MERGER AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
OREX GOLD MINES CORPORATION,
SANTA ▇▇▇▇▇ MINING CORPORATION,
▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
AND ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
DATED AS OF
AUGUST 16, 1999.
TABLE OF CONTENTS
Page
1. DEFINITIONS............................................................1
2. TRANSACTION; TRANSACTION CONSIDERATION; CLOSING........................1
2.1 Transaction......................................................1
2.2 Effect of the Merger.............................................2
2.3 Effective Time; Filing of Certificates of Merger.................2
2.4 Articles of Incorporation........................................2
2.5 Bylaws...........................................................2
2.6 Directors and Officers...........................................2
2.7 Tax Consequences.................................................2
2.8 Additional Actions...............................................2
2.9 The Closing......................................................3
2.10 Actions at the Closing...........................................3
2.11 No Dissenters' Rights............................................3
2.12 Surrender of Certificates........................................3
2.12.1 Company's Shares..........................................3
2.12.2 Dividends.................................................3
2.13 Transaction Consideration........................................3
2.13.1 OREX Shares...............................................4
2.13.2 Conversion of Shares......................................4
2.14 Shareholder Consent and Release..................................6
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.....................6
3.1 Organization, Qualification, and Corporate Power.................6
3.2 Capitalization...................................................6
3.3 Authorization....................................................7
3.4 Noncontravention.................................................7
3.5 Broker's Fees....................................................7
3.6 Title to Assets..................................................7
i
3.7 No Subsidiaries..................................................8
3.8 Financial Statements.............................................8
3.9 Events Subsequent to Most Recent Fiscal Year End.................8
3.9.1 Sale or Lease of Assets....................................8
3.9.2 Contracts..................................................8
3.9.3 Change in Contracts........................................8
3.9.4 Security Interests.........................................8
3.9.5 Investments................................................9
3.9.6 Debts......................................................9
3.9.7 Liabilities Unaffected.....................................9
3.9.8 Claims Unaffected..........................................9
3.9.9 Articles and Bylaws........................................9
3.9.10 Changes in Equity.........................................9
3.9.11 Distribution..............................................9
3.9.12 Property Damage...........................................9
3.9.13 Transactions with Affiliates..............................9
3.9.14 Collective Bargaining Agreements..........................9
3.9.15 Compensation Changes......................................9
3.9.16 Employee Benefit Plans....................................9
3.9.17 Officers; Directors; Employees............................9
3.9.18 Charitable or Capital Contributions......................10
3.9.19 Ordinary Course of Business..............................10
3.9.20 Accounting Practices.....................................10
3.9.21 Accounts Receivable......................................10
3.9.22 In ......................................................10
3.10 Undisclosed Liabilities.........................................10
3.11 Legal Compliance................................................10
3.12 Tax Matters.....................................................10
3.12.1 Tax Returns..............................................11
3.12.2 Withholding..............................................11
3.12.3 No Disputes of Claims....................................11
3.12.4 No Waivers...............................................11
3.12.5 No Special Circumstances.................................11
3.12.6 Subchapter "S"...........................................11
3.12.7 Audits of Tax Returns....................................12
3.12.8 Period of Assessment.....................................12
3.12.9 Tax Agreements...........................................12
3.12.10 Inclusions in Taxable Periods...........................12
3.12.11 Consents................................................12
3.12.12 Personal Holding Company................................12
3.12.13 Consolidated Tax Returns................................12
3.13 Real Property...................................................12
3.13.1 Binding..................................................12
3.13.2 Continued Validity.......................................13
3.13.3 No Defaults..............................................13
3.13.4 Repudiation..............................................13
3.13.5 No Disputes..............................................13
3.13.6 Subleases................................................13
3.13.7 Encumbrances.............................................13
3.13.8 Approvals................................................13
3.13.9 Utilities................................................13
3.14 Intellectual Property...........................................13
3.15 Condition of Tangible Assets....................................13
3.16 Contracts.......................................................13
3.16.1 Personal Property Leases.................................14
3.16.2 Services.................................................14
3.16.3 Partnership; Joint Venture...............................14
3.16.4 Indebtedness.............................................14
3.16.5 Confidentiality; Non-Competition.........................14
3.16.6 Shareholders' Agreements.................................14
3.16.7 Plans....................................................14
3.16.8 Employment or Consulting Agreements......................14
3.16.9 Advances; Loans..........................................14
3.16.10 Adverse Effects.........................................14
3.16.11 Other Agreements........................................14
3.17 Powers of Attorney..............................................15
3.18 Insurance; Malpractice..........................................15
3.19 Litigation......................................................16
3.20 [Open]..........................................................16
3.21 [Open]..........................................................16
3.22 Company Compliance..............................................17
3.23 [Open]..........................................................17
3.24 Employees.......................................................17
3.25 Employee Benefits...............................................17
3.25.1 Plans....................................................17
3.25.2 Compliance...............................................18
3.25.3 Reports and Descriptions.................................18
3.25.4 Contributions............................................18
3.25.5 Qualified Plan...........................................18
3.25.6 Market Value.............................................18
3.25.7 Copies...................................................18
3.25.8 Maintenance of Plans.....................................18
3.25.8.1 Reportable Events................................18
3.25.8.2 Prohibited Transactions..........................18
3.26 [Open]..........................................................19
3.27 Guaranties......................................................20
3.28 Environment, Health, and Safety.................................20
3.28.1 Compliance...............................................20
3.28.2 Permits and Licenses.....................................20
3.28.3 Notices..................................................20
3.28.4 Hazardous Substances.....................................20
3.29 Certain Business Relationships with the Company and its
Affiliates......................................................20
3.30 [Open]..........................................................20
3.31 Bank Accounts...................................................21
3.32 Tax Status......................................................21
3.33 Binding Obligation..............................................21
3.34 [Open]..........................................................21
3.35 [Open]..........................................................21
3.36 [Open]..........................................................21
3.37 Securities Representation.......................................21
3.37.1 No Registration of OREX Shares; Investment Intent........21
3.37.2 Resale Restrictions......................................21
3.37.3 Ability to Bear Economic Risk............................22
3.37.4 Accredited Investor......................................22
3.37.5 Residency................................................22
3.37.6 No Registration..........................................23
3.38 Disclosure......................................................23
4. REPRESENTATIONS AND WARRANTIES OF OREX................................23
4.1 Organization of OREX............................................23
4.1.1 Authorization of Transaction..............................23
5. DELIVERIES AT CLOSING; Termination....................................23
5.1 Deliveries of the Shareholders..................................23
5.1.1 Consents and Approvals....................................23
5.1.2 Termination of Agreements.................................23
5.1.3 Company Stock.............................................24
5.1.4 Corporate Authorization...................................24
5.1.5 Good Standing Certificate.................................24
5.1.6 Secretary's Certificate...................................24
5.1.7 Other documents...........................................25
5.2 Deliveries of OREX..............................................25
5.2.1 Transaction Consideration.................................25
5.2.2 Resolutions...............................................25
5.2.3 Certificate of Incumbency.................................25
5.3 Termination.....................................................25
6. FILING REGISTRATION STATEMENT.........................................25
6.1 Initial Public Offering.........................................25
6.2 Information.....................................................25
7. POST-CLOSING COVENANTS................................................25
7.1 General.........................................................25
7.2 Tax Returns.....................................................26
7.3 Transition......................................................26
7.4 Litigation Support..............................................26
7.5 Consents........................................................26
8. SURVIVAL AND INDEMNIFICATION.........................................27
8.1 Survival of Representations and Warranties......................27
8.2 Indemnification Provisions for the Benefit of OREX..............27
8.3 Indemnification Provisions for the Benefit of the
Shareholders....................................................27
8.4 Matters Involving Third Parties.................................27
8.4.1 Notification..............................................27
8.4.2 Defense by Indemnifying Party.............................27
8.4.3 Satisfactory Defense......................................28
8.4.4 Conditions................................................28
9. MISCELLANEOUS.........................................................29
9.1 Confidentiality, Press Releases, and Public Announcements.......29
9.2 Shareholders Restrictive Covenants..............................29
9.2.1 Restricted Period.........................................29
9.2.2 Not Applicable............................................30
9.2.3 Consideration.............................................30
9.2.4 Third-Party Beneficiaries.................................30
9.2.5 Defenses..................................................31
9.2.6 Severability..............................................31
9.3 Confidentiality.................................................31
9.4 No Third-Party Beneficiaries....................................31
9.5 Entire Agreement................................................32
9.6 Succession and Assignment.......................................32
9.7 Counterparts....................................................32
9.8 Headings........................................................32
9.9 Notices.........................................................32
9.10 Governing Law; Jurisdiction; Attorney's Fees....................33
9.11 Amendments and Waivers..........................................33
9.12 Severability....................................................33
9.13 Expenses........................................................34
9.14 Further Assurances..............................................34
9.15 Construction....................................................34
9.16 Incorporation of Exhibits and Schedules.........................34
MERGER AGREEMENT AND PLAN OF REORGANIZATION
THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
and entered into as of the 16th day of August, 1999, by and among OREX GOLD
MINES CORPORATION, a Delaware corporation ("OREX"), SANTA ▇▇▇▇▇ MINING
CORPORATION, a California corporation (the "Company"), ▇▇▇▇▇▇ ▇▇▇ ("▇▇▇"), ▇▇▇
▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇"), ▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇")
(Lee, Blackburn, ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ are also referred to herein individually as
the "Shareholder" and collectively, the "Shareholders"). OREX, the Company and
the Shareholders are sometimes referred to herein individually as a "Party" and
collectively as the "Parties."
