Execution Copy
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of the 24th day of April, 1998, (the "Plan Date") by and among
INTERNATIONAL ISOTOPES INC., a Texas corporation ("Acquisition Parent"), I3
ACQUISITION SUB INC., a Texas corporation, a wholly owned subsidiary of
Acquisition Parent ("Acquisition Sub"), MAC ISOTOPES, INC., a Colorado
corporation ("Target"), and MACTEC, INC., a Colorado corporation, the sole
shareholder of Target ("Target Parent").
W I T N E S S E T H:
WHEREAS, Target is involved in the sale and distribution of radioactive
isotopes and has exclusive contracts for the production, processing and
distribution of such radioactive isotopes;
WHEREAS, Acquisition Parent is involved in the manufacture, sale and
distribution of radioisotopes, pharmaceutical radiochemicals and finished radio
pharmaceuticals and has proprietary and exclusive production contracts and will
further develop new radioisotopes, imaging and therapeutic devices; and
WHEREAS, Acquisition Sub and Target, and their respective boards of
directors and shareholders, deem it advisable for the welfare and best interests
of the corporations that Acquisition Sub be merged with and into Target on the
terms and subject to the conditions set forth in this Agreement and in
accordance with the laws of the States of Colorado and Texas;
NOW, THEREFORE, for and in consideration of the premises and of the mutual
representations, warranties, covenants and agreements contained herein, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and upon the terms and subject to the conditions
hereinafter set forth, the parties do hereby agree as follows:
ARTICLE I.
MERGER
1.1 Merger of Acquisition Sub Into Target. At the Effective Time (as
defined in Section 1.2 below), Acquisition Sub shall be merged with and into
Target (the "Merger"). The separate existence of Acquisition Sub shall cease at
the Effective Time of the Merger and Target shall continue its corporate
existence as the Surviving Corporation (herein so called) and as a wholly owned
subsidiary of Acquisition Parent.
1.2 Effective Time of the Merger. The Merger shall become effective as
of the date specified in the Certificate of Merger filed pursuant to Section 1.8
below, which is expected to be April 24, 1998.
1.3 Effects of the Merger. At the Effective Time of the Merger:
(a) the separate existence of Acquisition Sub shall cease and
Acquisition Sub shall be merged with and into Target and Target shall be the
Surviving Corporation;
(b) the Articles of Incorporation of Target as in effect
immediately prior to the Effective Time of the Merger shall be the Articles of
Incorporation of the Surviving Corporation, provided that prior to the Effective
Time such Articles of Incorporation shall be amended to allow for such number of
Directors as specified in the Target's Bylaws;
(c) the Bylaws of Target as in effect immediately prior to the
Effective Time of the merger shall be the Bylaws of the Surviving Corporation,
until duly amended in accordance with their terms and as provided by law,
provided that prior to the Effective Time the Target's Bylaws shall have been
amended to a form acceptable to Acquisition Parent and its legal counsel;
(d) the directors of Acquisition Sub in office at the Effective
Time of the Merger shall be the directors of the Surviving Corporation, each of
such directors to hold office, subject to the applicable provisions of the
Bylaws of the Surviving Corporation, until his or her successor is duly elected
and qualified, or, if earlier, his death, resignation, or removal from office;
(e) the officers of Acquisition Sub in office at the Effective
Time of the Merger shall be the officers of the Surviving Corporation, each of
such officers to hold office, subject to the applicable provisions of the Bylaws
of the Surviving Corporation, at the pleasure of the board of directors of the
Surviving Corporation and until his or her successor is duly elected and
qualified, or, if earlier, his death, resignation, or removal from office;
(f) the Surviving Corporation shall possess all the rights,
privileges, immunities, and franchises, of a public as well as of a private
nature, of the Target and the Acquisition Sub and all property, real, personal,
and mixed, and all liabilities, obligations, and debts due on whatever account,
and all other choses in action, and all and every other interest, of or
belonging to or due to the Target or Acquisition Sub, shall be taken and deemed
to be transferred to and vested in the Surviving Corporation without further act
or deed; and
(g) the Surviving Corporation shall thenceforth be responsible and
liable for all liabilities and obligations of each of Target and Acquisition Sub
and any claim existing or action or proceeding pending by or against either of
Target or Acquisition Sub may be prosecuted as if the Merger had not taken place
and the Surviving Corporation had been substituted in its place. Neither the
rights of creditors nor liens upon the property of either Target or Acquisition
Sub shall be impaired by the Merger.
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1.4 Conversion of Target Stock. At the Effective Time, the following
actions shall occur:
(a) Target Parent shall first convert to equity that portion of
the inter-company liability then shown on Target's balance sheet (the
"Inter-Company Liability") which will leave the sum of Five Hundred Thousand
Dollars ($500,000.00) remaining in the Inter-Company Liability;
(b) Immediately following the action taken by Target Parent in (a)
above, all of the shares of the Target common stock, $0.01 par value per share,
issued to and then outstanding in Target Parent (the "Target Stock") shall be
converted into the right to receive that number of issued and outstanding shares
of Acquisition Parent common stock, $0.01 par value per share (the "Acquisition
Parent Stock") as shall have a total aggregate Market Value of the sum of (i)
Two Million Dollars ($2,000,000.00) plus (ii) that amount of Inter-Company
Liability which was converted to equity by Target Parent in (a) above. For
purposes of this Agreement, the "Market Value" of a share of Acquisition Parent
Stock shall be equal to the average of the closing sale price of Acquisition
Parent Stock as reported on the NASDAQ Small Cap Market for each of the sixty
(60) trading days ending five (5) trading days prior to the Effective Time; and
(c) Immediately following the actions taken by all parties in (b)
above, Acquisition Parent shall capitalize Target to the extent necessary to
allow Target to make payment in full of its remaining Inter-Company Liability to
Target Parent and shall insure that Target takes that action by making such
payment in full in good funds.
1.5 Conversion of Acquisition Sub Stock. At the Effective Time of the
Merger, each share of Acquisition Sub common stock, $.01 par value per share
(the "Acquisition Sub Stock"), that is outstanding immediately prior to the
Effective Time of the Merger shall be converted into one (1) share of Target
Stock and shall constitute the only outstanding shares of capital stock of the
Surviving Corporation.
1.6 Cancellation of Treasury Stock. Any shares of Target Stock held in
the treasury of Target at the Effective Time of the Merger shall be canceled at
the Effective Time of the Merger and no cash or securities shall be issuable
with respect to such treasury shares.
1.7 Exchange of Certificates. At the Effective Time of the Merger,
Target Parent shall surrender its stock certificates representing the Target
Stock for cancellation and shall cease to have any rights with respect to the
Target Stock, and upon such surrender, shall be entitled to receive the items
described in Section 1.4, above. At the Effective Time of the Merger,
Acquisition Parent shall surrender its stock certificates representing the
Acquisition Sub Stock for cancellation, and upon such surrender, shall be
entitled to receive stock certificates representing the Target Stock into which
the Acquisition Sub Stock has been converted, in accordance with Section 1.5,
above.
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1.8 Certificate of Merger. A certificate of merger, substantially in the
form of Exhibit A to this Agreement (the "Certificate of Merger") shall be
executed and delivered on behalf of Target and Acquisition Sub and submitted to
the Secretary of State of the State of Texas and the Secretary of State of the
State of Colorado for filing upon the satisfaction of the other conditions
precedent to the consummation of the Merger provided in this Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF TARGET AND TARGET PARENT
Target and Target Parent jointly and severally represent and warrant to
Acquisition Parent that the following representations and warranties are true
and correct as of the Plan Date and will be true and correct at the Effective
Time.
2.1 Authorization. This Agreement has been duly executed and delivered
by Target and Target Parent and constitutes the valid and binding obligation of
each such party, enforceable in accordance with its terms, except that (a) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally, (b) the remedy of
specific performance and injunctive relief are subject to certain equitable
defenses and to the discretion of the court before which any proceedings may be
brought and (c) rights to indemnification hereunder may be limited under
applicable securities laws (the items described in clauses (a) through (c)
hereof, the "Equitable Exceptions"). Target and Target Parent each has, or prior
to the Effective Time will have, full corporate power, capacity and authority to
execute this Agreement and all other agreements and documents contemplated
hereby and to effect the Merger.
2.2 Organization, Existence and Good Standing of Target. Target is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation with all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Target is duly qualified or licensed as a foreign
corporation and in good standing in the State of Idaho, which is the only
jurisdiction in which the character or location of the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary. The only other name under which Target has done
business in the last five (5) years is "MAC Isotopes, LLC." Target has not been
a subsidiary or division of another corporation other than Target Parent or a
part of an acquisition which was later rescinded. The minute books of Target, as
heretofore made available to Acquisition Parent, are correct and complete in all
material respects.
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2.3 Capital Stock of Target.
(a) Target's authorized capital stock consists of 10,000,000
shares of common stock, $.01 par share, of which 100 shares are issued and
outstanding. All of the Target Stock has been validly issued and is fully paid
and nonassessable and no holder thereof is entitled to any preemptive rights
(except any statutory preemptive rights, which Target Parent hereby waives).
There are no outstanding conversion or exchange rights, subscriptions, options,
warrants or other arrangements or commitments obligating Target to issue any
shares of capital stock or other securities or to purchase, redeem or otherwise
acquire any shares of capital stock or other securities, or to pay any dividend
or make any distribution in respect thereof, except as set forth on Schedule
2.3.
(b) Target Parent (i) owns of record and beneficially and has good
and marketable title to all of the issued and outstanding Target Stock, free and
clear of any and all liens, mortgages, security interests, encumbrances,
pledges, charges, adverse claims, options, rights or restrictions of any
character whatsoever other than standard state and federal securities law
private offering legends and restrictions (collectively, "Liens"), and (ii) has
the right to vote the Target Stock on any matters as to which any shares of
Target Stock are entitled to be voted under the laws of the State of Colorado
and Target's Articles of Incorporation and Bylaws, free of any right of any
other person.
