Exhibit 10.1
DRAFT
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
APPLIED MECHANICS, INC.
A WEST VIRGINIA CORPORATION
AND
NELX, INC.
A KANSAS CORPORATION
DATED: JULY ____, 1998
DRAFT AGREEMENT AND PLAN OF REORGANIZATION
APPLIED MECHANICS, INC.
AND
NELX, INC.
This Agreement and Plan of Reorganization ("Agreement"), dated as of
July ___, 1998, among APPLIED MECHANICS, INC. ("AMI"), a West Virginia
Corporation, NELX, INC. ("NELX") , a Kansas Corporation, and the shareholders of
APPLIED MECHANICS, INC. ("AMI Shareholders") who will join this agreement by
execution.
W I T N E S S E T H:
A. WHEREAS, AMI and NELX are corporations duly organized under the laws
of the State of West Virginia and Kansas, respectively.
B. PLAN OF REORGANIZATION. The AMI Shareholders are the owners of all
of the issued and outstanding common stock of AMI. It is the intention that all
of the issued and outstanding stock of AMI shall be acquired by NELX in exchange
solely for its voting stock. For federal income tax purposes it is intended that
this exchange shall qualify as a reorganization within the meaning of SEC 368
(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code").
C. EXCHANGE OF SHARES. NELX and the AMI Shareholders agree that all of
the common shares issued and outstanding of AMI shall be exchanged with NELX for
90,000,000 shares of the common stock of NELX. The pro rata numbers of the NELX
shares, on the closing date, shall be delivered to the individual shareholders
in exchange for their AMI shares as hereinafter set forth.
D. WHEREAS, the parties hereto wish to enter into this Agreement,
pursuant to the provisions of the Kansas Statutes.
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
THE CONSIDERATION
1.1 Subject to the conditions set forth herein on the "Effective Date"
(as herein defined), Shareholders of AMI shall exchange all of their shares of
AMI for 90,000,000 common shares of NELX common stock. The transactions
contemplated by this Agreement shall be completed at a closing ("Closing") on a
closing date ("Closing Date") which shall be as soon as possible after all
regulatory approvals and shareholder approvals are obtained in accordance with
law as set forth in this Agreement, but no later than 30 days after date hereof.
On the Closing Date, all of the documents to be furnished to NELX and
AMI, including the documents to be furnished pursuant to Article VII of this
Agreement, shall be delivered to M.A. ▇▇▇▇▇▇▇, to be held in escrow until the
Effective Date or the date of termination of this Agreement, whichever first
occurs, and thereafter shall be promptly distributed to the parties as their
interests may appear.
1.2 At the Effective Date, AMI shall become a wholly owned subsidiary
of NELX. AMI's shareholders shall receive pro rata shares of $.0001 par value
voting common stock as follows:
NELX shall issue 90,000,000 of its shares of common stock for
100% of the outstanding common shares of AMI, pro rata to the
shareholders of AMI.
1.3 If this Agreement is duly adopted by the holders of the requisite
number of shares, in accordance with the applicable laws and subject to the
other provisions hereof, such documents as may be required by law to accomplish
the Agreement shall be filed as required by law to effectuate same, and it shall
become effective. The time of filing the last document required by law shall be
the Effective Date for the Agreement. For accounting purposes, the Agreement
shall be effective as of 12:01 a.m., on the last day of the month preceding the
Effective Date.
ARTICLE II
ISSUANCE AND EXCHANGE OF SHARES
2.1 The shares of $.0001 par value common stock of NELX shall be issued
by it to AMI shareholders at closing.
2.2 NELX represents that no outstanding options or warrants for its
unissued shares exist. All preferred stock of NELX due for redemption as of the
date hereof shall have been redeemed as of closing date, if any.