Preliminary Statements
A.....OREX is a gold mining company that has a license to use an
environmentally safe gold extract process;
B.....The Company is a mining company that owns and operates several
mining operations in the State of Arizona. The Shareholders own all of the
issued and outstanding Company Shares, as hereinafter defined;
C.....All of the Parties hereto desire to enter into this Agreement to
effectuate the Merger, as hereinafter defined, of the Company with and into OREX
pursuant to the terms and conditions of this Agreement;
D.....It is the intention of the Parties for the Merger, contemplated
herein to qualify as a tax-free reorganization pursuant to Sections 368(a)(1)(A)
of the Code, as hereinafter defined; and
E.....Each Party will derive significant benefits from the consummation of
the transactions contemplated by this Agreement and wishes to induce the other
Parties to enter into this Agreement by entering into certain covenants and
agreements.
NOW, THEREFORE, in consideration of the premises and the actual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the receipt and adequacy of which are hereby
conclusively acknowledged, the Parties, intending to become legally bound,
hereby agree as follows:
Terms And Conditions
1. DEFINITIONS. All capitalized words that are not capitalized for purposes of
grammar and which are not defined in the text of this Agreement are defined
terms with their definitions set forth on Exhibit I.
2. TRANSACTION; TRANSACTION CONSIDERATION; CLOSING.
2.1 Transaction. Upon the terms and subject to the conditions hereof and in
accordance with the provisions of the California Business Corporation Act (the
"California Act") and the Delaware Business Corporation Act (the "Delaware
Act"), the Company shall be merged with and into OREX (the "Merger") and the
separate existence of the Company shall thereupon cease, and OREX, as the
surviving corporation (the "Surviving Corporation"), shall continue to exist
under and be governed by the Delaware Act (the "Transaction").
2.2 Effect of the Merger. At and after the Effective Time, the effect of the
Merger shall, in all respects, be as provided in the California Act and the
Delaware Act. From and after the Effective Time, OREX shall continue to be a
Delaware corporation.
2.3 Effective Time; Filing of Certificates of Merger. The Merger shall be
effected by the filing at the time of the Closing or as soon as practicable
thereafter, of the Articles of Merger (the "Articles of Merger"), substantially
in the form of Exhibit 2.3 attached hereto, with the Secretary of the State of
Delaware and Secretary of State of California in accordance with the provisions
of the Delaware Act and the California Act, respectively. The Merger shall
become effective as of 11:59 p.m. on the date of such filing (the "Effective
Time") and the parties shall take any and all other lawful actions and do any
and all other lawful things necessary to cause the Merger to become effective.
2.4 Articles of Incorporation. As of the Effective Time, the certificate of
incorporation of OREX, as in effect immediately prior to the Effective Time,
shall be the certificate of incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable law.
2.5 Bylaws. As of the Effective Time, the bylaws of OREX, as in effect
immediately prior to the Effective Time, shall be the bylaws of the Surviving
Corporation until thereafter amended in accordance with its terms and applicable
law.
2.6 Directors and Officers. As of the Effective Time, the directors and officers
of OREX immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation. Each director and officer of the
Surviving Corporation shall hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation. At the Closing, the
Company shall cause to be delivered to OREX the written resignations of all of
the directors and officers of the Company, which resignations shall be
unconditional and effective as of the Closing Date.
2.7 Tax Consequences. It is intended by the parties hereto that the Merger shall
constitute a tax-free reorganization within the meaning of Sections 368(a)(1)(A)
of the Code.
2.8 Additional Actions. If, at any time after the Closing, the Surviving
Corporation shall consider or be advised that any further acts are necessary or
desirable: (a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation, title to and possession of any property or right of the
Company acquired or to be acquired by reason of, or as a result of, the Merger;
or (b) otherwise to carry out the purposes of this Agreement, then the
Shareholders shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such deeds, assignments
and assurances in law and to do all other acts necessary or proper to vest,
perfect or confirm title to and possession of such property or rights in the
Surviving Corporation and otherwise to carry out the purposes of this Agreement;
and the officers and directors of the Surviving Corporation are fully authorized
in the name of the Shareholders and the Company to take any and all such
actions.
2.9 The Closing. The closing of the Transaction (the "Closing") shall take place
at the offices of OREX, commencing at 7:00 a.m. local time on August 16th, 1999,
or such other date or time as the Parties may mutually agree (the "Closing
Date").
2.10 Actions at the Closing. At the Closing: (a) the Shareholders shall convey
the Company Shares to OREX and deliver to OREX the various certificates,
instruments and documents referred to in Section 5.1 and elsewhere in this
Agreement; and (b) OREX shall deliver to the Shareholders the Transaction
Consideration required to be delivered hereunder and the various certificates,
instruments, and documents referred to in Section 5.2 and elsewhere in this
Agreement.
2.11 No Dissenters' Rights. Constituting all of the shareholders of the Company,
the Shareholders' approval and execution of this Agreement constitutes unanimous
approval of the transactions contemplated herein; therefore, neither the
Shareholders, nor any other party, is entitled to dissenters' rights under the
laws of the State of California.
2.12 Surrender of Certificates.
2.12.1......Company's Shares. At the Closing, the Shareholders shall be required
to surrender to OREX the original stock certificate(s) which immediately prior
to the Effective Time represented all of the Company Shares (the "Certificates")
(together with all stock powers duly endorsed to OREX). Until so surrendered,
each Certificate which immediately prior to the Effective Time represented the
Company Shares (other than Company Shares held in the treasury) shall upon and
after the Effective Time by virtue of the Merger be deemed for all purposes to
represent and evidence only the right to receive the OREX Shares determined in
accordance with Section 2.13.1.3 of this Agreement. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of the
Company Shares shall be made at any time thereafter.
2.12.2......Dividends. No dividends or other distributions declared or made
after the date of this Agreement with respect to the OREX Shares with a record
date after the Closing will be paid to the holder of any unsurrendered
Certificate with respect to the OREX Shares represented thereby until the holder
of record of such Certificate shall surrender such Certificate. Subject to
applicable law, following surrender of any such Certificate, there shall be paid
to the record holder of the Certificate representing whole OREX Shares issued in
exchange therefor, without interest, at the time of such surrender, the amount
of dividends or other distributions with a record date after the Closing payable
with respect to such whole OREX Shares.
2.13 Transaction Consideration. The aggregate transaction consideration (the
"Transaction Consideration") shall be transferred to the Shareholders as
follows:
2.13.1......OREX Shares. Eight Million (8,000,000) OREX Shares shall be issued
at or within fifteen (15) business days after the Closing Date, to the
Shareholders, in the number of shares to each Shareholder as indicated in
Exhibit 2.13.1. The OREX Shares received by the Shareholders shall not be
transferable by the Shareholders other than: (a) by will or the laws of
intestate succession; (b) in accordance with applicable state and federal
securities laws including, without limitation, Rule 144 of the Securities Act;
and (c) subject to the term and conditions of any applicable lock-up letter.
2.13.2......Conversion of Shares. Each share of capital stock of OREX issued and
outstanding immediately prior to the Closing shall continue to represent (1.6)
validly issued, fully paid and non-assessable share of capital stock of the
Surviving Corporation after the Merger. By virtue of the Merger and without any
action on the part of the Shareholders thereof, the Company Shares shall be
converted into eight million (8,000,000) OREX Shares.
2.14 Shareholder Consent and Release. The Shareholders hereby consent to the
Transaction and approves the execution and delivery of this Agreement and the
transactions contemplated hereby. Effective on the Effective Time, the
Shareholders hereby release the Company from any and all claims any one of them
may, could or will have, whether arising before or after the Effective Time,
against the Company as a result of any of the Shareholders having served as a
stockholder, director, officer, employee or agent of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. The Shareholders, jointly
and severally, represent and warrant to OREX that the statements contained in
this Section 3 are correct and complete as of the Closing Date, except as set
forth in the disclosure schedule accompanying this Agreement (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding
to the numbered paragraphs contained in this Section 3 to the Agreement
3.1 Organization, Qualification, and Corporate Power. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of California. The Company has full power and authority and
all licenses, permits and authorizations necessary to carry on the businesses in
which it is currently engaged and to own and use the properties owned and used
by it. Section 3.1 of the Disclosure Schedule lists the all of the officers and
members of the Board of Directors of the Company, as of the date immediately
preceding the Closing Date. The Company has made available to OREX correct and
complete copies of the minute book, articles of incorporation and bylaws of the
Company, as amended to date. The minute book (containing the records of meetings
of the stockholders, the board of directors and any committees of the board of
directors), the stock certificate books and stock record books of the Company
are correct and complete in all material respects and will be delivered to OREX
at the Closing. The Company is not in default under or in violation of any
provision of its articles of incorporation or bylaws.
3.2 Capitalization. The entire authorized capital stock of the Company consists
of shares, of which five million are issued and outstanding. All of the issued
and outstanding Company Shares have been duly authorized, are validly issued,
fully paid, and nonassessable and are held of record by the Shareholders as set
forth in Section 3.2 of the Disclosure Schedule. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Company to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Company. There are no stockholders' agreements, voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock of
the Company.
3.3 Authorization. The Company has full power and authority (including full
corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement by the Company has been duly authorized and approved by its Board
of Directors and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the transactions contemplated hereby.
The Company has given to the Shareholders any and all notice required to be
given to the Shareholders under applicable law. This Agreement constitutes the
valid and legally binding obligation of the Company, enforceable in accordance
with its terms and conditions.
