EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement"), is
executed this 23rd day of October, 1998, by and among Utilities Communications
International, Inc., a Utah corporation (hereinafter referred to as
"Utilities"); and ▇▇▇▇ ▇▇▇ and ▇▇▇ ▇▇▇▇▇, (hereinafter collectively referred to
as the "Shareholders"). Utilities and the Shareholders are collectively referred
to as the "Parties".
Premises
WHEREAS, the Shareholders own and have the right to sell, transfer and exchange
all (100%) of the issued and outstanding shares of capital stock of Intermost
Limited ("Intermost"), a corporation incorporated under the laws of the British
Virgin Islands;
WHEREAS, Utilities wishes to acquire one hundred percent (100%) of the issued
and outstanding capital stock of Intermost in exchange for 2,485,000 or
4,970,000 post forward split shares of Utilities common stock, par value $.001
per share (the "Utilities Common Stock"),
WHEREAS, the Shareholders wish to exchange their shares of Intermost for
Utilities Common Stock;
NOW THEREFORE, in consideration of the premises herein contained, and the mutual
covenants hereinafter set forth, the parties hereto have agreed, and by these
presents, do hereby contract as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF THE SHAREHOLDERS
As an inducement to, and to obtain the reliance of Utilities, the Shareholders
represent and warrant as follows:
Section 1.01 - Organization. Intermost is a corporation duly organized, validly
existing, and in good standing under the laws of the British Virgin Islands
("BVI") and has the corporate power and is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations, ordinances, and
orders of public authorities to own all of its properties and assets and to
carry on its businesses and shall include qualification to do business as a
foreign corporation in the states or countries in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification except where failure to be so qualified would not have
a material adverse effect on its business. Included in the Intermost Schedules
(as hereinafter defined) are complete and correct copies of the BVI equivalent
of articles of incorporation, as amended, and bylaws of Intermost as in effect
on the date hereof. The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not, violate any
provision of Intermost's BVI equivalent of the articles of incorporation or
bylaws. Intermost has taken, or will have taken prior to Closing, all actions
required by law, its articles of incorporation or BVI equivalent, or otherwise
to authorize the execution and delivery of this Agreement. Intermost has, or
will have prior to Closing, full power, authority, and legal right and has, or
will have prior to Closing, taken all action required by law, its bylaws,
articles of incorporation, or BVI equivalent, and otherwise to consummate the
transactions herein contemplated.
Section 1.02 - Capitalization and Outstanding Shares. The authorized
capitalization of Intermost consists of 50,000 shares of stock, par value of
$1.00 per share, of which the Shareholders own all or 100% of the outstanding
and issued shares of Intermost to date of closing. The Shareholders hereby
represent and warrant that they have full right, power, and authority to
transfer, assign, convey, and deliver their Intermost shares; and delivery of
such shares at the closing will convey to Utilities good and marketable title to
such shares, clear of any claims, charges, equities, liens, security interests
and encumbrances whatsoever.
Section 1.03 - Subsidiaries and Predecessor Corporations. Except as set forth on
the Intermost Schedules, Intermost does not have any subsidiaries, beneficially
or of record, or own any shares of any other corporation. For purposes
hereinafter, the term "Intermost" also includes those subsidiaries, if any, set
forth in the Intermost Schedules.
Section 1.04 - Financial Statements.
(a) Included in the Intermost Schedules are the audited balance sheets of
Intermost as of December 31, 1997 and December 31, 1996, and the related audited
statements of operations, stockholders' equity and cash flows for the two fiscal
years ended December 31, 1997 and December 31, 1996, together with the notes to
such statements and the opinion of an independent certified public accountant,
with respect thereto.
(b) All such financial statements have been prepared in accordance with
generally accepted accounting principles. The Intermost balance sheets present a
true and fair view as of the dates of such balance sheets of the financial
condition of Intermost. Intermost did not have, as of the dates of such balance
sheets, except as and to the extent reflected or reserved against therein, any
liabilities or obligations (absolute or contingent) which should be reflected in
the balance sheets or the notes thereto, prepared in accordance with generally
accepted accounting principles, and all assets reflected therein are properly
reported and present fairly the financial condition of the assets of Intermost
in accordance with generally accepted accounting principles.
(c) Intermost has no liabilities with respect to the payment of any federal,
state, county, local or other taxes (including any deficiencies, interest or
penalties), except for taxes accrued but not yet due and payable.
(d) Intermost has filed all state, federal or local income and/or franchise tax
returns required to be filed by it from inception to the date hereof. Each of
such income tax returns reflects the taxes due for the period covered thereby,
except for amounts which, in the aggregate, are immaterial.
(e) The books and records, financial and otherwise, of Intermost are in all
material respects complete and correct and have been maintained in accordance
with good business and accounting practices.
(f) All of Intermost's assets are reflected on its financial statements, and
except as set forth in the Intermost Schedules or the financial statements of
Intermost or the notes thereto, Intermost has no material liabilities, direct or
indirect, matured or unmatured, contingent or otherwise.
Section 1.05 Information. The information concerning Intermost set forth in this
Agreement and in the Intermost Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading. In addition,
the Shareholders have fully disclosed in writing to Utilities (through this
Agreement or the Intermost Schedules) all information relating to matters
involving Intermost or its assets or its present or past operations or
activities which (i) indicated or may indicate, in the aggregate, the existence
of a greater than $10,000 liability or diminution in value, (ii) have led or may
lead to a competitive disadvantage on the part of Intermost or (iii) either
alone or in aggregation with other information covered by this Section,
otherwise have led or may lead to a material adverse effect on the transactions
contemplated herein or on Intermost, its assets, or its operations or activities
as presently conducted or as contemplated to be conducted after the Closing
Date, including, but not limited to, information relating to governmental,
employee, environmental, litigation and securities matters and transactions with
affiliates.
Section 1.06 Options or Warrants. Except as set forth in this Agreement or the
Intermost Schedules, there are no existing options, warrants, calls, or
commitments of any character relating to the authorized and unissued Intermost
common stock.