2.3 The stock transfer books of AMI shall be closed on the Effective
Date, and thereafter no transfers of the stock of AMI shall be made. AMI shall
appoint an exchange agent ("Exchange Agent"), to accept surrender of the
certificates representing the common shares of AMI, and to deliver in exchange
for such surrendered certificates, shares of common stock of NELX. The
authorization of the Exchange Agent may be terminated by NELX after six months
following the Effective Date. Upon termination of such authorization, any shares
of AMI and any funds held by the Exchange Agent for payment to AMI shareholders
pursuant to this Agreement shall be transferred to NELX or its designated agent
who shall thereafter perform the obligations of the Exchange Agent. If
outstanding certificates for shares of AMI are not surrendered or the payment
for them not claimed prior to such date on which such payments would otherwise
escheat to or become the property of any governmental unit or agency, the
unclaimed items shall, to the extent permitted by abandoned property and other
applicable law, become the property of NELX (and to the extent not in its
possession shall be paid over to it), free and clear of all claims or interest
of any persons previously entitled to such items. Notwithstanding the foregoing,
neither the Exchange Agent nor any party to this Agreement shall be liable to
any holder of AMI shares for any amount paid to any governmental unit or agency
having jurisdiction of such unclaimed item pursuant to the abandoned property or
other applicable law of such jurisdiction.
2.4 No fractional shares of NELX stock shall be issued as a result of
the Agreement. Shares shall be rounded to nearest whole share.
2.5 At the Effective Date, each holder of a certificate or certificates
representing common shares of AMI, upon presentation and surrender of such
certificate or certificates to the Exchange Agent, shall be entitled to receive
the consideration set forth herein, except that holders of those shares as to
which dissenters' rights shall have been asserted and perfected pursuant to West
Virginia law shall not be converted into shares of NELX common stock, but shall
represent only such dissenters' rights. Upon such presentation, surrender, and
exchange as provided in this Section 2.5, certificates representing shares of
AMI previously held shall be canceled. Until so presented and surrendered, each
certificate or certificates which represented issued and outstanding shares of
AMI at the Effective Date shall be deemed for all purposes to evidence the right
to receive the consideration set forth in Section 1.2 of this Agreement. If the
certificates representing shares of AMI have been lost, stolen, mutilated or
destroyed, the Exchange Agent shall require the submission of an indemnity
agreement and may require the submission of a bond in lieu of such certificate.
ARTICLE III
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF APPLIED MECHANICS, INC.
No representations or warranties are made by any director, officer,
employee or shareholder of AMI as individuals, except as and to the extent
stated in this Agreement or in a separate written statement (the "AMI Disclosure
Statement"), if any. AMI hereby represents, warrants and covenants to NELX
except as stated in the AMI Disclosure Statement, as follows:
3.1 AMI is a corporation duly organized, validly existing and in good
standing under the laws of the State of West Virginia, and has the corporate
power and authority to own or lease its properties and to carry on its business
as it is now being conducted. The Articles of Incorporation and Bylaws of AMI
are complete and accurate, and the minute books of AMI contain a record, which
is complete and accurate in all material respects, of all meetings, and all
corporate actions of the shareholders and board of directors of AMI.
3.2 The aggregate number of shares which AMI is authorized to issue is
an unlimited number of Class A shares of common stock with $______ par value of
which ____________ shares are issued and outstanding.
3.3 AMI has complete and unrestricted power to enter into and, upon the
appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement.
3.4 Neither the making of nor the compliance with the terms and
provisions of this Agreement and consummation of the transactions contemplated
herein by AMI will conflict with or result in a breach or violation of the
Articles of Incorporation or Bylaws of AMI.
3.5 The execution, delivery and performance of this Agreement has been
duly authorized and approved by AMI's Board of Directors.
3.6 AMI will deliver to NELX consolidated audited financial statements
of AMI, as of ____________________, within 30 days and unaudited first quarter
1998 statements. All such statements, herein sometimes called "AMI Financial
Statements", are complete and correct in all material respects and, together
with the notes to these financial statements, present fairly the financial
position and results of operations of AMI for the periods included. The
__________________, statements will have been prepared in accordance with
generally accepted accounting principles.
3.7 Since the dates of the AMI Financial Statements, there have not
been any material adverse changes in the business or condition, financial or
otherwise of AMI.
3.8 There are no legal proceedings or regulatory proceedings involving
material claims pending, or to the knowledge of the officers of AMI, threatened
against AMI or affecting any of its assets or properties, and AMI is not in any
material breach or violation of or default under any contract or instrument to
which AMI is a party, and no event has occurred which with the lapse of time or
action by a third party could result in a material breach or violation of or
default by AMI under any contract or other instrument to which AMI is a party or
by which it or any of its properties may be bound or affected, or under its
respective Articles of Incorporation or Bylaws, nor is there any court or
regulatory order pending, applicable to AMI.
