AGREEMENT OF MERGER
RECITALS
AGREEMENT OF MERGER, dated as of May 25, 1999 by and between Pinnacle
East, Inc., a corporation of the State of South Carolina, with offices at 0000
Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx 00000 (hereinafter
the Company), Xxxxxxxx X. Xxxxx and Xxxxxx X. Xxxxxxxxxx (hereinafter the
Company Shareholders), Cobra Technologies, Inc., a corporation of the State of
Nevada, with offices located at Cobra Technologies, Inc.
0000 X. Xxxxxxxx Xxxx Xxxx, Xxxxx 000, Xxxx Xxxxx, XX 00000
(hereinafter Cobra), and Xxxxxxxx.xxx, Inc., a corporation of the State of South
Carolina (hereinafter the Merger Sub).
WHEREAS, the Company Shareholders are the owners of one hundred thousand
(100,000) shares of common stock, representing one hundred (100%) of the issued
and outstanding stock of the Company (hereinafter the Shares); and
WHEREAS, the Boards of Directors of Cobra, the Merger Sub and the
Company have approved the merger of the Company with Merger Sub, pursuant to
which all of the outstanding capital stock of the Company will be converted into
common stock of Cobra and the Company will merge with and into the Merger Sub,
with the Merger Sub being the surviving corporation; and
WHEREAS, the Boards of Directors of Cobra, the Merger Sub and the
Company have also approved the mergers, in accordance with the applicable
provisions of the statutes of the States of Nevada and South Carolina which
permit such mergers; and
WHEREAS, it is the intention of the parties that the merger shall
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (hereinafter the Code); and
WHEREAS, each of the parties to the Agreement desires to make certain
representations, warranties, and agreements in connection with the transaction
between the parties and to prescribe various conditions thereto.
ARTICLE I
INCORPORATION OF RECITALS
All of the recitals set forth above are incorporated herein by
reference.
ARTICLE II
DEFINITIONS
The following terms, as used herein, have the following meanings:
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"Affiliate" of a Person means a Person, who directly or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, such people.
"Agreement" has the meaning set forth in the introductory paragraph.
"Audited Financial Statements" has the meaning set forth in Section 4.10
"Closing" has the meaning set forth in Section 3.9.
"Closing Date" has the meaning set forth in Section 3.9.
"Cobra Stock" means the voting common stock of Cobra.
AEffective Time@ means the time indicated herein when the merger pursuant
to hereto shall be effective for corporate law purposes.
"Environmental Permits" means federal, state and local governmental
liens, permits and other authorizations and approvals, whether foreign or
domestic, which relate to the business of a Person as it may be affected by the
environment or to public health and safety or worker health and safety as they
may be affected by the environment.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"Evaluation Material" has the meaning set forth in Section 7.4.
"Handling Hazardous Substances" has the meaning set forth in
Section 4.5.
"Hazardous Emissions" has the meaning set forth in Section 4.5.
"Internal Revenue Code" or Code means the Internal Revenue Code of
1986, as amended.
"Intellectual Property" has the meaning set forth in Section 4.16.
"Inventory" has the meaning set forth in Section 4.6.
"Leases" and "Lease" have the meanings set forth in Section 4.15.
"Licenses and Permits" has the meaning set forth in Section 4.8.
"Material Contract" means each contract, agreement or commitment of a
Person other than Leases:
(a)upon which any substantial part of such Person's business
is dependent or which, if breached, could reasonably be expected to affect,
materially and adversely, the earnings, assets, financial condition or
operations of the business of such Person; or
(b)which provides for aggregate future payments of more than
$10,000, except for purchase orders or sale orders arising in the ordinary and
usual course of business, in which case they are listed only if any party
thereto is obligated to make payments pursuant thereto aggregating more than
$20,000; or
(c)which extends for more than one year from the date hereof
and is not cancelable by either party on 30 days' notice; or
(d)which provides for the sale, after the date hereof and
other than in the ordinary course of business, of any of its assets; or
(e)which relates to the employment, retirement or termination
of the services of any officer or former officer; or
(f)which contains covenants pursuant to which any other Person
has agreed not to compete with any business conducted by such Person or not to
disclose to others information concerning such Person.
Collectively, each material Contract of such Person is referred to as
"Material Contracts."
AMerger@ has the meaning set forth in Section 3.1.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plans" means all employee benefit plans and programs
including, without limitation, all retirement, savings and other pension plans.
"Permitted Exceptions" has the meaning set forth in Section 4.14.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
governmental or political subdivision or an agency of instrumentality thereof.
"Real Property" means all of the real property, together with the
fixtures and other improvements located thereon and the appurtenances thereto,
owned by a Person.
"Securities Act" means the Securities Act of 1933, as amended.
AShares@ means the outstanding capital stock of the Company.