2.4 Subsidiaries. Target does not presently own, of record or
beneficially, or control directly or indirectly, any capital stock, securities
convertible into capital stock or any other equity interest in any corporation,
association or business entity nor is Target, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
2.5 Financial Statements.
(a) Target Parent has previously furnished to Acquisition Parent
the audited consolidated balance sheet of Target Parent as of October 31, 1997,
and the related statements of operations, shareholders' equity and cash flows
for the three (3) fiscal years then ended, each as reviewed by certified public
accountants. Target has provided to Acquisition Parent Target's unaudited
balance sheet, management's statements of operations and shareholders' equity
for the fiscal year ended October 31, 1997 and for the five-month period ended
February 27, 1998 (collectively, the "Financial Statements"). The Financial
Statements present fairly the financial position and results of operations of
Target and Target Parent as of the indicated dates and for the indicated periods
and have been prepared in accordance with GAAP.
(b) Except to the extent (and not in excess of the amounts)
reflected in the February 27, 1998 balance sheet included in the Financial
Statements or as disclosed on Schedule 2.5, Target has no liabilities or
obligations required to be reflected in the Financial Statements (or the notes
thereto) in accordance with GAAP other than current liabilities incurred in the
ordinary course of business, consistent with past practice, subsequent to
February 27, 1998.
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Target has informed Acquisition Parent of the contingent liability for the
hazardous waste spill described on Schedule 2.5. Target has no other contingent
liabilities. Target has further informed Acquisition Parent that the unaudited
Financial Statements for Target do not include a reserve for Taxes (as defined
in Section 2.8) because such a reserve is maintained by Target Parent on its
Financial Statements for Target's benefit.
2.6 Accounts and Notes Receivable. Set forth on Schedule 2.6 is an
accurate list of the accounts and notes receivable of Target, as of February 27,
1998 included within the Financial Statements, and including receivables from
and advances to employees and the Target Parent. Target shall provide
Acquisition Parent with an aging of all accounts and notes receivable showing
amounts due in 30-day aging categories. Except to the extent reflected on
Schedule 2.6, all such accounts and notes are legal, valid and binding
obligations of the obligers collectible in the amount shown on Schedule 2.6, net
of reserves reflected in such balance sheet. To the extent the Surviving
Corporation is unable to collect any of such receivables, the provisions of
Section 4.11 shall apply.
2.7 Permits. Target holds all licenses, franchises, permits and other
governmental authorizations necessary to operate its properties and carry on its
business as now being conducted (the "Material Permits"), the absence of any of
which would have a material adverse effect on the business, operations,
properties, assets or conditions (financial or otherwise), results of operations
or prospects of Target (a "Material Adverse Effect"). An accurate list and
summary description of all such Material Permits is set forth on Schedule 2.7
hereto. The Material Permits are valid, and Target has not received any notice
that any governmental authority intends to cancel, terminate or not renew any
such Material Permit. Target has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in all applicable licenses, franchises, permits, orders, approvals, variances,
rules and regulations and is not in violation of any of the foregoing except
where such noncompliance or violation would not have a Material Adverse Effect.
Except as specifically provided on Schedule 2.7, the transactions contemplated
by this Agreement will not result in a default under or a breach or violation
of, or adversely affect the rights and benefits afforded to Target by, any such
Material Permits.
2.8 Tax Matters.
(a) Target Parent has filed, on a consolidated basis, all income
tax returns required to be filed by Target and all returns of other Taxes (as
defined below) required to be filed by Target and has paid or provided for (or
Target Parent has provided for) all Taxes shown to be due on such returns, and
all such returns are accurate and correct in all respects. Except as set forth
on Schedule 2.8, (i) no action or proceeding for the assessment or collection of
any Taxes is pending against Target; (ii) no deficiency, assessment or other
formal claim for any Taxes has been asserted or made against Target that has not
been fully paid or finally settled; and (iii) no issue has been formally raised
by any taxing authority in connection with an audit or examination of any return
of Taxes of Target. No federal, state or foreign income tax returns of Target
have been examined, and there are no outstanding agreements or waivers extending
the applicable statutory periods of
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limitation for such Taxes for any period. All Taxes that Target has been
required to collect or withhold have been duly collected or withheld and, to the
extent required, have been paid to the proper taxing authority. No Taxes will be
assessed on or after the Effective Time against Target for any tax period ending
on or prior to the Effective Time other than for Taxes disclosed on Schedule
2.8. For purposes of this Agreement, "Taxes" shall mean all taxes, charges,
fees, levies or other assessments including, without limitation, income, excise,
property, withholding, sales and franchise taxes, imposed by the United States,
or any state, county, local or foreign government or subdivision or agency
thereof, and including any interest, penalties or additions attributable
thereto.
(b) Target is not a party to any Tax allocation or sharing
agreement.
(c) Target has substantial authority for the treatment of, or has
disclosed (in accordance with Section 6662(d)(2)(B)(ii) of the Code) on its
Federal income returns, all positions taken therein that could give rise to a
substantial understatement of Federal income tax within the meaning of Section
6662(d) of the Code.
(d) Target has not been a member of an affiliated group filing a
consolidated federal income tax return and does not have any liability for Taxes
for any Person other than Target (i) under Section 1.1502-6 of the Treasury
regulations (or any similar provision of state, local or foreign law), (ii) as a
transferee or successor, (iii) by contract or (iv) otherwise.
(e) Target's Tax basis in its assets for purposes of determining
its future amortization, depreciation and other federal income Tax deductions is
accurately reflected on Target's Tax books and records.
2.9 Assets and Properties.
(a) Real Property. Target does not own any real property.
(b) Personal Property. Except as set forth on Schedule 2.9 and
except for inventory and supplies disposed of or consumed, and accounts
receivable collected or written off, and cash utilized, all in the ordinary
course of business consistent with past practice, Target owns all of its
inventory, equipment and other personal property (both tangible and intangible)
reflected on the latest balance sheet included in the Financial Statements or
acquired since February 27, 1998, free and clear of any Liens, except for
statutory Liens for current taxes, assessments or governmental charges or levies
on property not yet due and payable.
(c) Condition of Properties. The leasehold estates that are the
subject of the Real Property Leases (as defined in Section 2.10) and the
tangible personal property owned or leased by Target are in good operating
condition and repair, ordinary wear and tear excepted; and neither Target nor
Target Parent have any knowledge of any condition not disclosed herein of any
such
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leasehold estate that would materially affect the leasehold estate or otherwise
have a Material Adverse Effect.
(d) Compliance. The continued use and occupancy of the leasehold
estates the subject of the Real Property Leases as currently operated, used and
occupied will not violate any zoning, building, health, flood control, fire or
other law, ordinance, order or regulation or any restrictive covenant. There are
no violations of any federal, state, county or municipal law, ordinance, order,
regulation or requirement affecting any portion of the leasehold estates and no
written notice of any such violation has been issued by any governmental
authority.
2.10 Real Property Leases; Options. Schedule 2.10 sets forth a list of
(a) all leases and subleases under which Target is lessor or lessee or sublessor
or sublessee of any real property, together with all amendments, supplements,
nondisturbance agreements, brokerage and commission agreements and other
agreements pertaining thereto ("Real Property Leases"); (b) all material options
held by Target or contractual obligations on the part of Target to purchase or
acquire any interest in real property; and (c) all options granted by Target or
contractual obligations on the part of Target to sell or dispose of any material
interest in real property. Copies of all Real Property Leases and such options
and contractual obligations have been delivered to Acquisition Parent. Target
has not assigned any Real Property Leases or any such options or obligations.
There are no liens on the interest of Target in the Real Property Leases,
subject only to (i) Liens for taxes and assessments not yet due and payable and
(ii) those matters set forth on Schedule 2.10. The Real Property Leases and
options and contractual obligations listed on Schedule 2.10 are in full force
and effect and constitute binding obligations of Target and the other parties
thereto, and (x) there are no defaults thereunder and (y) no event has occurred
that with notice, lapse of time or both would constitute a default by Target or,
to the best knowledge of Target and Target Parent, by any other party thereto.
2.11 Environmental Laws and Regulations.
(a) (i) Except as set forth on Schedule 2.11(a), during the
occupancy and operation of the "Subject Property" (as defined below) by Target
and, to the knowledge of Target and Target Parent, prior to its occupancy and
operation, the operations of the Subject Property, and any use, storage,
treatment, disposal or transportation of "Hazardous Substances" (as defined
below) that has occurred in or on the Subject Property prior to the date of this
Agreement have been in compliance with "Environmental Requirements" (as defined
below); (ii) during the occupancy and operation of the Subject Property by
Target and, to the knowledge of Target and Target Parent, prior to its occupancy
or operation, no release, leak, discharge, spill, disposal or emission of
Hazardous Substances has occurred in, on or under the Subject Property in a
quantity or manner that violates or requires further investigation or
remediation under Environmental Requirements; (iii) to the knowledge of Target
and Target Parent, the Subject Property is free of Hazardous Substances as of
the date of this Agreement, except for the presence of small quantities of
Hazardous Substances utilized by Target or other tenants of the Subject Property
in the ordinary course of their business; (iv) to the knowledge of Target and
Target Parent, there is no pending or threatened litigation or
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administrative investigation or proceeding concerning the Subject Property
involving Hazardous Substances or Environmental Requirements; (v) to the
knowledge of Target and Target Parent, there are no above-ground or underground
storage tank systems located at the Subject Property; (vi) except as set forth
on Schedule 2.11(a), Target has never owned, operated, or leased any real
property other than the Subject Property; and (vii) to the knowledge of Target
and Target Parent, Target's transportation to or disposal at any off-site
location of any Hazardous Substances from property now or formerly owned,
operated or leased by Target at the time of Target's ownership, operation or
lease thereof was conducted in full compliance with applicable Environmental
Requirements.
(b) Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Environmental Requirements" means all laws, statutes, rules,
regulations, ordinances, guidance documents, judgments, decrees, orders,
agreements and other restrictions and requirements of any governmental
authority, including, without limitation, federal, state and local
authorities, relating to the regulation or protection of human health and
safety, natural resources, conservation, the environment, or the storage,
treatment, disposal, transportation, handling or other management of
industrial or solid waste, hazardous waste, hazardous or toxic substances
or chemicals, or pollutants.
"Hazardous Substance" means (i) any "hazardous substance" as defined
in ss.101(14) of the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended from time to time (42 U.S.C. ▇▇.▇▇.
9601 et seq.) ("CERCLA") or any regulations promulgated thereunder, or the
Occupational Safety and Health Act of 1970, as amended from time to time
(29 U.S.C. ss. 651 et seq.), or any regulations promulgated thereunder; or
(ii) any additional substances or materials that have been or are
currently classified or considered to be pollutants, hazardous or toxic
under Environmental Requirements.