3.4 Noncontravention. Except as set forth in Section 3.4 of the Disclosure
Schedule, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby will: (a) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, or other restriction of any government, governmental agency or any other
third party whatsoever, or court to which the Company is subject, or any
provision of the articles of incorporation or bylaws of the Company; or (b)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which the Company is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets). Except as set forth in Section
3.4 of the Disclosure Schedule, the Shareholders and the Company need not give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency or any other third party
whatsoever in order for the Parties to consummate the transactions contemplated
by this Agreement. The Parties agree that Section 3.4 of the Disclosure Schedule
shall be divided into two (2) sections, consisting of: (i) Section 3.4(a) which
shall list all such authorizations, consents and approvals which must be
obtained prior to the Closing, as a condition to Closing; and (ii) Section
3.4(b) which shall list all such authorizations, consents and approvals which
will not be obtained prior to Closing which shall be obtained within a
reasonable period of time after Closing.
3.5 Broker's Fees. Neither the Company nor the Shareholders have any Liability
or obligation to pay any fees, expenses, or commissions to any consultant,
broker, finder, or agent with respect to the transactions contemplated by this
Agreement.
3.6 Title to Assets. Section 3.6 of the Disclosure Schedule contains a complete,
true and correct list of all of the assets of the Company. The Company has good
and marketable title to, or a valid leasehold interest in, the properties and
assets used by it, located on its premises, or shown on the Most Recent
Financial Statement or acquired after the date thereof, free and clear of all
Security Interests. The assets set forth in Section 3.6 in conjunction with any
assets which the Company leases, constitute all of the assets used by the
Company in connection with its businesses as presently conducted.
3.7 No Subsidiaries. The Company has no Subsidiaries and does not control,
directly or indirectly, or have any direct or indirect equity participation in
any corporation, partnership, limited liability company, trust or other business
association.
3.8 Financial Statements. Attached as Section 3.8 of the Disclosure Schedule are
the following financial statements (collectively, the "Financial Statements"):
(a) audited balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal years ended 1999 (the "Most
Recent Fiscal Year End") for the Company; and (ii) unaudited compiled balance
sheet and statements of income, changes in stockholders' equity, and cash flow
(the "Most Recent Financial Statements") as of and for the month ended, July,
1999 (the "Most Recent Fiscal Month End") for the Company. The Financial
Statements (including the notes thereto) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby,
present fairly the financial condition of the Company as of such dates and the
results of operations of the Company for such periods, are correct and complete,
and are consistent with the books and records of the Company (which books and
records are correct and complete); provided, however, that the Most Recent
Financial Statements are subject to normal year-end adjustments which will not
be material. Except as provided in the Most Recent Financial Statements, or as
fully disclosed in Section 3.8 of the Disclosure Schedule, the Company does not
have any Liabilities or obligations (whether accrued, absolute, contingent,
whether due or to become due or otherwise) which might be or become a charge
against the Company, including any "loss contingencies" considered "probable" or
"reasonably possible" within the meaning of the Financial Accounting Standard
Board's Statement of Financial Accounting Standards No. 5, except trade payables
and similar liabilities and obligations incurred in the ordinary and regular
course of business since the date of the Most Recent Financial Statements.
3.9 Events Subsequent to Most Recent Fiscal Year End. Since the Most Recent
Fiscal Year End, there has not been any material adverse change in the business,
financial condition, operations, results of operations, or future prospects of
the Company. Without limiting the generality of the foregoing, since the Most
Recent Fiscal Year End:
3.9.1 Sale or Lease of Assets. The Company has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for fair market
value in the ordinary course of its business;
3.9.2 Contracts. The Company has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases, and
licenses) outside the ordinary course of business;
3.9.3 Change in Contracts. No Party (including the Company) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) to which the
Company is a party or by which it is bound and neither the Shareholders nor the
Company has any intent to do any of the foregoing or have received a verbal or
written indication of any third party's intent to do any of the foregoing;
3.9.4 Security Interests. The Company has not imposed any Security Interest
upon any of its assets, tangible or intangible;
3.9.5 Investments. The Company has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions);
3.9.6 Debts. The Company has not issued any note, bond, or other debt security
or created, incurred, assumed, or guaranteed any indebtedness for borrowed money
or capitalized lease obligation;
3.9.7 Liabilities Unaffected. The Company has not delayed or postponed the
payment of accounts payable and other Liabilities or accelerated the
collection of accounts, notes or other receivables;
3.9.8 Claims Unaffected. The Company has not canceled, compromised, waived,
or released any right or claim (or series of related rights and claims)
outside the ordinary course of its business;
3.9.9 Articles and Bylaws. There has been no change made or authorized in
the articles of incorporation or bylaws of the Company;
3.9.10......Changes in Equity. The Company has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
3.9.11......Distribution. The Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
3.9.12......Property Damage. The Company has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its property;
3.9.13......Transactions with Affiliates. The Company has not made any loan
to, or entered into any other transaction with, any of its directors,
officers and employees;
3.9.14......Collective Bargaining Agreements. The Company has not entered
into any collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
3.9.15......Compensation Changes. The Company has not granted any increase
in the base compensation of any of its directors, officers, and employees;
3.9.16......Employee Benefit Plans. The Company has not adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any other
Employee Benefit Plan);
3.9.17......Officers; Directors; Employees. The Company has not made any
change in the employment terms for any of its directors, officers and
employees, other than to terminate such agreements as required herein;
3.9.18......Charitable or Capital Contributions. The Company has not made or
pledged to make any charitable or other capital contribution;
3.9.19......Ordinary Course of Business. There has not been any other
occurrence, event, incident, action, failure to act, or transaction outside
the ordinary course of business involving the Company;
3.9.20......Accounting Practices. There has not been any change in any
method of accounting or accounting principle, estimate or practice of the
Company;
3.9.21......Accounts Receivable. The Company has not accelerated the
collection of any Accounts Receivable or any other amounts owed to it; and
3.9.22......In General. Neither the Company nor the Shareholders have
committed to do any of the foregoing.
3.10 Undisclosed Liabilities. The Company has no Liability and there is no basis
for any present or future action, suit, proceeding, hearing, investigation,
complaint, claim, or demand against it giving rise to any Liability, except for:
(a) Liabilities set forth on the Most Recent Financial Statements; (b)
Liabilities disclosed in the Disclosures Schedule; and (c) Liabilities which
have arisen after the Most Recent Fiscal Month End in the ordinary course of
business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law). As of the Closing, other than the current
trade accounts payable, the Company shall not have any unpaid liabilities,
including, but not limited to, any bank debt, capital leases or any general or
professional liability claims, or be obliged in any other way to provide funds
in respect of, or to guarantee or assume, any debt, obligation or dividend of
any person, except endorsements in the ordinary course of business in connection
with the deposit, in banks or other financial institutions, of items for
collection. Except as provided in the Most Recent Financial Statements, or as
disclosed in detail in Section 3.8 of the Disclosure Schedule, the Company does
not have any Liabilities or obligations which might be or become a charge
against the Company.
3.11 Legal Compliance. The Company and its predecessors and Affiliates have
complied with all applicable laws (including rules, regulations, codes,
injunctions, judgments, orders, decrees, and rulings of federal, state, local,
and foreign governments (and all agencies thereof)), and no action, suit,
proceeding, hearing, complaint, claim, demand, notice or investigation has been
filed or commenced, or to the Knowledge of the Shareholders and the Company,
threatened against the Company alleging any failure so to comply.
3.12 Tax Matters.
3.12.1......Tax Returns. The Company has filed all Tax Returns it was required
to file. All such Tax Returns were correct and complete in all respects and were
filed on a timely basis. All Taxes owed by the Company (whether or not shown on
any Tax Return) have been paid. The Company currently is not the beneficiary of
any extension of time within which to file any Tax Return. No claim is currently
pending by an authority in a jurisdiction where the Company is or may be subject
to taxation by that jurisdiction. There are no Security Interests on any of the
assets of the Company that arose in connection with any failure (or alleged
failure) to pay any Tax.
3.12.2......Withholding. The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
3.12.3......No Disputes of Claims. No shareholder or director or officer (or
employee responsible for Tax matters) of the Company expects any authority to
assess any additional Taxes for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax Liability of the Company
either: (a) claimed or raised by any authority in writing; or (b) as to which
any of the shareholders, directors and officers (and employees responsible for
Tax matters) of the Company has Knowledge based upon personal contact with any
agent of such authority. Section 3.12 of the Disclosure Schedule lists all
federal, state, local, and foreign income Tax Returns filed with respect to the
Company for taxable periods ended on or after December 31,1999, indicates those
Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. The Shareholders have made available to OREX
correct and complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by any of
the Company and its Affiliates since December 31, 1999.
3.12.4......No Waivers. The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
3.12.5......No Special Circumstances. The Company has not made any payments, is
not obligated to make any payments, nor is a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. The Company has not been a United States
real property holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section 897(c)(1)(A)(ii). The
Company has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income
Tax within the meaning of Code Section 6662.
3.12.6......Subchapter "S". The Company has elected, by the unanimous consent of
the Shareholders and in compliance with all applicable legal requirements, to be
taxed under Subchapter "S" of the Code and corresponding provisions under any
applicable state and local laws, and such elections are currently in full force
and effect for the Company. No action has been taken by the Company or the
Shareholders that may result in the revocation of any such elections. The
Company has no "Subchapter C earnings and profits," as defined in Code Section
1362(d). The Company has no "net unrealized built-in gain," as such term is
defined in Code Sections 1374(d)(1) and 1374(d)(8). The Company has no
Liability, absolute or contingent, for the payment of any income Taxes under the
Code or under Subchapter "S" of the Code.