ASurviving Corporation@ shall have the meaning set forth in Section 3.1.
"Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Internal Revenue Code section 59A), customs duties, capital stock, franchise
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Welfare Plans" means all health, severance, insurance, disability and
other employee welfare plans.
ARTICLE III
THE MERGER
3.1 THE MERGER. Subject to the terms and conditions of this Agreement,
at the Closing provided for in this Agreement, on the Closing Date and at the
Effective Time, the Company shall be merged into the Merger Sub and the separate
existence of the Company shall thereupon cease, in accordance with the
applicable provisions of the General Corporation Law of the State of Nevada and
the General Corporation Law of the State of South Carolina. Said merger is
referred to herein as the Merger. The Merger Sub will the surviving corporation
in the Merger and will be governed by the laws of the State of South Carolina.
The separate corporate existence of the Merger Sub with all its rights,
privileges, powers and franchises shall continue unaffected by the Merger. The
Merger shall have the effects specified by the corporate laws of the States of
Nevada and South Carolina. From and after the Effective Time, the Merger Sub is
sometimes referred to herein as the ASurviving Corporation@.
3.2 ARTICLES OF MERGER. On or before the Closing Date, the parties
hereto shall cause Articles of Merger (the AArticles of Merger@), meeting the
requirements of the corporate laws of the States of Nevada and South Carolina to
be properly executed and filed. The Merger shall be effective, for corporate law
purposes, at the Effective Time.
3.3 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of Incorporation
of the Merger Sub shall continue to be in effect after the merger and shall be
the Articles of Incorporation of the Surviving Corporation. The Bylaws of the
Merger Sub in effect immediately prior to the Effective Time shall be the Bylaws
of the Surviving Corporation.
3.4 OFFICERS AND DIRECTORS. The officers and directors of the Merger
Sub immediately prior to the Effective Time shall be the officers and directors
of the Surviving Corporation and will hold office until their successors are
duly elected and qualify in the manner provided in the Articles of Incorporation
or as otherwise provided by law, or until their earlier death, resignation or
removal.
3.5 CLASS OF STOCK. Cobra, the Merger Sub and the Company each
represent that they presently each have one class of common stock outstanding
and no other classes of stock outstanding.
3.6 CONVERSION OF SHARES. The manner of converting the shares of the
capital stock of Merger Sub and the Company shall by virtue of the Merger and
without any action on the part of the holders thereof, be as follows:
a. Subject to the terms hereof, the Shares outstanding
immediately prior to the Effective Time (the AConverted Shares@), shall be
converted into 500,000 shares of Cobra common stock and one hundred thousand
($100,000) dollars in cash, which will be paid as set forth in schedule 3.12(a).
b. All of the Converted Shares, by virtue of the Merger and
upon surrender at the Closing, shall no longer be outstanding and shall be
canceled and retired and shall cease to exist, and the holders thereof shall
cease to have any rights with respect to the Converted Shares.
c. Each share of the Company=s common stock, if any, held in
the treasury of the Company on the Closing Date shall be canceled and retired
and shall cease to exist, no consideration shall be paid with respect thereto.
3.7 STOCK RESTRICTED. All Cobra stock issued to the Company
Shareholders shall be "restricted" shares within the meaning of Securities and
Exchange Commission Rule 144 promulgated under the Securities Act of 1933, as
amended (the "Act"), and accordingly the certificate or certificates
representing the Cobra shares shall bear a restrictive legend in accordance with
the requirements of Rule 144.
3.8 NO REPRESENTATION OF VALUE. The Company Shareholders hereby confirm
that neither Cobra, nor any officer, director or shareholder of Cobra, nor any
agent of, or professional employed by Cobra, has made any representation as to
the present or future value or price of the Cobra shares, or any other
securities of Cobra. Nor has Cobra or any other such person made any
representation with respect to the ability of the Company Shareholders to sell
all or any part of the Cobra shares at their current market price or at any
other price.
Further, the parties hereby confirm their understanding that the future
bid or asking price of Cobra=s common stock, may not bear any relationship to
the net tangible book value of Cobra's common stock and, further, may be
unrelated to any other generally accepted method of valuation of the Cobra
stock.
3.9 CLOSING. The closing of the Merger contemplated herein (the
"Closing") shall take place through the execution of this Agreement at the
respective offices of the parties, on or before June 1, 1999 (the "Closing
Date") or at another time or location mutually agreeable to the parties.
3.10 ACTIONS TAKEN PRIOR TO CLOSING. Prior to closing, both parties
shall take all necessary actions to approve of this transaction, including any
required meeting of the directors of Cobra, the Company and the Merger Sub.
