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EXHIBIT 2.1
MERGER AGREEMENT
AND
PLAN OF REORGANIZATION
PREAMBLE
This Merger Agreement and Plan of Reorganization is made as of August
25, 2000, between Pan Western Energy Corporation, an Oklahoma corporation,
("Parent "), IntelliReady, Inc., ("Target "), a Colorado corporation, and Pan
Western Acquisition Corp. ("Subsidiary "), a Colorado corporation. In
consideration of the mutual covenants, agreements, representations and
warranties contained in this Merger Agreement the Parties hereto agree as
follows:
ARTICLE I
1. DEFINITIONS. The capitalized terms set forth below shall have the following
meanings:
"Articles of Merger" shall mean the Articles of Merger attached as
Schedule 1.1.
"Building" shall mean the office building located at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ owned by the Parent which is currently
under a contract of sale.
"Business" shall mean and refer to all of the business enterprises
presently conducted by Target.
"Business Day" means a day in which banks are open for business in
Denver, Colorado.
"Clean Up" means the completion of the undertakings in the agreement
between Parent and Cambrian Capital Corporations ("Cambrian") dated
June 14, 2000 and amended from time to time and all schedules attached,
which involves among other things the settlement of all claims and
trade payables asserted against Parent, the transfer of all assets of
the Parent to Cambrian except for the Partnership Interests, the
Building, and the sum of $250,000 cash.
"Closing" has that meaning set forth in Section 2.2.
"Closing Date" has that meaning set forth in Section 2.2.
"Closing Documents" shall mean all certificates, Parent Common Stock,
and all other documents of any kind or nature that is to be delivered
by Parent and Subsidiary at Closing.
"Code" means the United States Internal Revenue Code of 1986 and the
regulations thereunder as either or both are amended.
"Current Obligations" shall mean allocations to attorneys and
accountants for work performed between the date of this Agreement and
Closing and accrued but unpaid payroll taxes accrued between the date
of this Agreement and Closing which shall be paid in full from the
proceeds from the sale of the Building and will not reduce the $250,000
which will be an asset at closing.
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"Effective Date" means that date on which Target is merged into
Subsidiary as evidenced by the filing of the Agreement of Merger.
"Knowledge" or "best of knowledge" of a person means that no
information has come to the attention of such person that would give
such person actual knowledge of facts contrary to the existence or
absence of the facts indicated and that such person has not undertaken
any independent investigation to determine the existence or absence of
such facts.
"Material Adverse Change" means a change materially and adversely
affecting the financial condition, business, assets or, to Target's
knowledge, prospects of Target or affecting the financial condition,
business assets or, to Parent's knowledge, prospects of Parent.
"Merger" means that transaction set forth in Section 2.1.
"Merger Agreement" means this agreement to merge Target into
Subsidiary.
"Parent Additional Common Stock " means the additional Parent Common
Stock to be issued as set forth in Section 3.1 which, when issued,
shall be validly issued and non-assessable.
"Parent Common Stock " means the Parent Common Stock and the Parent
Additional Common Stock which, when issued to the IntelliReady
Shareholders, will be validly issued and non-assessable.
"Parent Financial Statements" has that meaning set forth in Section 4.3
and 4.6.
"Parent" means Pan Western Energy Corporation, an Oklahoma corporation.
"Parent Shareholders Meeting" shall refer to the meeting of the Parent
Shareholders as set forth in Section 11.2.
"Partnership Interest " shall mean the 15% General Partnership Interest
owned by Parent in the Parent 87 Production Program Partnership and the
18.5% General Partnership Interest owned by Parent in the 1986 Drilling
Program Partnership.
"Parties" shall mean Parent, Subsidiary and Target.
"Party" means either Parent, Subsidiary or Target.
"Subscription Agreement " shall mean the agreement attached hereto as
Schedule 1.2 to be completed and executed by the Target Shareholders
and delivered to the Parent at Closing.
"Subsidiary" shall mean Pan Western Acquisition Corporation.
"Surviving Corporation" means the Subsidiary.
"Target" means IntelliReady, Inc., a Colorado corporation.
"Target Common Stock" means all common stock owned by the Selling
Shareholders which represents 100% of the issued and outstanding stock
of Target.
"Target Employment Agreements" shall refer to the Employment Agreements
set forth in Schedule 4.12.
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"Target Employment Options" shall refer to the Options granted to
certain Target Employees as set forth in Schedule 4.12.
"Target Shareholders" means the Shareholders who, as of the date of
Closing, are collectively the owners of 100% of the issued and
outstanding common stock of Target.
"Tax" means tax, license, franchise or registration fee, governmental
charge, withholding or assessment of any nature, including without
limitation income, excise, property, franchise, sales, use and transfer
taxes (including vehicle transfer taxes) imposed by any government
(federal, state, or local) or any subdivision, agency, or taxing
authority thereof, and any interest, penalty, or addition to tax
relating thereto.
"Transaction" means the merger, the transfer of the Target Common Stock
to Subsidiary, the transfer of the Parent Common Stock and Parent
Additional Common Stock to the Target Shareholders and all other
undertakings provided for herein.
ARTICLE II
2. MERGER AGREEMENT: EFFECT OF THE TRANSACTION.
2.1 MERGER. At Closing, and subject to and upon the terms and
conditions of this Merger Agreement, a merger shall take place (the "Merger")
whereby Target shall merge with and into Subsidiary, and Subsidiary shall be the
Surviving Corporation and the separate existence of Target shall cease. (The
term "Surviving Corporation" appearing in this Merger Agreement denotes
Subsidiary after consummation of the Merger.) Subsidiary's corporate name,
existence, and all its purposes, powers, and objectives shall continue
unaffected and unimpaired by the Merger, and, as the Surviving Corporation, it
shall be governed by the laws of the State of Colorado and succeed to all of
Target's rights, assets, liabilities, and obligations in accordance with the
Colorado Business Corporation Act and pursuant to the terms of this Merger
Agreement.
2.2 CLOSING PLACE, DATE AND TIME. Consummation of the Merger (the
"Closing") shall be effected as soon as practicable after all the conditions
established in this Merger Agreement have been satisfied or waived. The Closing
shall take place at the offices of IntelliReady, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as the parties may agree to in
writing on or before August 31, 2000 unless extended by Target at its sole
discretion. The time and date of Closing are called the "Closing Date."
2.3 ARTICLES. The articles of incorporation of Subsidiary, in effect on
the Effective Date of the Merger, shall become the articles of incorporation of
the Surviving Corporation. From and after the Effective Date of the Merger, said
articles of incorporation, as they may be amended from time to time as provided
by law, shall be, and may be separately certified as, the articles of
incorporation of the Surviving Corporation.
2.4 BYLAWS. The bylaws of Subsidiary in effect on the Effective Date of
the Merger shall be the bylaws of the Surviving Corporation until they are
thereafter duly altered, amended, or repealed.
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2.5 DIRECTORS. The directors of Target on the Effective Date of the
Merger shall be the directors of the Surviving Corporation. They shall hold
office until their successors have been elected and qualified. The officers of
Target on the Effective Date of the Merger shall be the officers of Surviving
Corporation. Each officer and director shall hold office subject to the bylaws
and the pleasure of the directors of Surviving Corporation. The officers and
directors of the Subsidiary shall resign as of Closing.
ARTICLE III
3. CONVERSION OF SHARES.
3.1. At Closing, Parent will issue to Target Shareholders in the
aggregate 20,975,697 shares of Parent's common stock ("Parent Common Stock") and
in the aggregate 58,168,095 shares of the Parent Additional Common Stock to each
of the Selling Shareholders (collectively the "Consideration Shares "). The
Parent shall be obligated to deliver to the Target Shareholders the Parent
Additional Common Stock to the Target Shareholders in the aggregate amounts
within ten days after the Shareholder Meeting described in Section 11.2 and the
amendment to the Parent Articles of Incorporation described in Section 11.2.
3.2 STOCK TRANSFER. At Closing, the stock transfer books of Target
shall be closed, and thereafter no transfers of shares of Target Capital Stock
shall be made or consummated.
3.3 PAYMENT FOR SHARES. At Closing, Parent shall take all steps
necessary to deliver the Parent Common Stock and, immediately after the Parent's
Shareholder Meeting referred to in Section 11.2, the Parent Additional Common
Stock to the Target Shareholders and the Target Shareholders shall deliver the
Target Common Stock to Subsidiary to be canceled. If any certificate evidencing
ownership of Target Common Stock shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person who is the Shareholder who
presents an executed letter of transmittal and certificates evidencing ownership
of Target Common Stock at the Closing shall be immediately entitled to payment
of the consideration for such stock.