3.12.7......Audits of Tax Returns. No Tax Return of the Company is currently
under audit or examination by any taxing authority, and the Company has not
received a written notice stating the intention of any taxing authority to
conduct such an audit or examination. Each deficiency resulting from any audit
or examination relating to Taxes by any taxing authority has been paid, except
for deficiencies being contested in good faith. The revenue agents' reports
related to any prior audits and examinations are attached as part of Section
3.12 of the Disclosure Schedule.
3.12.8......Period of Assessment. There is no agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any Taxes.
3.12.9......Tax Agreements. The Company is not a party to or bound by any tax
sharing agreement, tax indemnity obligation or similar agreement with respect to
Taxes (including any advance pricing agreement, closing agreement or other
agreement relating to Taxes with any taxing authority).
3.12.10.....Inclusions in Taxable Periods. The Company will be required to
include in a taxable period ending after the Closing Date taxable income
attributable to income that accrued in a prior taxable period but was not
recognized in any prior taxable period as a result of the installment method of
accounting, the completed contract method of accounting, the long-term contract
method of accounting, the cash method of accounting or Code Section 481 with
respect to a change in method of accounting occurring before the Closing Date or
comparable provisions of state, local or foreign tax law. As of the Closing
Date, the Shareholders will place funds in a separate bank account in the name
of the Company in an amount sufficient to pay all such liabilities and such
funds shall be used to pay such liabilities as they become due.
3.12.11.....Consents. The Company has not filed a consent pursuant to or
agreed to the application of Code Section 341(f).
3.12.12.....Personal Holding Company. The Company has not, during the five (5)
year period ending on the Closing Date, been a personal holding company within
the meaning of Code Section 541.
3.12.13.....Consolidated Tax Returns. The Company has never filed or been
included in any combined or consolidated Tax Return with any other person or
been a member of an Affiliated Group filing a consolidated federal income Tax
Return.
3.13 Real Property. The Company has various mining claims and equipment. Section
3.13 of the Disclosure Schedule lists and describes briefly all real property
leased or subleased by the Company. The Shareholders have made available to OREX
correct and complete copies of the leases and subleases listed in Section 3.13
of the Disclosure Schedule (as amended to date). With respect to each lease and
sublease listed in Section 3.13 of the Disclosure Schedule:
3.13.1......Binding. The lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
3.13.2......Continued Validity. The lease or sublease will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby;
3.13.3......No Defaults. The Company is not in breach or default under the lease
or sublease and no third party is in breach or default under the lease or
sublease, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification or
acceleration thereunder;
3.13.4......Repudiation. Neither the Company nor any other party to the
lease has repudiated any provision of the lease or sublease;
3.13.5......No Disputes. There are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
3.13.6......Subleases. With respect to each sublease, the representations
and warranties set forth in subsections 3.13.1 through 3.13.5 above are true
and correct with respect to the underlying lease;
3.13.7......Encumbrances. None of the Company or its Affiliates has
assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered
any interest in the leasehold or subleasehold;
3.13.8......Approvals. All facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained in accordance with applicable laws, rules, and
regulations; and
3.13.9......Utilities. All facilities leased or subleased thereunder are
supplied with utilities and other services reasonably necessary for the
operation of said facilities.
3.14 Intellectual Property. The Company owns or has the right to use pursuant to
a valid license, sublicense, agreement, or permission all Intellectual Property
necessary or desirable for the operation of the businesses of the Company as
presently conducted and as presently proposed to be conducted. No claim or
demand of any person has been made, nor is there any proceeding that is pending,
or to any of the Shareholders' Knowledge, threatened, which challenges the
rights of the Company with respect to any Intellectual Property or asserts that
the Company is infringing or otherwise in conflict with or is required to pay
any royalty or license fee with respect to any Intellectual Property.
3.15 Condition of Tangible Assets. Each tangible asset of the Company is free
from defects (patent and latent), has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to normal
wear and tear), and is suitable, designed and intended for the purposes for
which it presently is used by the Shareholders and the Company and is not
outdated in comparison with the assets used for similar purposes by similar
businesses.
3.16 Contracts. Section 3.16 of the Disclosure Schedule lists the following
contracts and other agreements, written or oral, to which the Company was a
party immediately preceding the Closing:
3.16.1......Personal Property Leases. Any agreement (or group of related
agreements) for the lease of personal property to or from any Person
providing for lease payments;
3.16.2......Services. Any agreement (or group of related agreements) for the
furnishing or receipt of services, the performance of which will extend over
a period of more than one (1) year;
3.16.3......Partnership; Joint Venture. Any agreement constituting a
partnership or joint venture;
3.16.4......Indebtedness. Any agreement (or group of related agreements)
under which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation;
3.16.5......Confidentiality; Non-Competition. Any agreement concerning
confidentiality or non-competition;
3.16.6......Shareholders' Agreements. Any agreement by and between any of
the Shareholders and any Affiliates of the Company;
3.16.7......Plans. Any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of its current or former directors, officers, and employees;
3.16.8......Employment or Consulting Agreements. Any agreement for the
employment of any individual on a full-time or part-time or the engagement of
any individual as a consultant or independent contractor, or otherwise
compensating an individual for services rendered or to be rendered to the
Company;
3.16.9......Advances; Loans. Any agreement under which the Company has
advanced or loaned any amount to any of its directors, officers and employees
outside the ordinary course of business;
3.16.10.....Adverse Effects. Any agreement under which the consequences of a
default or termination could have a material adverse effect on the business,
financial condition, operations, results of operations or future prospects of
the Company; and
3.16.11.....Other Agreements. Any other agreement (or group of related
agreements) the performance of which involves consideration in excess of Five
Thousand and No/100 Dollars ($5,000.00).
The Shareholders have made available to OREX a correct and complete copy of each
written agreement listed in Section 3.16 of the Disclosure Schedule (as amended
to date) and a written summary setting forth the terms and conditions of each
oral agreement referred to in Section 3.16 of the Disclosure Schedule. With
respect to each such agreement: (a) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (b) there shall be no breach or other
violation resulting from the consummation of the transactions contemplated
hereby; (c) the Company is not in default or breach and no other party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (d) the Company and no other party has
repudiated any provision of the agreement. None of the agreements listed in
Section 3.16 of the Disclosure Schedule requires the consent or approval of any
Person, or any compensation or payment to be made to any such Person by reason
of the transactions contemplated by this Agreement, or the merger of the Company
with and into another Person.
3.17 Powers of Attorney. There are no outstanding powers of attorney executed on
behalf of the Company.
3.18 Insurance; Malpractice. Section 3.18 of the Disclosure Schedule contains a
list and brief description of all policies or binders of fire, liability,
product liability, workers compensation, health and other forms of insurance
policies or binders currently in force insuring against risks to which the
Company has been a party, a named insured or otherwise the beneficiary of
coverage at any time during the five (5) years immediately preceding the Closing
Date. Except as set forth on Section 3.18 of the Disclosure Schedule, neither
the Company, nor its employees, nor the Shareholders have, during the five (5)
years immediately preceding the Closing Date, filed a written application for
any insurance coverage relating to the Company's business or property which has
been denied by an insurance agency or carrier. Section 3.18 of the Disclosure
Schedule also sets forth a list of all claims for any insured loss in excess of
Five Thousand Dollars and No/100 Dollars ($5,000.00) per occurrence filed by the
Company, the Company's employees or the Shareholders during the five (5) years
immediately preceding the Closing Date, including workers compensation, general
liability, environmental liability and professional liability claims. With
respect to each insurance policy listed in Section 3.18 of the Disclosure
Schedule: (i) the policy is legal, valid, binding, enforceable, and in full
force and effect; (ii) the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (iii) neither the Company,
the Shareholders, other health care professionals nor any other party to the
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; (iv) the Company
has not repudiated any provision thereof and no other party to the policy has
repudiated any provision thereof; (v) there is no claim pending under any of
such policies as to which coverage has been questioned, denied or disputed by
the underwriters of such policies or any notice that a defense will be afforded
with reservation of rights; (vi) the Company has not received: (A) any notice
that any issuer of any such policy has filed for protection under applicable
bankruptcy laws or is otherwise in the process of liquidating or has been
liquidated; or (B) any other indication that such policies are no longer in full
force and effect or that the issuer of any such policy is no longer willing or
able to perform its obligations thereunder; and (vii) neither the Shareholders
nor the Company has received any written notice from or on behalf of any
insurance carrier issuing such policies, that there will hereafter be a
cancellation, or an increase in a deductible or non-renewal of existing
policies. The Company has been covered during the past five (5) years by
insurance in scope and amount customary and reasonable for the business in which
it has engaged during the aforementioned period.
3.19 Litigation. Section 3.19 of the Disclosure Schedule sets forth each
instance in which any of the Company or any individual engaged or employed by
the Company, including, but not limited to the Shareholders, with respect to the
products or services rendered on behalf of the Company: (a) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge; or (b) is a
party or is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator and contains a summary thereof. None of the actions,
suits, proceedings, hearings, and investigations set forth in Section 3.19 of
the Disclosure Schedule is likely after the Closing to result in any Adverse
Consequences change in the business, financial condition, operations, results of
operations, or future prospects of OREX and the Surviving Corporation. Neither
the Company nor the Shareholders have any reason to believe that any reason
exists upon which such action, suit, proceeding, hearing, or investigation may
be brought or threatened against any of the Company or any individual engaged or
employed by the Company.