3.11 DELIVERIES AT CLOSING BY THE COMPANY.
a. At Closing, the Company and the Company Shareholders shall
deliver to the representatives of Cobra (i) certificates representing the
Shares, with stock powers endorsed in blank with Medallion signature guarantees,
and with all necessary transfer stamps attached; (ii) the stock books, stock
ledgers, minute books and seals of the Company; (iii) a current certificate of
good standing for the Company issued by the South Carolina Secretary of State;
(iii) minutes of the meeting of shareholders or directors approving of this
transaction or proof that such meeting was not required and (iv) all other items
required to be delivered by the Company to Cobra at or prior to Closing under
this Agreement, including, without limitation, a legal opinion reasonably
satisfactory to Cobra to the effect that:
(1) The Company is duly incorporated and a validly
existing corporation in good standing under the laws of the State of South
Carolina, and is duly qualified to carry on its business and is in good standing
in any state in which it does business;
(2) The Company has the requisite power and authority
to execute and deliver, and has taken all necessary corporate action to
authorize the execution and delivery of, this Agreement and the other documents
and the transactions contemplated herein. The Company Shareholders who execute
this Agreement have all requisite power, authority and capacity to enter into
this Agreement on behalf of the Company and the ability to cause the Company to
fulfill its obligations hereunder.
(3) The execution and delivery by the Company and the
Company Shareholders of this Agreement, the performance by the Company of its
obligations hereunder, and the consummation of the transactions contemplated
herein will not result in the breach of or violate any term or provision of the
Articles of Incorporation or Bylaws of the Company, or any contract, agreement,
law, rule, regulation, judgment, order, decree or award to which the Company is
subject.
(4) The Shares of the Company have been duly issued
to the Company Shareholders and are fully paid and non-assessable.
(5) The Agreement has been duly executed and
delivered by the Company and the Company Shareholders; and the Agreement and all
documents delivered pursuant to the terms hereof are valid and binding on the
Company and the Company Shareholders and are enforceable in accordance with
their respective terms, subject to any applicable bankruptcy, insolvency,
reorganization or other laws of general application affecting the enforcement of
creditors' rights generally and general principles of equity.
(6) No consent of any party other than the parties
hereto, and no consent, license, approval or authorization of, or registration
or declaration with, any governmental bureau or agency is required in connection
with the execution, delivery, performance, validity and enforceability of this
Agreement.
(7) The Company Shareholders transfer of the Shares
to Cobra shall vest in Cobra good and valid title to the Shares, free and clear
of any lien, encumbrance, or adverse claim.
(8) Such other matters as are customary in connection
with transactions of this kind.
b. The Company Shareholders shall also deliver to Cobra at
Closing the Company Shareholders= executed non-competition, non-solicitation and
confidentiality agreements in the form of Exhibit 3.11(b) attached hereto.
3.12 DELIVERIES AT CLOSING BY COBRA.
a. At closing, Cobra shall deliver to the Company
Shareholders, certificates representing Cobra stock issued to the PC
Shareholders in the quantities set forth in Exhibit 3.12(a) and cash and notes
in the form and quantity set forth in Exhibit 3.12 (a).
b. At Closing, Cobra shall deliver to the Company; (i) a
current certificate of good standing for Cobra issued by the Nevada Secretary of
State; (ii) minutes of the meeting of Cobra Directors approving of this
transaction or proof that such meeting was not required and (iii) all other
items required to be delivered by Cobra to the Company at or prior to Closing
under this Agreement, including, without limitation, a legal opinion reasonably
satisfactory to the Company to the effect that:
(1) Cobra and Merger Sub are duly incorporated and
are validly existing corporations in good standing under the laws of the State
of Nevada and South Carolina, and are duly qualified to carry on its business
and is in good standing in any states in which they do business;
(2) Cobra and Merger Sub have the requisite power and
authority to execute and deliver, and have taken all necessary corporate action
to authorize the execution and delivery of, this Agreement and the other
documents and the transactions contemplated herein. The representatives of Cobra
and Merger Sub who execute this Agreement have all requisite power, authority
and capacity to enter into this Agreement on behalf of Cobra and Merger Sub and
the ability to cause Cobra and Merger Sub to fulfill their obligations
hereunder.
(3) The execution and delivery by Cobra and Merger
Sub of this Agreement, the performance by Cobra and Merger Sub of their
obligations hereunder, and the consummation of the transactions contemplated
herein will not result in the breach of or violate any term or provision of the
articles or Bylaws of Cobra or Merger Sub, or any contract, agreement, law,
rule, regulation, judgment, order, decree or award to which Cobra or Merger Sub
is subject.
(4) When issued to the Company Shareholders, the
outstanding shares of Cobra and Merger Sub shall be duly issued to the Company
Shareholders and will be fully paid and non-assessable, and free of any lien,
encumbrance or adverse claim.