"Subject Property" means all property subject to the Real Property
Leases and any properties listed on Schedule 2.10, but excludes the Test
Reactor Hot Cells facility at the Idaho National Engineering Laboratory
(the "TRAHC").
(c) With respect to the TRAHC, (i) Target's use of such facility
and its operations therein is in compliance with the Environmental Requirements
specifically applicable to the kind of business conducted by Target at the site,
including but not limited to National Environmental Policy Act Document Number
TRA-96-013 (the "Business-Specific Environmental Requirements"); (ii) during the
occupancy and operation of the TRAHC by Target and, to the knowledge of Target
and Target Parent, prior to its occupancy or operation, no release, leak,
discharge, spill, disposal or emission of Hazardous Substances has occurred in,
on or under the TRAHC in a quantity or manner that violates or requires further
investigation or remediation under the Business-Specific Environmental
Regulations, except as disclosed on Schedule 2.11(c); and (iii) to the knowledge
of Target and Target Parent, there is no pending or threatened litigation or
administrative proceeding concerning the
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TRAHC involving Hazardous Substances or the Business-Specific Environmental
Regulations except as disclosed on Schedule 2.11(c). Target is in compliance
with the environmental regulatory provisions of the Commercial Use Subcontract
Number C96-175950 between Target and Lockheed ▇▇▇▇▇▇ Idaho Technologies Company
dated as of October 1, 1996 (the "LMITCO Contract").
2.12 Contracts.
(a) Set forth on Schedule 2.12(a) is a list of all material
contracts, agreements, arrangements and commitments (whether oral or written) to
which Target is a party or by which its assets or business are bound including,
without limitation, contracts, agreements, arrangements or commitments (the
following, "Contracts") that relate to (i) the sale, lease or other disposition
by Target of all or any substantial part of its business or assets (other than
in the ordinary course of business) or the maintenance thereof, (ii) the
purchase or lease by Target of a substantial amount of assets (other than in the
ordinary course of business), (iii) the supply by Target of any customer's
requirements for any item or the purchase by Target of its requirements for any
item or of a vendor's output of any item, (iv) lending or advancing funds by
Target, (v) borrowing of funds or guaranteeing the borrowing of funds by any
other person, whether under an indenture, note, loan agreement or otherwise,
(vi) any transaction or matter with any affiliate of Target, (vii)
noncompetition, (viii) the acquisition by Target of any operating business or
the capital stock of any person since February 27, 1998, (ix) the use of any
facility used in connection with Target's business, or (x) any other matter that
is material to the business, assets or operations of Target.
(b) Except as set forth on Schedule 2.12(b), each Contract is in
full force and effect on the Plan Date hereof, Target is not in default under
any Contract, Target has not given or received notice of any default under any
Contract, and, to the knowledge of Target and Target Parent, no other party to
any Contract is in default thereunder.
2.13 No Violations. The execution, delivery and performance of this
Agreement and the other agreements and documents contemplated hereby by Target
and the Target Parent and the consummation of the transactions contemplated
hereby, including but not limited to the Merger, will not (i) violate any
provision of the Articles of Incorporation or Bylaws of Target, (ii) violate any
statute, rule, regulation, order or decree of any public body or authority by
which Target or the Target Parent or their respective properties or assets are
bound, or (iii) except as set forth on Schedule 2.13, result in a violation or
breach of, or constitute a default under, or result in the creation of any
encumbrance upon, or create any rights of termination, cancellation or
acceleration in any person with respect to any Contract or any material license,
franchise or permit of Target or any other agreement, contract, indenture,
mortgage or instrument to which Target is a party or by which any of its
properties or assets is bound.
2.14 Consents. Except as set forth on Schedule 2.14, no consent, approval
or other authorization of any governmental authority or under any Contract or
other agreement or commitment to which Target or Target Parent are parties or by
which their respective assets are
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bound is required as a result of or in connection with the execution or delivery
of this Agreement and the other agreements and documents to be executed by
Target and Target Parent or the consummation by Target and Target Parent of the
transactions contemplated hereby, including but not limited to the Merger.
2.15 Litigation and Related Matters. Set forth on Schedule 2.15 is a list
of all actions, suits, proceedings, investigations or grievances pending against
Target or, to the best knowledge of Target and Target Parent, threatened against
Target, the business or any property or rights of Target, at law or in equity,
before or by any arbitration board or panel, court or federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign ("Agencies"). None of the actions, suits,
proceedings or investigations listed on Schedule 2.15 either (i) results in or
would, if adversely determined, have a Material Adverse Effect or (ii) affects
or would, if adversely determined, affect the right or ability of Target to
carry on its business substantially as now conducted. Target is not subject to
any continuing court or Agency order, writ, injunction or decree applicable
specifically to its business, operations or assets or its employees, nor in
default with respect to any order, writ, injunction or decree of any court or
Agency with respect to its assets, business, operations or employees.
2.16 Compliance with Laws. Target (a) is in material compliance with all
applicable laws, regulations (including federal, state and local procurement
regulations), orders, judgments and decrees, and (b) possesses all Material
Permits.
2.17 Intellectual Property Rights. Target does not have any domestic or
foreign trade names, trademarks, service marks, trademark registrations or
applications, service ▇▇▇▇ registrations or applications, patents, patent
applications, patent licenses, software licenses or copyright registrations or
applications, nor does it use any such intellectual property in the operation of
its business.
2.18 Employee Benefit Plans.
(a) Target Parent maintains each employee benefit plan within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), for the benefit of Target or any of its Group Members (as
defined below) (collectively, the "Plans") in substantial compliance with
applicable law and each such Plan has been administered and operated in all
material respects in accordance with its terms. Except as set forth on Schedule
2.18, neither the execution and delivery of this Agreement by Target or the
consummation of the transactions contemplated hereby, including but not limited
to the Merger, will (i) entitle any current or former employee of Target to
severance pay, unemployment compensation or any similar payment, (ii) accelerate
the time of payment or vesting, or increase the amount of, any compensation due
to any such employee or former employee, or (iii) directly or indirectly result
in any payment made or to be made to or on behalf of any person to constitute a
"parachute payment" (within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code")). For purposes of this
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Agreement, "Group Member" shall mean any member of any "affiliated service
group" as defined in Section 414(m) of the Code that includes Target, any member
of any "controlled group of corporations" as defined in Section 1563 of the Code
that includes Target or any member of any group of "trades or businesses under
common control" as defined by Section 414(c) of the Code that includes Target.
(b) Target Parent will retain all liability with respect to any
Plan and will indemnify and hold Surviving Corporation, Acquisition Sub and
Acquisition Parent harmless with respect to any benefit owed or claim made under
any Plan, it being understood that Surviving Corporation, Acquisition Sub and
Acquisition Parent do not intend to assume any Plan applicable to Target's
employees.
2.19 Employees; Employee Relations.
(a) Schedule 2.19 sets forth (i) the name, hire date and current
annual salary (or rate of pay) and other compensation (including, without
limitation, normal bonus, profit-sharing and other compensation) now payable by
Target to each employee, (ii) any increase to become effective after the Plan
Date in the total compensation or rate of total compensation payable by Target
to each such person, (iii) any increase to become payable after the Plan Date by
Target to employees other than those specified in clause (i) of this Section
2.19(a), (iv) all presently outstanding loans and advances (other than routine
travel advances to be repaid or formally accounted for within sixty (60) days)
made by Target to, or made to Target by, any director, officer or employee, and
(v) all other transactions between Target and any director, officer or employee
thereof since February 27, 1998.
(b) Except as disclosed on Schedule 2.19, Target is not a party
to, or bound by, the terms of any collective bargaining agreement, and Target
has not experienced any material labor difficulties during the last five (5)
years. Except as set forth on Schedule 2.19, there are no labor disputes
existing, or to the best knowledge of Target and Target Parent, threatened
involving, by way of example, strikes, work stoppages, slowdowns, picketing, or
any other interference with work or production, or any other concerted action by
employees. No charges or proceedings before the National Labor Relations Board,
or similar agency, exist, or to the best knowledge of Target and Target Parent,
are threatened.
(c) The relationships enjoyed by Target with its employees are
good and Target and Target Parent have no knowledge of any facts that would
indicate that the employees of Target will not continue in the employ thereof
following the Effective Time on a basis similar to that existing on the date of
this Agreement. Since February 27, 1998, Target has not experienced any
difficulties in obtaining any qualified personnel necessary for the operations
of its business and, to the best knowledge of Target and Target Parent, no such
shortage of qualified personnel is threatened or pending. Except as disclosed on
Schedule 2.19, Target is not a party to any employment contract with any
individual or employee, either express or implied. No legal proceedings,
charges, complaints or similar actions exist under any federal, state or local
laws affecting the employment
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relationship including, but not limited to: (i) anti-discrimination statutes
such as Title VII of the Civil Rights Act of 1964, as amended (or similar state
or local laws prohibiting discrimination because of race, sex, religion,
national origin, age and the like); (ii) the Fair Labor Standards Act or other
federal, state or local laws regulating hours of work, wages, overtime and other
working conditions; (iii) requirements imposed by federal, state or local
governmental contracts such as those imposed by Executive Order 11246; (iv)
state laws with respect to tortious employment conduct, such as slander,
harassment, false light, invasion of privacy, negligent hiring or retention,
intentional infliction of emotional distress, assault and battery, or loss of
consortium; or (v) the Occupational Safety and Health Act, as amended, as well
as any similar state laws, or other regulations respecting safety in the
workplace; and to the best knowledge of Target and Target Parent, no
proceedings, charges, or complaints are threatened under any such laws or
regulations and no facts or circumstances exist that would give rise to any such
proceedings, charges, complaints, or claims, whether valid or not. Target is not
subject to any settlement or consent decree with any present or former employee,
employee representative or any government or Agency relating to claims of
discrimination or other claims in respect to employment practices and policies;
and no government or Agency has issued a judgment, order, decree or finding with
respect to the labor and employment practices (including practices relating to
discrimination) of Target. Since February 27, 1998, Target has not incurred any
liability or obligation under the Worker Adjustment and Retraining Notification
Act or similar state laws; and Target has not laid off more than ten percent
(10%) of its employees at any single site of employment in any ninety (90) day
period.
(d) Target is in compliance in all material respects with the
provisions of the Americans with Disabilities Act.
2.20 Insurance. Target Parent maintains all policies and contracts for
fire, casualty, liability and other forms of insurance for the benefit of
Target. All such policies are in full force and effect and shall remain in full
force until the Effective Time. Such policies shall not be available to the
Surviving Corporation after the Merger.