ARTICLE IV
4. TARGET'S REPRESENTATIONS AND WARRANTIES. Target represents and warrants to
Parent and Subsidiary as follows:
4.1 TARGET DUE ORGANIZATION. Target is a corporation duly organized,
validly existing, and in good standing under Colorado law and has all necessary
corporate powers to own its properties and to operate its business as now owned
and operated by it.
4.2 TARGET CAPITAL STOCK AND RIGHTS TO CAPITAL STOCK. The authorized
capital stock of Target consists of 50,000,000 shares of common stock ("Common
Stock") no par value and 50,000,000 shares of preferred stock, no par value. Not
more than 10,000,000 shares of Common Stock are issued and outstanding. All
shares are validly issued, fully paid, and non-assessable. Except as set forth
in Schedule 4.2, there are not outstanding subscriptions, options, rights,
warrants, convertible securities, or other agreements or commitments obligating
Target to issue any additional Target Common Stock.
4.3 TARGET FINANCIAL STATEMENTS. Schedule 4.3 sets forth the audited
balance sheet of Target as of December 31, 1999, and the related statements of
income and retained earnings for the
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period ending December 31, 1999. Schedules 4.3 and 4.3(a-d) set forth the
unaudited balance sheets of Target as of June 30, 2000, and the related
statements of income and retained earnings for the years ending on those dates.
The financial statements in Schedule 4.3 are referred to collectively as the
"Target Financial Statements." The Target Financial Statements fairly present
the financial position of Target in all material respects as of the respective
dates of the balance sheets included in the Target Financial Statements, and the
results of its operations for the respective periods indicated.
4.4 TARGET TRANSACTIONS. Except as set forth on Schedule 4.4, to
Target's knowledge, since June 30, 2000, there has not been any Material Adverse
Change in the business, operations or financial condition of Target.
4.5 TARGET DEBTS. Except as set forth on the Schedules hereto, Target
has no known material debt, liability, or obligation of any nature, whether
accrued, absolute, contingent or otherwise and whether due or to become due,
that is not reflected or reserved against in Target's balance sheet as of June
30, 2000, included in the Target Financial Statements or set forth in Schedule
4.5 to this Merger Agreement, except for those (a) that may have been incurred
after the date of that balance sheet, or (b) that are not required by generally
accepted accounting principles to be included in a balance sheet. Except as
described in Schedules 4.3 and 4.5, all known material debts, liabilities, and
obligations incurred after that date were incurred in the ordinary course of
business.
4.6 TARGET TAX RETURNS. Within the times and in the manner prescribed
by law, Target has filed all federal, state, county, and local tax returns
required by law. Target has paid all, or made adequate provision for the payment
of, taxes, assessments, and penalties due and payable, except such taxes,
assessments and penalties, if any, that are adequately reserved against in
Target's Financial Statements. The federal and state income and franchise tax
returns of Target have not been audited by the Internal Revenue Service for any
period and Target has not been notified that any audit is contemplated. The
provisions for taxes reflected in Target's balance sheet as of December 31,
1999, are adequate for any and all federal, state, county, and local taxes for
the period ending on the date of that balance sheet and for all prior periods.
There are no present disputes as to taxes of any nature payable by Target which
could reasonably result in a Material Adverse Change. The Target Tax Returns are
attached as Schedule 4.6.
4.7 TARGET TRADEMARKS. Schedule 4.7 to this Merger Agreement is a
schedule of all trade names, trademarks, service marks, and copyrights and their
registrations owned by Target, or in which it has any rights or licenses,
together with a brief description of each. Target has no knowledge of any
infringement or alleged infringement by others of any such trade name,
trademark, service ▇▇▇▇, or copyright. Target has no knowledge that it has
infringed, or is now infringing, on any trade name, trademark, service ▇▇▇▇, or
copyright belonging to any other person, firm, or corporation. Except as set
forth in Schedule 4.7, Target is not a party to any license, agreement, or
arrangement, whether as licensor, licensee, franchiser, franchisee, or
otherwise, with respect to any copyrights or any trademarks, service marks,
trade names, or applications. Target owns, or holds adequate licenses or other
rights to use, all trademarks, service marks, trade names, and copyrights
necessary for its businesses as now conducted, and that use does not, and will
not violate any rights of others. Target has the right to sell or assign to
Buyer all such owned trademarks, trade names, service marks, and copyrights, and
all such licenses or other rights.
4.8 TARGET INTELLECTUAL PROPERTY. Schedule 4.8 to this Merger Agreement
is a complete and accurate schedule of all inventions, industrial models,
processes, and designs owned by Target or in which it has any rights, licenses,
or immunities. The manufacture, use, or sale of the inventions, models, designs,
and systems do not violate or infringe on any patent or any proprietary or
personal right of any person, firm, or corporation; and Target has not infringed
or is now infringing on any
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patent or other right belonging to any person, firm, or corporation. Except as
set forth in Schedule 4.8, Target is not a party to any license, agreement, or
arrangement, whether as licensee, licensor, or otherwise, with respect to any
patent, application for patent, invention, design, model, process, trade secret,
or formula. Target has the right and authority to inventions, trade secrets,
processes, models, designs, and formulas as are necessary to enable continuation
of the conduct all phases of its businesses in the manner presently conducted by
it, and that use will not violate any patent or other rights of others.
4.9 TARGET TRADE SECRETS. Schedule 4.9 to this Merger Agreement is a
complete and accurate list, without extensive or revealing descriptions, of
Target's trade secrets, including all secret formulas, recipes, customer lists,
processes, know-how, computer programs and routines, and other technical data.
Schedule 4.9 also contains the specific location of each trade secret's
documentation, including its complete description, specifications, charts,
procedures, and other material relating to it. Each trade secret's documentation
is current, accurate, and sufficient in detail and content to identify and
explain it and to allow its full and proper use by Buyer without reliance on the
special knowledge or memory of others.
Target is the sole owner of each of these trade secrets, free and clear
of any liens, encumbrances, restrictions, or legal or equitable claims of
others, except as specifically stated in Schedule 4.9. Target has taken all
reasonable security measures to protect the secrecy, confidentiality, and value
of these trade secrets; any of its employees and any other persons who, either
alone or in concert with others, developed, invented, discovered, derived,
programmed, or designed these secrets, or who have knowledge of or access to
information relating to them, have been put on notice and, if appropriate, have
entered into agreements that these secrets are proprietary to Target and not to
be divulged or misused.
All of these trade secrets are presently valid and protectable and are
not part of the public knowledge or literature; to Target's knowledge, they have
not been used, divulged, or appropriated for the benefit of any past or present
employees or other persons, or to the detriment of Target.
4.10 TARGET INTANGIBLE PERSONAL PROPERTY. Schedule 4.10 to this
Agreement is a complete and accurate list of all material intangible assets,
other than those specifically referred to in the Target Financial Statements or
elsewhere in this Merger Agreement.
4.11 TARGET'S TITLE TO ASSETS. To its knowledge Target has good and
marketable title to all its assets and interests in assets, whether real,
personal, mixed, tangible or intangible, which constitute all the assets and
interests in assets that are necessary in the business of Target except those
assets licensed or leased as set forth in Schedule 4.11. All these assets are
free and clear of restrictions on or conditions to transfer or assignment, and
are free and clear of mortgages, liens, pledges, charges, encumbrances,
equities, claims, easements, right-of-way, covenants, conditions, or
restrictions, except for (a) those disclosed in Target's balance sheet as of
June 30, 2000 as contained in Schedule 4.3(c) to this Merger Agreement; (b) the
lien of current taxes not yet due and payable; (c) statutory mechanics and
materialmen's liens; and (d) possible minor matters that, in the aggregate,
could not reasonably result in a Material Adverse Change. Neither any Target
Shareholders, nor any officer, director, or employee of Target, nor any spouse,
or child, of any Target Shareholder, officer or director, owns, or has any
interests, directly or indirectly, in any of the real or personal property owned
by or leased to Target. To Target's knowledge, Target does not occupy any real
property in violation of any material law, regulation, or decree.