Section 1.07 Absence of Certain Changes or Events. Except as set forth in this
Agreement or the Intermost Schedules, since December 31, 1997:
(a) there has not been (i) any material adverse change in the business,
operations, properties, assets, or condition of Intermost or (ii) any damage,
destruction, or loss to Intermost (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties, assets,
or condition of Intermost;
(b) Intermost has not (i) amended its Articles of Incorporation or By-Laws or
BVI equivalent; (ii) declared or made, or agreed to declare or make, any payment
of dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed, or agreed to purchase or redeem, any of
its capital stock; (iii) waived any rights of value which in the aggregate are
outside of the ordinary course of business or material considering the business
of Intermost; (iv) made any material change in its method of management,
operation or accounting; (v) entered into any other material transaction other
than sales in the ordinary course of its business; (vi) made any accrual or
arrangement for payment of bonuses or special compensation of any kind or any
severance or termination pay to any present or former officer or employee; (vii)
increased the rate of compensation payable or to become payable by it to any of
its officers or directors or any of its salaried employees whose monthly
compensation exceeds $1,000; or (viii) made any increase in any profit sharing,
bonus, deferred compensation, insurance, pension, retirement, or other employee
benefit plan, payment, or arrangement made to, for, or with its officers,
directors, or employees;
(c) Intermost has not (i) borrowed or agreed to borrow any funds or incurred, or
become subject to, any material obligation or liability (absolute or contingent)
except as disclosed herein and except liabilities incurred in the ordinary
course of business; (ii) paid or agreed to pay any material obligations or
liability (absolute or contingent) other than current liabilities reflected in
or shown on the most recent Intermost balance sheet, and current liabilities
incurred since that date in the ordinary course of business and professional and
other fees and expenses in connection with the preparation of this Agreement and
the consummation of the transactions contemplated hereby; (iii) sold or
transferred, or agreed to sell or transfer, any of its assets, properties, or
rights (except assets, properties, or rights not used or useful in its business
which, in the aggregate have a value of less than $1,000), or canceled, or
agreed to cancel, any debts or claims (except debts or claims which in the
aggregate are of a value of less than $1,000); (iv) made or permitted any
amendment or termination of any contract, agreement, or license to which it is a
party if such amendment or termination is material, considering the business of
Intermost; or (v) issued, delivered, or agreed to issue or deliver any stock,
bonds or other corporate securities including debentures (whether authorized and
unissued or held as treasury stock); and
(d) to the best knowledge of the Shareholders, Intermost has not become subject
to any law or regulation which materially and adversely affects, or in the
future may adversely affect the business, operations, properties, assets, or
condition of Intermost.
Section 1.08 Title and Related Matters. Intermost has good and marketable title
to all of its properties, inventory, interests in properties, and assets, real
and personal, which are reflected in the most recent Intermost balance sheet or
acquired after that date (except properties, inventory, interests in properties,
and assets sold or otherwise disposed of since such date in the ordinary course
of business) free and clear of all liens, pledges, charges, or encumbrances
except (a) statutory liens or claims not yet delinquent; (b) such imperfections
of title and easements as do not and will not materially detract from or
interfere with the present or proposed use of the properties subject thereto or
affected thereby or otherwise materially impair present business operations on
such properties; or (c) as described in the Intermost Schedules. Except as set
forth in the Intermost Schedules, Intermost owns, free and clear of any liens,
claims, encumbrances, royalty interests, or other restrictions or limitations of
any nature whatsoever, any and all products it is currently manufacturing,
including the underlying technology and data, and all procedures, techniques,
marketing plans, business plans, methods of management, or other information
utilized in connection with Intermost's business. Except as set forth in the
Intermost Schedules , no third party has any right to, and Intermost has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any product, technology, data, trade secrets, know-how,
propriety techniques, trademarks, service marks, trade names, or copyrights
which, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a materially adverse effect on the
business, operations, financial condition, income, or business prospects of
Intermost or any material portion of its properties, assets, or rights.
Section 1.09 Litigation and Proceedings. Except as set forth in the Intermost
Schedules, there are no actions, suits, proceedings, or investigations pending
or, to the knowledge of the Shareholders after reasonable investigation,
threatened by or against Intermost or affecting Intermost or its properties, at
law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind. The
Shareholders do not have any knowledge of any material default on the part of
Intermost with respect to any judgment, order, injunction, decree, award, rule,
or regulation of any court, arbitrator, or governmental agency or
instrumentality or of any circumstances which, after reasonable investigation,
would result in the discovery of such a default.
Section 1.10 Contracts.
(a) Except as included or described in the Intermost Schedules, there are no
"material" contracts, agreements, franchises, license agreements, debt
instruments or other commitments to which Intermost is a party or by which it or
any of its assets, products, technology, or properties are bound other than
those incurred in the ordinary course of business (as used in this Agreement, a
"material" contract, agreement, franchise, license agreement, debt instrument or
commitment is one which (i) will remain in effect for more than six (6) months
after the date of this Agreement or (ii) involves aggregate obligations of at
least ten thousand dollars ($10,000);
(b) All contracts, agreements, franchises, license agreements, and other
commitments to which Intermost is a party or by which its properties are bound
and which are material to the operations of Intermost taken as a whole are valid
and enforceable by Intermost in all respects, except as limited by bankruptcy
and insolvency laws and by other laws affecting the rights of creditors
generally;
(c) Intermost is not a party to or bound by, and the properties of Intermost are
not subject to any contract, agreement, other commitment or instrument; any
charter or other corporate restriction; or any judgment, order, writ,
injunction, decree, or award which materially and adversely affects, the
business operations, properties, assets, or condition of Intermost; and
(d) Except as included or described in the Intermost Schedules or reflected in
the most recent Intermost balance sheet, Intermost is not a party to any oral or
written (i) contract for the employment of any officer or employee which is not
terminable on 30 days, or less notice; (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension benefit or retirement plan,
(iii) agreement, contract, or indenture relating to the borrowing of money, (iv)
guaranty of any obligation, other than one on which Intermost is a primary
obligor, for the borrowing of money or otherwise, excluding endorsements made
for collection and other guaranties of obligations which, in the aggregate do
not exceed more than one year or providing for payments in excess of $10,000 in
the aggregate; (v) collective bargaining agreement; or (vi) agreement with any
present or former officer or director of Intermost.
Section 1.11 Material Contract Defaults. Intermost is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets or condition of Intermost and there is no event of default in any
material respect under any such contract, agreement, lease, or other commitment
in respect of which Intermost has not taken adequate steps to prevent such a
default from occurring.
Section 1.12 No Conflict With Other Instruments. The execution of this Agreement
and the consummation of the transactions contemplated by this Agreement will not
result in the breach of any term or provision of, constitute an event of default
under, or terminate, accelerate or modify the terms of any material indenture,
mortgage, deed of trust, or other material contract, agreement, or instrument to
which Intermost is a party or to which any of its properties or operations are
subject.
Section 1.13 Governmental Authorizations. Except as set forth in the Intermost
Schedules, Intermost has all licenses, franchises, permits, and other
governmental authorizations that are legally required to enable it to conduct
its business in all material respects as conducted on the date hereof.