2.21 Interests in Customers, Suppliers, Etc. No shareholder, officer,
director or affiliate of Target possesses, directly or indirectly, any financial
interest in, or is a director, officer, employee or affiliate of, any
corporation, firm, association or business organization that is a client,
supplier, customer, lessor, lessee or competitor of Target. Ownership of
securities of a corporation whose securities are registered under the Securities
Exchange Act of 1934 not in excess of five percent (5%) of any class of such
securities shall not be deemed to be a financial interest for purposes of this
Section 2.21.
2.22 Business Relations. Except as set forth on Schedule 2.22, to the
best knowledge of Target and Target Parent, no supplier of Target has or will
cease to do business therewith after the consummation of the transactions
contemplated hereby, which cessation would have a Material Adverse Effect.
Except as set forth on Schedule 2.22, since February 27, 1998, Target has not
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experienced any difficulties in obtaining any inventory items necessary to the
operation of its business, and, to the best knowledge of Target and Target
Parent, no such shortage of supply of inventory items is threatened or pending.
The Company is not required to provide any bonding or other financial security
arrangements in any material amount in connection with any transactions with any
of its suppliers.
2.23 Officers and Directors. Set forth on Schedule 2.23 is a list of the
current officers and directors of Target.
2.24 Bank Accounts and Powers of Attorney. Schedule 2.24 sets forth each
bank, savings institution and other financial institution with which Target has
an account or safe deposit box and the names of all persons authorized to draw
thereon or to have access thereto. Each person holding a power of attorney or
similar grant of authority on behalf of Target is identified on Schedule 2.24.
Except as disclosed on such Schedule, Target has not given any revocable or
irrevocable powers of attorney to any person, firm, corporation or organization
relating to its business for any purpose whatsoever.
2.25 Absence of Certain Changes or Events. Except as set forth on
Schedule 2.25 or as otherwise contemplated by this Agreement, since February 27,
1998, there has not been (a) any damage, destruction or casualty loss to the
physical properties of Target (whether or not covered by insurance), (b) any
event or circumstance that would have a Material Adverse Effect, (c) any entry
into any transaction, commitment or agreement (including, without limitation,
any borrowing) material to Target, except transactions, commitments or
agreements in the ordinary course of business consistent with past practice, (d)
any declaration, setting aside or payment of any dividend or other distribution
in cash, stock or property with respect to the capital stock or other securities
of Target, any repurchase, redemption or other acquisition by Target of any
capital stock or other securities, or any agreement, arrangement or commitment
by Target to do so, (e) any increase that is material in the compensation
payable or to become payable by Target to its directors, officers, employees or
agents or any increase in the rate or terms of any bonus, pension or other
employee benefit Plan, payment or arrangement made to, for or with any such
directors, officers, employees or agents, except as set forth on Schedule 2.25,
(f) any sale, transfer or other disposition of, or the creation of any Lien
upon, any part of the assets of Target, tangible or intangible, except for sales
of inventory and use of supplies and collections of accounts receivables in the
ordinary course of business consistent with past practice, or any cancellation
or forgiveness of any debts or claims by Target, (g) any change in the relations
of Target with or loss of its customers or suppliers, or any loss of business or
increase in the cost of inventory items or change in the terms offered to
customers, which would have a Material Adverse Effect, or (h) any capital
expenditure (including any capital leases) or commitment therefor by Target in
excess of $10,000.
2.26 Disclosure. All written agreements, lists, schedules, instruments,
exhibits, documents, certificates, reports, statement and other writings
furnished to Acquisition Parent pursuant hereto or in connection with this
Agreement or the transactions contemplated hereby,
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including but not limited to the Merger, are and will be complete and accurate
in all material respects. No representation or warranty by Target Parent or
Target contained in this Agreement, in the schedules attached hereto or in any
certificate furnished or to be furnished by Target Parent or Target to
Acquisition Sub or Acquisition Parent in connection herewith or pursuant hereto
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary in order to make any statement
contained herein or therein not misleading. There is no fact known to Target
Parent that has specific application to Target (other than general economic or
industry conditions) and that materially adversely affects or, as far as Target
Parent can reasonably foresee, materially threatens, the assets, business,
prospects, financial condition, or results of operations of Target that has not
been set forth in this Agreement or any schedule hereto.
Target Parent represents and warrants to the Acquisition Sub and Acquisition
Parent that the following representations and warranties are true and correct as
of the Plan Date and will be true and correct at the Effective Time.
2.27 Investment Purposes. When Target Parent receives the Acquisition
Parent Stock in accordance with Section 1.4 hereof, it will do so for investment
for its own account, and not with a view to, or for resale in connection with,
any distribution of any part of such securities to third parties within the
meaning of such terms as used in the Securities Act of 1933, as amended (the
"Securities Act"). Target Parent understands that the Acquisition Parent Stock
cannot be sold, transferred, or otherwise disposed of without registration under
the Securities Act or exemption therefrom. Target Parent has no present
intention of selling, granting any participation in, or otherwise distributing
the Acquisition Parent Stock, except in connection with a distribution to its
stockholders, or except in connection with the Option to Sell Agreement (the
"Equity Agreement") attached hereto as Exhibit B or pursuant to the registration
of the Acquisition Parent Stock or an exemption therefrom. By executing this
Agreement, Target Parent further represents that Target Parent does not have any
contract, undertaking, agreement or arrangement with any person other than
Acquisition Parent to sell, transfer or grant participation to such person or to
any third person, with respect to any of the Acquisition Parent Stock, except in
connection with a distribution to it stockholders, or except in connection with
the Equity Agreement. Target Parent recognizes that the offering, sale and
delivery of the Acquisition Parent Stock pursuant to the Merger has not been
registered by Acquisition Parent pursuant to the registration provisions of the
Securities Act in reliance upon the availability of an exemption under the
Securities Act which depends, in part, on Target Parent's representations
contained herein. Target Parent recognizes that the stock certificate or
certificates representing the Acquisition Parent Stock to be issued to Target
Parent shall bear a legend substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES ACT OF ANY STATE. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
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TRANSFERRED FOR VALUE, PLEDGED, HYPOTHECATED, OR OTHERWISE ENCUMBERED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION OF THEM UNDER THE SECURITIES ACT
OF 1933 AND/OR THE SECURITIES ACT OF ANY STATE OR IN THE ABSENCE OF AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR ACTS."
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
OPTION TO SELL AGREEMENT DATED EFFECTIVE APRIL 24, 1998, A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION, WHICH GOVERNS THE
TRANSFERABILITY OF THE SHARES IN CERTAIN INSTANCES. A COPY OF SAID OPTION
TO SELL AGREEMENT WILL BE FURNISHED WITHOUT CHARGE TO THE RECORD HOLDER OF
THIS CERTIFICATE UPON RECEIPT OF THE CORPORATION AT ITS PRINCIPAL PLACE OF
BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE RECORD HOLDER
REQUESTING SUCH COPY."
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF ACQUISITION PARENT
Acquisition Parent represents and warrants to Target and Target Parent as
follows:
3.1 Organization and Authorization. Acquisition Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Texas with all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Each of Acquisition Sub and Acquisition Parent has, or prior to the Effective
Time will have, all requisite corporate power, capacity and authority to execute
and deliver this Agreement and all other agreements and documents contemplated
hereby. The execution and delivery of this Agreement and such other agreements
and documents by Acquisition Sub and Acquisition Parent and the consummation by
Acquisition Sub and Acquisition Parent of the transactions contemplated hereby
have been or will be duly authorized by Acquisition Sub and Acquisition Parent
prior to the Effective Time and no other corporate action on the part of
Acquisition Sub or Acquisition Parent will be necessary to authorize the
transactions contemplated hereby, including but not limited to the Merger. This
Agreement has been duly executed and delivered by Acquisition Sub and
Acquisition Parent and constitutes the valid and binding obligation of each such
party, enforceable in accordance with its terms, subject to the Equitable
Exceptions.
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3.2 No Violations. The execution and delivery of this Agreement and the
other agreements and documents contemplated hereby by Acquisition Sub and
Acquisition Parent and the consummation of the transactions contemplated hereby
will not (a) violate any provision of the Articles of Incorporation or Bylaws of
such parties, (b) violate any statute, rule, regulation, order or decree of any
public body or authority by which such parties or their properties or assets are
bound, or (c) result in a violation or breach of, or constitute a default under
or result in the creation of any encumbrance upon, or create any rights of
termination, cancellation or acceleration in any person with respect to any
agreement, contract, indenture, mortgage or instrument to which Acquisition Sub
or Acquisition Parent is a party or any of its properties or assets is bound.
3.3 Consents. Except as set forth on Schedule 3.3, no consent, approval
or other authorization of any governmental authority or third party is required
as a result of or in connection with the execution and delivery of this
Agreement and the other agreements and documents to be executed by Acquisition
Sub or Acquisition Parent or the consummation by Acquisition Sub or Acquisition
Parent of the transactions contemplated hereby, including but not limited to the
Merger.
3.4 Financial Statements
(a) Acquisition Parent has previously furnished to Target and
Target Parent the Form 10-KSB of Acquisition Parent, filed with the United
States Securities and Exchange Commission on March 31, 1998, which contains the
consolidated financial statements with an independent auditor's report of
Acquisition Parent, including the consolidated balance sheets of Acquisition
Parent for the fiscal years ended December 31, 1996 and December 31, 1997, the
consolidated statements of operations for the fiscal year ended December 31,
1997, for the period from November 1, 1995 to December 31, 1996, and for the
period from November 1, 1995 to December 31, 1997, the consolidated statements
of stockholders' equity for the fiscal year ended December 31, 1997, for the
period from November 1, 1995 to December 31, 1996, and for the period from
November 1, 1995 to December 31, 1997, the consolidated statements of cash flows
for the fiscal year ended December 31, 1997, for the period from November 1,
1995 to December 31, 1996, and for the period from November 1, 1995 to December
31, 1997, and the notes thereon (collectively, the "Acquisition Parent Financial
Statements"). The Acquisition Parent Financial Statements present fairly the
financial position and results of operations of Acquisition Parent as of the
indicated dates and for the indicated periods and have been prepared in
accordance with GAAP.