(5) The Agreement has been duly executed and
delivered by Cobra and Merger Sub; and the Agreement and all documents delivered
pursuant to the terms hereof are valid and binding on Cobra and Merger Sub and
are enforceable in accordance with their respective terms, subject to any
applicable bankruptcy, insolvency, reorganization or other laws of general
application affecting the enforcement of creditors' rights generally and general
principles of equity.
(6) No consent of any party other than the
representatives of Cobra and Merger Sub, and no consent, license, approval or
authorization of, or registration or declaration with, any governmental bureau
or agency is required in connection with the execution, delivery, performance,
validity and enforceability of this Agreement.
(7) Such other matters as are customary in connection
with transactions of this kind.
c. Employment agreements for the individuals set for on
Exhibit 3.12(c).
3.13 FURTHER AGREEMENTS PRIOR TO CLOSING. Prior to closing, the Company
Shareholders will execute a Continuity Agreement stating that they have no
present intention to sell in excess of fifty (50) percent of the Cobra stock
which they will receive and that for a period of one year from closing and that
they will not sell in excess of fifty percent of the Cobra stock which they
receive.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and the Company Shareholders jointly and severally
represent and warrant the following:
4.1 ORGANIZATION, QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of South
Carolina and has corporate power and authority to own all of its properties and
assets and to carry on its business as it is presently being conducted. The
Company is duly qualified and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary, except in
those jurisdictions where the failure to be duly qualified and in good standing
would not have a material adverse effect on the Company or the business
conducted by it. The Company has heretofore delivered to Cobra complete and
correct copies of the Articles of Incorporation and Bylaws of the Company, as
currently in effect.
4.2 CAPITALIZATION OF THE COMPANY. The authorized capital stock of the
Company consists only of 100,000 shares of Common Stock, $.01 par value, of
which, as of the date hereof, 100,000 common shares are validly issued and
outstanding, fully paid and non-assessable, and were not issued in violation of
any preemptive rights. The Company has no commitment to issue or sell any shares
of its capital stock or any securities or obligations convertible into or
exchangeable for, or giving any person the right to acquire from it, any shares
of its capital stock and no such securities or obligations are issued or
outstanding.
4.3 CONSENTS AND APPROVALS. There is no requirement applicable for the
Company to make any filing with, or to obtain any permit, authorization, consent
or approval of, any public body as a condition to the consummation of this
transaction. Except as set forth in Schedule 4.3, there is no requirement that
any party to any Material Contract of the Company, or of any license or permit
for the use of Intellectual Property of the Company or of any loan agreement to
which the Company is a party or by which it or they are or were bound, must
consent to the execution of this Agreement by the Company or to the consummation
of this transaction.
4.4 NON-CONTRAVENTION. The execution and delivery by the Company of
this Agreement does not, and the consummation of the sale of the Shares will
not, (i) violate or result in a breach of any provision of the Articles of
Incorporation or Bylaws of the Company, (ii) result in a default (or give rise
to any right of termination, cancellation or acceleration) under the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which the Company is a
party or by which the Company or the business conducted by it, may be bound, or
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or to the business conducted by the Company, excluding
from the foregoing clauses (ii) and (iii) such defaults and violations as would
not have a material adverse effect on the Company.
4.5 ENVIRONMENTAL MATTERS. The Company has obtained all Environmental
Permits required, by any governmental or non-governmental agency with
jurisdiction, to conduct its business as it is presently being conducted
including, without limitation, those relating to (i) emissions, discharges or
threatened discharges of pollutants, contaminants, hazardous or toxic substances
or petroleum into the air, surface water, ground water or the ocean, or on or
into the land, and (ii) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
hazardous or toxic substances or petroleum. The Company has not received notice
of, or is otherwise aware of, any facts, events or conditions which (a)
interfere with, prevent, or, with the passage of time, could interfere with
continued substantial compliance with any of the aforementioned environmental
laws, regulations, policies, guidelines, orders, judgments or decrees, (b) may
give rise to any liability (whether based in contract, tort, implied or express
warranty, criminal or civil stature or otherwise) under any law, regulation,
policy or guideline relating to hazardous emissions or handling hazardous
substances, or (c) obligate the Company or, with the passage of time, could
cause the Company to be obligated to clean up, remedy or otherwise restore to a
former condition, by itself or jointly with others, any contaminated surface
water, ground water, soil or any natural resource associated therewith.
4.6 INVENTORY. The raw materials, work-in-process, and finished goods,
and goods on hand for sale or refurbishing, store supplies and spare parts,
which are owned by the Company, wherever they are located, are hereinafter
referred to as the "Inventory." The Inventory (i) is usable or, if refurbished
or assembled in final form for sale, is saleable in the ordinary course of
business, (ii) is sufficient but not excessive in kind or amount for the conduct
of the business of the Company as it is presently being operated, and (iii) is
carried on the books of the Company at an amount which reflects valuations not
in excess of the lower of cost or market determined in accordance with generally
accepted accounting principles applied on a consistent basis. Schedule 4.6 sets
forth a list of locations of the Inventory not located on the Real Property of
the Company or on real estate subject to a Company Lease.