Section 1.14 Compliance With Laws and Regulations. Except as set forth in the
Intermost Schedules, to the best of the Shareholders' knowledge, Intermost has
complied with all applicable statutes and regulations of any federal, state, or
other governmental entity or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the business,
operations, properties, assets, or condition of Intermost or except to the
extent that noncompliance would not result in the occurrence of any material
liability for Intermost.
Section 1.15 Insurance. Intermost will maintain all of its current policies of
insurance (liability and casualty) during the term of this Agreement.
Section 1.16 Approval of Agreement. The board of directors of Intermost has
approved this Agreement.
Section 1.17 Material Transactions or Affiliations. Set forth in the Intermost
Schedules is a description of every contract, agreement, or arrangement between
Intermost and any predecessor and any person who was at the time of such
contract, agreement, or arrangement an officer, director, or person owning of
record, or known by Intermost to own beneficially, 5% or more of the issued and
outstanding common stock of Intermost and which is to be performed in whole or
in part after the date hereof or which was entered into not more than three
years prior to the date hereof. Except as disclosed in the Intermost Schedules
or otherwise disclosed by writing to Utilities, no officer, director, or 5%
shareholder of Intermost has, or has had since inception of Intermost, any known
interest, direct or indirect, in any transaction with Intermost which was
material to the business of Intermost. There are no commitments by Intermost,
whether written or oral, to lend any funds, or to borrow any money from, or
enter into any other transaction with, any such affiliated person.
Section 1.18 Labor Relations. Intermost has not had work stoppage resulting from
labor problems. To the knowledge of the Shareholders, no union or other
collective bargaining organization is organizing or attempting to organize any
employee of Intermost.
Section 1.19 Valid Obligation. This Agreement and all agreements and other
documents executed by the Shareholders in connection herewith constitute the
valid and binding obligation of the Shareholders, enforceable in accordance with
its or their terms, except as may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and subject to the qualification that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefor may be brought.
Section 1.20 Intermost Schedules . The Shareholders have delivered to Utilities
the following schedules, which are collectively referred to as the "Intermost
Schedules " and which consist of separate schedules dated as of the date of
execution of this Agreement, all certified by the chief executive officer of
Intermost as complete, true, and correct as of the date of this Agreement in all
material respects:
(a) Schedule 1.01 through Schedule 1.18 setting forth any exceptions,
information and copies of documents required to be disclosed in the Intermost
Schedules by Sections 1.01 through 1.18.
(b) a Schedule 1.20(b) containing a list indicating the name and address of each
shareholder of Intermost together with the number of shares owned by him, her or
it;
(c) a Schedule 1.20(c) containing a description of all real property owned by
Intermost, together with a description of every mortgage, deed of trust, pledge,
lien, agreement, encumbrance, claim, or equity interest of any nature whatsoever
in such real property;
(d) a Schedule 1.20(d) including copies of all licenses, permits, and other
governmental authorizations (or requests or applications therefor) pursuant to
which Intermost carries on or proposes to carry on its business (except those
which, in the aggregate, are immaterial to the present or proposed business of
Intermost);
(e) a Schedule 1.20(e) listing the accounts receivable and notes and other
obligations receivable of Intermost as of December 31, 1997, or thereafter other
than in the ordinary course of business of Intermost, indicating the debtor and
amount, and classifying the accounts to show in reasonable detail the length of
time, if any, overdue, and stating the nature and amount of any refunds, set
offs, reimbursements, discounts, or other adjustments, which are in the
aggregate material and due to or claimed by such debtor; and
(f) a Schedule 1.20(f) listing the accounts payable and notes and other
obligations payable of Intermost as of December 31, 1997, or that arose
thereafter other than in the ordinary course of the business of Intermost,
indicating the creditor and amount, classifying the accounts to show in
reasonable detail the length of time, if any, overdue, and stating the nature
and amount of any refunds, set offs, reimbursements, discounts, or other
adjustments, which in the aggregate are material and due to or claimed by
Intermost respecting such obligations.
(g) a Schedule 1.20(g) comprising a true and complete list of (a) all accounts
with banks, money market mutual funds or securities or other financial
institutions maintained by Intermost within the past twelve (12) months, the
account numbers thereof, and all persons authorized to sign or act on behalf of
Intermost, (b) all safe deposit boxes and other similar custodial arrangements
maintained by Intermost within the past twelve (12) months, and (c) the names of
all persons holding powers of attorney from Intermost or who are otherwise
authorized to act on behalf of Intermost with respect to any matter, other than
its officers and directors, and a summary of the terms of such powers or
authorizations.
The Shareholders shall cause the Intermost Schedules and the instruments and
data delivered to Utilities hereunder to be promptly updated after the date
hereof up to and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above have
been completed or are available to be furnished by the Shareholders. The
Shareholders shall have 20 days from the date of execution hereof to provide
such schedules. If the Shareholders cannot or fail to do so, or if Utilities
acting reasonably finds any such schedules or updates provided after the date
hereof to be unacceptable, Utilities may terminate this Agreement by giving
written notice to Intermost within ten (10) days after the schedules or updates
were due to be produced or were provided.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF UTILITIES
As an inducement to, and to obtain the reliance of the Shareholders, except as
set forth in the Utilities Schedules (as hereinafter defined), Utilities
represents and warrants as follows:
Section 2.01 Organization. Utilities is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Utah and has the
corporate power and is duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets, to carry on its business in
all material respects as it is now being conducted, and except where failure to
be so qualified would not have a material adverse effect on its business, there
is no jurisdiction in which it is not qualified in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in the Utilities Schedules are complete and
correct copies of the Articles of Incorporation and By-Laws of Utilities as in
effect on the date hereof. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not,
violate any provision of Utilities's Articles of Incorporation or By-Laws.
Utilities has taken all action required by law, its Articles of Incorporation,
By-Laws, or otherwise to authorize the execution and delivery of this Agreement,
and Utilities has full power, authority, and legal right and has or will have
taken all action required by law, its Articles of Incorporation, By-Laws, or
otherwise to consummate the transactions herein contemplated.
Section 2.02 Capitalization. Utilities's authorized capitalization consists of
100,000,000 shares of common stock, and 5,000,000 shares of Preferred Stock, par
value $.001, of which 1,742,853 or 3,485,706 post forward split common shares
are issued and outstanding. Utilities anticipates issuing an additional
1,300,000 to other investors prior to, or shortly after the Closing. All issued
and outstanding shares are legally issued, fully paid, non-assessable and not
issued in violation of the pre-emptive or other rights of any person.