(b) Except to the extent reflected in the Acquisition Parent
Financial Statements or as disclosed on Schedule 3.4, Acquisition Parent has no
liabilities or obligations required to be reflected in the Financial statements
(or the notes thereto) in accordance with GAAP other than current liabilities
incurred in the ordinary course of business, consistent with past practice,
subsequent to December 31, 1997.
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ARTICLE IV.
COVENANTS OF THE PARTIES
4.1 Course of Conduct by Target. From the Plan Date through and until
the Effective Time, except as approved in writing by Acquisition Parent or as
otherwise permitted or contemplated by this Agreement, Target's business shall
be conducted only in the ordinary course of business consistent with past
practice, and Target Parent shall cause Target to comply with the following
covenants:
(a) Capital Expenditures. Target shall not make any capital
expenditures or commitments therefor which, when combined with capital
expenditures or commitments therefor after February 27, 1998 would exceed
$5,000.
(b) Articles of Incorporation; Bylaws. Target shall not make any
change in its Articles of Incorporation or Bylaws except as may be requested by
Acquisition Parent in connection with the Merger.
(c) Stock Issuance: Redemptions: Reorganizations. Target shall not
(i) issue, grant or dispose of, or make any agreement, arrangement or commitment
obligating Target to issue, grant or dispose of any capital shares or other
securities of Target, (ii) redeem or acquire, or make any agreement, arrangement
or commitment obligating Target to redeem or acquire, any shares of capital
stock or other securities of Target, or (iii) authorize or effect or make any
agreement, arrangement or commitment obligating Target to effect, any
reorganization, recapitalization or split-up of such capital stock of Target.
(d) Employee Matters. Target shall not (i) except for increases in
compensation of employees required under any collective bargaining agreement
listed on Schedule 2.19, make any increase that is material in the compensation
payable or to become payable to any of the officers, employees, or agents of
Target, or (ii) make, amend or enter into any employment contract or any bonus,
incentive, stock option, profit sharing, pension, retirement, stock purchase,
hospitalization, medical reimbursement, insurance, severance benefit or other
similar Plan or arrangement or make any voluntary contribution to any such Plan
or arrangement.
(e) Insurance Coverage. Target Parent shall maintain on Target's
behalf, insurance coverage for the benefit of Target on the same basis as, or on
a substantially equivalent basis to, the current insurance coverage as of the
Plan Date.
(f) Business Organization. Target shall use commercially
reasonable efforts to preserve intact its business organization and to keep
available the services of its present officers and employees as a group.
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(g) Maintenance of Property. Target shall maintain its equipment
and other tangible personal property in its present operating condition and
repair, ordinary wear and tear excepted. Target will fully perform and pay for
all maintenance, painting, repairs, alterations and other work required to be
performed by Target as lessee under the Real Property Leases listed on Schedule
2.10.
(h) Relations with Suppliers, Etc. Target will use commercially
reasonable efforts to preserve its relationships with its material suppliers,
customers and others having material business dealings with it. Target promptly
shall notify Acquisition Parent if Target is informed by any of its or suppliers
that such or supplier will or may cease to do business with Target either prior
to or following the Effective Time.
(i) Incurrence of Debt. Target will not voluntarily incur or
assume, whether directly or by way of guaranty or otherwise, any material
obligation or liability, except obligations and liabilities incurred in the
ordinary course of business, consistent with past practice.
(j) Liens. Target will not mortgage, pledge, encumber, create or
allow any Liens not existing on the date hereof upon any of its properties or
assets, tangible or intangible, except Liens created in the ordinary course of
business, consistent with past practice.
(k) Disposition of Assets. Target will not sell, transfer or
otherwise dispose of any of its tangible or intangible property or assets,
except for inventory and supplies sold, disposed of or consumed and accounts
receivable collected or written off in the ordinary course of business,
consistent with past practice. Target will not cancel or forgive any debts or
claims except or in the ordinary course of business, consistent with past
practice.
(l) Agreements, Leases and Licenses. Target will not amend,
terminate before the end of its term, or allow to lapse any material agreement,
lease, license or permit to which it is a party or of which it is the holder.
(m) Accounting Practices. Target will not make any material
changes in its accounting methods, principles or practices, except as required
by GAAP.
(n) Changes in Business Practice. Target will not take any action,
the purpose or effect of which is to shift income from post-closing periods to
the pre-closing period or to defer expenses from the pre-closing period to
post-closing periods, which action is not in the ordinary course of business,
consistent with past practice.
(o) Transactions with Affiliates. Target will not enter into any
agreement, arrangement or transaction with, or make any payment, distribution,
loan or advance to, any affiliate of Target or any officer, director or
shareholder of Target, except for salaries and travel advances consistent with
past practices or as otherwise specifically permitted by this Agreement, and
except
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for repayment of the Inter-Company Liability in accordance with the terms of
such arrangement and as described herein.
(p) Material Transactions. Target will not enter into any other
agreement, course of action or transaction material to it, except in the
ordinary course of business, consistent with past practice.
4.2 Approvals and Consents. Target and Target Parent shall use their
respective reasonable best efforts (i) to cause all conditions to the
obligations of Acquisition Sub and Acquisition Parent under this Agreement over
which they are able to exercise influence or control to be satisfied prior to
the Effective Time and (ii) to obtain promptly and to comply with all requisite
statutory, regulatory or court approvals, third party releases and consents, and
other requirements necessary for the valid and legal consummation of the
transactions contemplated hereby, including but not limited to any consent
required under the LMITCO Contract.
4.3 Investigations. Target shall provide Acquisition Parent and its
representatives and agents such access to the books and records of Target and
furnish to Acquisition Parent such financial and operating data and other
information with respect to the businesses and property of Target as it may
reasonably request from time to time, and permit Acquisition Parent and its
representatives and agents to make such inspections of Target's properties as
they may reasonably request. Target Parent shall promptly arrange for
Acquisition Parent and its representatives and agents to meet with such
directors, officers, employees and agents of Target as requested.
4.4 Environmental Inspection. Target, at its own cost and expense, shall
provide Acquisition Parent access to all records and information concerning all
Hazardous Substances, used, stored, generated, treated or disposed of by Target,
all environmental or safety studies conducted by or on behalf of Target and all
reports, correspondence or filings to governmental agencies with jurisdiction
over Environmental Requirements or Business-Specific Environmental Requirements
concerning the compliance with Environmental Requirements or Business-Specific
Environmental Requirements, all policies and procedures manuals or guidelines
utilized by Target to comply with Environmental Requirements or
Business-Specific Environmental Requirements, and any other information
reasonably requested by Acquisition Parent pertaining to environmental, health
and safety issues (the "Environmental Information"). Target agrees that
Acquisition Parent shall have the right to inspect the Environmental
Information, including the performance of an environmental site assessment and
audit. Target understands and agrees that Acquisition Parent and its agents and
representatives may find it appropriate to contact governmental agencies for
purposes of obtaining information in the possession of such agencies in
connection with their analysis of the Environmental Information or as a result
of their other investigations.
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4.5 Records Pertaining to Target.
(a) Turnover of Records. At the Effective Time, Target Parent will
deliver or cause to be delivered to Acquisition Parent any records (i) in the
possession of Target Parent, (ii) applicable primarily to Target, and (iii) of
which Acquisition Parent does not already have copies.
(b) Retention of Records. Target Parent shall, for a period of
four (4) years after the Effective Time, neither dispose of nor destroy any of
the business records or files of Target Parent that pertain in part to Target
without first offering to turn over possession of copies thereof to Acquisition
Parent, or its successors or assigns, at such party's expense, by written notice
to Acquisition Parent, or its successors or assigns, at least thirty (30) days
prior to the proposed date of such disposition or destruction.
(c) Access to Records. Target Parent shall allow Acquisition
Parent and its representatives, successors and assigns access to all business
records and files of Target Parent that pertain in part to Target, during normal
working hours at the principal place of business of Target Parent, or at any
location where such records are stored, and Acquisition Parent, or its
representatives, successors or assigns, shall have the right, at their own
expense, to make copies of any such records and files.
(d) Assistance with Records. From and after the Effective Time,
Target Parent shall make available to Acquisition Parent, upon written request,
(i) personnel of Target Parent to assist Acquisition Parent in locating and
obtaining records and files maintained by Target Parent, and (ii) any of the
personnel of Target Parent, whose assistance or participation is reasonably
required by Acquisition Parent in anticipation of, or preparation for, any
existing or future third party actions, Tax or other matters in which Target or
any of its past, present or future affiliates is involved and which relate to
the business of Target.
(e) Auditors' Work Papers. Target Parent shall use its best
efforts (including, without limitation, furnishing any certificates reasonably
requested, and complying with other reasonable requests as a prerequisite to
availability) to cause Price Waterhouse, and any other independent accounting
firm that has reviewed or prepared a report on any financial statements of
Target to make available to Acquisition Parent for inspection and copying, at
Acquisition Parent's expense and upon its written request therefor, such
accounting firm's work papers with respect to any such financial statements and
shall take all such actions as required by any such accounting firm in
connection with such request.
4.6 Tax Elections. No new elections with respect to Taxes or any changes
in current elections with respect to Taxes affecting Target shall be made after
the Plan Date without prior written consent of Acquisition Parent, which shall
not be unreasonably withheld.
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4.7 No Solicitation. Except with respect to Acquisition Parent and its
affiliates, after the Plan Date, Target Parent shall not, and Target Parent
shall cause Target and the respective officers, directors, employees, agents and
representatives of Target Parent and Target (including, without limitation, any
investment banker, attorney or accountant retained by any of them) not to (i)
initiate or solicit, directly or indirectly, any inquiries or the making of any
proposal with respect to a merger, consolidation, sale of shares of capital
stock or similar transaction involving, or any purchase of all or any
significant portion of the assets (other than in the ordinary course of
business) of, or any equity interest in, Target (an "Acquisition Transaction"),
or (ii) engage in any negotiations concerning, or provide to any other person
any information or data relating to Target for the purposes of or have any
discussions with any person relating to, or otherwise cooperate in any way with,
or assist or participate in, facilitate or encourage any effort or attempt by
any other person to seek or effect, an Acquisition Transaction. Target Parent
shall promptly advise Acquisition Parent of, and communicate to Acquisition
Parent the terms of, any such inquiry or proposal Target or Target Parent may
receive.