4.7 ACCOUNTS RECEIVABLE. The accounts receivable for the Company as of
May 11, 1999, are reflected in Schedule 4.7. Such accounts receivable and those
acquired by the Company subsequent to May 11, 1999, but prior to the Closing
(and not collected prior to Closing) have or will have arisen in the ordinary
course of business and will have been collected or be collectible in amounts not
less than the aggregate amount thereof (net of reserves established in
accordance with the prior practice) carried on the books of the Company. Except
as reflected in Schedule 4.7, each of such accounts receivable, and those
acquired after May 11, 1999, but prior to the Closing, is not and will not be
the subject of a pledge or assignment, is and will be free of any and all liens,
hypothecation, encumbrances and charges whatsoever, and has not been and will
not be placed for collection with any attorney, collection agency or similar
individual firm.
4.8 LICENSES AND PERMITS. The term "Licenses and Permits" as used
herein means federal, state and local governmental licenses, permits, approvals
and authorizations, whether foreign or domestic, other than Environmental
Permits. The Company has all of the Licenses and Permits required to conduct its
business as it is presently being conducted, all of which are in full force and
effect. No written notice of a violation of any such License or Permit has been
received by the Company or, to the knowledge of the Company, threatened, and no
proceeding is pending or, to the knowledge of the Company, threatened, to revoke
or limit any of them. The Company has no reason to believe that any of its
Licenses and Permits in effect on the date hereof will not be renewed.
4.9 COMPLIANCE WITH LAWS. In addition to the representations and
warranties contained in Section 4.5 relating to environmental matters and in
Section 4.8 relating to Licenses and Permits, the Company has operated its
business in compliance with all laws, regulations, orders, policies, guidelines,
judgments or decrees of any federal, state, local or foreign court or
governmental authority applicable to it or its business including, without
limitation, those related to antitrust and trade matters, civil rights, zoning
and building codes, public health and safety, worker health and safety and labor
and nondiscrimination, the failure to comply with which could reasonably be
expected to affect, materially and adversely, the earnings, assets, financial
condition or operations of the Company. The Company has not received any notice
alleging non-compliance with any of the aforementioned laws, regulations,
policies, guidelines, orders, judgments or decrees.
4.10 FINANCIAL STATEMENTS. The Company has previously furnished to
Cobra true and complete copies of audited financial statements of the Company
for the fiscal year ended December 31, 1998 and the period ended March 31, 1999,
including the notes thereto (the "Audited Financial Statements"), together with
the report on such financial statements of the Company's auditors. The Audited
Financial Statements fairly represent the financial position of the Company as
of such dates and the results of its operations and changes in financial
position for such periods and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis.
4.11 LITIGATION. There are no actions, suits, claims, investigations or
proceedings (legal, administrative or arbitrative) pending, asserted or, to the
knowledge of the Company, threatened, against the Company, whether at law or in
equity and whether civil or criminal in nature, before any federal, state,
municipal or other court, arbitrator, governmental department, commission,
agency or instrumentality, domestic or foreign, nor are there any judgments,
decrees or orders of any such court, arbitrator, governmental department,
commission, agency or instrumentality outstanding against the Company which
have, or if adversely determined could reasonably be expected to have, a
material adverse effect on the earnings, assets, financial condition or
operations of the business conducted by the Company, or which seek specifically
to prevent, restrict or delay consummation of the sale of the Shares or
fulfillment of any of the conditions of this Agreement.
4.12 ABSENCE OF CHANGES. Except as set forth in Schedule 4.12,
since May 11, 1999, there has not been:
a. any change, or development involving a prospective change,
including, without limitation, any damage, destruction or loss (whether or not
covered by insurance), which to the knowledge of the Company can reasonably be
expected to affect, materially and adversely, the earnings, assets, financial
condition or operations of the business of the Company;
b. any obligation or liability involving more than $5,000
(whether matured, absolute, accrued, contingent, or otherwise) incurred by the
Company;
c. any general uniform increase in the compensation of the
employees of the Company (including, without limitation, any increase pursuant
to any bonus, pension, profit sharing or other plan);
d. any increase (other than normal increases consistent with
past practices and those required by law or collective bargaining agreements) in
the compensation payable to any employee (including officers) of the Company;
e. any amendment to any employment agreement to which
any employee of the Company is a party;
f. any sale of assets by the Company other than in the
ordinary course of business;
g. any deterioration of relations between the Company
and its suppliers, financial institutions or customers;
h. any direct or indirect redemption, purchase or other
acquisition of any shares of the capital stock of the Company;
i. any declaration, setting aside or payment of any dividend
(whether in cash, capital stock or property) with respect to the Company's
common stock; or
j. any issuance by the Company of any shares of its capital
stock, or any securities or obligations convertible into or exchangeable for, or
giving any person the right to acquire from it, any shares of its capital stock.