3.9 All liability of AMI has been properly provided for and is adequate
to comply with all regulatory requirements regarding same.
3.10 The representations and warranties of AMI shall be true and
correct as of the date hereof and as of the Effective Date.
3.11 AMI will deliver to NELX a copy of each of the federal income tax
returns of AMI for the year ending __________________, and for any additional
open years. The provisions for taxes paid by AMI are believed by AMI to be
sufficient for payment of all accrued and unpaid federal, state, county and
local taxes of AMI (including any penalties or interest payable) whether or not
disputed for the periods then ended and for all prior fiscal periods. All
returns and reports of other information required or requested by federal,
state, county, and local tax authorities have been filed or supplied in a timely
fashion, and all such information is true and correct in all material respects.
Provision has been made for the payment of all taxes due to date by AMI,
including taxes for the current year ending ___________________________________.
No federal income tax return of AMI is currently under audit.
3.12 AMI has no employee benefit plan, including non-qualified stock
awards, options, and consulting fees for independent contractors.
3.13 No representation or warranty by AMI in this Agreement, the AMI
Disclosure Statement or any certificate delivered pursuant hereto contains any
untrue statement of a material fact or omits to state any material fact
necessary to make such representation or warranty not misleading.
3.14 INTELLECTUAL PROPERTY. All trade names, inventions, discoveries,
ideas, research, engineering, methods, practices, processes, systems, formulae,
designs, drawings, products, projects, improvements, developments, know-how, and
trade secrets which are used in the conduct of AMI's business, whether
registered or unregistered (collectively the "Proprietary Rights") are owned by
AMI. To the knowledge of each Seller and AMI, AMI created or developed such
Proprietary Rights and such Proprietary Rights are not subject to any
restriction, lien, encumbrance, right, title or interest in others. All of the
foregoing Proprietary Rights that are not in the public domain stand solely in
the name of AMI and not in the name of any shareholder, director, officer,
agent, partner or employee or anyone else known to any Seller or AMI and none of
the same have any right, title, interest, restriction, lien or encumbrance
therein or thereon or thereto. To the knowledge of each Seller and AMI, AMI's
ownership and use of the Proprietary Rights do not and will not infringe upon,
conflict with or violate in any material respect any patent, copyright, trade
secret or other lawful proprietary right of any other party, and no claim is
pending or, to the knowledge of any Seller or AMI, threatened to the effect that
the operations of AMI infringe upon or conflict with the asserted rights of any
other person under any of the Proprietary Rights, and to the knowledge of each
Seller and AMI there is no reasonable basis for any such claim (whether or not
pending or threatened). No claim is pending, or to the knowledge of each Seller
and AMI, threatened to the effect that any such Proprietary Rights owned or
licensed by AMI, or which AMI otherwise has the right to use, is invalid or
unenforceable by AMI and there is no reasonable basis for any such claim
(whether or not pending or threatened). AMI has not granted or assigned to any
other person or entity any right to manufacture, have manufactured, assemble or
sell the products or proposed products or to provide the services or proposed
services of Seller.
3.15 a. LIENS. Except as disclosed on Schedule 3.15(a), no one
other than Seller has any right, title, interest, lien, claim, security
interest, restriction or encumbrance in, on or to AMI's assets.
b. MATERIAL CONTRACTS. Other than as disclosed on Schedule
3.15(b), Seller does not have any material obligation, contract, agreement,
lease, sublease, commitment or understanding of any kind, nature or description,
oral or written, fixed or contingent due or to become due, existing or inchoate.
c. NO UNDISCLOSED LIABILITIES. AMI does not have any material
liabilities or obligations, including, without limitation, contingent
liabilities for the performance of any obligation, except for (i) liabilities or
obligations which are disclosed or fully provided for in AMI's Financial
Statements, (ii) liabilities or obligations disclosed in this Agreement or in
any Exhibit or Schedule to this Agreement, and (iii) liabilities not in excess
of $2,000 in the aggregate.