3.20 Company Compliance. The Company is lawfully operated in accordance with the
requirements of all applicable laws and has in full force and effect all
authorizations and permits necessary to operate a mining company in the
jurisdictions where it is currently operating. There are no outstanding notices
of deficiencies relating to the Company issued by any governmental authority
requiring conformity or compliance with any applicable law or condition for
participation with such governmental authority or third-party condition for
participation with such governmental authority. The Company has not received
notice and the Company and Shareholders have no Knowledge or reason to believe
that, such necessary authorizations may be revoked or not renewed in the
ordinary course of business.
3.21 Employees. Except as set forth on Section 3.24 of the Disclosure Schedule:
(a) there is no unfair labor practice charge or complaint pending or threatened
relating to the business of the Company; and (b) payment in full to all of the
employees of the Company of all wages, salaries, commissions, bonuses, benefits,
and other compensation lawfully due and owing to such employees or otherwise
arising under any policy, practice, agreement, plan, program, statute, or other
law as of the Closing Date has been made.
3.22 Employee Benefits.
3.22.1......Plans. Section 3.25 of the Disclosure Schedule lists each Employee
Benefit or health and welfare plan that the Company maintains or to which the
Company contributes.
3.22.2......Compliance. Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all material
respects with its terms and with the applicable requirements of ERISA, the Code
and other applicable laws.
3.22.3......Reports and Descriptions. All required reports and descriptions
(including Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's, and
Summary Plan Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Part 6 of
Subtitle B of Title I of ERISA and of Code Section 4980B have been met with
respect to each such Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
3.22.4......Contributions. All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any pay period ending on or before the
Closing Date which are not yet due have been paid to each such Employee Pension
Benefit Plan or accrued in accordance with the past custom and practice of the
Company. All premiums or other payments due for all periods ending on or before
the Closing Date have been paid with respect to each such Employee Benefit Plan
which is an Employee Welfare Benefit Plan.
3.22.5......Qualified Plan. Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan and is intended to meet the requirements of a "qualified
plan" under Code Section 401(a) meets such requirements and has received, within
the last two (2) years, a favorable determination letter from the IRS.
3.22.6......Market Value. The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested and
nonvested Liabilities thereunder determined in accordance with PBGC methods,
factors, and assumptions applicable to an Employee Pension Benefit Plan
terminating on the date for determination.
3.22.7......Copies. The Shareholders have delivered to OREX correct and complete
copies of the plan documents and summary plan descriptions, the most recent
determination letter received from the IRS, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance contracts, and other funding
agreements which implement each such Employee Benefit Plan.
3.22.8......Maintenance of Plans. With respect to each Employee Benefit Plan
that the Company maintains, ever has maintained, or to which it contributes,
ever has contributed, or ever has been required to contribute:
3.22.8.1....Reportable Events. No such Employee Benefit Plan which is an
Employee Pension Benefit Plan has been completely or partially terminated or
been the subject of a Reportable Event as to which notices would be required to
be filed with the PBGC. No proceeding by the PBGC to terminate any such Employee
Pension Benefit Plan has been instituted or threatened; and
3.22.8.2....Prohibited Transactions. There have been no Prohibited Transactions
with respect to any such Employee Benefit Plan. No Fiduciary has any Liability
for breach of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of any such Employee Benefit
Plan. No action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Employee Benefit Plan
(other than any Multiemployer Plan), other than routine claims for benefits, is
pending or threatened. The Shareholders and the Company have no Knowledge of any
basis for any such action, suit, proceeding, hearing, or investigation.
3.23 Guaranties. The Company is not a guarantor or otherwise liable for any
Liability or obligation (including indebtedness) of any other Person.
3.24 Environment, Health, and Safety.
3.24.1......Compliance. Each of the Company and its predecessors and
Affiliates has complied and is in compliance with all Environmental, Health,
and Safety Requirements.
3.24.2......Permits and Licenses. Without limiting the generality of the
foregoing, each of the Company and its Affiliates has obtained and complied
with, and is in compliance with, all permits, licenses and other authorizations
that are required pursuant to Environmental, Health, and Safety Requirements for
the occupation of its facilities and the operation of its business; a list of
all such permits, licenses and other authorizations is set forth on Section 3.28
of the Disclosure Schedule.
3.24.3......Notices. Neither the Company nor its predecessors or Affiliates has
received any written or oral notice, report or other information regarding any
actual or alleged violation of Environmental, Health, and Safety Requirements,
or any Liabilities or potential Liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory, remedial or
corrective obligations, relating to any of them or its facilities arising under
Environmental, Health, and Safety Requirements.
3.24.4......Hazardous Substances. None of the Company or its predecessors or
Affiliates has treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to liabilities,
including any Liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Solid Waste Disposal Act, as amended or any other
Environmental, Health, and Safety Requirements.
3.25 Certain Business Relationships with the Company and its Affiliates. Neither
the Shareholders nor any of their Affiliates have been involved in any business
arrangement or relationship with the Company and its Affiliates within the past
twelve (12) months, and none of the Shareholders nor any their Affiliates own
any asset, tangible or intangible, which is material to the business of any of
the Company and its Affiliates.
3.26 Bank Accounts. Section 3.31 of the Disclosure Schedule sets forth all of
the bank and security accounts and all safe deposit boxes maintained by the
Company and all lines of credit owned or used by the Company, and the names of
all persons with authority to withdraw funds from, or execute drafts or checks
on, each such account.
3.27 Tax Status. None of the Shareholders is not a "nonresident alien
individual" or "foreign corporation" for purposes of Code Section 897(a)(1).
3.28 Binding Obligation. This Agreement constitutes the valid and legally
binding obligation of the Shareholders, enforceable in accordance with its terms
and conditions.
3.29 Securities Representation.
3.29.1......No Registration of OREX Shares; Investment Intent. The Shareholders
acknowledge that the OREX Shares to be delivered pursuant to this Agreement have
not been and will not be registered under the Securities Act and may not be
resold without compliance with the Securities Act. The OREX Shares to be
acquired by the Shareholders pursuant to this Agreement are being acquired
solely for his own account, for investment purposes only and with no present
intention of distributing, selling or otherwise disposing of them in connection
with a distribution other than in compliance with the Securities Act.
3.29.2......Resale Restrictions. The Shareholders covenant, warrant and
represent that none of the OREX Shares issued to the Shareholders will be
offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all of the applicable provisions
of the Securities Act and the rules of regulations of the Commission and
applicable state securities laws and this Agreement.
3.29.3......Ability to Bear Economic Risk. Each of the Shareholders covenant,
warrant and represent that he is able to bear the economic risk of an investment
in OREX Shares acquired pursuant to this Agreement and can afford to sustain a
total loss of such investment and have such Knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of the proposed investment and therefore has the capacity to protect his
own interests in connection with the acquisition of the OREX Shares. Each of the
Shareholders, and each of their Shareholders' purchaser representative, if any,
has had an adequate opportunity to ask questions and receive answers from the
officers of OREX concerning the background and experience of the officers and
directors of OREX, the plans for the operations of the business of OREX, and any
plans for additional acquisitions and the like. Each of the Shareholders, and
each of the Shareholders' purchaser representative, if any, has asked any and
all questions in the nature described in the preceding sentence and all
questions have been answered to such individual's satisfaction.
3.29.4......Accredited Investor. The Shareholders covenant, represent and
warrant that he is an: (a) individual with a net worth (either individually or
jointly with his respective spouse) in excess of One Million and No/100 Dollars
($1,000,000.00) (for the purpose of determining net worth, the Shareholders'
principal residence is valued at cost, including the cost of improvements, net
of current encumbrances upon the property); or (b) individual who had an income
in excess of Two Hundred Thousand and No/100 Dollars ($200,000.00) in each of
1997 and 1998, or had a joint income with his respective spouse in excess of
Three Hundred Thousand and No/100 Dollars ($300,000.00) in each of 1997 and
1998, and has a reasonable expectation of reaching the same income level in
1999.
3.29.5......Residency. Each of the Shareholders covenant, warrant and represent
that he is a resident of the State of Nevada, and received this Agreement and
first learned of the transactions contemplated hereby in the State of
California. He executed and will execute all documents contemplated hereby in
the State of California, and intends that the laws of the State of California
govern this transaction.
3.29.6......No Registration. Each of the Shareholders understand, agree and
acknowledge that the OREX Shares have not been registered under the Delaware
Securities Act, California Securities Act or the Securities Act in reliance upon
exemption provisions contained therein which OREX believes are available.
3.30 Disclosure. The representations and warranties contained in this Section 3
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Section 3 not misleading.
4. REPRESENTATIONS AND WARRANTIES OF OREX. OREX represents and warrants to the
Shareholders that the statements contained in this Section 4 are correct and
complete as of the Closing Date.
4.1 Organization of OREX. OREX is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
4.2 Authorization of Transaction. OREX has full power and authority (including
full corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of OREX, enforceable in accordance with its terms and
conditions.