Section 2.03 Financial Statements.
(a) Included in the Utilities Schedules are (i) the unaudited balance sheets of
Utilities and the related statements of operations and cash flows as of and for
the eight months ended August 30, 1998 and (ii) the audited balance sheets of
Utilities as of December 31, 1997 and December 31, 1996, and the related audited
statements of operations, stockholders' equity and cash flows for the two fiscal
years ended December 31, 1997 and December 31, 1996, together with the notes to
such statements and the opinion of independent certified public accountants,
with respect thereto, all as set forth in the SEC Reports.
(c) All such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved. The Utilities balance sheets present fairly as of their
respective dates the financial condition of Utilities. As of the date of such
balance sheets, except as and to the extent reflected or reserved against
therein, Utilities had no liabilities or obligations (absolute or contingent)
which should be reflected in the balance sheets or the notes thereto prepared in
accordance with generally accepted accounting principles, and all assets
reflected therein are properly reported and present fairly the financial
condition of the assets of Utilities, in accordance with generally accepted
accounting principles. The statements of operations, stockholders' equity and
cash flows reflect fairly the information required to be set forth therein by
generally accepted accounting principles.
(d) Utilities has no liabilities with respect to the payment of any federal,
state, county, local or other taxes (including any deficiencies, interest or
penalties), except for taxes accrued but not yet due and payable.
(e) Utilities has filed all state, federal or local income and/or franchise tax
returns required to be filed by it from inception to the date hereof. Each of
such income tax returns reflects the taxes due for the period covered thereby,
except for amounts which, in the aggregate, are immaterial.
(f) The books and records, financial and otherwise, of Utilities are in all
material aspects complete and correct and have been maintained in accordance
with good business and accounting practices.
(g) All of Utilities's assets are reflected on its financial statements, and,
except as set forth in the Utilities Schedules or the financial statements of
Utilities or the notes thereto, Utilities has no material liabilities, direct or
indirect, matured or unmatured, contingent or otherwise.
Section 2.05 Information. The information concerning Utilities set forth in this
Agreement and the Utilities Schedules is complete and accurate in all material
respects and does not contain any untrue statements of a material fact or omit
to state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading. In addition, Utilities
has fully disclosed in writing to the Shareholders (through this Agreement or
the Utilities Schedules) all information relating to matters involving Utilities
or its assets or its present or past operations or activities which (i)
indicated or may indicate, in the aggregate, the existence of a greater than
$50,000 liability or diminution in value, (ii) have led or may lead to a
competitive disadvantage on the part of Utilities or (iii) either alone or in
aggregation with other information covered by this Section, otherwise have led
or may lead to a material adverse effect on the transactions contemplated herein
or on Utilities, its assets, or its operations or activities as presently
conducted or as contemplated to be conducted after the Closing Date, including,
but not limited to, information relating to governmental, employee,
environmental, litigation and securities matters and transactions with
affiliates.
Section 2.06 Options or Warrants. Except as set forth in the Utilities
Schedules, there are no existing options, warrants, calls, or commitments of any
character relating to the authorized and unissued stock of Utilities (the
"Existing Rights").
Section 2.07 Absence of Certain Changes or Events. Except as otherwise described
herein or in the Utilities Schedules, or permitted in writing by the
Shareholders, since the date of the most recent Utilities balance sheet:
(a) Utilities has not (i) amended its Articles of Incorporation or By-Laws; or
(ii) declared or made, or agreed to declare or make any payment of dividends or
distributions of any assets of any kind whatsoever to stockholders or purchased
or redeemed, or agreed to purchase or redeem, any of its capital stock (however,
Utilities may change its name to Intermost Holding, Inc. or a name substantially
similar thereto prior to the Closing);
(b) Utilities has not (i) granted or agreed to grant any options, warrants, or
other rights for its stock, bonds, or other corporate securities calling for the
issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or
become subject to, any material obligation or liability (absolute or contingent)
except liabilities incurred in the ordinary course of business; (iii) paid or
agreed to pay any material obligations or liabilities (absolute or contingent)
other than current liabilities reflected in or shown on the most recent
Utilities balance sheet and current liabilities incurred since that date in the
ordinary course of business and professional and other fees and expenses in
connection with the preparation of this Agreement and the consummation of the
transaction contemplated hereby, including but not limited to the divestiture of
assets and liabilities; (iv) issued, delivered or agreed to issue or deliver,
any stock, bonds, or other corporate securities including debentures (whether
authorized and unissued or held as treasury stock), except in connection with
this Agreement; and
(c) to the best knowledge of Utilities, it has not become subject to any law or
regulation which materially and adversely affects, or in the future, may
adversely affect, the business, operations, properties, assets or condition of
Utilities.
Section 2.08 Litigation and Proceedings. Except as set forth in the Utilities
Schedules, there are no actions, suits, proceedings or investigations pending
or, to the knowledge Utilities after reasonable investigation, threatened by or
against Utilities or affecting Utilities or its properties, at law or in equity,
before any court or other governmental agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind. Utilities has no knowledge of any
default on its part with respect to any judgement, order, writ, injunction,
decree, award, rule or regulation of any court, arbitrator, or governmental
agency or instrumentality or any circumstance which after reasonable
investigation would result in the discovery of such default.
Section 2.09 Contracts.
(a) Utilities is not a party to, and is not bound by, any material contract,
franchise, license agreement, agreement, debt instrument or other commitments
whether such agreement is in writing or oral, except as disclosed in the SEC
Reports or the Utilities Schedules.
(b) All contracts, agreements, franchises, license agreements, and other
commitments to which Utilities is a party or is bound and which are material to
the operations of Utilities taken as a whole are valid and enforceable by
Utilities in all respects, except as limited by bankruptcy and insolvency laws
and by other laws affecting the rights of creditors generally;
(c) Utilities is not a party to or bound by any contract, agreement, other
commitment or instrument; any charter or other corporate restriction; or any
judgment, order, writ, injunction, decree, or award which materially and
adversely affects, the business operations, properties, assets, or condition of
Utilities; and (d) Except as included or described in the Utilities Schedules or
reflected in the most recent Utilities balance sheet, Utilities is not a party
to any oral or written (i) contract for the employment of any officer or
employee which is not terminable on 30 days, or less notice; (ii) profit
sharing, bonus, deferred compensation, stock option, severance pay, pension
benefit or retirement plan, (iii) agreement, contract, or indenture relating to
the borrowing of money, (iv) guaranty of any obligation, other than one on which
Utilities is a primary obligor, for the borrowing of money or otherwise,
excluding endorsements made for collection and other guaranties of obligations
which, in the aggregate do not exceed more than one year or providing for
payments in excess of $25,000 in the aggregate; or (vi) collective bargaining
agreement.