Since May 11, 1999, except as set forth in Schedule 4.12, the
Company has not operated its business other than in the ordinary and usual
course and in a manner consistent with past practices.
4.13 NO UNDISCLOSED LIABILITIES. The Company does not have any material
liabilities or obligations, whether absolute, accrued, contingent or otherwise,
including, without limitation, any uninsured liabilities which were not accrued
or reserved against in the Audited Financial Statements other than those
incurred after May 11, 1999, in the ordinary course of business of which in the
aggregate do not or cannot reasonably be expected to have a material adverse
effect upon the earnings, assets, financial condition or operations of the
Company.
4.14 TITLE TO PROPERTIES.
a. The Company has no Real Property.
b. The Company has good title to all of the personal property,
tangible and intangible, owned by it, free and clear of any liens, charges,
pledges, security interest of other encumbrances other than those reflected in
the Audited Financial Statements heretofore delivered to Cobra.
4.15 LEASES. Schedule 4.15 sets forth a complete and correct list of
each agreement to lease into which the Company has entered, whether as a lessor
or lessee, which relates to either real or personal property, other than monthly
leases of personal property which may be canceled upon not more than 60 days
notice or require the payment of not more than $100 per month. The agreements
listed in Schedule 4.15 are referred to herein as the "Leases" (each a "Lease").
Except as set forth in Schedule 4.15, neither the Company nor any other party
hereto has breached any such Lease and, to the knowledge of the Company, no
event has occurred which, with the giving of notice or the passage of time or
both, would cause a default under, or permit the termination, modification or
acceleration of any such Lease by any party thereto. Complete copies of all of
the Leases have been delivered to Cobra.
4.16 INTELLECTUAL PROPERTY. The term "Intellectual Property" as used
herein means the rights of the owner thereof in all trade names, trademarks and
service marks, patents, patent rights, copyrights, whether domestic or foreign,
(as well as applications, registrations or certificates for any of the
foregoing), inventions, trade secrets, proprietary processes, software and other
industrial and intellectual property rights. The Company owns or is licensed or
otherwise has the right to use all of the Intellectual Property which is being
used in its business as it is presently being conducted. There is no claim,
suit, action or proceeding, pending or, to the knowledge of the Company,
threatened, against the Company asserting that its use of any Intellectual
Property infringes the rights of any third party or otherwise contesting the
Company's rights with respect to any Intellectual Property, and no third party
is known to the Company to be infringing upon the rights of the Company in the
Intellectual Property of the Company. Furthermore, to the knowledge the Company,
no party is infringing upon the rights of the Company in the Company's
Intellectual Property. All letters, patents, registrations and certificates
issued by any governmental agency relating to the Intellectual Property of the
Company are valid and subsisting and have been properly maintained.
4.17 MATERIAL CONTRACTS. Schedule 4.17 sets forth a complete and
correct list of each Material Contract of the Company. Except as set forth in
Schedule 4.17, all of the Material Contracts of the Company are in full force
and effect and to the knowledge of the Company there has not occurred, with
respect to any such Material Contract, any default or event of default, which,
with or without due notice of with the lapse of time, or both, would constitute
a default or event of default on the part of the Company or, to the knowledge of
the Company, any other party thereto. Complete copies of all the Material
Contracts of the Company have been delivered to Cobra.
4.18 MAINTENANCE OF TANGIBLE ASSETS. The tangible personal property
which belongs to the Company has been maintained in accordance with the usual
practices in the United States of business which are similar to the business
conducted by the Company, is in good condition, ordinary wear and tear excepted,
and is usable by the Company in the ordinary course of its business as it is
presently being conducted.
4.19 INSURANCE. Except as set forth in Schedule 4.19, the Company has
insurance contracts in force for such coverages and amounts as are usual and
customary for similar businesses in the United States.
4.20 LABOR MATTERS. The Company has no collective bargaining agreements
covering employees of the Company. The Company is in compliance with all federal
and state laws regarding employment, wages, and hours. The Company has not
engaged in any unfair labor practices nor have any employment discrimination or
unfair labor practice complaints been filed against, or to the best knowledge of
the Company, been threatened to be filed against the Company with any federal or
state agency having jurisdiction over labor matters. There are no controversies
pending or, to the knowledge of the Company, threatened between the Company and
any of its employees which effect, or can reasonably be expected to affect,
materially and adversely, its earnings, assets, financial condition or
operations of the business conducted by the Company, or relate to any specific
effort to prevent, restrict or delay consummation of the sale of the Shares.