5. DELIVERIES AT CLOSING; TERMINATION.
5.1 Deliveries of the Shareholders. At or prior to the Closing, the Shareholders
shall deliver to OREX the following:
5.1.1 Consents and Approvals. Copies of all authorizations, consents, and
approvals of governments, governmental agencies and third parties referred to in
Section 3.4(a) of the Disclosure Schedule;
5.1.2 Termination of Agreements. Copies of documents effectuating the
termination of any and all written employment and independent contractor
agreements, compensation agreements, buy-sell agreements and other similar
agreements entered into by the Company and which are in effect immediately
preceding the Closing, which terminations shall each include a complete release
of the Company from all known or unknown obligations or liabilities;
5.1.3 Company Stock. The Certificates and stock powers, duly endorsed,
transferring the Company Stock to OREX and the officer and director
resignations required in Section 2.6;
5.1.4 Corporate Authorization. A resolution of the Shareholders and board of
directors of the Company which authorizes the transaction in accordance with:
(a) applicable law; (b) the Company's articles of incorporation and bylaws; and
(c) all other requirements for proper corporate authorization;
5.1.5 Good Standing Certificate. A certificate issued by the appropriate state
governmental authority no more than ten (10) days prior to the Closing Date
evidencing the good standing of the Company;
5.1.6 Secretary's Certificate. A certificate of the secretary of the Company
certifying that the minute books, articles of incorporation and bylaws of the
Company, attached as exhibits to such certificate, are true, correct, and
complete;
5.1.7 Representations and Warranties; Performance. The representations and
warranties of the Company contained in Section 3 and elsewhere in this Agreement
and all information contained in any exhibit, schedule or attachment hereto,
delivered by or on behalf of the Company, shall be true and correct in all
material respects when made and shall be true and correct in all material
respects on the Closing Date as though then made, except as expressly provided
herein. An officer of the Company shall have delivered to OREX a certificate,
dated the Closing Date, certifying to the foregoing; and
5.1.8 Other documents. Such other instruments or documents as may be necessary
or appropriate to carry out the Transactions.
5.2 Deliveries of OREX. At or within five (5) business days after the Closing
Date, OREX shall deliver to the Shareholders the following:
5.2.1 Transaction Consideration. The Transaction Consideration;
5.2.2 Resolutions. A resolution of the board of directors of OREX
authorizing the Transaction;
5.2.3 Representations and Warranties; Performance. The representations and
warranties of OREX contained in Section 4 and elsewhere in this Agreement and
all information contained in any exhibit, schedule or attachment hereto,
delivered by or on behalf of the Company, shall be true and correct in all
material respects when made and shall be true and correct in all material
respects on the Closing Date as though then made, except as expressly provided
herein. An officer of the Company shall have delivered to the Company a
certificate, dated the Closing Date, certifying to the foregoing; and
5.2.4 Certificate of Incumbency. A certificate of incumbency of OREX.
5.3 Termination. This Agreement may be terminated and the transactions herein
contemplated may be abandoned at any time prior to Closing:
5.3.1 By unanimous consent of OREX and the Company;
5.3.2 By OREX, the Company, or the Shareholders (acting unanimously) if this
Agreement is not consummated on or before August 15th, 1999; or
5.3.3 By OREX or the Company if as of the Closing Date (including any
extensions) any of the conditions specified in Section 5.1 or 5.2 hereof shall
not have been satisfied.
5.4 Procedure Upon Termination. In the event of termination and abandonment
pursuant to Section 5.3 hereof, this Agreement shall terminate and shall be
abandoned, without further action by any of the parties hereto.
If this Agreement is terminated as provided herein:
5.4.1 Each party shall redeliver all documents and other material of any other
party relating to the transactions contemplated hereby, whether obtained before
or after the execution hereof, to the party furnishing the same;
5.4.2 All information received by any party hereto with respect to the business
of any other party (other than information which is a matter of public knowledge
or which has heretofore been or is hereafter published in any publication for
public distribution or filed as public information with any governmental
authority) shall not at any time be used for the advantage of, or disclosed to
third parties by, such party to the detriment of the party furnishing such
information; and
5.4.3 No party hereto shall have any further liability or obligation to any
other party under or in connection with this Agreement; provided, however, the
non-breaching or non-defaulting party shall not be foreclosed from bringing a
claim or cause of action or otherwise recovering from the breaching or
defaulting party.
6. FILING REGISTRATION STATEMENT.
6.1 Initial Public Offering. If OREX shall decide, in its sole and absolute
discretion, to sell OREX Shares to the public through an Initial Public
Offering, at such time as OREX considers it desirable and appropriate in its
sole and absolute discretion, the Shareholders shall cooperate to prepare and
file with the Commission the Registration Statement on Form S-1 (or such other
form as OREX determines at its sole discretion) to be filed by OREX in
connection with an Initial Public Offering (the "Registration Statement"). As
part of the Initial Public Offering, if requested by the underwriter, the
Shareholders will execute a lock-up letter for the period applicable to other
stockholders of OREX. Nothing in this Agreement shall be construed as an
obligation or commitment of OREX to effectuate an Initial Public Offering at any
time.
6.2 Information. The Shareholders shall, upon request, furnish OREX with all
information concerning the Shareholders, the Company and the Company's
directors, officers and partners and such other matters as may be reasonably
requested by OREX in connection with the preparation of the Registration
Statement and each amendment or supplement thereto, or any other statement,
filing, notice or application made by or on behalf of each such party or any of
its Subsidiaries to any governmental entity in connection with the transactions
contemplated by this Agreement, and shall properly execute all such documents
deemed necessary and appropriate by OREX in its sole and absolute discretion in
connection with the preparation of the Registration Statement including, without
limitation, the Registration Statement and each amendment and supplement
thereto. None of the information or documents supplied or to be supplied by the
Shareholders specifically for inclusion in the Registration Statement, by
exhibit or otherwise, will, at the time the Registration Statement and each
amendment and supplement thereto, if any, becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
7. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the
period following the Closing:
7.1 General. In the event that at any time after the Closing any further action
is necessary to carry out the purposes of this Agreement, each of the Parties
will take such further action (including the execution and delivery of such
further instruments and documents) as any other Party may reasonably request,
all at the sole cost and expense of the requesting Party; provided, however,
that the taking of any action necessary to execute or deliver to OREX any stock
powers and such other instruments of transfer as may be necessary to transfer
ownership of the Company's Stock by the Shareholders shall be borne by the
Shareholders.
7.2 Tax Returns. The Shareholders shall be responsible for preparing and filing
all income or franchise Tax Returns of the Company relating to periods of time
prior to the Closing Date. OREX will be responsible for preparing and filing all
income and franchise Tax Returns of the Company, if any, relating to periods
after the Closing. The Shareholders will provide OREX with an opportunity to
review and comment on such Tax Returns (including any amended returns). The
Shareholders will take no positions on the Tax Returns of the Company that
relate to the tax period prior to the Closing Date that could adversely affect
the Company after the Closing. The income of the Company will be apportioned to
the period up to the Closing Date and the period from and after the Closing Date
in accordance with the provisions of Code Section 1362(e)(6)(D) by closing the
books of the Company as of the close of business on the last calendar day
immediately preceding the Closing Date.
7.3 Transition. Neither the Shareholders nor the Company will take any action
that is designed, intended or likely to have the effect of discouraging any
lessor, licensor, customer, supplier or other business associate of the Company
from maintaining the same business relationships with the Company after the
Closing as he, she or it maintained with the Company prior to the Closing.
7.4 Litigation Support. In the event and for so long as any Party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand in connection with: (a) any
transaction contemplated under this Agreement; or (b) any fact, situation,
circumstances, status, condition, activity, practice, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the Parties will cooperate with the contesting or
defending Party and its or his counsel in the contest or defense, at the sole
cost and expense of the contesting or defending Party except to the extent that
the contesting or defending party is entitled to indemnification therefor under
this Agreement
7.5 Consents. The Shareholders hereby covenant and agree that, after the
Closing, he shall use his best efforts to obtain all authorizations, consents,
and approvals set forth in Section 3.4(b) of the Disclosure Schedule. Anything
to the contrary notwithstanding, this Agreement shall not constitute an
assignment of, or an agreement to assign, any contract if an attempted
assignment thereof, without the consent, approval or agreement of a third party
thereto, would constitute a breach thereof or in any way adversely affect the
rights of the parties thereunder. If such consent, approval or agreement is not
obtained, or if an attempted assignment thereof would affect the rights of the
parties thereunder so that such parties would not in fact receive all such
rights, the Parties will cooperate in any arrangement designed to provide for
the Parties to receive the benefits under any such contract, including
enforcement for the benefit of OREX of any and all rights of the Shareholders
against a third party thereto arising out of the breach or cancellation by such
third party or otherwise.
8. SURVIVAL AND INDEMNIFICATION.
8.1 Survival of Representations and Warranties. All of the representations,
warranties, covenants, and agreements contained in this Agreement are material
and have been relied upon by the Parties hereto and shall survive the Closing
for their applicable statute of limitations. The representations and warranties
contained herein shall not be affected by any investigation, verification or
examination by any Party or by anyone on behalf of such Party.
8.2 Indemnification Provisions for the Benefit of OREX. In the event of: (a) a
misrepresentation (or in the event any third party alleges facts that, if true,
would mean a misrepresentation) of any of the Company's or the Shareholders'
representations and/or warranties contained in this Agreement; (b) a breach (or
in the event any third party alleges facts that, if true, would mean a breach)
of any of the Company's or the Shareholders' covenants contained in this
Agreement; or (c) any Liability of the Company of any nature whatsoever accrued
or existing as of the Closing Date or related to actions of the Company which
occurred prior to the Closing Date, which is not reflected on the Financial
Statements or the Closing Date Balance Sheet, then the Shareholders agree to
indemnify OREX from and against any Adverse Consequences OREX may suffer through
and after the date of the claim for indemnification resulting from, arising out
of, relating to, in the nature of, or caused by the misrepresentation or breach
(or alleged breach) or non-disclosed Liability. No provision of this Agreement,
including but not in any way limited to, any "Knowledge" qualifiers or
materiality standards in the Representations and Warranties of the Shareholders,
shall have any effect on the Shareholders' indemnity for any Liability arising
prior to the Closing Date.