4.8 Terms of Employment Retention. Acquisition Parent shall cause Target
to continue to employ on an at-will basis following the Effective Time all or
substantially all of Target's current employees at the same or substantially
equivalent compensation basis (including wages and benefits), in the same or
substantially equivalent job function or position. Acquisition Parent agrees to
recognize the original hire date recognized and determined by Target for each
employee retained by Target for the purposes of determining and providing
benefits to such employees, including the use of such original hire dates
recognized by Target in determining eligibility and the accrual dates related to
time off for paid vacation and other benefits affected by the date of hire (it
being agreed that Target Parent will credit Acquisition Parent for the amount of
accrued but unpaid vacation pay due to the employees as of the Effective Time
based upon Target Parent's books and records).
4.9 Inter-Company Liability. At the Effective Time, Target Parent shall
deem the receipt of the Cash to be a repayment of that portion of the
Inter-Company Liability remaining following the conversion required by the terms
of Section 1.4(a) hereof so that, thereafter, the Surviving Corporation has no
obligation whatsoever for the Inter-Company Liability.
4.10 Tax-Free Treatment. The parties intend and agree that the
transactions contemplated herein will qualify for Tax-free treatment under
Section 368(a)(1)(A) of the Code and the rules and regulations promulgated
thereunder. None of the parties will take any action that would be inconsistent
with or fail to take any action that is reasonably necessary or appropriate to
ensure, the qualification or treatment of the transactions contemplated herein
as Tax-free under such provisions, without the prior written consent of the
other parties hereto.
4.11 Accounts Receivable. After the Effective Time, Target, as the
Surviving Corporation, shall use reasonable efforts to collect the accounts
receivable described in Section 2.6, as it shall be updated in accordance with
Section 5.14 and Schedule 2.6 (the "Accounts"), and shall notify Target Parent
in writing on a monthly basis as to its progress thereon. To the extent any of
the accounts are
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deemed uncollectible and are written off in accordance with GAAP, Acquisition
Parent shall provide Target Parent with prompt written notice of such fact.
Target Parent shall, within five (5) business days of the date of such notice,
pay to Acquisition Parent, in cash, the amount of any such account that is
deemed uncollectible and written off, and shall receive in exchange an
assignment to it of each such account.
4.12 Piggy-Back Registration Rights..
(a) For a period of two years following the Effective Time, if any
securities of Acquisition Parent are proposed to be registered under the
Securities Act of 1933, as amended (the "Securities Act") (other than a
registration effected solely to implement an employee benefit plan or a
transaction to which Rule 145 of the Securities and Exchange Commission is
applicable), Acquisition Parent will each such time give written notice to
Target Parent of such event. Upon the written request of Target Parent given 60
days after receipt of any such notice (stating the number of shares of
Acquisition Parent Stock to be disposed of and the intended method of
disposition of such shares), Acquisition Parent will use its best efforts to
cause promptly all such shares of Acquisition Parent Stock intended to be
disposed of by Target Parent to be registered under the Securities Act and
qualified under applicable state securities law so as to permit the sale or
other disposition by Target Parent of the shares so registered and to keep such
registration and qualification effective until this sale or other disposition of
such Acquisition Parent Stock is completed.
(b) Acquisition Target will furnish to Acquisition Parent such
information as Acquisition Parent may reasonably require from Acquisition Target
for inclusion in the registration statement (and the prospectus included
therein).
(c) With respect to any registration pursuant to this Agreement,
Acquisition Parent shall pay all of the expenses incurred in effecting such
registration, excluding any underwriting discount and commission attributable to
the shares of Acquisition Parent Stock being sold or otherwise disposed of under
this Section 4.12.
(d) Acquisition Parent and Acquisition Target shall grant to each
other the usual and customary indemnifications in connection with any
registration of Acquisition Parent Stock hereunder.
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ARTICLE V.
CONDITIONS TO OBLIGATIONS OF ACQUISITION SUB AND
ACQUISITION PARENT TO CONSUMMATE THE MERGER
The obligations of Acquisition Sub and Acquisition Parent to effect the Merger,
and to cause the other transactions contemplated hereby to occur at the
Effective Time, shall be subject to the satisfaction or written waivers by
Acquisition Parent of each of the following conditions at or prior to the
Effective Time:
5.1 Representations and Warranties. Each representation and warranty of
Target and Target Parent contained in this Agreement and in any schedule or
other disclosure in writing from Target or Target Parent shall be true and
correct when made, and shall be true and correct on and as of the Effective Time
with the same effect as though such representation and warranty had been made on
and as of the Effective Time.
5.2 Covenants. All of the covenants and agreements herein on the part of
Target Parent and Target to be complied with or performed on or before the
Effective Time shall have been fully complied with and performed.
5.3 Absence of Litigation. No inquiry, action, suit or proceeding shall
have been asserted, threatened or instituted (a) in which it is sought to
restrain or prohibit the carrying out of the transactions contemplated by this
Agreement or to challenge the validity of such transactions or any part thereof,
(b) which could, if adversely determined, result in any Material Adverse Effect
or (c) as a result of which, in the reasonable judgment of Acquisition Parent,
Acquisition Parent would be deprived of the material benefits of the ownership
of the Target Stock.
5.4 Consents and Approvals. All material authorizations, consents,
approvals, waivers and releases, if any, necessary for Target Parent and Target
to consummate the transactions contemplated hereby shall have been obtained and
copies thereof shall be delivered to Acquisition Parent, including but not
limited to consents and approvals by the boards of directors and shareholders of
Target and Target Parent, as applicable, and any consent required under the
LMITCO Contract.
5.5 Certificates. Target and Target Parent shall have delivered to
Acquisition Parent (i) certificates of the appropriate governmental authorities,
dated as of a date not more than twenty (20) days prior to the Effective Time,
attesting to the good standing of Target in the State of Colorado and Idaho;
(ii) copies, certified by the Secretary of State of Colorado as of a date not
more than twenty (20) days prior to the Closing Date, of the Articles of
Incorporation and all amendments thereto of Target, and attesting to the
existence of Target; (iii) a copy, certified by the Secretary of Target, dated
no more than ten (l0) days prior to the Effective Time, of the Bylaws of Target;
and (iv) a certificate, dated no more than ten (l0) days prior to the Effective
Time, of the Secretaries of Target and Target
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Parent relating to the incumbency and corporate proceedings in connection with
the consummation of the transactions contemplated hereby.
5.6 Estoppel Certificates. Target Parent shall have delivered to
Acquisition Parent duly executed estoppel certificates in form and substance
satisfactory to Acquisition Parent from the lessors under the Real Property
Leases.
5.7 Opinion of Counsel. Acquisition Parent shall have received an
opinion of ▇▇▇▇▇▇▇ & Link, P.C., counsel to Target Parent and Target, dated as
of the Effective Time and in form and substance reasonably satisfactory to
Acquisition Parent, substantially to the effect that: (a) Target is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Colorado; (b) the authorized capital stock of Target
consists of 10,000,000 shares of common stock, $.01 par value per share, of
which 100 shares are outstanding; to counsel's knowledge (subject to compliance
with applicable federal and state securities laws), all of such shares are
validly issued, fully paid and nonassessable and were not issued in violation of
any preemptive rights of any shareholder of Target; such shares are owned of
record by Target Parent and such counsel has no knowledge of any outstanding
securities convertible into, exchangeable for or carrying the right to acquire
capital stock of Target, or any subscriptions, warrants, options, rights or
other arrangements or commitments obligating Target to issue or dispose of any
capital stock or any ownership therein; (c) the execution and delivery of this
Agreement, the Certificate of Merger, the Equity Agreement, and all other
agreements and documents contemplated hereby by Target and Target Parent and the
performance by Target and Target Parent of their respective obligations under
this Agreement, the Equity Agreement and such other agreements and documents do
not constitute a violation of or a default under their respective Articles of
Incorporation or Bylaws (as applicable) or any agreements, arrangements,
commitments, orders, judgments or decrees to which they are a party or by which
they or their respective assets are bound of which such counsel has knowledge;
(d) Target and Target Parent have the corporate power and authority to execute,
deliver and perform their obligations under this Agreement and the other
agreements and documents contemplated hereby (to which each is a party); the
execution and delivery of this Agreement and the other agreements and documents
by Target and Target Parent and the performance by Target and Target Parent of
their obligations hereunder and under the other agreements and documents have
been duly authorized by all requisite corporate action on the part of Target and
Target Parent (as applicable); (e) this Agreement and each other agreement and
document contemplated hereby is a valid and binding obligation of Target and
Target Parent, respectively, enforceable against Target and Target Parent (to
the extent each is a party) in accordance with their respective terms, subject
to the Equitable Exceptions; and (f) to such counsel's knowledge, there are no
actions, suits or proceedings pending or threatened that are required by the
terms of Section 2.15 to be described in Schedule 2.15 that are not described
therein, and no consent, approval, authorization or other action by, or filing
with, any governmental authority, regulatory body or other person is required to
be obtained by Target or Target Parent in connection with the execution,
delivery or performance by them of their respective obligations under this
Agreement, except for such as have been duly obtained or made.
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5.8 No Material Adverse Effect. There shall not have been any Material
Adverse Effect.
5.9 No Transfers to Affiliates. Except as otherwise expressly
contemplated by this Agreement, Target shall not have distributed or transferred
any of its assets or properties, or made any payments, to or for the benefit of
any of its affiliates.
5.10 Compliance with Section 4.1. The Company shall not have entered into
any agreement, commitment or transaction nor shall have taken any other action
that would not be in compliance with each provision of Section 4.1.
5.11 Resignations and Releases of Directors and Officers. Acquisition
Parent shall have received the resignations of and releases from each of the
directors and officers of Target, effective as of the Effective Time.
5.12 Certificate of Merger. The Certificate of Merger shall be fully
executed by all parties thereto and shall have been filed with the Secretary of
State of Texas and the Secretary of State of Colorado.
5.13 Equity Agreement. The Equity Agreement shall be fully executed by
all parties thereto.
5.14 Accounts. Target shall provide the Acquisition Parent with an
updated version of Schedule 2.6, showing the Accounts outstanding as of the
Effective Time, for the purpose of gauging any obligation Target Parent may have
under Section 4.11.
5.15 LMITCO Contract. Any consent to the transactions contemplated hereby
required by the LMITCO Contract shall have been obtained, and LMITCO and all
other necessary parties shall have executed a Novation Agreement with respect to
the LMITCO Contract.
ARTICLE VI.