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4.12 TARGET EMPLOYMENT AGREEMENTS AND OPTIONS. Schedule 4.12 to this
Merger Agreement is a list of all employment contracts and all pension, bonus,
profit sharing, stock option, or other agreements or arrangements providing for
employee remuneration or benefits to which Target is a party or by which Target
is bound; all these contracts and arrangements are in full force and effect, and
neither Target nor, to Target's knowledge, any other party is in default under
them. In addition, Section 4.12 sets forth certain options granted to Target
employees. There have been no claims of defaults and, to Target's knowledge,
there are not facts or conditions which if continued will result in a default
under these contracts or arrangements.
4.13 TARGET INSURANCE. Schedule 4.13 is a description of all insurance
policies held by Target concerning its business and properties.
4.14 TARGET COMPLIANCE. Except as set forth in Schedule 4.14, to
Target's knowledge, Target has complied with all, and is not in violation of
any, applicable federal, state, or local statutes, laws, and regulations
(including, without limitation, any applicable building, zoning, or other law,
ordinance, or regulation) materially affecting its properties or the operation
of its business.
4.15 TARGET SUITS. Except as set forth on Schedules 4.15, there is no
suit, action, arbitration, or legal, administrative, or, other proceeding, or
governmental investigation pending or, to Target's knowledge, threatened,
against Target or any of its Business or assets. The matters set forth in
Schedules 4.15, if decided adversely to Target, will not result in a Material
Adverse Change. Except as set forth on Schedules 4.15, Target is not in default
with respect to any order, writ, injunction, or decree of any federal, state,
local, or foreign court, department, agency, or instrumentality nor is Target
presently engaged in any legal action to recover monies due or damages
sustained.
4.16 CONSUMMATION BY TARGET. The execution and delivery of this Merger
Agreement does not, and the consummation of the Merger will not, subject to
obtaining requisite approval of the Target Shareholders, (a) violate any
provision of the articles of incorporation or bylaws of Target; (b) violate any
material provision of or result in the acceleration of any material obligation
under any mortgage, note, lien, lease, franchise, license, permit, agreement,
instrument, order, arbitration award, judgment, or decree to which Target is a
party or by which it is bound, except for such violations or acceleration as to
which requisite waivers or consents have been obtained or which would not result
in a Material Adverse Change; (c) result in the termination of any license,
franchise, lease, or permit to which Target is a party or by which it is bound,
except for such terminations which would not result in a Material Adverse
Change. After the Target Shareholders have adopted the Agreement of Merger, said
board of directors and shareholders will take or will have taken all actions
required by law, the articles of incorporation, the bylaws, or otherwise, to
authorize the execution and delivery of this Merger Agreement and to authorize
the Merger.
4.17 TARGET AUTHORITY. Target has the right, power, legal capacity, and
authority to enter into and perform its respective obligations under this
Agreement, and no approvals or consents of any persons other than Target and its
shareholders are necessary in connection with it. The execution and delivery of
this agreement by Target has been duly authorized by all necessary corporate
action on the part of Target.
4.18 TARGET INTERESTED PARTY AGREEMENTS. Except for investments of less
than 5% of the equity as set forth in Schedule 4.18, neither any Target
Shareholders, nor any officer, director, or employee of Target, nor any spouse
or child of any of them, has any direct or indirect interest in any competitor,
supplier, or customer of Target or in any person from whom or to whom Target
leases any real or personal property, or in any other person with whom Target is
doing business.
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4.19 TARGET BOOKS & RECORDS. At the request of Parent, Target will
furnish to Parent for its examination, to the extent such documents exist, (a)
copies of the articles of incorporation and bylaws of Target; (b) the minutes
books of Target containing all records required to be set forth of all
proceedings, consents, actions, and meetings of the shareholders and Board of
Directors of Target; (c) all permits, orders, and consents issued by the
Colorado Secretary of State with respect to Target, and all applications for
such permits, orders, and consents; (d) the stock transfer books of Target
setting forth all transfers of any capital stock; and (e) the Financial
Statements for Target's three most recent fiscal years.
4.20 TARGET REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS. The
representations, warranties and other agreements of Target contained in this
Merger Agreement shall be true on and as of the Closing Date, with the same
force and effect as though made on and as of the Closing Date. Target shall have
performed and complied with all covenants and agreements required by this Merger
Agreement to be performed or complied with by them on or prior to the Closing
Date. Target shall have delivered to Parent certificates, dated the Closing
Date, to such effect as set forth in Section 10.2.4.
ARTICLE V
5. PARENT'S AND SUBSIDIARY'S REPRESENTATIONS AND WARRANTIES. Parent and
Subsidiary represent and warrant to Target as follows:
5.1 PARENT DUE ORGANIZATION. Parent is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Oklahoma.
As of the Closing, Subsidiary will be a wholly owned subsidiary of Parent duly
organized, validly existing, and in good standing under the laws of the State of
Colorado. Parent has and Subsidiary will have as of the Closing all necessary
corporate powers to own their respective properties and to operate their
respective businesses as now owned and operated by them.
5.2 PARENT CAPITAL. The authorized capital stock of Parent consists of
25,000,000 shares of $.01 par value common stock of which 4,024,303 shares of
common stock are currently issued and outstanding excluding the Consideration
Shares and 25,000,000 shares of "blank check Preferred" at $.05 par value of
which none is currently issued and outstanding. All of the issued and
outstanding stock of Parent are now, and the Consideration Shares when issued,
will be duly and validly issued, fully paid and non-assessable and are not
subject to any preemptive rights. Except as set forth in this Merger Agreement,
there are no outstanding subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments obligating Parent to issue or to
transfer from treasury any additional shares of its capital stock of any class.
Parent does not have outstanding any shares of Parent Capital Stock that have
liquidation, dividend or other preference senior to the Parent Common Stock; and
prior to Closing, Parent, will not issue a series of Parent capital stock that
has a liquidation, dividend or other preference or restriction senior to the
Parent Common Stock.
5.3 SUBSIDIARY CAPITAL. The authorized capital stock of Subsidiary
consists of 1000 shares of no par value common stock of which 1000 shares of
common stock are currently issued and outstanding. All of the issued and
outstanding stock of Subsidiary are duly and validly issued, fully paid and non-
assessable, and are owned by Parent. There are no outstanding subscriptions,
options, rights, warrants, convertible securities, or other agreements or
commitments obligating Subsidiary to issue or to transfer from treasury any
additional shares of its capital stock of any class.
5.4 PARENT AUTHORIZATION. Parent and Subsidiary have the corporate
power to execute and deliver this Merger Agreement and have taken (or by the
Closing Date will have taken) all actions
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required by law, their articles of incorporation, their bylaws, or otherwise, to
authorize the execution and delivery of this Merger Agreement and the
consummation of the transactions contemplated hereby. This Merger Agreement is a
valid and binding agreement of Parent and Subsidiary enforceable in accordance
with its terms.
5.5 CONSUMMATION BY PARENT. The execution and delivery of this Merger
Agreement do not, and the consummation of the Merger will not, (a) violate any
provision of the articles of incorporation or bylaws of Parent or of Subsidiary;
(b) violate any provision of or result in the acceleration of any obligation
under any mortgage, note, lien, lease, franchise, license, permit, agreement,
instrument, order, arbitration award, judgment, or decree to which Parent or
Subsidiary is a party or by which either is bound; (c) result in the termination
of any license, franchise, lease, or permit to which Parent or Subsidiary is a
party or by which either is bound; or (d) violate or conflict with any other
restriction of any kind or character to which Parent or Subsidiary is subject.
After the boards of directors of Parent and Subsidiary and the shareholder(s) of
Subsidiary have adopted the plan of merger as set forth in this Merger
Agreement, said boards of directors and shareholder(s) will take or will have
taken all actions required by law, their respective articles of incorporation,
their bylaws, or otherwise, to authorize the execution and delivery of this
Merger Agreement and to authorize the Merger.
5.6 PARENT MATERIAL SHAREHOLDERS. Schedule 5.6 sets forth a list of the
name and address of all Parent Shareholders owning over 5% of the issued and
outstanding shares of stock of Parent just prior to closing.
5.7 PARENT SUBSIDIARIES. Other than the Subsidiary or as set forth on
Schedule 5.7, Parent does not have any subsidiaries or affiliates or own any
interest in any other enterprise (whether or not such enterprise is a
corporation).
5.8 PARENT DIRECTORS AND OFFICERS. Schedule 5.8, annexed hereto,
contains the names and titles of all directors and officers of Parent as of the
date of this Merger Agreement.