8.3 Indemnification Provisions for the Benefit of the Shareholders. In the event
of a misrepresentation or breach (or in the event any third party alleges facts
that, if true, would mean a misrepresentation or breach) of any of OREX's
representations, warranties, and covenants contained in this Agreement, then
OREX agrees to indemnify the Shareholders from and against any Adverse
Consequences the Shareholders may suffer through and after the date of the claim
for indemnification resulting from, arising out of, relating to, in the nature
of, or caused by the breach (or the alleged breach).
8.4 Matters Involving Third Parties.
8.4.1 Notification. If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against the other Party (the "Indemnifying
Party") under this Section 8, then the Indemnified Party shall promptly notify
the Indemnifying Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying the Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless the
Indemnifying Party thereby is prejudiced and then only to the extent that the
Indemnified Party is actually prejudiced.
8.4.2 Defense by Indemnifying Party. The Indemnifying Party will have the right
to defend the Indemnified Party against the Third Party Claim with counsel of
its choice satisfactory to the Indemnified Party so long as: (a) the
Indemnifying Party notifies the Indemnified Party in writing within ten (10)
business days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party from and
against any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim; (b) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third Party Claim
and fulfill the Indemnifying Party's indemnification obligations hereunder; (c)
the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief; (d) settlement of, or an adverse judgment
with respect to, the Third Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or practice adverse
to the continuing business interests of the Indemnified Party; and (e) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently.
8.4.3 Satisfactory Defense. So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 8.4.2 above: (a) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim; (b) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld or delayed unreasonably); and (c) the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (not to be withheld or delayed unreasonably)
and any such settlement must include a complete release of the Indemnified
Party.
8.5 Conditions. In the event any of the conditions in Section 8.4.2 above is or
becomes unsatisfied, however: (a) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, the
Indemnifying Party in connection therewith); (b) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses); and (c) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 8.
9. MISCELLANEOUS.
9.1 Confidentiality, Press Releases, and Public Announcements. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the other
Parties.
9.2 Shareholders' Restrictive Covenants.
9.2.1 Restricted Period. The Shareholders hereby agree that during the time
period commencing as of the Closing Date and continuing for a period of two (2)
years thereafter, neither the Shareholders nor any of their Affiliates, shall,
other than on behalf of OREX, directly or indirectly, for himself, or on behalf
of any other corporation, person, firm, partnership, association, or any other
entity whatsoever (whether as an individual, agent, servant, employee, employer,
officer, director, shareholder, investor, principal, consultant or in any other
capacity whatsoever):
9.2.1.1.....Establish in, operate, or engage or participate in or finance any
business which engages in direct competition with the business being conducted
by OREX at such time;
9.2.1.2.....Solicit or engage in the solicitation of, or serve or accept any
business from client, suppliers, or other customers of the business conducted by
OREX for services competitive with those of OREX, OREX's successors and assigns,
or OREX's Affiliates;
9.2.1.3.....Request, induce or advise any clients, suppliers, vendors, employers
or other customers of the business conducted by OREX or OREX's Affiliates to
withdraw, curtail or cancel their business or other relationships with OREX or
assist, induce, help or join any other person or entity in doing any of the
above activities; or
9.2.1.4.....Induce or attempt to influence any employee of OREX to terminate his
or her employment with OREX or to hire, recruit or solicit any such employee,
whether or not so induced or influenced.
9.2.2 Not Applicable. The restrictions set forth in Section 9.2 shall not be
deemed to prevent the Shareholders from acquiring through market purchases and
owning, solely as an investment, less than five percent (5%) in the aggregate of
the equity securities of any class of any issuer whose shares are listed or
admitted for trading on any United States national securities exchange or are
quoted on the National Association of Securities Dealers Automated Quotations
Systems, or any similar system of automated dissemination of quotations of
securities prices in common use, so long as neither of them is a member of any
"control group" (within the meaning of the rules and regulations of the
Commissions) of any such issuer.
9.2.3 Consideration. OREX and the Shareholders have carefully considered the
nature and extent of the restrictions imposed by this Section 9.2 and the rights
and remedies conferred upon OREX hereunder and hereby expressly acknowledge and
agree that: (a) the restricted territory, period, and activities are reasonable
and are designed to eliminate competition which would otherwise be unfair to
OREX; (b) are necessary and fully required to protect the legitimate business
interest of OREX; (c) any violation of the terms of these restrictive covenants
would have a substantial detrimental effect on OREX's businesses; (d) the
restrictive covenants do not stifle any of the Shareholders' inherent skill and
experience; and (e) would not operate as a bar to any of the Shareholders' means
of support. Because of the difficulty of measuring economic losses to OREX as a
result of the breach of the foregoing covenants, and because of the immediate
and irreparable damage that would be caused to OREX for which it would have no
other adequate remedy, the Shareholders agree that, in the event of a breach by
any of them of the foregoing covenants, the covenants set forth in this Section
9.2 may be enforced by OREX by injunctions and restraining orders in addition to
all other available legal remedies.
9.2.4 Third-Party Beneficiaries. All successors and assigns of OREX, all
Affiliates of OREX, and all successors and assigns of such Affiliates are
third-party beneficiaries of the restrictive covenants contained in this Section
9.2 and the provisions of this Section 9.2 are intended for the benefit of, and
may be enforced by, OREX's and successors and assigns and OREX's Affiliates and
such Affiliates' successors and assigns.
9.2.5 Defenses. The existence of any claim or cause of action by the
Shareholders against OREX, whether predicated upon this Agreement or otherwise,
shall not constitute a defense to the enforcement by OREX, or any of OREX's
successors and assigns or Affiliates and such Affiliates' successors and
assigns, but shall be litigated separately. The provisions of this Section 9.2
shall survive the termination of this Agreement.
9.2.6 Severability. The covenants in this subsection are severable and separate,
and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems reasonable,
and the Agreement shall thereby be reformed.
9.3 Confidentiality. In order to induce OREX to enter into this Agreement, the
Shareholders covenant and agree that from and after the Closing Date, the
Shareholders nor any of their Affiliates (to the extent any such Affiliate has
received Confidential Information as defined below or trade secrets, as defined
below) shall disclose, divulge, furnish or make accessible to anyone any
Confidential Information or Trade Secrets, or in any way use any Confidential
Information or Trade Secrets in the conduct of any business; provided, however,
that nothing in this Section 9.3 will prohibit the disclosure of any
Confidential Information or Trade Secrets: (a) which is required to be disclosed
by the Shareholders or any of their Affiliates in connection with any court
action or any proceeding before any authority; (b) in connection with the
enforcement of any of the respective rights of the Shareholders hereunder; or
(c) in connection with the defense by the Shareholders of any claim asserted
against them hereunder; provided, however, that in the case of a disclosure
contemplated by Section 9.3(a) above, no disclosure shall be made until the
Shareholders shall give notice to OREX of the intention to disclose such
Confidential Information or Trade Secrets so that OREX may contest the need for
disclosure, and the Shareholders will cooperate (and will cause their Affiliates
and their respective representatives to cooperate) with OREX in connection with
any such proceeding. Notwithstanding any provision of this Agreement which may
be to the contrary, the foregoing provisions restricting the use of Confidential
Information and Trade Secrets shall survive the Closing for the time period
equal to five (5) years from the date of this Agreement. For the purpose of this
Agreement, the term "Confidential Information" shall mean all records, files,
reports, protocols, policies, manuals, databases, processes (including, but not
limited to, the ▇▇▇▇▇ Gold Process), procedures, computer systems, materials and
other documents pertaining to the operations of OREX and the term "Trade
Secrets" shall mean information, including a formula, pattern, compilation,
program, device, method, technique, or process that: (i) derives independent
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use; and (ii) is the subject of efforts
that are reasonable under the circumstances to maintain its secrecy.
9.4 No Third-Party Beneficiaries. Other than with respect to the restrictive
covenants set forth in Section 9.2 above, this Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
9.5 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
9.6 Succession and Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties named herein and their respective successors,
assigns, distributees, heirs, and grantors of any revocable trusts of a Party
hereto. No Party may assign either this Agreement or any of its or his rights,
interests, or obligations hereunder without the prior written approval of the
other Parties; provided, however, OREX may assign this Agreement to their
Affiliates as part of a corporate restructuring.