d. ENVIRONMENTAL MATTERS. (i) AMI has not received notice of
any violation of or investigation relating to any environmental or pollution
law, regulation, or ordinance with respect to assets now or previously owned or
operated by AMI that has not been fully and finally resolved; (ii) All permits,
licenses and other authorizations which are required under United States,
federal, state, provincial and local laws with respect to pollution or
protection of the environment ("Environmental Laws") relating to assets now
owned or operated by AMI or any of its subsidiaries, including Environmental
Laws relating to actual or threatened emissions, discharges or releases of
pollutants, contaminants or hazardous or toxic materials or wastes
("Pollutants"), have been obtained and are effective, and, with respect to
assets previously owned or operated by AMI, were obtained and were effective
during the time of AMI's operation; (iii) To the knowledge of AMI, no conditions
exist on, in or about the properties now or previously owned or operated by AMI
or any third-party properties to which any Pollutants generated by AMI were sent
or released that could give rise on the part of AMI to liability under any
Environmental Laws, claims by third parties under Environmental Laws or under
common law or the occurrence of costs to avoid any such liability or claim; and
(iv) to the knowledge of AMI, all operators of AMI's assets are in compliance
with all terms and conditions of such Environmental Laws, permits, licenses and
authorizations, and are also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in such laws or contained in any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder, relating to AMI's assets.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF NELX, INC.
No representations or warranties are made by any director, officer,
employee or shareholder of NELX as individuals, except as and to the extent
stated in this Agreement or in a separate written statement.
NELX hereby represents, warrants and covenants to AMI, except as stated
in the NELX Disclosure Statement, as follows:
4.1 NELX is a corporation duly organized, validly existing and in good
standing under the laws of the State of Kansas, and has the corporate power and
authority to own or lease its properties and to carry on its business as it is
now being conducted. The Articles of Incorporation and Bylaws of NELX, copies of
which have been delivered to AMI, are complete and accurate, and the minute
books of NELX contain a record, which is complete and accurate in all material
respects, of all meetings, and all corporate actions of the shareholders and
Board of Directors of NELX.
4.2 The aggregate number of shares which NELX is authorized to issue is
500,000,000 shares of common stock with a par value of $.0001 per share, of
which 46,352,042 shares of such common stock will be issued and outstanding,
fully paid and non-assessable, prior to closing under this agreement. NELX has
no outstanding options, warrants or other rights to purchase, or subscribe to,
or securities convertible into or exchangeable for any shares of capital stock.
No preferred stock of NELX is outstanding.
4.3 NELX has complete and unrestricted power to enter into and, upon
the appropriate approvals as required by law, to consummate the transactions
contemplated by this Agreement.
4.4 Neither the making of nor the compliance with the terms and
provisions of this Agreement and consummation of the transactions contemplated
herein by NELX will conflict with or result in a breach or violation of the
Articles of Incorporation or Bylaws of NELX.
4.5 The execution of this Agreement has been duly authorized and
approved by the NELX's Board of Directors.
4.6 NELX has delivered to AMI financial statements of NELX dated
__________________. All such statements, herein sometimes called "NELX Financial
Statements" are (and will be) complete and correct in all material respects and,
together with the notes to these financial statements, present fairly the
financial position and results of operations of NELX of the periods indicated.
All statements of NELX will have been prepared in accordance with generally
accepted accounting principles.
4.7 Since the dates of the NELX Financial Statements, there have not
been any material adverse changes in the business or condition, financial or
otherwise, of NELX. NELX does not have any material liabilities or obligations,
secured or unsecured except as shown on updated financials (whether accrued,
absolute, contingent or otherwise).
4.8 NELX has delivered to AMI a list and description of all pending
legal proceedings involving NELX, none of which will materially adversely affect
them, and, except for these proceedings, there are no legal proceedings or
regulatory proceedings involving material claims pending, or, to the knowledge
of the officers of NELX, threatened against NELX or affecting any of its assets
or properties, and NELX is not in any material breach or violation of or default
under any contract or instrument to which NELX is a party, and no event has
occurred which with the lapse of time or action by a third party could result in
a material breach or violation of or default by NELX under any contract or other
instrument to which NELX is a party or by which they or any of their respective
properties may be bound or affected, or under their respective Articles of
Incorporation or Bylaws, nor is there any court or regulatory order pending,
applicable to NELX.