Section 2.10 Material Contract Defaults. Utilities is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment and there is no event of default in any material respect
under any such contract, agreement, lease, or other commitment in respect of
which Utilities has not taken adequate steps to prevent such a default from
occurring.
Section 2.11 No Conflict With Other Instruments. The execution of this Agreement
and the consummation of the transactions contemplated by this Agreement will not
result in the breach of any term or provision of, constitute a default under, or
terminate, accelerate or modify the terms of, any indenture, mortgage, deed of
trust, or other material agreement or instrument to which Utilities is a party.
Section 2.12 Governmental Authorizations. Except for compliance with federal and
state securities or corporation laws, as hereinafter provided, no authorization,
approval, consent or order of, of registration, declaration or filing with, any
court or other governmental body is required in connection with the execution
and delivery by Utilities of this Agreement and the consummation by Utilities of
the transactions contemplated hereby.
Section 2.13 Compliance With Laws and Regulations. To the best of its knowledge,
Utilities has complied with all applicable statutes and regulations of any
federal, state, or other applicable governmental entity or agency thereof,
except to the extent that noncompliance would not materially and adversely
affect the business, operations, properties, assets or condition of Utilities or
except to the extent that noncompliance would not result in the occurrence of
any material liability. This compliance includes, but is not limited to, the
filing of all reports to date with federal and state securities authorities.
Section 2.14 Insurance. Utilities owns no insurable properties and carries no
casualty or liability insurance.
Section 2.15 Approval of Agreement. The board of directors of Utilities has
authorized the execution and delivery of this Agreement by Utilities and has
approved this Agreement and the transactions contemplated hereby. Consummation
of the transactions contemplated hereby are subject to approval of the
shareholders of Utilities.
Section 2.16 Material Transactions or Affiliations. Except as disclosed herein
and in the Utilities Schedules, there exists no contract, agreement or
arrangement between Utilities and any predecessor and any person who was at the
time of such contract, agreement or arrangement an officer, director, or person
owning of record or known by Utilities to own beneficially, 5% or more of the
issued and outstanding common stock of Utilities and which is to be performed in
whole or in part after the date hereof or was entered into not more than three
years prior to the date hereof. Neither any officer, director, nor 5%
shareholder of Utilities has, or has had since inception of Utilities, any known
interest, direct or indirect, in any such transaction with Utilities which was
material to the business of Utilities. Utilities has no commitment, whether
written or oral, to lend any funds to, borrow any money from, or enter into any
other transaction with, any such affiliated person.
Section 2.17 Valid Obligation. This Agreement and all agreements and other
documents executed by Utilities in connection herewith constitute the valid and
binding obligation of Utilities, enforceable in accordance with its or their
terms, except as may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought.
Section 2.18 Utilities Schedules. Utilities has delivered to the Shareholders,
the following schedules, which are collectively referred to as the "Utilities
Schedules" and which consist of separate schedules, which are dated the date of
this Agreement, all certified by the chief executive officer of Utilities to be
complete, true, and accurate in all material respects as of the date of this
Agreement:
Schedule 2.01 through Schedule 2.16 setting forth any exceptions, information
and copies of documents required to be disclosed in the Utilities Schedules by
Sections 2.01 through 2.16.
Utilities shall cause the Utilities Schedules and the instruments and data
delivered to Intermost hereunder to be promptly updated after the date hereof up
to and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above have
been completed or are available to be furnished by Utilities. Utilities shall
have until 20 days from the date of execution hereof to provide such schedules.
If Utilities cannot or fails to do so, or if the Shareholders, find any such
schedules or updates provided after the date hereof to be unacceptable, the
Shareholders may terminate this Agreement by giving written notice to Utilities
within ten (10) days after the schedules or updates were due to be produced or
were provided.
ARTICLE III
PLAN OF EXCHANGE
Section 3.01 - The Exchange. Subject to the conditions set forth in this
Agreement, the Shareholders hereby agree to assign, transfer, and deliver to
Utilities, free and clear of all liens, pledges, encumbrances, charges,
restrictions or known claims of any kind, nature, or description, two shares of
common stock of Intermost, constituting 100% of the issued and outstanding
shares of common stock of Intermost, and Utilities agrees to acquire such shares
on such date by issuing and delivering in exchange therefor 4,970,000 shares of
Utilities restricted common stock, par value $.001, referred to as the
"Exchanged Utilities Stock". Section 3.02 - Certificates. At the Closing, the
Shareholders shall surrender their stock certificate or certificates,
representing 100% of Intermost shares (the "Acquired Intermost Stock") to
Utilities, and thereafter be entitled to receive a certificate or certificates
evidencing the Exchanged Utilities Stock.
Section 3.03 - Closing. The closing ("Closing") of the transactions contemplated
herein shall be on a date and at such time and place as the parties may mutually
agree ("Closing Date"), but in no event later than November 20, 1998.
Section 3.04 - Closing Events. At the Closing, each of the respective parties
hereto shall execute, acknowledge, and deliver (or shall ensure to be executed,
acknowledged, and delivered) any and all certificates, opinions, financial
statements, schedules, agreements, resolutions, ruling or deeds or other
instruments required by this Agreement to be so delivered at or prior to the
Closing, together with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby.
Section 3.05 - Finder's Fees. The parties represent to each other that no
brokers were involved in this transaction and neither party is obligated to pay
any finder's fee.
Section 3.06 - Termination.
(a) This Agreement may be terminated by the board of directors of either
Utilities or the Shareholders at any time prior to the Closing Date if:
(i) there shall be any additional, i.e. actual or threatened action or
proceeding before any court or any governmental body which has not been
disclosed in this agreement and which shall seek to restrain, prohibit, or
invalidate the transactions contemplated by this Agreement and which, in the
judgment of such board of directors, made in good faith and based upon the
advice of its legal counsel, makes it inadvisable to proceed with the exchange
contemplated by this Agreement;
(ii) any of the transactions contemplated hereby are disapproved by any
regulatory authority whose approval is required to consummate such transactions
or in the judgment of such board of directors, made in good faith and based on
the advice of counsel, there is substantial likelihood that any such approval
will not be obtained or will be obtained only on a condition or conditions which
would be unduly burdensome, making it inadvisable to proceed with the exchange;
(iii) there shall have been any change in the assets, properties, business, or
financial condition of Intermost, which could have a materially adverse affect
on the value of the business of Intermost, except any changes disclosed in the
Shareholders Schedules, as the case may be, dated as of the date of the
execution of this Agreement; or
(iv) the Board of Directors of Utilities or the Shareholders determine in good
faith that a condition to closing has not occurred.