5.9 PARENT FINANCIAL STATEMENTS. Schedule 5.9(a-d), annexed hereto and
incorporated herein by this reference, consists of the audited financial
statements of Parent as of December 31, 1997, December 31, 1998, December 31,
1999, and 6 month interim statement dated June 30, 2000, containing the balance
sheets of Parent and the related statements of income and retained earnings for
the periods then ended. The financial statements have been prepared in
accordance with generally accepted accounting principles and practices
consistently followed by Parent throughout the period indicated, and fairly
present the financial position of Parent as of the dates of the balance sheet
included in the financial statements, and the results of operations for the
periods indicated.
5.10 PARENT ABSENCE OF CHANGES. Since June 30, 2000, and except for the
Clean Up, and as of Closing there has not been any change in the financial
condition or operations of Parent, except that approximately $12,500 will have
been expended in connection with this transaction which amount shall be paid by
Parent prior to Closing and shall not reduce the $250,000 of cash on hand at
closing.
5.11 PARENT ABSENCE OF UNDISCLOSED LIABILITIES. Since the date of the
balance sheets included in Schedule 5.9(a-d), there has not been any material
debt, liability, or obligation of any nature, whether accrued, absolute,
contingent, or otherwise, and whether due or to become due, except as described
in Schedule 5.9 above. As of Closing the only liability of Parent or Subsidiary
will consist of a real estate tax obligation and the mortgage on the Building,
which will be paid upon the sale of the Building, not in excess of $5,000 and
Current Obligations which will not be in excess of $25,000. The real estate
taxes and the Current Obligations will be paid in full from the net proceeds
from the sale of the Building.
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5.12 PARENT TAX RETURNS. Within the times and in the manner prescribed
by law, Parent has filed all federal, state, county, and local tax returns
required by law. Parent has paid all, or made adequate provision for the payment
of, taxes, assessments, and penalties due and payable, except such taxes,
assessments and penalties, if any, that are adequately reserved against in
Parent's Financial Statements. The federal and state income and franchise tax
returns of Parent have not been audited by the Internal Revenue Service for any
period and Parent has not been notified that any audit is contemplated. The
provisions for taxes reflected in Parent's balance sheet as of December 31,
1999, are adequate for any and all federal, state, county, and local taxes for
the period ending on the date of that balance sheet and for all prior periods.
There are no present disputes as to taxes of any nature payable by Parent which
could reasonably result in a Material Adverse Change. The Parent Tax Returns for
the years ending December 31, 1999, December 31, 1998, and December 31, 1997 are
attached as Schedule 5.12.
5.13 PARENT INVESTIGATION OF FINANCIAL CONDITION. Without in any manner
reducing or otherwise mitigating the representations contained herein and in
addition to the investigation rights provided for in Section 15.2, Target shall
have the opportunity to meet with Parent accountants and attorneys to discuss
the financial condition of Parent. Parent shall make available to Target all
books and records of Parent.
5.14 PARENT TRADE NAMES AND RIGHTS. Parent does not use any trademark,
service ▇▇▇▇, trade name, or copyright in its business, or own any trademarks,
trademark registrations or applications, trade names, service marks, copyrights,
copyright registrations or applications. No person owns any trademark, trademark
registration or application, service ▇▇▇▇, trade name, copyright, or copyright
registration or application the use of which is necessary or contemplated in
connection with the operation of Parent's business.
5.15 PARENT COMPLIANCE WITH LAWS. Parent has complied with, and is not
in violation of, applicable federal, state or local statutes, laws and
regulations (including, without limitation, laws affecting the environment, any
applicable building, zoning, or other law, ordinance, or regulation) affecting
its properties or the operation of its business and issuance of its securities.
5.16 PARENT FILING REQUIREMENTS. Parent has delivered to Target
accurate and complete copies of the "Parent SEC Documents. " As of the time it
was filed with the SEC (or, if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing): (a) each of the Parent
SEC Documents compiled in all material respects with the applicable requirements
of the Securities Act or the Exchange Act (as the case may be); and (b) none of
the Parent SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements misleading. Parent is and has been subject to the
requirements of the Exchange Act and has timely filed all required forms,
reports, statements and documents with the SEC since December 31, 1997, all of
which have compiled in all material respects with all applicable requirements of
the Securities Act and the Exchange Act except as set forth in Schedule 5.16
5.17 PARENT TRADEABLE STOCK. Parent Stock is qualified to be publicly
traded in all states of the United States except those listed on Schedule 5.17.
5.18 PARENT LITIGATION. Except as set forth in Schedule 5.18 Parent and
its shareholders, officers, directors and agents are not a party to any suit,
action, arbitration, or legal, administrative, or other proceeding, or
governmental investigation pending or, to the best knowledge of Parent,
threatened against or affecting Parent or its business, assets, or financial
condition which would have a Material Adverse Effect on Parent. Parent is not in
default with respect to any order, writ, injunction, or decree of
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any federal, state, local, or foreign court, department agency, or
instrumentality. Parent is not engaged in any legal action to recover monies due
to it.
5.19 PARENT ASSETS. Parent has good and marketable title to all of its
property free and clear of any and all liens, claims and encumbrances. At
Closing, Parent assets shall consist solely of the Building, which is subject to
a contract for sale with a purchase price in excess of all outstanding
mortgages, tax assessments and other liens or encumbrances against the Building,
the Partnership Interests and $250,000 cash.
5.20 PARENT MATERIAL CONTRACTS. Except as otherwise disclosed in
Schedule 5.20, Parent has no material contracts to which it is a party or by
which it is bound.
5.21 PARENT AND SUBSIDIARY ARTICLES OF INCORPORATION AND BYLAWS. Not
less than ten business days prior to the Closing Date, Parent will deliver to
Target true and complete copies of its Articles of Incorporation (certified by
the Secretary of State of Oklahoma) and Bylaws (certified by its corporate
secretary) as then in effect for Parent and similar documents for the
Subsidiary.
5.22 PARENT PARTNERSHIP INTEREST. The Parent owns the Partnership
Interests free and clear of any claim by any other person or entity.
Specifically, and without limiting the foregoing, there are no defaults pursuant
to the relevant partnership agreement, the Parent as general partner of each of
the Partnership has fully and faithfully performed all of the requirements
imposed on it by virtue of applicable laws, and the respective partnership
agreements. There is no environmental or other contamination of any property
owned, leased, or operated by the Partnerships.
5.23 PARENT BROKER'S OR FINDER'S FEES. No agent, broker, Person or firm
acting on behalf of Parent or Subsidiary is, or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto, or from
any Person controlling, controlled by or under common control with any of the
parties hereto, in connection with the Transaction.
5.24 PARENT DISCLOSURE. Neither this Merger Agreement nor any schedule
or certificate delivered in accordance with the terms hereof or any document or
statement in writing which has been supplied by or on behalf of Parent or the
Subsidiary in connection with the Transaction, contains any untrue statement of
a material fact, or omits any statement of a material fact necessary in order to
make the statements contained herein or therein not misleading.
5.25 PARENT AND SUBSIDIARY BEST EFFORTS. Parent and Subsidiary will use
their best efforts to timely apply for and obtain all permits, consents and
approvals, if any, and to complete any due diligence deemed necessary by Target
in order to complete the Transaction by the Closing Date. Parent and Subsidiary
will execute and deliver such instruments and take such other action as may be
reasonable or appropriate to carry out the Transition and the intentions of this
Merger Agreement.
5.26 CONFIDENTIALITY. Parent and Subsidiary agree that, unless the
Closing has been consummated, Parent, Subsidiary, and their respective officers,
directors and other representatives will hold in strict confidence and will not
use to the detriment of Target any and all data and information obtained from
Target in connection with this transaction or Merger Agreement with respect to
the business of Target, except as such disclosure may be required by law or
governmental authorities.
5.27 PARENT AND SUBSIDIARY LEGAL OPINION. Target shall have received a
legal opinion from Parent's counsel substantially to the effect of Schedule
5.27.
5.28 PARENT REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS. The
representations, warranties and other agreements of Parent contained in this
Merger Agreement shall
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be true on and as of the Closing Date, with the same force and effect as though
made on and as of the Closing Date. Parent shall have performed and complied
with all covenants and agreements required by this Merger Agreement to be
performed or complied with by them on or prior to the Closing Date. Parent shall
have delivered to Target certificates, dated the Closing Date, to such effect as
set forth in Section 10.1.2.