4.21 EMPLOYEE BENEFIT PLANS.
The company has no Pension or Welfare Plans, except the insurance plan
set forth in Schedule 4.21.
4.22 TAX MATTERS.
a. The provisions made for taxes in the Audited Financial
Statements are sufficient for the payment of all Taxes of the Company, whether
or not disputed, which are properly accruable. There are no agreements by the
Company for the extension of time, or waiver of any statute of limitations, for
the assessment of any taxes, and all taxes due and payable by the Company on or
before the date of this Agreement have been paid or provided for, and are not
delinquent.
b. The Company has filed all Tax Returns that it was required
to file. All such Tax Returns were correct and complete in all respects. No
claim has ever been made by an authority in a jurisdiction where the Company
does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no liens on any of the assets of the Company that arose
in connection with any failure (or alleged failure) to pay any Tax.
c. The Company has withheld and paid all Taxes required to
have been withheld and paid through May 11, 1999, in connection with the amounts
paid or owing to any employee, independent contractor, creditor, stockholder or
other third party.
d. The Company does not expect any authority to assess any
additional Taxes for any period for which Tax Returns have been filed. There is
no dispute or claim concerning any Tax liability of the Company either (i)
claimed or raised by any authority in writing or (ii) as to which the Company
has knowledge based upon personal contact with any agent of such authority. The
Company has delivered to Cobra correct and complete copies of all federal income
Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by the Company.
4.23 FINDERS. No broker, finder or investment banker is entitled to any
fee or commission from the Company for services rendered on behalf of the
Company in connection with the transactions contemplated by this Agreement.
4.24 FULL DISCLOSURE. None of the representations and warranties of the
Company which are made in Article IV of this Agreement contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
4.25 INSIDER INTERESTS. No Affiliate of the Company (i) competes with
or is involved in or has a direct or indirect interest in any business entity
which competes with the business conducted by the Company, (ii) has any
agreement with the Company, or (iii) has any interest, direct or indirect, in
any property, real or personal, tangible or intangible, including, without
limitation, Intellectual Property, used in or pertaining to the business of the
Company, except as a stockholder or employee of the Company.
4.26 NO INTEREST IN COMPETITORS, ETC. No officer or director of the
Company, nor any Affiliate of any of the foregoing, directly or indirectly owns
any interest in or controls or is an employee, agent, member, principal,
officer, director, or partner of, or participant in, or consultant to any
corporation, partnership, limited liability company, sole proprietorship,
limited partnership, joint venture, association, or other entity which is a
competitor, supplier, customer, or tenant of the Company.
4.27 PURCHASE AND SALE OBLIGATIONS. All unfilled purchase and sale
orders and other commitments for purchases and sales made by the Company were
made in the usual and ordinary course of its business at the then current market
prices. None of such orders or commitments calls for deliveries thereunder
beyond a period of 90 days from the Closing Date with the exception of normal
outstanding maintenance and service contracts.
4.28 BOOKS AND RECORDS. The books of account and other financial and
corporate records of the Company are in all material respects complete and
correct, are maintained in accordance with good business practices, and are
accurately reflected in the Financial Statements. The minute books of the
Company as previously made or to be made available Cobra contained accurate
records of all meetings and accurately reflect all other corporate actions of
the stockholders and directors of the Company.
4.29 BANK AND SAFE DEPOSIT ARRANGEMENTS. Schedule 4.29 sets forth a
correct and complete list of each bank account and safe deposit box maintained
by the Company, and the names of all persons authorized to deal with such
accounts and safe deposit boxes.
4.30 INSIDER TRANSACTIONS. Schedule 4.30 sets forth a correct and
complete statement of (a) the amounts and other essential terms of indebtedness
or other obligations, liabilities or commitments (contingent or otherwise) of
the Company to or from any past or present officer, director, employee, partner
or stockholder thereof or any person related to, controlled by or under common
control of any of the foregoing and (b) all transactions, together with their
essential terms, between such persons and the Company during the past two years.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF COBRA AND MERGER SUB
Cobra represents and warrants as of the date of execution of this
Agreement and as of Closing as follows:
5.1 ORGANIZATION, QUALIFICATION. Cobra is a corporation duly organized,
validly existing and in good standing under the laws of Nevada and has corporate
power and authority to own all of its properties and assets and to carry on its
business as it is presently being conducted. Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of South
Carolina. Cobra is duly qualified and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary, except in
those jurisdictions where the failure to be duly qualified and in good standing
would not have a material adverse effect on the Cobra or the business conducted
by it. Cobra has heretofore delivered to the Company complete and correct copies
of the Articles of Incorporation and Bylaws of Cobra and Merger Sub, as
currently in effect.