9.7 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
9.8 Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
9.9 Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given: (a) upon receipt if it is
sent by facsimile, (b) the next business day if sent by reputable overnight
courier, or (c) three (3) days after mailing if by certified mail return receipt
requested, postage prepaid, and addressed or otherwise sent to the intended
recipient as set forth below:
If to OREX: Orex Gold Mines Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Shareholders: ▇▇. ▇▇▇▇▇▇ ▇▇▇
------------------------
California
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------
Wickenburg, AZ
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Mr. ▇▇▇ ▇▇▇▇▇
------------------------
Facsimile:
--------------
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------
------------------------
Facsimile:
--------------
With a copy to:
Attn:
Facsimile:
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address or facsimile number set forth
above using any other means (including personal delivery, messenger service,
ordinary mail, or electronic mail), but no such notice, request, demand, claim,
or other communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any party may change the
address or facsimile number to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
9.10 Governing Law; Jurisdiction; Attorney's Fees. This Agreement, and all
proceedings hereunder, shall be governed by and construed in accordance with the
domestic laws of the State of Florida without giving effect to any choice or
conflict of law provision or rule (either of the State of Florida or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Florida. In the event of any suit under this Agreement
or otherwise between the parties hereto, the prevailing Party shall be entitled
to all reasonable attorney's fees and costs, including allocated costs of
in-house counsel, to be included in any judgment recovered. In addition, the
prevailing Party shall be entitled to recover reasonable attorney's fees and
costs, including allocated costs of in-house counsel, incurred in enforcing any
judgment arising from a suit under this Agreement. This post-judgment attorney's
fees and costs provision shall be severable from the other provisions of this
Agreement and shall survive any judgment on such suit and is not to be deemed
merged into the judgment. Venue for any such dispute or suit between the
parties, venue shall be in Miami-Dade County, Florida.
9.11 Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Parties. No
waiver by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence and all waivers must be in writing, signed
by the waiving Party, to be effective.
9.12 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
9.13 Expenses. Except as set forth herein, each of the Parties will bear its or
his own costs and expenses (including, but not limited to, legal and accounting
fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
9.14 Further Assurances. Each Party shall, at the reasonable request of any
other Party hereto, execute and deliver to such other Party all such further
instruments, assignments, assurances and other documents, and take such actions
as such other Party may reasonably request in connection with the carrying out
the terms and provisions of this Agreement.
9.15 Construction. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. Nothing in the Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein, unless the Disclosure Schedule identifies the exception
with reasonable particularity. The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from nor mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
9.16 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
(including the Disclosure Schedule) identified in this Agreement and the
recitals first set forth above are incorporated herein by reference and made a
part hereof.
[SIGNATURES CONTINUED ON NEXT PAGE]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
OREX:
OREX GOLD MINES CORPORATION, a Delaware
corporation
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
COMPANY:
SANTA ▇▇▇▇▇ MINING CORPORATION, a
California corporation
By:
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▇▇▇▇▇▇ ▇▇▇, President
SHAREHOLDERS:
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............ ▇▇▇▇▇▇ ▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇▇▇
...... ------------------------------------
............ ▇▇▇ ▇▇▇▇▇
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...... ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-iv-
EXHIBITS
2.3... Articles of Merger
2.13.1 Allocation of OREX Shares
DISCLOSURE SCHEDULES
3.1... Officers and Directors
3.2... Capitalization
3.4(a) Consents to be Obtained Prior to Closing
3.4(b) Consents to be Obtained After Closing
3.6... Assets
3.8... Financial Statements
3.12.. Tax Returns
3.13.. Real Property
3.16.. Material Contracts
3.18.. Insurance
3.19.. Litigation
3.24.. Employment Matters
3.25.. Employment Benefits
3.28.. Environmental Permits, Licenses and Approvals
3.31.. Bank Accounts
EXHIBIT I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
1.1 "Accounts Receivable" means the accounts receivable of the Company
determined in accordance with GAAP with respect to the operations of the Company
prior to the Closing Date arising from the rendering of services to patients
through the Closing Date, including, without limitation, those from private pay
patients, private insurance payors, third party payors and governmental
programs.
1.2 "Accounts Receivable Collection Period" has the meaning set forth in Section
2.13.2.1.
1.3 "Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, complaints, claims, demands, injunctions, judgments, orders,
decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in
settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees,
including court costs and reasonable attorneys' fees and expenses.
1.4 "Affiliate" shall mean, with respect to any Person: (a) any corporation,
proprietorship, partnership, limited liability company, or any other business
entity whatsoever that, directly or indirectly, owns or controls, is under
common ownership or control with, or is owned or controlled by, such Person; and
(b) if the Person is an individual, any other individual who is related to such
Person. For the purposes of this definition, the terms "controls," "is
controlled by" and "is under common control with" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise. OREX is not an Affiliate of the Company
or the Shareholders for purposes of this Agreement and neither the Shareholders
nor the Company is an Affiliate of OREX for purposes of this Agreement.
1.5 "Agreement" has the meaning set forth in the Preamble.
1.6 "Articles of Merger" has the meaning set forth in Section 2.3.
1.7 "Certificate(s)" has the meaning set forth in Section 2.12.1.
1.8 "Closing" has the meaning set forth in Section 2.9.
1.9 "Closing Date" has the meaning set forth in Section 2.9.
1.10 "Code" means the Internal Revenue Code of 1986, as amended.
1.11 "Collected Accounts Receivable" has the meaning set forth in Section
2.13.2.1.
1.12 "Commission" means the U.S. Securities and Exchange Commission.
1.13 "Company" has the meaning set forth in the Preamble.
1.14 "Company Shares" means any share of common stock, $_____ par value per
share, of the Company.
1.15 "Delaware Act" and "California Act" have the meanings set forth in Section
2.1.
1.16 "Disclosure Schedule" has the meaning set forth in Section 3.
1.17 "Effective Time" has the meaning set forth in Section 2.3.
1.18 "Employee Benefit Plan" means any: (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan; (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan; (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan); (d) Employee Welfare Benefit Plan; or (e) any bonus,
incentive, severance, stock option, stock purchase, short-term disability plan
or other material fringe benefit plan, program or arrangement, including
policies concerning holidays, vacations and salary continuation during short
absences for illness or otherwise.
1.19 "Employee Pension Benefit Plan" has the meaning set forth in ERISA Section
3(2).
1.20 "Employee Welfare Benefit Plan" has the meaning set forth in ERISA Section
3(1).
1.21 "Environmental, Health, and Safety Requirements" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Clean Air Act, the Federal Water
Pollution Control Act, the Safe Drinking Water Act, the Toxic Substance Control
Act, the Emergency Planning and Community Right-to-Know Act of 1986, the
Hazardous Material Transportation Act, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, injunctions, judgments, orders, decrees, and rulings) of
federal, state, local, and foreign governments (and all agencies thereof)
concerning pollution or protection of the environment, public health and safety,
or employee health and safety, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials (including petroleum products and
asbestos) or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes.
1.22 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.23 "Fiduciary" has the meaning set forth in ERISA Section 3(21).
1.24 "Financial Statements" has the meaning set forth in Section 3.8.
1.25 "GAAP" means the United States generally accepted accounting principles in
effect from time to time.
1.26 "Indemnified Party" has the meaning set forth in Section 8.4.1.
1.27 "Indemnifying Party" has the meaning set forth in Section 8.4.1.
1.28 "Initial Public Offering" means the initial underwritten public offering of
OREX Shares contemplated by the Registration Statement.
1.29 "Intellectual Property" means: (a) all trade secrets and confidential
business information (including customer and supplier lists, ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
pricing and cost information, and business and marketing plans and proposals);
(b) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith; (c) all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof; (d)
all copyrightable works, all copyrights, and all applications, registrations,
and renewals in connection therewith; (e) all computer software (including data
and related documentation); (f) all other proprietary rights; and (g) all copies
and tangible embodiments thereof (in whatever form or medium).
1.30 "IRS" means the U.S. Internal Revenue Service.
1.31 "Knowledge" shall be deemed to include the assurance that such Knowledge is
based upon reasonable investigation and "Knowledge," as it applies to the
Shareholders, means the Knowledge of the Shareholders, and "Knowledge," as it
applies to the Company, means the Knowledge of the Shareholders and the
officers, directors and employees of the Company.
1.32 "Liability" means any liability, whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due, including,
but not in any way limited to, any liability for Taxes.
1.33 "Merger" has the meaning set forth in Section 2.1.
1.34 "Most Recent Financial Statements" has the meaning set forth in Section
3.8.
1.35 "Most Recent Fiscal Month End" has the meaning set forth in Section 3.8.
1.36 "Most Recent Fiscal Year End" has the meaning set forth in Section 3.8.
1.37 "Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
1.38 "OREX" has the meaning set forth in the Preamble.
1.39 "OREX Shares" means any share of common stock, $.0001 par value per share,
of OREX.
1.40 "Party(ies)" has the meaning set forth in the Preamble.
1.41 "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
1.42 "Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a limited liability company or partnership, a trust, a
joint venture, an unincorporated organization, any other form of entity
whatsoever, or a governmental entity (or any department, agency, or political
subdivision thereof).
1.43 "Prohibited Transaction" has the meaning set forth in ERISA Section 406 and
Code Section 4975.
1.44 "Registration Statement" has the meaning set forth in Section 6.1.
1.45 "Reportable Event" has the meaning set forth in ERISA Section 4043.
1.46 "Securities Act" means the Securities Act of 1933, as amended.
1.47 "Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.48 "Security Interest" means any lien, claim, encumbrance, mortgage,
hypothecation, pledge, or other security interest, excluding purchase money
security interests arising in the ordinary course of business and liens arising
by operation of law for Taxes not yet due and payable.
1.49 "Shareholder" and "Shareholders" have the meaning set forth in the
Preamble.
1.50 "Subsidiary" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
members of the board of directors.
1.51 "Tax" or "Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, production, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including interest, penalty, or additions thereto, whether disputed or not, and
whether or not accrued on the Financial Statements.
1.52 "Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
1.53 "Third Party Claim" has the meaning set forth in Section 8.4.1.
1.54 "Trade Secrets" has the meaning set forth in Section 9.3.
1.55 "Transaction" has the meaning set forth in Section 2.1.
1.56 "Transaction Consideration" has the meaning set forth in Section 2.13.