In the event of termination pursuant to this paragraph (a) of Section 3.06, no
obligation, right or liability shall arise hereunder, and each party shall bear
all of the expenses incurred by it in connection with the negotiation, drafting,
and execution of this Agreement and the transactions herein contemplated.
(b) This Agreement may be terminated at any time prior to the Closing by action
of the board of directors of Utilities, if the Shareholders shall fail to comply
in any material respect with any of their covenants or agreements contained in
this Agreement or if any of the representations or warranties of the
Shareholders contained herein shall be inaccurate in any material respect.
If this Agreement is terminated pursuant to this paragraph (b) of Section 3.06,
this Agreement shall be of no further force or effect, and no obligation, right
or liability shall arise hereunder, except that the Shareholders shall bear
their own costs as well as the reasonable costs of Utilities in connection with
the negotiations, preparation, and execution of this Agreement, and matters
connected therewith.
(c) This Agreement may be terminated at any time prior to the Closing by action
of the Shareholders if Utilities shall fail to comply in any material respect
with any of its covenants or agreements contained in this Agreement or if any of
the representations or warranties of Utilities contained herein shall be
inaccurate in any material respect.
If this Agreement is terminated pursuant to this paragraph (d) of Section 3.06,
this Agreement shall be of no further force or effect, and no obligation, right
or liability shall arise hereunder, except that Utilities shall bear its own
costs as well as the reasonable costs of the Shareholders incurred in connection
with the negotiation, preparation and execution of this Agreement.
ARTICLE IV
SPECIAL COVENANTS
Section 4.01 - Access to Properties and Records. Utilities and the Shareholders
will each afford to the officers and authorized representatives of the other
full access to the properties, books and records of Utilities or Intermost as
the case may be, in order that each may have full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of the other,
and each will furnish the other with such additional financial and operating
data and other information as to the business and properties of Utilities or
Intermost, as the case may be, as the other shall from time to time reasonably
request.
Section 4.02 - Delivery of Books and Records. At the Closing, the Shareholders
shall deliver to Utilities the originals of the corporate minute books, books of
account, contracts, records, and all other books or documents of Intermost now
in the possession of Intermost or its representatives.
Section 4.03 - Special Covenants and Representations Regarding the Exchanged
Utilities Stock and the Acquired Intermost Stock.
(a) The Exchanged Utilities Stock. The consummation of this Agreement and the
transactions herein contemplated, including the issuance of the Exchanged Stock
to the Shareholder of Intermost as contemplated hereby, constitutes the offer
and sale of securities under the Securities and Exchange Act and applicable
state statutes. The Shareholders acknowledge that the shares of Utilities to be
delivered to them pursuant to this Agreement have not been registered under the
Securities Act of 1993 as amended, referred to in this Agreement as the
"Securities Act," or the laws of any other jurisdiction, and that therefore the
stock is not fully transferable except as permitted under various exemptions, if
any contained in the Securities Act and the rules of the Securities and Exchange
Commission interpreting the act. Under US law, Utilities Common Stock cannot be
sold or transferred by the Shareholders unless they are subsequently registered
under applicable law or an exemption from registration is available. Utilities
is not required to register or assist in the registration of the Utilities
Common Stock except as provided herein or to make any exemption from
registration available. The provisions contained in this paragraph are intended
to ensure compliance with the Securities Act. The Shareholders represent and
warrant to Utilities that they are acquiring the shares of Utilities common
stock under this Agreement for their own account for investment, and not for the
purpose of resale or any other distribution of such shares. The Shareholders
also represent and warrant that they have no present intention of disposing of
all or any part of such shares at any particular time, for any particular price
or on the happening of any particular circumstances. They further represent that
they have such knowledge and experience in financial and business matters that
they are capable of evaluating the merits and risks of an investment in
Utilities. The Shareholders acknowledge that Utilities is relying on the truth
and accuracy of these warranties and representations in issuing the shares
without first registering the shares under the Securities Act. The Shareholders
covenant and represent that none of the shares of Utilities capital stock to be
issued to them pursuant to this Agreement, will be offered, sold, assigned,
pledged, transferred, or otherwise disposed of except after full compliance with
all of the applicable provisions of the 1933 act and the rules and regulations
of the Securities and Exchange Commission under the 1933 act. Therefore the
Shareholders agree not to sell or otherwise dispose of any of the shares of
Utilities common stock received pursuant to this agreement unless they 1. have
delivered to Utilities a written legal opinion in form and substance
satisfactory to counsel for Utilities to the effect that the disposition is
permissible under the terms of the Securities Act and regulations interpreting
the act; 2. have complied with the registration and prospectus requirements of
the 1933 act relating to such disposition; or 3. have presented Utilities
satisfactory evidence that such a disposition is exempt from registration under
the act. Utilities shall place a stop transfer order against transfers of shares
until one of the conditions set forth in this paragraph have been met.
Furthermore the Shareholders agree that the certificates evidencing the shares
that they will receive under this agreement will contain the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND HAVE BEEN TAKEN FOR INVESTMENT. THE SECURITIES MAY
NOT BE SOLD OR OFFERED FOR SALE UNLESS A REGISTRATION STATEMENT UNDER THE
FEDERAL SECURITIES ACT OF 1933, AS AMENDED IS IN EFFECT FOR THE SECURITIES, OR
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS IN FACT
APPLICABLE TO SUCH OFFER OR SALE, AND SUCH EXEMPTION IS EVIDENCED BY AN OPINION
OF COUNSEL SATISFACTORY TO THE ISSUER.