ARTICLE VI
6. TARGET'S OBLIGATIONS BEFORE CLOSING. Target covenants that from the date of
this Merger Agreement until the Closing as follows:
6.1 ACCESS TO TARGET. Parent and its counsel, accountants, and other
representatives shall have full access upon reasonable notice during normal
business hours to all properties, books, accounts, records, contracts, and
documents of or relating to Target. Target shall furnish or cause to be
furnished to Parent and its representatives all data and information concerning
the business, finances, and properties of Target that may reasonably be
requested.
6.2 CONTINUATION OF TARGET BUSINESS. Target will use commercially
reasonable efforts to carry on its business and activities diligently and in
substantially the same manner as they have previously been carried out, and
shall not make or institute any unusual or novel methods of management,
accounting, or operation that will vary materially from those methods by Target
as of the date of this Merger Agreement.
6.3 PRESERVATION OF TARGET BUSINESS RELATIONS. Target will use
commercially reasonable efforts, without making any commitments on behalf of
Parent, to preserve its business organization intact until the Closing, to keep
available its present officers and employees, and to preserve its present
relationships with suppliers, customers, and others having business
relationships with it.
6.4 TARGET CAPITAL STOCK. Target's total issued and outstanding capital
stock will not exceed a total of 10,000,000 shares of no par value common stock
including the shares currently issued. Except in connection with the hiring of
additional employees and except in connection with the completion of Target's
Private Placement currently being undertaken, Target will not prior to the
Closing (a) amend its Articles of Incorporation or bylaws, (b) issue or acquire
any shares of its capital stock, (c) issue or create any warrants, obligations,
subscription, options, convertible securities, or other commitments under which
any additional shares of its capital stock of any class may be directly or
indirectly authorized, issued, or transferred from treasury, or (d) agree to do
any of the acts listed above. At Closing, Target will have no more than
10,000,000 shares issued and outstanding.
6.5 TARGET INSURANCE. Target will continue to carry its existing
insurance, subject to variations in amounts required by the ordinary operations
of its business.
6.6 TARGET COMPENSATION. Target will not make any compensation
decisions outside the ordinary course of its business except for hiring
additional employees and consultants in furtherance of its business.
6.7 TARGET GOVERNMENTAL PERMITS AND APPROVALS. All permits and
approvals from any governmental or regulatory body required for the lawful
completion of the Transaction shall have been obtained.
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6.8 TARGET THIRD PARTY CONSENTS. All consents, permits and approvals
from parties to any contracts or other agreements that may be required in
connection with the performance by Target of its obligations under this
Agreement or the continuance of such contracts or other agreements without
material modification after the Closing Date shall have been obtained.
6.9 TARGET LITIGATION. No action, suit or proceeding shall have been
instituted against Target before any court or governmental or regulatory body,
or instituted by any governmental or regulatory body, to restrain, modify or
prevent the carrying out of the Transaction or to seek damages or an order in
connection with such transactions, or that has or could reasonably be expected
to have, a Materially Adverse Effect on the Target Assets or the Business.
6.10 NO TARGET MATERIAL ADVERSE CHANGE. There shall be no Material
Adverse Change in the Business or the Target Assets taken as a whole, financial
or otherwise, or, to either Target's Knowledge, Target's customers, regardless
of reason, including those changes that are as a result of any legislative or
regulatory change, revocation of any Permits, licenses or rights to do business,
failure to obtain any Permit at the normal time or in the manner applied for by
Target, fire, explosion, accident, casualty, labor trouble, flood, riot, storm,
condemnation or act of God or otherwise, and Target shall have delivered to
Parent a certificate, dated the Closing Date, to such effect.
6.11 TARGET SUBSCRIPTION AGREEMENT. Before or at Closing, Parent shall
have received from the Target Shareholders the Subscription Agreement for the
Parent Common Stock and the Parent Additional Common Stock in the form attached
hereto as Schedule 1.4.
6.12 TARGET BOOKS AND RECORDS. Parent shall have received the books,
books of account, papers, records, correspondence and instruments of, or
relating to, the Target Assets and/or Business.
6.13 TARGET COPIES OF BUSINESS RECORDS. Parent shall have received
copies of the books of account, papers, records, correspondence and instruments
of, or relating to, the Target Assets and/or Business and reasonably requested
by Parent or its accountants prior to Closing. The receipt of such information
shall not, in any manner, limit Parent's right to access set forth in Section
15.2.
6.14 TARGET RESOLUTIONS. There shall have been delivered to Parent a
copy of the resolutions duly adopted by the Board of Directors and Target
Shareholders, authorizing and approving the execution and delivery by the Target
of this Merger Agreement, and the completion by Target of the Transaction,
certified by the secretary of the Target, dated as of the Closing Date.
6.15 TARGET CERTIFICATES, ETC. There shall have been delivered all
certified resolutions, certificates, documents, or instruments with respect to
Target's authority and such other matters as Parent's counsel may have
reasonably requested prior to the Closing Date substantially in the form of
Schedule 10.2.4.
6.16 APPROVAL OF COUNSEL TO PARENT. All actions and proceedings
hereunder and all documents or other papers required to be delivered by Target
hereunder or in connection with the completion of the Transaction, and all other
related matters shall have been approved by Pray, Walker, Jackman, ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, counsel to Parent, as to their form, which approval shall not be
unreasonably withheld or delayed.
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ARTICLE VII
7. PARENT'S OBLIGATIONS BEFORE CLOSING.
7.1 FORMATION OF SUBSIDIARY. Parent covenants that prior to the
Closing, Parent shall cause Subsidiary to be formed.
7.2 REQUIRED FILINGS. By Closing, Parent will file any required
documents with the SEC, NASD, Standard & Poors, as well as all other filings
required by law or regulation to be made with any federal, state or private
agency. As soon as possible, but no later than 3 business days after the Parent
audited financial statements are filed, Parent shall mail such financial
statements and all material filings made to all Parent shareholders.
7.3 CLEAN UP. Parent shall fully complete the Clean Up and have paid
and received unconditional releases from all creditors except for Current
Obligations.
7.4 ABSENCE OF LIABILITIES. Parent shall have no liabilities except for
Current Obligations and Parent shall have taken all steps to satisfy all other
creditors and received unconditional releases from them.
7.5 COMPLIANCE. Parent shall have completed all undertakings and made
all regulatory filings as set forth in this Merger Agreement.
7.6 TERMINATION OF AGREEMENTS. Except as disclosed on Schedule 7.6,
prior to Closing, Parent shall have legally terminated or cancelled all
Employment Agreements, Options, Warrants and other agreements, commitments, or
obligations and shall provide Target written documentation of such terminations
or cancellations including any necessary third party consents.
7.7 ASSETS. Parent shall have no assets other than the Building, the
Partnership Interests and $250,000 cash.
7.8 FORM 14f. As soon as reasonably practical, and in no event more
that ten (10) business days following Closing, Parent shall have prepared, filed
with the Securities and Exchange Commission, and delivered to all Parent
Shareholders a form 14f-1 information statement as required by the Securities
and Exchange Commission.
7.9 PARENT STOCK ISSUANCE. Between the date of the Merger Agreement and
the Closing neither Parent nor Subsidiary shall issue or grant to any person or
entity the right to receive any Parent Common Stock, Parent Preferred Stock,
Subsidiary Common Stock, or Subsidiary Preferred Stock.
7.10 PARENT AND SUBSIDIARY RESOLUTIONS. There shall have been delivered
to Target a copy of the resolutions duly adopted by the Board of Directors and
Parent Shareholders, authorizing and approving the execution and delivery by the
Target of this Merger Agreement, and the completion by Parent and Subsidiary of
the Transaction, certified by the secretary of the Parent and Subsidiary, dated
as of the Closing Date.
7.11 PARENT CERTIFICATES, ETC. There shall have been delivered all
certified resolutions, certificates, documents, or instruments with respect to
Parent's authority and such other matters as Target's counsel may have
reasonably requested prior to the Closing Date substantially in the form of
Schedule 10.1.2.
7.12 APPROVAL OF COUNSEL TO TARGET. All actions and proceedings
hereunder and all documents or other papers required to be delivered by Target
hereunder or in connection with the completion of the Transaction, and all other
related matters shall have been approved by ▇▇▇▇▇ ▇. ▇▇▇▇▇., counsel to Target,
as to their form, which approval shall not be unreasonably withheld or delayed.
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7.13 DIRECTORS EXECUTION OF CONDITIONAL RESIGNATION. Each Director
shall execute a conditional resignation substantially in the form of Schedule
7.13.