CONDITIONS TO OBLIGATIONS OF TARGET AND TARGET PARENT
TO CONSUMMATE THE MERGER
The obligations of Target and Target Parent to effect the Merger and to cause
the other transactions contemplated hereby to occur shall be subject to the
satisfaction or written waiver by Target Parent of each of the following
conditions at or prior to the Effective Time:
6.1 Representations and Warranties. Each representation and warranty of
Acquisition Sub and Acquisition Parent contained in this Agreement and in any
schedule or other disclosure in writing from Acquisition Sub or Acquisition
Parent shall be true and correct when made, and shall
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be true and correct on and as of the Effective Time with the same effect as
though such representation and warranty had been made on and as of the Effective
Time.
6.2 Covenants. All of the covenants and agreements herein on the part of
Acquisition Sub and Acquisition Parent to be complied with or performed on or
before the Effective Time shall have been fully complied with and performed.
6.3 Absence of Litigation. No inquiry, action, suit or proceeding shall
have been asserted, threatened or instituted in which it is sought to restrain
or prohibit the carrying out of the transactions contemplated by this Agreement
or to challenge the validity of such transactions or any part thereof.
6.4 Consents and Approvals. All material authorizations, consents,
approvals, waivers and releases, if any, necessary for Acquisition Sub or
Acquisition Parent to consummate the transactions contemplated hereby shall have
been obtained and copies thereof shall be delivered to Target Parent, including,
but not limited to, consents and approvals by the boards of directors and
shareholders of Acquisition Sub and Acquisition Parent, as applicable.
6.5 Certificates. Acquisition Sub and Acquisition Parent shall have
delivered to Target Parent (i) certificates of the appropriate governmental
authorities, dated as of a date not more than twenty (20) days prior to the
Effective Time, attesting to the existence and good standing of Acquisition Sub
in the State of Texas; (ii) copies, certified by the Secretary of State of Texas
as of a date not more than twenty (20) days prior to the Effective Time, of the
Articles of Incorporation and all amendments thereto of Acquisition Parent;
(iii) a copy, certified by the Secretary of Acquisition Parent, dated no more
than ten (l0) days prior to the Effective Time of the Bylaws of Acquisition
Parent; and (iv) a certificate, dated no more than ten (l0) days prior to the
Effective Time of the Secretaries of Acquisition Sub and Acquisition Parent
relating to the incumbency and corporate proceedings in connection with the
consummation of the transactions contemplated hereby.
6.6 Opinion of Counsel. Target Parent shall have received an opinion of
▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇ (A Professional Corporation), counsel to Acquisition
Sub and Acquisition Parent, dated as of the Effective Time and in form and
substance reasonably satisfactory to Target Parent, substantially to the effect
that: (a) Acquisition Sub is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Texas; (b) the execution and
delivery of this Agreement, the Certificate of Merger, the Equity Agreement and
all other agreements and documents contemplated hereby by Acquisition Sub and
Acquisition Parent and the performance by Acquisition Sub and Acquisition Parent
of its respective obligations under this Agreement and such other agreements and
documents does not constitute a violation of or a default under their Articles
of Incorporation or Bylaws (as applicable) or any agreements, arrangements,
commitments, orders, judgments or decrees to which they are a party or by which
their assets are bound of which such counsel has knowledge; (c) Acquisition Sub
and Acquisition Parent have the corporate power and authority to execute,
deliver and perform their obligations under this Agreement and the other
agreements and documents contemplated hereby (to the extent each is a party) and
the execution and
-27-
delivery of this Agreement and the other agreements and documents by Acquisition
Sub and Acquisition Parent and the performance by Acquisition Sub and
Acquisition Parent of their obligations hereunder and under the other agreements
and documents have been duly authorized by all requisite corporate action on the
part of Acquisition Sub and Acquisition Parent; and (d) this Agreement and each
other agreement and document contemplated hereby is a valid and binding
obligation of Acquisition Sub and Acquisition Parent, respectively, enforceable
against Acquisition Sub and Acquisition Parent (to the extent each is a party)
in accordance with their respective terms, subject to the Equitable Exceptions.
6.7 Certificate of Merger. The Certificate of Merger shall be fully
executed by all parties thereto and shall have been filed with the Secretary of
State of Texas and the Secretary of State of Colorado.
6.8 Equity Agreement. The Equity Agreement shall be fully executed by
all parties thereto.
ARTICLE VII.
CLOSING
7.1 Closing. Unless this Agreement is first terminated as provided in
Section 8.1, and subject to the satisfaction or waiver of all the conditions set
forth in Articles V and VI, the closing of the transactions contemplated hereby
(the "Closing") shall take place at the offices of Target Parent, in Golden,
Colorado, or such other place as is agreed to by Acquisition Parent and Target
Parent, on April 24, 1998 or such other date as the parties may agree upon in
writing (the "Closing Date").
7.2 Filing Certificate of Merger. Concurrently with the delivery of the
items described above, the parties will file the Certificate of Merger with the
Secretary of State of Colorado and the Secretary of State of Colorado, or if
pre-filed shall cause such Certificate of Merger to be deemed effective as of
the Effective Time.
7.3 Conversion of Stock. At the Closing, in addition to the execution
and/or delivery of those items required by Articles V and VI, the parties will
consummate the conversion of the Target Stock and the Acquisition Sub Stock in
accordance with Sections 1.4 and 1.5, respectively, and the exchange of share
certificates in accordance with Section 1.7.
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ARTICLE VIII.
TERMINATION PRIOR TO EFFECTIVE TIME
8.1 Termination. This Agreement and the transactions contemplated hereby
may be terminated and abandoned at any time prior to the Closing:
(a) By the written mutual consent of Acquisition Parent and Target
Parent;
(b) By Acquisition Parent if any of the conditions set forth in
Article V shall not have been fulfilled on or prior to the Closing;
(c) By Target Parent if any of the conditions set forth in Article
VI shall not have been fulfilled on or prior to the Closing; or
(d) By any party hereto if the Merger shall not have been effected
on or before May 31, 1998.
8.2. Rights after Termination. Any termination pursuant to this Article
VIII shall be without prejudice to the terminating party's rights and remedies
under this Agreement by reason of any violation of this Agreement occurring
prior to such termination. In the event of a termination pursuant to this
Article VIII, each party shall bear its own costs and expenses incurred with
respect to the transactions contemplated hereby.
ARTICLE IX.
INDEMNIFICATION
9.1 Acquisition Parent's Losses.
(a) Target Parent agrees to indemnify and hold harmless
Acquisition Parent and its directors, officers, employees, representatives,
agents and attorneys from, against and in respect of any and all Acquisition
Parent's Losses (as defined below) suffered, sustained, incurred or required to
be paid by any of them by reason of (i) any representation or warranty made by
Target or Target Parent in or pursuant to this Agreement (including, without
limitation, the representations and warranties contained in any certificate
delivered pursuant hereto) being untrue or incorrect in any respect; (ii) the
items described in Schedule 2.8 (Tax Matters) or Schedule 2.15 (Litigation and
Related Matters) hereof, except in any instance and to the extent Acquisition
Parent's Losses result from the negligence or misconduct of Acquisition Parent;
or (iii) any failure by Target or Target Parent to observe or perform its
covenants and agreements set forth in this Agreement or in any other agreement
or document executed by it in connection with the transactions contemplated
hereby,
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except in any instance and to the extent Acquisition Parent's Losses result from
the negligence or misconduct of Acquisition Parent.
(b) "Acquisition Parent's Losses" shall mean all damages
(including, without limitation, amounts paid in settlement with the Target
Parent's consent, which consent may not be unreasonably withheld), losses,
obligations, liabilities, claims, deficiencies, costs and expenses (including,
without limitation, reasonable attorneys' fees), penalties, fines, interest and
monetary sanctions, including, without limitation, reasonable attorneys' fees
and costs incurred to comply with injunctions and other court and Agency orders,
and other costs and expenses incident to any suit, action, investigation, claim
or proceeding or to establish or enforce the rights of Acquisition Parent or
such other persons to indemnification hereunder.
(c) Target Parent agrees to indemnify and hold harmless the
Surviving Corporation and Acquisition Parent and their directors, officers,
employees, representatives, agents and attorneys from, against and in respect of
any and all Contamination Losses (as defined below) suffered, sustained,
incurred or required to be paid by any of them by reason of the contamination of
the TRAHC that occurred in September 1997.
(d) "Contamination Losses" shall mean all damages (including,
without limitation, amounts paid in settlement with the consent of Acquisition
Parent, which consent may not be reasonably withheld), losses, obligations,
liabilities, claims, deficiencies, costs and expenses (including, without
limitation, reasonable attorneys' fees), penalties, fines, interest and monetary
sanctions, including, without limitation, reasonable attorneys' fees and costs
incurred to comply with injunctions and other court and Agency orders, and other
costs and expenses incident to any suit, action, investigation, claim or
proceeding or to establish or enforce the rights of Acquisition Parent and the
Surviving Corporation or such other persons to indemnification hereunder.
9.2 Target Parent Losses.
(a) Acquisition Parent agrees to indemnify and hold harmless
Target Parent and its directors, officers, managers, employees, representatives,
agents and attorneys from, against and in respect of any and all Target Parent
Losses (as defined below) suffered, sustained, incurred or required to be paid
by any of them by reason of (i) any representation or warranty made by
Acquisition Parent in or pursuant to this Agreement (including, without
limitation, the representations and warranties contained in any certificate
delivered pursuant hereto) being untrue or incorrect in any respect; or (ii) any
failure by Acquisition Parent to observe or perform its covenants and agreements
set forth in this Agreement or any other agreement or document executed by it in
connection with the transactions contemplated hereby, except in any instance and
to the extent Target Parent Losses result from the negligence or misconduct of a
Target Parent.
-30-
(b) "Target Parent Losses" shall mean all damages (including,
without limitation, amounts paid in settlement with the consent of Acquisition
Parent, which consent may not be reasonably withheld), losses, obligations,
liabilities, claims, deficiencies, costs and expenses (including, without
limitation, reasonable attorneys' fees), penalties, fines, interest and monetary
sanctions, including, without limitation, reasonable attorneys' fees and costs
incurred to comply with injunctions and other court and Agency orders, and other
costs and expenses incident to any suit, action, investigation, claim or
proceeding or to establish or enforce the right of Target Parent or such other
persons to indemnification hereunder.