(b) The Acquired Intermost Stock. Utilities acknowledges that the shares of
Intermost to be delivered to Utilities by each Shareholder pursuant to this
Agreement have not been registered under the Securities Act of 1993 as amended,
referred to in this agreement as the "Securities Act," or the laws of any other
jurisdiction, and that therefore the stock is not fully transferable except as
permitted under various exemptions, if any contained in the act and the rules of
the Securities and Exchange Commission interpreting the act. The provisions
contained in this paragraph are intended to ensure compliance with the
Securities Act. Under US law, Intermost Common Stock cannot be sold or
transferred by Utilities unless they are subsequently registered under
applicable law or an exemption from registration is available. Intermost is not
required to register or assist in the registration of the Acquired Intermost
Stock or to make any exemption from registration available. The provisions
contained in this paragraph are intended to ensure compliance with the
Securities Act. Utilities represents and warrants to the Shareholders that it is
acquiring the shares of Intermost under this Agreement for its own account for
investment, and not for the purpose of resale or any other distribution of such
shares. Utilities also represents and warrants that it has no present intention
of disposing of all or any part of such shares at any particular time, for any
particular price or on the happening of any particular circumstances. Utilities
further represents that it has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
investment in Intermost. Furthermore Utilities agrees that the certificates
evidencing the shares that it will receive under this Agreement will contain the
following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND HAVE BEEN TAKEN FOR INVESTMENT. THE SECURITIES MAY
NOT BE SOLD OR OFFERED FOR SALE UNLESS A REGISTRATION STATEMENT UNDER THE
FEDERAL SECURITIES ACT OF 1933, AS AMENDED IS IN EFFECT FOR THE SECURITIES, OR
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS IN FACT
APPLICABLE TO SUCH OFFER OR SALE, AND SUCH EXEMPTION IS EVIDENCED BY AN OPINION
OF COUNSEL SATISFACTORY TO THE ISSUER.
Section 4.04 Short Positions Prohibited. For a period beginning from the closing
date and ending on the second anniversary of the closing date none of the
Shareholders or any of their affiliates, subsidiaries, officers, directors or
agents, shall directly or indirectly maintain, or assist in maintaining any
short position in the securities of Utilities.
Section 4.05 - Third Party Consents and Certificates. Utilities and Intermost
agree to cooperate with each other in order to obtain any required third party
consents to this Agreement and the transactions herein and therein contemplated.
Section 4.06 - Actions Prior to Closing.
(a) From and after the date of this Agreement until the Closing Date and except
as set forth in the Intermost Schedules or as permitted or contemplated by this
Agreement, Intermost, through the Shareholders will:
(i) carry on its business in substantially the same manner as it had heretofore;
(ii) maintain and keep its properties in states of good repair and condition as
at present, except for depreciation due to ordinary wear and tear and damage due
to casualty;
(iii) maintain in full force and effect insurance comparable in amount and in
scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations under material
contracts, leases, and instruments relating to or affecting its assets,
properties, and business;
(v) use its best efforts to maintain and preserve its business organization
intact, to retain its key employees, and to maintain its relationship with its
material suppliers and customers;
(vi) fully comply with and perform in all material respects all obligations and
duties imposed on it by all federal and state laws and all rules, regulations,
and orders imposed by federal or state governmental authorities; and
(vii) not take any action described in Section 1.07 or enter into or amend any
contract, agreement, or other instruments of any of the types described in the
Intermost schedules, except that Intermost may enter into or amend any contract,
agreement, or other instrument in the ordinary course of business involving the
sale of goods or services.
(b) From and after the date of this Agreement until the Closing Date, neither
Utilities, the Shareholders nor Intermost will make any changes in their
articles of incorporation or bylaws or the BVI equivalent
Section 4.07 - Sales Under Rule 144 or 145, if Applicable.
(a) Utilities will use its best efforts to at all times comply with the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and NASD, including timely filing of all periodic reports
required under the provisions of the Exchange Act and the rules and regulations
promulgated thereunder.
(b) Upon being informed in writing by any such person holding restricted stock
of Utilities as of the date of this Agreement that such person intends to sell
any shares under Rule 144 or Rule 145 promulgated under the Securities Act
(including any rule adopted in substitution or replacement thereof), Utilities
will certify in writing to such person that it has filed all of the reports
required to be filed by it under the Exchange Act to enable such person to sell
such person's restricted stock under Rule 144 or 145, as may be applicable in
the circumstances, or will inform such person in writing that it has not filed
any such report or reports.
(c) If any certificate representing any such restricted stock is presented to
Utilities' transfer agent for registration of transfer in connection with any
sale theretofore made under Rule 144 or 145, provided such certificate is duly
endorsed for transfer by the appropriate person(s) or accompanied by a separate
stock power duly executed by the appropriate person(s) in each case with
reasonable assurances that such endorsements are genuine and effective, and is
accompanied by an opinion of counsel satisfactory to Utilities and its counsel
that stock transfer has complied with the requirements of Rule 144 or 145, as
the case may be, Utilities will promptly instruct its transfer agent to register
such shares and to issue one or more new certificates representing such shares
to the transferee and, if appropriate under the provisions of Rule 144 or 145,
as the case may be, free of any stop transfer order or restrictive legend. The
provisions of this Section 4.07 shall survive the Closing and the consummation
of the transactions contemplated by this Agreement.
Section 4.08 - Indemnification.
(a) The Shareholders hereby agree to indemnify Utilities and each of the
officers, agents and directors of Utilities as of the date of execution of this
Agreement against any loss, liability, claim, damage, or expense (including, but
not limited to, any and all expense whatsoever reasonably incurred in
investigating, preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever), to which it or they may become subject
arising out of or based on any inaccuracy appearing in or misrepresentations
made under Article I of this Agreement. The indemnification provided for in this
paragraph shall survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement.
(b) Utilities hereby agrees to indemnify the Shareholders as of the date of
execution of this Agreement against any loss, liability, claim, damage, or
expense (including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever), to which it or
they may become subject arising out of or based on any inaccuracy appearing in
or misrepresentation made under Article II of this Agreement. The
indemnification provided for in this paragraph shall survive the Closing and
consummation of the interactions contemplated hereby and termination of this
Agreement.
4.09 Exclusive Dealing Rights. Until 5:00 P.M. New York City Time on November
10th, 1998, in recognition of the substantial time and effort which Utilities
has spent and will continue to spend in investigating Intermost and its business
and in addressing the matters related to the transactions contemplated herein,
each of which may preempt or delay other management activities, neither the
Shareholders, nor any of their representatives or agents will directly or
indirectly solicit or initiate any discussions or negotiations with, or, except
where required by fiduciary obligations under applicable law as advised by
counsel, participate in any negotiations with or provide any information to or
otherwise cooperate in any other way with, or facilitate or encourage any effort
or attempt by, any corporation, partnership, person or other entity or group
(other than Utilities and its directors, officers, employees, representatives
and agents) concerning any merger, sale of substantial assets, sale of shares of
capital stock, (including without limitation, any public or private offering of
the common stock of Intermost) or similar transactions involving Intermost (all
such transactions being referred to as "Intermost Acquisition Transactions"). If
Intermost receives any proposal with respect to a Intermost Acquisition
Transaction, the Shareholders will immediately communicate to Utilities the fact
that it has received such proposal and the principal terms thereof.