ARTICLE VIII
8. CONDITIONS PRECEDENT TO PARENT'S OBLIGATION TO CLOSE
8.1 CONSUMMATION. Parent's obligation to consummate the Merger is
subject to the satisfaction, on or before the Closing Date, of all the
conditions set out below in this Article VIII. Parent may waive any or all of
these conditions in whole or in part without prior notice; provided, however,
that no such waiver of a condition shall constitute waiver by Parent of any of
its other rights or remedies, at law or in equity, if Target shall be in default
of any of its representations, warranties, or covenants under this Merger
Agreement. Should any condition not be met or unwaived, Parent and Target may
elect to proceed with the Closing and reduce the Cash in the amount of $250,000
at Closing to an agreed amount.
8.2 ACTS COMPLETED. Each of the acts and undertakings of Target to be
performed on or before the Closing Date pursuant to the terms of this Merger
Agreement shall have been duly performed.
8.3 RESOLUTIONS. Target shall have furnished Parent with a copy,
certified by Target's secretary, of (1) a resolution or resolutions duly adopted
by Target's board of directors authorizing and approving this Merger Agreement
and directing that it be submitted to a vote of the Target Shareholders; and (2)
a resolution or resolutions adopting this Merger Agreement, duly approved by the
holders of all of the outstanding shares of common stock of Target,
substantially in the form of Schedule 8.3.
8.4 REPRESENTATIONS. All of the representations and warranties of
Target contained in this Merger Agreement shall be true in all material respects
on and as of the Closing Date, with the same effect as though such
representations and warranties had been made on and as of that date; and Parent
shall have received at the closing a certificate, dated the Closing Date and
executed by the president or a vice president of Target, containing a
representation and warranty to that effect.
8.5 SHAREHOLDER SUBSCRIPTION AGREEMENT. All Target Shareholders have
completed, executed, and delivered Subscription Agreements to the Parent.
8.6 TARGET LEGAL OPINION. Parent shall have received a legal opinion
from counsel to Target substantially to the effect of Schedule 8.6.
8.7 FILING. The Articles of Merger shall have been filed in the office
of the Secretary of State of the State of Colorado or other office of each
jurisdiction in which such filings are required in order for the Merger to
become effective, or Parent shall have satisfied itself that all such filings
will be or are capable of being made effective as of the Closing Date.
8.8 CHANGES. During the period from June 30, 1999, to the Closing Date,
there shall not have been any Material Adverse Change.
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ARTICLE IX
9. CONDITIONS PRECEDENT TO TARGET'S OBLIGATION TO CLOSE
9.1 CONSUMMATION. Target's obligation to consummate the Merger is
subject to the satisfaction, on or before the Closing Date, of all the
conditions set out below in this Article IX. Target may waive any or all of
these conditions in whole or in part without prior notice; provided, however,
that no such waiver of a condition shall constitute waiver by Target of any of
its other rights or remedies, at law or in equity, if Parent shall be in default
of any of its representations, warranties, or covenants under this Merger
Agreement.
9.2 ACTS COMPLETED. Each of Parent's and Subsidiary's acts and
undertakings to be performed on or before the Closing Date pursuant to this
Merger Agreement shall have been performed.
9.3 COMPLETION CLEAN UP. Parent shall have fully completed the Clean
Up.
9.4 RESOLUTIONS. Parent shall have furnished Target with certified
copies of (1) resolutions duly adopted by the board of directors of Parent and
the board of directors of Subsidiary authorizing and approving the execution and
delivery of this Merger Agreement and authorizing the consummation of the
transactions contemplated by this Merger Agreement, and (2) resolutions duly
adopted by Parent as sole shareholder of Subsidiary, authorizing this Merger
Agreement substantially in the form of Schedule 9.4.
9.5 REPRESENTATIONS. The representations and warranties of Parent and
Subsidiary contained in this Merger Agreement shall be true on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of that date; and Target shall have received at the
closing a certificate, dated the Closing Date and executed on behalf of Parent
or Subsidiary, as the case may be, by its president or any vice president,
containing a representation and warranty to that effect.
9.6 FILING. The Agreement of Merger shall have been filed in the office
of the Secretary of State of the State of Colorado or other office of each
jurisdiction in which such filings are required in order for the Merger to
become effective, or Target shall have satisfied itself that all such filings
will be or are capable of being made effective as of the Closing Date.
9.7 FORM AND SUBSTANCE. The form and substance of all certificates,
instruments, opinions, and other documents delivered to Target under this Merger
Agreement shall be satisfactory in all reasonable respects to Target and its
counsel.
9.8 TERMINATION OF EMPLOYMENT AGREEMENTS. All Employment Agreements or
similar agreements of any kind between the Parent and any current or former
employees shall have been terminated and no party to any such agreements shall
have released all claims that they may have against the Parent, the Subsidiary
and any and all officers, directors, agents or other Employees of Parent or the
Subsidiary.
9.9 TERMINATION OF WARRANTS. Except as disclosed on Schedule 9.9, all
Holders of any warrants or similar rights have terminated such warrants or
similar agreements and the holders thereof shall have no rights or claims
thereunder. Such terminations shall be evidenced by a release by all holders
thereof.
9.10 TERMINATION OF OPTIONS. Except as disclosed on Schedule 9.10, all
Holders of options or similar rights have terminated such options or similar
agreements and the holders thereof shall have no rights or claims thereunder.
Such terminations shall be evidenced by a release by all holders thereof.
9.11 ABSENCE OF OBLIGATIONS. Except for the Current Obligations, Parent
and Subsidiary shall have no creditors or other persons or entities who have, or
may assert any claim against the Parent, the Subsidiary, the Target, the Target
Shareholders, any officer, director, agent or employee of the
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Parent, the Subsidiary or the Target or any other person or entity directly or
indirectly related to the parties hereto.
9.12 FORM 14f. Parent shall have prepared a Form 14f-1 information
statement as required by the Securities and Exchange Commission in full
compliance with the Exchange Act, applicable Rules and Regulations, and shall
have filed the Form 14f-1 with the Securities and Exchange Commission and
delivered same to all shareholders of Parent at least 10 days prior to the
Shareholders Meeting referred to in Section 11.2.
9.14 ASSETS AT CLOSING. Parents assets at Closing shall consist of the
Building, the Partnership Interests, and the $250,000 cash.
9.15 CONDITIONAL RESIGNATIONS. Parent shall have delivered the
conditional resignations signed by each of the directors.
ARTICLE X
10. ACTIONS TO BE TAKEN AT THE CLOSING. The following actions shall be taken at
the Closing, each of which shall be conditioned on completion of all the others
and all of which shall be deemed to have taken place simultaneously:
10.1 AT CLOSING - PARENT SHAREHOLDER. At Closing Parent and Subsidiary
shall;
10.1.1 Deliver the Parent Common Stock to the Target
Shareholders.
10.1.2 Parent shall deliver to Target a closing certificate
certifying all matters set forth in Article V and
certify the truth and accuracy of all matters set
forth in Article VII as of Closing dated the Closing
Date, and the performance of all requirements of
Parent set forth in Article IX in a form
substantially similar to Schedule 10.1.2 attached.
Said certificate shall be signed on behalf of Parent
by an executive officer of Parent.
10.1.3 Parent and Subsidiary shall deliver to Target copies
of Parent and Subsidiary resolutions certified as
required by Section 9.4.
10.1.4 Counsel to Parent shall deliver the Parent legal
opinion substantially in the form set forth in
Schedule 5.27.
10.1.5 Deliver to Target all further documentation and
certificates of compliance and completion of all
requirements to be performed by Parent as set forth
herein.
10.1.6 Deliver to Target evidence of the completion of all
undertakings set forth herein and certifications
signed by executive officer of Parent attesting to
same.
10.2 AT THE CLOSING TARGET AND SELLING SHAREHOLDERS. At Closing the
Selling Shareholders and Target respectively shall:
10.2.1 Each Selling Shareholders shall deliver the Target
Common Stock owned by each of them together with a
Stock Power duly executed and attested to conveying
the Target Common Stock to Parent.
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10.2.2 Each Selling Shareholder shall deliver to Parent the
Subscription Agreement for the Parent Stock and the
Parent Additional Stock.
10.2.3 Target shall either (a) deliver the written consents
to the assumption by Parent of its contracts
identified on Schedule 10.2.3 (the "Assumed
Contracts"), or (b) if Target will not be released
from liability under the Assumed Contracts, the
Parties shall execute assignment agreements
reasonably satisfactory to Parent and Target.