9.3 Notice of Loss. Except to the extent set forth in the next sentence,
a party to the Agreement will not have any liability under the indemnity
provisions of this Agreement with respect to a particular matter unless a notice
setting forth in reasonable detail the breach or other matter which is asserted
has been given to the Indemnifying Party (as defined below) and, in addition, if
such matter arises out of a suit, action, investigation, proceeding or claim,
such notice is given promptly, but in any event within thirty (30) days after
the Indemnified Party (as defined below) is given notice of the claim or the
commencement of the suit, action, investigation or proceeding. Notwithstanding
the preceding sentence, failure of the Indemnified Party to give notice
hereunder shall not release the Indemnifying Party from its obligations under
this Article IX, except to the extent the Indemnifying Party is actually
prejudiced by such failure to give notice. With respect to Acquisition Parent's
Losses, Target Parent shall be the Indemnifying Party and Acquisition Parent and
its directors, officers, employees, representatives, agents and attorneys shall
be the Indemnified Party. With respect to Contamination Losses, Target Parent
shall be the Indemnifying Party and Acquisition Parent and the Surviving
Corporation and their directors, officers, employees, representatives, agents
and attorneys shall be the Indemnified Party. With respect to Target Parent
Losses, Acquisition Parent shall be the Indemnifying Party and Target Parent and
its respective directors, officers, managers, employees, representatives, agents
and attorneys shall be the Indemnified Party.
9.4 Right to Defend. Upon receipt of notice of any suit, action,
investigation, claim or proceeding for which indemnification might be claimed by
an Indemnified Party, the Indemnifying Party shall be entitled to defend,
contest or otherwise protect against any such suit, action, investigation, claim
or proceeding at its own cost and expense, and the Indemnified Party must
cooperate in any such defense or other action. The Indemnified Party shall have
the right, but not the obligation, to participate at its own expense in defense
thereof by counsel of its own choosing, but the Indemnifying Party shall be
entitled to control the defense unless the Indemnified Party has relieved the
Indemnifying Party from liability with respect to the particular matter or the
Indemnifying Party fails to assume defense of the matter. In the event the
Indemnifying Party shall fail to defend, contest or otherwise protect in a
timely manner against any such suit, action, investigation, claim or proceeding,
the Indemnified Party shall have the right, but not the obligation, thereafter
to defend, contest or otherwise protect against the same and make any compromise
or settlement thereof and recover the entire cost thereof from the Indemnifying
Party including, without limitation, reasonable attorneys' fees, disbursements
and all amounts paid as a result of such suit, action, investigation, claim or
proceeding or the compromise or settlement thereof, provided, however, that the
Indemnified Party must send a written notice to the Indemnifying Party of any
such proposed settlement or compromise, which settlement or compromise the
Indemnifying Party may
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reject, in its reasonable judgment, within thirty (30) days of receipt of such
notice. Failure to reject such notice within such thirty (30) day period shall
be deemed an acceptance of such settlement or compromise. The Indemnified Party
shall have the right to effect a settlement or compromise over the objection of
the Indemnifying Party; provided, that if (i) the Indemnifying Party is
contesting such claim in good faith or (ii) the Indemnifying Party has assumed
the defense from the Indemnified Party, the Indemnified Party waives any right
to indemnity therefor. If the Indemnifying Party undertakes the defense of such
matters, the Indemnified Party shall not, so long as the Indemnifying Party does
not abandon the defense thereof, be entitled to recover from the Indemnifying
Party any legal or other expenses subsequently incurred by the Indemnified Party
in connection with the defense thereof other than the reasonable costs of
investigation undertaken by the Indemnified Party with the prior written consent
of the Indemnifying Party.
9.5 Limitations of Indemnification. The persons or entities indemnified
pursuant to this Article IX shall not assert any claim for indemnification
hereunder until such time as and solely to the extent that the aggregate of all
claims that such persons may have against the Indemnifying Party shall exceed
$5,000 with respect to all claims, but upon reaching such amount, from the first
dollar of all claims.
9.6 Cooperation. Each of Acquisition Parent, Target Parent and Target,
and each of their affiliates, successors and assigns, shall cooperate with each
other in the defense of any suit, action, investigation, proceeding or claim by
a third party and, during normal business hours, shall afford each other access
to their books and records and employees relating to such suit, action,
investigation, proceeding or claim and shall furnish each other all such further
information that they have the right and power to furnish as may reasonably be
necessary to defend such suit, action, investigation, proceeding or claim,
including, without limitation, reports, studies, correspondence and other
documentation relating to Federal Drug Administration, Department of Energy,
Nuclear Regulatory Commission, Environmental Protection Agency, Occupational
Safety and Health Administration and Equal Employment Opportunity Commission
matters.
ARTICLE X.
MISCELLANEOUS
10.1 Entire Agreement. This Agreement (including the exhibits and
schedules hereto) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof, and no party shall be liable or bound
to the other in any manner by any representations or warranties not set forth
herein.
10.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any
rights, interests, or obligations hereunder may be assigned by any party hereto
without the prior written consent of all other parties hereto, and any purported
assignment in violation of this Section 10.2 shall be null and void.
Notwithstanding the foregoing, after the Effective Time, the Surviving
Corporation expects to redomesticate by merging with and
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into a newly formed Texas corporation that is a wholly owned subsidiary of
Acquisition Parent. Such merger, and the accompanying assignment by the
Surviving Corporation of all of its rights, interests and obligations hereunder
are expressly consented to by all of the parties.
10.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
10.4 Headings. The headings of the articles and sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
10.5 Construction. As used in this Agreement, the words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular article, section, paragraph or
other subdivision.
10.6 Modification and Waiver. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof, and this Agreement may be modified or amended by a written
instrument executed by Acquisition Parent, Target and Target Parent. No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by all of the parties hereto (or their permitted successors
or assigns). No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
10.7 Schedules, Etc. All Exhibits and Schedules annexed hereto are
expressly made a part of this Agreement as though fully set forth herein.
10.8 Notices. All notices of communication required or permitted
hereunder shall be in writing and may be given by (a) depositing the same in
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt request, (b) delivering the same in
person to an officer or agent of such party, (c) transmitting by facsimile the
same with electronic confirmation of receipt.
(i) If to Acquisition Parent, addressed to it at:
International Isotopes Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
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with copies to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq. or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(ii) If to Acquisition Sub, addressed to it at:
I3 Acquisition Sub Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
with copies to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ Rain ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq. or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(iii) If to Target Parent, addressed to:
MACTEC, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ & Link, P.C.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇. ▇. ▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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(iv) If to Target, addressed to:
MAC Isotopes, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with copies to:
▇▇▇▇▇▇▇ & Link, P.C.
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P. O. ▇▇▇ ▇▇▇
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Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 10.8 from time to time.
10.9 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
LAWS OF THE STATE OF TEXAS.
10.10 Survival of Covenants, Agreements, Representations and Warranties.
(a) Covenants and Agreements. All covenants and agreements made
hereunder or pursuant hereto or in connection with the transactions contemplated
hereby shall survive the Closing and shall continue in full force and effect
thereafter according to their terms without limit as to duration.
(b) Representations and Warranties. All representations and
warranties contained herein shall survive the Closing and shall continue in full
force and effect thereafter for a period of twelve (12) months following the
Closing, except that (i) the representations and warranties contained in
Sections 2.8 (Tax and Related Matters), 2.11 (Environmental Laws and
Regulations) and 2.18 (Employee Benefit Plans) hereof shall survive until the
expiration of the applicable periods (including any extensions) of the statutes
of limitation to which such representations and warranties relate, and (ii) the
representations and warranties contained in Sections 2.1 (Authorization) and 2.3
(Capital Stock of Target) shall survive indefinitely.
(c) Claims Made Prior to Expiration. Notwithstanding the foregoing
survival periods set forth in this Section 10.10, the termination of a survival
period shall not affect the rights of an Indemnified Party in respect of any
claim made by such party with specificity, in good faith and in writing to the
Indemnifying Party in accordance with Sections 9.3 and 10.8 hereof prior to
expiration of the applicable survival period.
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10.11 Expenses. Target and Target Parent, on the one hand, and Acquisition
Sub and Acquisition Parent, on the other hand, shall be solely responsible for
their respective costs and expenses incurred in connection with the transactions
contemplated hereby.
10.12 Third Party Beneficiaries. Except as otherwise specifically provided
in Article IX, no individual or firm, corporation, partnership or other entity
shall be a third-party beneficiary of the representations, warranties, covenants
and agreements made by any party hereto.
10.13 Number and Gender of Words. Whenever the singular number is used,
the same shall include the plural where appropriate, and words of any gender
shall include each other gender where appropriate.
10.14 Further Assurances. From time to time after the Effective Time, at
the request of any other party but at the expense of the requesting party, each
of the parties hereto, as the case may be, will execute and deliver any such
other instruments of conveyance, assignment and transfer, and take such other
action as the other party may reasonably request in order to consummate or
evidence the transactions contemplated hereby.
10.15 Brokers and Agents. Except as disclosed on Schedule 10.15, each
party represents and warrants that it has employed no broker or agent in
connection with this transaction and agrees to indemnify and hold harmless the
other parties against all loss, cost, damages or expense arising out of claims
for fees or commissions of brokers employed or alleged to have been employed by
such indemnifying party.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the Plan Date.
ACQUISITION PARENT:
INTERNATIONAL ISOTOPES INC.
By:
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Title:
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ACQUISITION SUB:
I3 ACQUISITION SUB INC.
By:
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Title:
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TARGET:
MAC ISOTOPES, INC.
By:
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Title:
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TARGET PARENT:
MACTEC, INC.
By:
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Title:
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LIST OF SCHEDULES AND EXHIBITS
Schedule 2.3 Capital Stock
Schedule 2.5 Financial Statements
Schedule 2.6 Accounts Receivable
Schedule 2.7 Permits
Schedule 2.8 Tax Matters
Schedule 2.9 Personal Property
Schedule 2.10 Real Property Leases
Schedule 2.11 Environmental Matters
Schedule 2.12 Contracts
Schedule 2.13 Violations
Schedule 2.14 Target and Target Parent's Consents
Schedule 2.15 Litigation
Schedule 2.18 Employee Benefits
Schedule 2.19 Employee Matters
Schedule 2.22 Business Relations
Schedule 2.23 Officers and Directors
Schedule 2.24 Bank Accounts
Schedule 2.25 Absence of Certain Changes
Schedule 3.3 Acquisition Parent's Consents
Schedule 10.15 Brokers and Agents
Exhibit A Certificate of Merger
Exhibit B Equity Agreement