4.9 NELX shall not enter into or consummate any transactions prior to
the Effective Date other than in the ordinary course of business and will pay no
dividend, or increase the compensation of officers and will not enter into any
agreement or transaction which would adversely affect its financial condition.
4.10 NELX is not a party to any contract performable in the future
except its land lease obligation which will not adversely affect it.
4.11 The representations and warranties of NELX shall be true and
correct as of the date hereof and as of the Effective Date.
4.12 NELX has delivered, or will deliver within two weeks of the date
of this Agreement, to AMI, all of its corporate books and records for review,
true and correct copies of NELX tax return since 1996, if any. NELX will also
deliver to AMI on or before the Closing Date any reports relating to the
financial and business condition of NELX which occur after the date of this
Agreement and any other reports sent generally to its shareholders after the
date of this Agreement.
4.13 NELX has no employee benefit plan in effect at this time.
4.14 No representation or warranty by NELX in this Agreement, the NELX
Disclosure Statement or any certificate delivered pursuant hereto contains any
untrue statement of a material fact or omits to state any material fact
necessary to make such representation or warranty not misleading.
4.15 NELX agrees that all rights to indemnification now existing in
favor of the employees, agents, directors or officers of AMI and its
subsidiaries, as provided in the Articles of Incorporation or Bylaws or
otherwise in effect on the date hereof shall survive the transactions
contemplated hereby in accordance with their terms, and NELX expressly assumes
such indemnification obligations of AMI.
ARTICLE V
OBLIGATIONS OF THE PARTIES PENDING THE EFFECTIVE DATE
5.1 This Agreement shall be duly submitted to the shareholders of AMI
for the purpose of considering and acting upon this Agreement in the manner
required by law at a meeting of shareholders on a date selected by AMI, such
date to be the earliest practicable date. The Board of Directors of AMI, subject
to its fiduciary obligations to shareholders, shall use its best efforts to
obtain the requisite approval of AMI shareholders of this Agreement and the
transactions contemplated herein. AMI and NELX shall take all reasonable and
necessary steps and actions to comply with and to secure AMI shareholder
approval of this Agreement and regulations of such states.
5.2 At all times prior to the Effective Date during regular business
hours, each party will permit the other to examine its books and records and the
books and records of its subsidiaries and will furnish copies thereof on
request. It is recognized that, during the performance of this Agreement, each
party may provide the other parties with information which is confidential or
proprietary information. During the term of this Agreement, and for four years
following the termination of this Agreement, the recipient of such information
shall protect such information from disclosure to persons, other than members of
its own or affiliated organizations and its professional advisers, in the same
manner as it protects its own confidential or proprietary information from
unauthorized disclosure, and not use such information to the competitive
detriment of the disclosing party. In addition, if this Agreement is terminated
for any reason, each party shall promptly return or cause to be returned all
documents or other written records of such confidential or proprietary
information, together with all copies of such writings and, in addition, shall
either furnish or cause to be furnished, or shall destroy, or shall maintain
with such standard of care as is exercised with respect to its own confidential
or proprietary information, all copies of all documents or other written records
developed or prepared by such party on the basis of such confidential or
proprietary information. No information shall be considered confidential or
proprietary if it is (a) information already in the possession of the party to
whom disclosure is made, (b) information acquired by the party to whom the
disclosure is made from other sources, or (c) information in the public domain
or generally available to interested persons or which at a later date passes
into the public domain or becomes available to the party to whom disclosure is
made without any wrongdoing by the party to whom the disclosure is made.
5.3 NELX and AMI shall promptly provide each other with information as
to any significant developments in the performance of this Agreement, and shall
promptly notify the other if it discovers that any of its representations,
warranties and covenants contained in this Agreement or in any document
delivered in connection with this Agreement was not true and correct in all
material respects or became untrue or incorrect in any material respect.
5.4 All parties to this Agreement shall take all such action as may be
reasonably necessary and appropriate and shall use their best efforts in order
to consummate the transactions contemplated hereby as promptly as practicable.
ARTICLE VI
PROCEDURE EXCHANGE
6.1 At the Effective Date, the exchange shall be effected as set forth
in Kansas General Laws with common stock certificates of NELX being exchanged
for AMI common stock certificates as and when submitted to the transfer agent.