10.2.4 Target shall deliver to Parent a closing certificate
certifying all matters set forth in Article IV
certifying the truth and accuracy of all matters set
forth in Article VI as of Closing dated the Closing
Date and the performance of all requirements of
Target set forth in Article VIII, in a form
substantially similar to Schedule 10.2.4 attached.
Such certificate shall be signed on behalf of Target
by an executive officer of Target .
10.2.5 Target shall deliver to Parent and Subsidiary copies
of Target resolutions certified as required by
Sections 6.14.
ARTICLE XI
11. POST CLOSING.
11.1 PARENT FILINGS. Parent will comply, on a timely basis, with all
federal and state securities laws. Specifically, Parent agrees to file a Form
8-K within six (6) business days after the Closing date. Such Form 8-K shall
include a thorough description of Parent, this transaction and all required
financial statements. In addition, Parent shall obtain a listing for the
combined companies in Standard & Poors immediately after the Closing Date using
the symbol. All disclosures made to the public through: (a) the Standard & Poors
Listing (b) the SEC filings, (c) due diligence packages to brokers, or made by
any other means shall not contain any untrue statement of material fact or omit
any material fact which would cause the facts presented to be misleading.
11.2 PROXY. Parent shall file with the Securities and Exchange
Commission a Proxy Statement for a Parent Shareholder Meeting to be held as soon
as reasonable after the Closing and after approval thereof by mail or otherwise
properly deliver to all Shareholders of the Parent immediately after Closing a
notice of a Special meeting of the Shareholders of Parent to vote on the
following:
11.2.1 Increasing the authorized Parent Common Stock to
100,000,000 million shares, no par value and
increasing the Parent Preferred Stock to 50,000,000
shares, no par value.
11.2.2 Changing the name of the Parent to IntelliReady, Inc.
11.2.3 Redomesticating the domicile of the Parent to
Colorado.
11.2.4 Electing the persons to the Board of Directors of the
Parent as nominated by Target.
11.2.5 Declaring and implementing a reverse 1 for 8.0485255
stock split so that for each 8.0485255 shares of
stock held by a Parent Shareholder after Closing the
Parent Shareholder shall receive 1 share and after
issuance of the 58,168,095
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shares of the Parent Additional Common Stock the
Shareholders shall receive 1 share of the Parent
Common Stock for each 8.0485255 shares of Parent
Additional Common Stock. Normal rounding rules shall
apply. Following the Reverse Stock split the holders
of Parent Common Stock at Closing shall own in the
aggregate 500,000 shares of the Parent's Common
Stock. The Selling Shareholder shall own in the
aggregate approximately 9,833,333 shares of the
Parent's Common Stock. There shall be, at the
completion of the transaction, 10,333,333 shares of
the Parent Common Stock issued and outstanding
excluding the Target Employee Options.
11.2.6 Ratifying and adopting all actions of the officers
and directors of the Parent to date.
11.2.7 Adopting an Equity Incentive Plan substantially in
the form of the IntelliReady Equity Incentive Plan.
11.2.8 All other actions to properly come before the
Shareholders Meeting.
11.3 ISSUANCE OF PARENT ADDITIONAL COMMON STOCK. Subsequent to the
Parent Shareholder Meeting set forth in Section 11.2 hereof, Parent agrees to
issue to the Target Shareholders the Parent Additional Common Stock in the
aggregate number of 58,168,095 and prior to the Reverse Stock Split set forth in
Section 11.2.5 shares to each of the Target Shareholders set forth in Schedule
1.2
11.4 SHARES POST SPLIT. Subsequent to the Shareholders meeting set
forth in Sections 11.2 and 11.3 and the completion and approval of the Reverse
Stock Split set forth in Section 11.2.5 the Parent shall take all steps
reasonably necessary to fully implement the stock split set forth herein.
ARTICLE XII
12. SURVIVAL OF REPRESENTATION AND WARRANTIES; INDEMNIFICATION
12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the parties contained in this Agreement and any Schedules
attached hereto shall not survive the Closing.
12.2 FEES AND EXPENSES. In the event of any dispute or controversy
between any of the parties to this Agreement, the prevailing party in such
dispute shall, in addition to any other remedies the prevailing party may obtain
in such dispute, be entitled to recover from the other party all of its
reasonable legal fees and out-of-pocket costs incurred by such party in
enforcing or defending its rights hereunder.
12.3 LITIGATION SUPPORT. If, and for so long as, any party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (a) any
transaction contemplated hereunder, or (b) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date involving
the Business, the other party will cooperate with the contesting or defending
party and its counsel in the contest or defense, make available its personnel
and provide such testimony and access to its books and records as shall be
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending party, unless the contesting or defending
party is entitled to indemnification therefore under this Article XII.
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12.4 INDEMNIFICATION. Target or its' successor in interest shall
indemnify, save and hold harmless the Parent's Board of Directors from any
claim, cause of action or litigation arising as a result of this Transaction;
provided, however, that Target or its' successor in interest will not indemnify
the Board of Director's for any claim, cause of action or litigation resulting
from or relating to any item that should have been disclosed on a Schedule
hereto or involves a matter that was not actually disclosed to the Target in
written documentation.
ARTICLE XIII
13. RESERVED
ARTICLE XIV
14. REMEDIES.
14.1 GOOD FAITH EFFORTS TO SETTLE DISPUTES. Each of the Parties agrees
that, prior to commencing any litigation against the other concerning any matter
with respect to which such Party intends to claim a right of indemnification in
such proceeding, such Parties shall meet in a timely manner and attempt in good
faith to negotiate a settlement of such dispute.
14.2 PARENT FAILURE TO CLOSE. If Parent or Subsidiary is in default of
any of the provisions of this Merger Agreement as of the Closing Date, Parent,
as liquidated damages, shall pay the sum of $25,000 in consideration for the
costs and expenses incurred by Target in connection with the Transaction to
Target as liquidated damages which amount shall be the sole and exclusive remedy
of Target for a default by Parent or Subsidiary as provided for in this Section
14. Payment of liquidated damages is not to be construed as a penalty, but as a
reasonable forecast of the actual damages which Target would suffer.
14.3 TARGET FAILURE TO CLOSE. If Target is in default of any of the
provisions of this Merger Agreement as of the Closing Date, Target, as
liquidated damages, shall pay the sum of $25,000 in consideration for the costs
and expenses incurred by Parent and Subsidiary in connection with the
Transaction to Parent as liquidated damages which amount shall be the sole and
exclusive remedy of Parent and Subsidiary for a default by Target as provided
for in this Section 14. Payment of liquidated damages is not to be construed as
a penalty, but as a reasonable forecast of the actual damages which Parent and
Subsidiary would suffer.
14.4 SOLE REMEDY. The foregoing specific remedies shall be the only
remedies of the Parties and shall constitute the Parties Sole Remedy after
Closing or otherwise pursuant to this Merger Agreement and shall be in lieu of
all claims of any nature and kind, whether in law or in equity and in lieu of
any claim based on any legal theory including but not limited to remedies based
on contract or tort law and shall be in lieu of any claim for monetary damages
whether actual or special based on any claim for relief.
ARTICLE XV
15. ADDITIONAL PROVISIONS
15.1 NOTICE OF EVENTS. All parties shall promptly notify the other
parties with reasonable specificity of: (1) any event, condition or circumstance
occurring from the date hereof through the Closing
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Date that would constitute a violation or breach of this Agreement; or (2) any
event, occurrence, transaction or other item which would have been required to
have been disclosed on any Schedule or statement delivered hereunder, had such
event, occurrence, transaction or item existed on the date hereof, other than
items arising in the Ordinary Course of Business which would not render any of
the representations, warranties or other agreements of Target or Parent
materially misleading.
15.2 EXAMINATIONS AND INVESTIGATIONS.
15.2.1 Prior to the Closing Date, during normal business
hours between 9:00 a.m. and 5:00 p.m., Mountain
Daylight Savings Time, Monday through Friday, or such
other hours as to which the parties mutually agree,
any party shall be entitled, through their employees
and representatives, including counsel, lenders,
appraisers and accountants, to make such
investigation of the assets, properties, business and
operations of the Business, and such examination and
copies of the books, records and financial condition
of the Business as the other party wish. Each party
shall cause all such employees, representatives,
counsel, lenders, appraisers and accountants to
execute on behalf of themselves and their respective
representatives agreements to keep all information so
obtained confidential. No review, examination or
investigation by either party shall diminish or
obviate any of the representations, warranties,
covenants or agreements of Target, Subsidiary or
Parent under this Agreement.
