Date, to the foregoing
effect.
Section 7.02 STOCKHOLDER APPROVAL. The stockholders of LoanNet shall
have approved this Agreement, the transactions contemplated hereby, and the
other matters described in Section 4.01.
Section 7.03 OFFICER'S CERTIFICATE. ▇▇▇▇▇▇ shall have been furnished
with a certificate dated the Closing Date and signed by a duly authorized
executive officer of LoanNet to the effect that no litigation, proceeding,
investigation, or inquiry is pending or, to the best knowledge of LoanNet
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement.
Section 7.04 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business, or operations of LoanNet nor shall any event have occurred
which, with the lapse of time or the giving of notice, may cause or create any
material adverse change in the financial condition, business, or operations of
LoanNet.
Section 7.05 GOOD STANDING. ▇▇▇▇▇▇ shall have received a certificate
of good standing from the Secretary of State of the state of Texas or other
appropriate office, dated as of a date within ten days prior to the Closing Date
certifying that LoanNet is in good standing as a corporation in the State of
Texas and has filed all tax returns required to have been filed by it to date
and has paid all taxes reported as due thereon.
Section 7.06 OTHER ITEMS.
(a) ▇▇▇▇▇▇ shall have received Uniform Commercial Code
certificates from the appropriate state of local authority or agency
for each county and state in which any personal property of LoanNet
with a value in excess $1,000 is situated, dated as of the Closing
Date, to the effect that there are no liens on such personal property,
other than those disclosed in a schedule attached hereto.
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(b) ▇▇▇▇▇▇ shall have received a shareholders' list of LoanNet
containing the name, address, and number of shares held by each LoanNet
shareholder as of the date of Closing certified by an executive officer
of ▇▇▇▇▇▇ as being true, complete, and accurate.
(c) ▇▇▇▇▇▇ shall have received such further documents,
certificates, or instruments relating to the transactions contemplated
hereby as ▇▇▇▇▇▇ may reasonably request.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 BROKERS. ▇▇▇▇▇▇ and LoanNet agree that there were no
finders or brokers involved in bringing the parties together or who were
instrumental in the negotiation, execution, or consummation of this Agreement,
except ▇▇▇▇▇▇▇▇▇, to whom ▇▇▇▇▇▇ has agreed to issue a warrant. ▇▇▇▇▇▇ and
LoanNet each agree to indemnify the other against any claim by any third person
other than those described above for any commission, brokerage, or finders' fee
arising from the transactions contemplated hereby based on any alleged agreement
or understanding between the indemnifying party and such third person, whether
express or implied from the actions of the indemnifying party.
Section 8.02 GOVERNING LAW. This Agreement shall be governed by,
enforced, and construed under and in accordance with the laws of the United
States of America and, with respect to matters of state law, with the laws of
Texas.
Section 8.03 NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to it or
sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram addressed as follows:
If to ▇▇▇▇▇▇, to: ▇▇▇▇▇▇ Capital, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇. ▇. ▇▇▇▇▇▇▇▇▇, M.D., President
With copies to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to LoanNet to: LoanNet, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
With copies to: Gardere & ▇▇▇▇▇, L.L.P.
3000 Thanksgiving Tower
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: I. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
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or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, or
telegraphed.
Section 8.04 ATTORNEY'S FEES. In the event that any party institutes
any action or suit to enforce this Agreement or to secure relief from any
default hereunder or breach hereof, the breaching party or parties shall
reimburse the nonbreaching party or parties for all costs, including reasonable
attorneys' fees, incurred in connection therewith and in enforcing or collecting
any judgment rendered therein.
Section 8.05 CONFIDENTIALITY. Each party hereto agrees with the other
parties that, unless and until the transactions contemplated by this Agreement
have been consummated, it and its representatives will hold in strict confidence
all data and information obtained with respect to another party or any
subsidiary thereof from any representative, officer, director, or employee, or
from any books or records or from personal inspection, os such other party, and
shall not use such data or information or disclose the same to others, except
(i) to the extent such data or information is published, is a matter of public
knowledge, or is required by law to be published; and (ii) to the extent that
such data or information must be used or disclosed in order to consummate the
transactions contemplated by this Agreement.
Section 8.06 SCHEDULES; KNOWLEDGE. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
Section 8.07 THIRD PARTY BENEFICIARIES. This contract is solely
between ▇▇▇▇▇▇ and the LoanNet Shareholders, and, except as specifically
provided, no director, officer, stockholder, employee, agent, independent
contractor, or any other person or entity shall be deemed to be a third party
beneficiary of this Agreement.
Section 8.08 ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof, including
This Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations, or warranties, written or oral,
except as set forth herein.
Section 8.09 SURVIVAL; TERMINATION. The representations, warranties,
and covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated.
Section 8.10 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument. Facsimile transmission of any signed
original document and/or retransmission of any signed facsimile transmission
will be deemed the same as delivery of an original. At the request of any party,
the parties will confirm facsimile transmission by signing a duplicate original
document.
Section 8.11 AMENDMENT OR WAIVER. Every right and remedy provided
herein shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently herewith, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition
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of this Agreement may be waived or the time for performance hereof may be
extended by a writing signed by the party or parties for whose benefit the
provision is intended.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
as of the date first above-written.
▇▇▇▇▇▇ CAPITAL, INC.
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇.▇. ▇▇▇▇▇▇▇▇▇, President
LOANNET, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, individually
▇▇▇▇▇ NATION TRUST
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
REA CAPITAL CORPORATION, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇
-------------------------------------------
▇▇▇▇ ▇. ▇▇▇, President
THE GM GROUP, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Executive Vice President
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LOANNET SHAREHOLDERS
▇▇▇▇▇ NATION TRUST
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
REA CAPITAL CORPORATION, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇, President
CONCHO TRUST
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, Trustee
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
PARTNERS CAPITAL, L.P.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
▇▇▇▇ Group, Inc.
General Partner
SAXET, INC.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Authorized Agent
▇▇▇▇ GROUP, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
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TENAX, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ Verde
--------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ Verde
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇
--------------------------------------------
▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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SCHEDULE A
LOANNET SHAREHOLDERS
--------------------
▇▇▇▇▇ Nation Trust
Rea Capital Corporation, Inc.
Concho Trust
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Partners Capital, L.P.
Saxet, Inc.
▇▇▇▇ Group, Inc.
Tenax, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Verde
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
25