ARTICLE VII
CONDITIONS PRECEDENT TO THE
CONSUMMATION OF THE EXCHANGE
The following are conditions precedent to the consummation of the
Agreement on or before the Effective Date:
7.1 AMI shall have performed and complied with all of its respective
obligations hereunder which are to be complied with or performed on or before
the Effective Date and NELX and AMI shall provide one another at the Closing
with a certificate to the effect that such party has performed each of the acts
and undertakings required to be performed by it on or before the Closing Date
pursuant to the terms of this Agreement.
7.2 This Agreement, the transactions contemplated herein shall have
been duly and validly authorized, approved and adopted, at meetings of the
shareholders of AMI duly and properly called for such purpose in accordance with
the applicable laws.
7.3 No action, suit or proceeding shall have been instituted or shall
have been threatened before any court or other governmental body or by any
public authority to restrain, enjoin or prohibit the transactions contemplated
herein, or which might subject any of the parties hereto or their directors or
officers to any material liability, fine, forfeiture or penalty on the grounds
that the transactions contemplated hereby, the parties hereto or their directors
or officers, have violated any applicable law or regulation or have otherwise
acted improperly in connection with the transactions contemplated hereby, and
the parties hereto have been advised by counsel that, in the opinion of such
counsel, such action, suit or proceeding raises substantial questions of law or
fact which could reasonably be decided adversely to any party hereto or its
directors or officers.
7.4 All actions, proceedings, instruments and documents required to
carry out this Agreement and the transactions contemplated hereby and the form
and substance of all legal proceedings and related matters shall have been
approved by counsel for AMI and NELX.
7.5 The representations and warranties made by AMI and NELX in this
Agreement shall be true as though such representations and warranties had been
made or given on and as of the Effective Date, except to the extent that such
representations and warranties may be untrue on and as of the Effective Date
because of (1) changes caused by transactions suggested or approved in writing
by AMI or (2) events or changes (which shall not, in the aggregate, have
materially and adversely affected the business, assets, or financial condition
of NELX or AMI during or arising after the date of this Agreement.)
7.6 AMI will have sought and obtained from its legal counsel an opinion
in form and substance satisfactory to AMI to the effect that: if the
transactions contemplated hereby are consummated in accordance with the terms of
this Agreement, they will constitute a reorganization within the meaning of the
Internal Revenue Code of 1986, as amended (the "Code"); NELX and AMI will each
be a party to the reorganization; no gain or loss will be recognized pursuant to
the Code by NELX or AMI as a consequence of the transactions contemplated
hereby; AMI will succeed to and take into account the items of NELX described in
the Code; when a AMI shareholder receives solely NELX common stock in accordance
with the transactions contemplated hereby, such AMI shareholder will not
recognize gain or loss; the basis for the NELX common stock to be received by
AMI shareholders will be the same as the basis for the shares of AMI stock they
surrender in connection with the transactions contemplated hereby; and the
holding period for any AMI shareholder of the NELX common stock received in the
transactions contemplated hereby will include the period during which the shares
of the AMI stock surrendered were held provided that the AMI stock was a capital
asset in the hands of such AMI shareholder on the Effective Date.
7.7 AMI shall have furnished NELX with:
(1) a certified copy of a resolution or resolutions
duly adopted by the Board of Directors of AMI approving this
Agreement and the transactions contemplated by it and
directing the submission thereof to a vote of the shareholders
of AMI;
(2) a certified copy of a resolution or resolutions
duly adopted by a majority of all of the classes of
outstanding shares of AMI capital stock approving this
Agreement and the transactions contemplated by it;
(3) an opinion of its counsel dated as of the Closing
Date in accordance with 7.6 hereof;
(4) an agreement from each "affiliate" of AMI as
defined in the rules adopted under the Securities Act of 1933,
as amended, to the effect that (a) the affiliate is familiar
with SEC Rules 144 and 145; (b) none of the shares of NELX
common stock will be transferred by or through the affiliate
in violation of the Federal Securities Laws; (c) the affiliate
will not sell or in any way reduce his risk relative to any
NELX common stock received pursuant to this Agreement until
such time as financial results covering at least 30 days of
post-closing date combined operations shall have been
published by NELX on SEC Form 10-Q or otherwise; and (d) the
affiliate acknowledges that NELX is under no obligation to
register the sale, transfer, or the disposition of NELX common
stock by the affiliate or to take any action necessary in
order to make an exemption from registration available to the
affiliate, but understands that NELX will satisfy the public
information requirements of Rules 144 and 145 during the
three-year period following the Closing Date.