15.2.2 If this Agreement terminates because of the failure
of a party to close: (a) Parent shall return all
confidential information and shall not use in any
manner any information or documents obtained from
Target concerning the Business or the Target Assets,
unless readily ascertainable from public or published
information, or trade sources, or subsequently
developed by Parent independent of any investigation
of the Business, or received from a third party not
under an obligation to Target or Target to keep such
information confidential, and (b) any documents
obtained from Target or Target shall be promptly
returned to it.
15.3 REVIEW OF REVISED SCHEDULES AND INFORMATION. At any time prior to
Closing, either party shall have the right to revise any schedule or make
further disclosure, as well as to make any disclosure as herein provided or
referenced and the other party shall have a period of ten business days to
review any revised Schedule or further disclosure made by Target or Target
solely with respect to the Schedule so revised or the new information so
disclosed, provided, however such ten day review period shall not apply to
extend the Closing Date if the new information disclosed on any schedule or the
further disclosure is not of a material nature adverse to the other party in its
reasonable determination and further provided that in any event the Closing Date
will not be extended beyond September 30, 2000, unless the Target extends the
Closing in its sole discretion.
15.4 NO NEGOTIATION BY PARENT. Between the date hereof and the earlier
of (1) the Closing Date; and (2) the date of termination of this Agreement,
Parent shall not, directly or indirectly:
15.4.1 Solicit, initiate or encourage the submission of
inquiries, proposals or offers from any Person (other
than Target) relating to any acquisition or purchase
of assets of, or any interest in, the Parent or any
exchange offer, merger, consolidation, purchase of
assets, liquidation, dissolution or similar
transaction involving the Parent Assets (each, an
"Acquisition Proposal");
15.4.2 Enter into or participate in any discussions or
negotiations regarding any of the foregoing, or
furnish to any Person (other than Target and its
representatives)
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any information with respect to the Parent, other
than in the Ordinary Course of Business; or
15.4.3 Otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort
or attempt by any Person (other than Target) to do or
seek any of the foregoing.
15.4.4 Parent will notify Target immediately if any such
Acquisition Proposal is received subsequent to the
date of this agreement or if any such discussions,
negotiations or other events occur or are sought to
be initiated, and such notice will set forth in
detail the terms or other particulars thereof. As
used herein, Acquisition Proposal shall refer to any
proposal to acquire all of substantially all of the
Parent or to enter into any transactions or series of
transactions wherein an unrelated party would acquire
more than 15% of the issued and outstanding stock of
Parent.
ARTICLE XVI
16. MISCELLANEOUS
16.1 PUBLICITY. The parties shall cooperate with each other in the
development and distribution of all news releases and other public disclosures
relating to the transactions contemplated hereby. None of the parties shall
issue or make, or cause to have issued or made, any press release or
announcement concerning the transactions contemplated hereby without the advance
approval in writing of the form and substance thereof by the other party, unless
otherwise required by applicable law.
16.2 TAX REORGANIZATION. Parent, Subsidiary and Target acknowledge this
Transaction is intended to qualify as a reorganization under Code section
368(a)(1)(A). No Party hereto shall take any action contrary to that intent.
16.3 CAPTIONS. Captions and headings in this Merger Agreement are for
convenience only and shall not be considered in interpreting any provisions.
16.4 INTEGRATION. This Merger Agreement embodies the entire agreement
and understanding which exists between the signatories hereto with respect to
the subject matter hereof and supersedes all prior and contemporaneous
agreements, representations, and undertakings. No supplement, modification, or
amendment of this Merger Agreement shall be binding unless executed in writing
by all the parties. No waiver of any of the provisions of this Merger Agreement
shall be deemed, or shall constitute, a waiver of any other provisions whether
or not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party making the waiver.
16.5 COUNTERPARTS. This Merger Agreement may be executed in
counterparts and all counterparts so executed shall constitute one Agreement
binding on all the parties hereto. It shall not be necessary for each party to
execute the same counterpart hereof.
16.6 GENDER/TENSE. Whenever required by the context hereof, the
singular shall be deemed to include the plural, and the plural shall be deemed
to include the singular, and the masculine, feminine and neuter genders shall
each be deemed to include the other.
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16.7 THIRD PARTIES. Nothing in this Merger Agreement, whether express
or implied, is intended to confer any rights or remedies under or by reason of
this Merger Agreement on any persons other than the parties to it and their
respective successors and assigns, nor is anything in this Merger Agreement
intended to relieve or discharge the obligation or liability of any third
persons to any party to this Merger Agreement, nor shall any provision give any
third persons any right of subrogation or action over or against any party to
this Merger Agreement.
16.8 ASSIGNMENT. This Merger Agreement shall be binding on, and it
shall inure to the benefit of the parties to it and their respective successors;
provided, however, no party may assign any of its rights under this agreement.
16.9 NOTICES. All notices, requests, demands, and other communications
under this Merger Agreement shall be in writing and shall be deemed to have been
duly given upon personal delivery, facsimile transmission (with written or
facsimile confirmation of receipt), telex or delivery by an overnight express
courier service (delivery, postage or freight charges prepaid), or on the fifth
day after mailing if mailed to the party to whom notice is to be given, by first
class mail, registered or certified, postage prepaid, and properly addressed as
follows:
To Parent and Subsidiary at:
Pan Western Energy Corporation
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇
With a copy to:
Pray, Walker, Jackman, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
900 ONEOK Building
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
To Target at:
IntelliReady, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
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With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇
IntelliReady, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
Any Party may change its address for purposes of this Section by giving the
other Parties written notice of the new address in the manner set forth above.
17.10 GOVERNING LAW. This Merger Agreement shall be governed in all
respects, including validity, interpretation and effect, by the internal laws of
the State of Colorado.
17.11 ATTORNEY'S FEES. If either party to this Merger Agreement shall
bring any action, suit, counterclaim or appeal for any relief against the other,
declaratory or otherwise, to enforce the terms hereof or to declare rights
hereunder (collectively, an "Action"), the prevailing party shall, in addition
to any liquidated damages, be entitled to recover as part of any such Action its
reasonable attorneys' fees and costs, including any fees and costs incurred in
bringing and prosecuting such Action and/or enforcing any order, judgment,
ruling or award granted as part of such Action. "Prevailing party" within the
meaning of this section includes, without limitation, a party who agrees to
dismiss an Action upon the other party's payment of all or a portion of the sums
allegedly due or performance of the covenants allegedly breached, or who obtains
substantially the relief sought by it.
17.12 SEVERABILITY. Any portion or provision of the Merger Agreement
which is invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining portions or
provisions hereof in such jurisdiction or, to the extent permitted by law,
rendering that or any other portion or provision of the Merger Agreement
invalid, illegal or unenforceable in any other jurisdiction.
17.13 SCHEDULES AND EXHIBITS. All schedules, exhibits, appendices and
documents referred to in or attached to this Merger Agreement are integral parts
of this Merger Agreement as if fully set forth herein, and all statements
appearing therein shall be deemed disclosed for all purposes and not only in
connection with the specific representation to which they are explicitly
referenced. The parties acknowledge that certain of the schedules and exhibits
hereto have not been completed as of the date hereof and shall be completed and
attached hereto at or prior to Closing.
17.14 CONSTRUCTION. The parties hereto acknowledge and agree that (a)
each party hereto is of equal bargaining strength, (b) each party has actively
participated in the drafting, preparation and negotiation of this Merger
Agreement, (c) each party has consulted with such party's own, independent legal
counsel, and such other professional advisors as such party has deemed
appropriate, relative to any and all matters contemplated under this Merger
Agreement, (d) each party and such party's legal counsel and advisors have
reviewed this Merger Agreement, (e) each party has agreed to enter into this
Merger Agreement following such review and their rendering of such advice, and
(f) any rule of
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construction to the effect that ambiguities are to be resolved against the
drafting parties shall not apply in the interpretation of this Merger Agreement,
or any portions hereof, or any amendments hereto.
IN WITNESS WHEREOF, each of the Parties have caused this Merger
Agreement to be executed on its behalf by its duly authorized officers, all as
of the day and year first above written.
PAN WESTERN ENERGY CORPORATION
By:
---------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman and CEO
INTELLIREADY, INC.
By:
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman and Acting CEO
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