Section 4.10 Board of Directors of Utilities. Upon completion of the
acquisition, the existing Board of Directors of Utilities shall be dissolved or
resign and a new board shall be constituted by Intermost.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF UTILITIES
The obligations of Utilities under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.01 - Accuracy of Representations. The representations and warranties
made by the Shareholders in this Agreement were true when made and shall be true
at the Closing Date with the same force and effect as if such representations
and warranties were made at and as of the Closing Date (except for changes
therein permitted by this Agreement). Additionally, the Shareholders shall have
performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by such Shareholders, and when
necessary by Intermost, prior to or at the Closing. Utilities shall be furnished
with a certificate, signed by a duly authorized executive officer of Intermost
and the Shareholders dated the Closing Date, to the foregoing effect.
Section 5.02 - Officer's Certificate. Utilities shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
Intermost to the effect that no litigation, proceeding, investigation, or
inquiry is pending, or to the best knowledge of the Shareholders, threatened,
which might result in an action to enjoin or prevent the consummation of the
transactions contemplated by this Agreement, or, to the extent not disclosed in
the Intermost Schedules, by or against Intermost, which might result in any
material adverse change in any of the assets, properties, business, or
operations of Intermost.
Section 5.03 - No Material Adverse Change. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business, or operations of Intermost nor shall any event have occurred which,
with the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business or operations of Intermost.
Section 5.04 - Good Standing. Utilities shall have received a certificate of
good standing from the appropriate BVI official, dated as of a date within ten
days prior to the Closing Date certifying that Intermost is in good standing as
a corporation in the British Virgin Islands.
Section 5.05 - Shareholder Approval. - The shareholders of Utilities shall have
approved this agreement and the transactions contemplated hereby as required by
law.
Section 5.06 - Other Items.
(a) Utilities shall have received a Shareholder list of Intermost containing the
name, address, and number of shares held by each Intermost Shareholder,
certified by an executive officer of Intermost as being true, complete and
accurate,
(b) Utilities shall have received such further documents, certificates or
instruments relating to the transactions contemplated hereby as Utilities may
reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE SHAREHOLDERS
The obligations of the Intermost Shareholders under this Agreement are subject
to the satisfaction, at or before the Closing Date, of the following conditions:
Section 6.01 - Accuracy of Representations. The representations and warranties
made by Utilities in this Agreement were true when made and shall be true as of
the Closing Date (except for changes therein permitted by this Agreement) with
the same force and effect as if such representations and warranties were made at
and as of the Closing Date, and Utilities shall have performed and complied with
all covenants and conditions required by this Agreement to be performed or
complied with by Utilities prior to or at the Closing. The Shareholders shall
have been furnished with a certificate, signed by a duly authorized executive
officer of Utilities and dated the Closing Date, to the foregoing effect.
Section 6.02 - Officer's Certificate. The Shareholders shall have been furnished
with a certificate dated the Closing Date and signed by a duly authorized
executive officer of Utilities, to the effect that no litigation, proceeding,
investigation or inquiry is pending, other than those disclosed herein, or to
the best knowledge of Utilities threatened, which might result in an action to
enjoin or prevent the consummation of the transactions contemplated by this
Agreement.
Section 6.03. - Resignation of Existing Board. The Shareholders shall have
received the written resignations of all directors and such officers of
Utilities as are requested by the Shareholders.
ARTICLE VII
MISCELLANEOUS
Section 7.01 - Governing Law. This Agreement shall be governed by, enforced, and
construed under and in accordance with the laws of the United States of America
and, with respect to the matters of state law, with the laws of Utah.
Section 7.02 - Notices. Any notice or other communications required or permitted
hereunder shall be sufficiently given if personally delivered to it or sent by
registered mail or certified mail, postage prepaid, or by prepaid telegram
addressed as follows:
If to Utilities, to: Utility Communications International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
With copies to: Vanderkam and ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to the Shareholders: Intermost Limited
_________________________
_________________________
_________________________
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed or telegraphed.
Section 7.03 - Attorney's Fees. In the event that any party institutes any
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the breaching party or parties shall reimburse the
nonbreaching party or parties for all costs, including reasonable attorney's
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
Section 7.04 - Confidentiality. Each party hereto agrees with the other parties
that, unless and until the transactions contemplated by this Agreement have been
consummated, he, she or it and respective representatives will hold in strict
confidence all data and information obtained with respect to another party or
any subsidiary thereof from any representative, officer, director or employee,
or from any books or records or from personal inspection, and shall not use such
disclosure data or information or disclose the same to others, except (i) to the
extent such data or information is published, is a matter of public knowledge,
or is required by law to be published; and (ii) to the extent that such
disclosure data or information must be used or disclosed in order to consummate
the transactions contemplated by this Agreement. In the event of the termination
of this agreement, each party shall return to the other party all documents and
other materials obtained by it or on its behalf and shall destroy all copies,
digests, workpapers, abstracts or other materials relating thereto, and each
party will continue to comply with the confidentiality provisions set forth
herein.
Section 7.05 - Schedules; Knowledge. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
Section 7.06 - Third Party Beneficiaries. This contract is strictly between
Utilities and the Shareholders and, except as specifically provided, no
director, officer, stockholder, employee, agent, independent contractor or any
other person or entity shall be deemed to be a third party beneficiary of this
Agreement.
Section 7.07 - Entire Agreement. This Agreement represents the entire agreement
between the parties relating to the subject matter thereof.
Section 7.08 - Survival; Termination. The representations, warranties, and
covenants of the respective parties shall survive the Closing Date. All rights
and obligations under this entire agreement shall be binding upon and inure to
the benefit of the heirs, executors, administrators and assigns of the parties.
Section 7.09 - Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument. For purposes of this Agreement only,
facsimile signatures shall be considered original signatures. Section 7.10 -
Amendment or Waiver. Every right and remedy provided herein shall be cumulative
with every other right and remedy, whether conferred herein, at law, or in
equity, and may enforced concurrently herewith, and no waiver by any party of
the performance of any obligation by the other shall be construed as a waiver of
the same of any other default then, theretofore, or thereafter occurring or
existing. At any time prior to the Closing Date, this Agreement may by amended
by a writing signed by all Parties hereto, with respect to any of the terms
contained herein, and say term or condition of this Agreement may be waived or
the time for performance may be extended by a writing signed by the party or
Parties for whose benefit the provision in intended.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to
be extended by their respective officers, hereunto duly authorized, as of the
date first-above written.
ATTEST: UTILITIES COMMUNICATIONS
INTERNATIONAL, INC.
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Secretary or Assistant Secretary By:
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Title:
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THE SHAREHOLDERS
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