(5) Each U.S. citizen shareholder of AMI shall sign a Consent/
Subscription Agreement as contained on Exhibit "A".
7.8 NELX shall furnish AMI with a certified copy of a resolution or
resolutions duly adopted by the Board of Directors of NELX, approving this
Agreement and the transactions contemplated by it.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1 Anything contained in this Agreement to the contrary
notwithstanding, the Agreement may be terminated and abandoned at any time
(whether before or after the approval and adoption thereof by the shareholders
of AMI) prior to the Effective Date:
(a) By mutual consent of AMI and NELX;
(b) By AMI, or NELX, if any condition set forth in
Article VII relating to the other party has not been met or
has not been waived;
(c) By AMI, or NELX, if any suit, action or other
proceeding shall be pending or threatened by the federal or a
state government before any court or governmental agency, in
which it is sought to restrain, prohibit or otherwise affect
the consummation of the transactions contemplated hereby;
(d) By any party, if there is discovered any material
error, misstatement or omission in the representations and
warranties of another party;
(e) By any party if the Agreement Effective Date
is not within 30 days from the date hereof; or
(f) AMI shall have the right to assign this agreement
to any other entity, at any time, subject to the due diligence
terms herein.
8.2 Any of the terms or conditions of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, by action taken
by its Board of Directors provided; however, that such action shall be taken
only if, in the judgment of the Board of Directors taking the action, such
waiver will not have a materially adverse effect on the benefits intended under
this Agreement to the party waiving such term or condition.
ARTICLE IX
TERMINATION OF REPRESENTATION AND
WARRANTIES AND CERTAIN AGREEMENTS
9.1 The respective representations and warranties of the parties hereto
shall expire with, and be terminated and extinguished by consummation of the
Agreement; provided, however, that the covenants and agreements of the parties
hereto shall survive in accordance with their terms.
ARTICLE X
MISCELLANEOUS
10.1 This Agreement embodies the entire agreement between the parties,
and there have been and are no agreements, representations or warranties among
the parties other than those set forth herein or those provided for herein.
10.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall be deemed
to be an original instrument, but all such counterparts together shall
constitute but one instrument. Counterparts shall include the execution of the
Exchange Agreement and Representations by all shareholders.
10.3 All parties to this Agreement agree that if it becomes necessary
or desirable to execute further instruments or to make such other assurances as
are deemed necessary, the party requested to do so will use its best efforts to
provide such executed instruments or do all things necessary or proper to carry
out the purpose of this Agreement.
10.4 This Agreement may be amended upon approval of the Board of
Directors of each party provided that the shares issuable hereunder shall not be
amended without approval of the requisite shareholders of AMI.
10.5 Any notices, requests, or other communications required or
permitted hereunder shall be delivered personally or sent by overnight courier
service, fees prepaid, addressed as follows:
To Applied Mechanics, Inc.:
To NELX, Inc.:
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
▇▇▇▇▇ ▇, ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
received.
10.6 No press release or public statement will be issued relating to
the transactions contemplated by this Agreement without prior approval of AMI
and NELX. However, either AMI or NELX may issue at any time any press release or
other public statement it believes on the advice of its counsel it is obligated
to issue to avoid liability under the law relating to disclosures, but the party
issuing such press release or public statement shall make a reasonable effort to
give the other party prior notice of and opportunity to participate in such
release or statement.
IN WITNESS WHEREOF, the parties have set their hands and seals this
_____ day of July, 1998.
Applied Mechanics, Inc. NELX, Inc.
By:__________________________ by:________________________
President President
Attest:________________________ Attest:______________________
Secretary Secretary
APPLIED MECHANICS, INC., SHAREHOLDERS (by signature below or pursuant to
execution of the Exchange Agreement and Representations incorporating this
Agreement by reference.)
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