5.2 CAPITALIZATION OF THE COBRA. The authorized capital stock of Cobra
consists only of 20,000,000 shares of Common Stock, $.001 par value and
1,000,000 shares of Preferred Stock, $.001 par value, of which, as of the date
hereof, 8,091,903 common shares are validly issued and outstanding, fully paid
and non-assessable, and were not issued in violation of any preemptive rights.
No shares of Preferred stock have been issued or are outstanding. Cobra has no
commitment to issue or sell any shares of its capital stock or any securities or
obligations convertible into or exchangeable for, or giving any person the right
to acquire from it, any shares of its capital stock and no such securities or
obligations are issued or outstanding.
5.3 CONSENTS AND APPROVALS. There is no requirement applicable for
Cobra to make any filing with, or to obtain any permit, authorization, consent
or approval of, any public body as a condition to the consummation of this
transaction. There is no requirement that any party to any Material Contract of
Cobra, or of any license or permit for the use of Intellectual Property of Cobra
or of any loan agreement to which Cobra is a party or by which it or they are or
were bound, must consent to the execution of this Agreement by Cobra or to the
consummation of this transaction.
5.4 NON-CONTRAVENTION. The execution and delivery by Cobra and the
Merger Sub of this Agreement does not, and the consummation of the Merger will
not, (i) violate or result in a breach of any provision of the Articles of
Incorporation or Bylaws of Cobra or the Merger Sub, (ii) result in a default (or
give rise to any right of termination, cancellation or acceleration) under the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which Cobra is a party or
by which Cobra or the business conducted by it, may be bound, or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Cobra or to the business conducted by Cobra, excluding from the foregoing
clauses (ii) and (iii) such defaults and violations as would not have a material
adverse effect on Cobra.
5.5 CORPORATE AUTHORITY AND RESOLUTIONS. The Boards of Directors Cobra
and the Merger Sub have adopted resolutions authorizing execution of this
Agreement as of the date hereof and shall adopt such additional resolutions as
may be necessary authorizing the execution of documents and closing by Cobra and
the Merger Sub as contemplated by this Agreement.
5.6 VALIDITY OF SHARES OF COBRA TO BE ISSUED. The Cobra shares to be
issued to the Company Shareholders as a result of the Merger have been duly
authorized as required under all applicable laws and, upon delivery thereof
pursuant to the terms of this Agreement, will be validly issued, fully paid and
non-assessable, and not subject to, or in violation of, any preemptive rights.
5.7 CURRENT INFORMATION. Cobra has previously delivered to the Company
a copy of Cobra=s business plan and information related to its current financial
status. At the time of mailing or delivery thereof to the Company, none of such
documents or information contained or will contain an untrue statement of a
material fact or omitted or will omit to state material facts necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading; provided, however, that no representation is
made with respect to any projections relating to Cobra which have been or will
be furnished to the Company by Cobra and, provided further, that no
representation is made with respect to tentative or pro forma information which
may be furnished to the Company by Cobra which is superseded by later or more
definitive information.
5.8 AUTHORIZATION OF TRANSACTIONS; SECURITIES COMPLIANCE. By the
Closing Date, the Cobra shares to be issued to the Company Shareholders on the
consummation of the transactions contemplated hereunder will be exempt from
registration under the Securities Act pursuant to Section 4(2) thereof, and
shall have been exempt or registered or qualified under the securities or blue
sky laws of the State of South Carolina for issuance upon the Closing Date. The
Cobra shares, when issued in accordance with the terms of this Agreement, will
be fully paid and non-assessable and not subject to, or issued in violation of,
any preemptive rights.
5.9 NO REGISTRATION RIGHTS. Except as provided in Section 7.7 of this
Agreement, none of the Company Shareholders has entered into any agreement with
Cobra granting or providing for registration rights with respect to the Cobra
shares to be delivered to the Company Shareholders pursuant to this Agreement.
5.10 NO BROKERS OR COMMISSIONS. Cobra has not engaged any broker,
finder or similar individual in connection with this transaction for which the
Company shall have any liability.
5.11 BINDING AGREEMENT. The execution, delivery and performance of this
Agreement and the other instruments contemplated by this Agreement by Cobra and
the Merger Sub, have been duly authorized by all necessary corporate action of
Cobra and the Merger Sub. This Agreement has been duly executed and delivered to
the Company Shareholders by Cobra and the Merger Sub and constitutes the legal,
valid and binding agreement of Cobra and the Merger Sub, enforceable in
accordance with its terms.
5.12 NO VIOLATION. The execution, delivery and performance of this
Agreement by Cobra and the Merger Sub and the consummation of the transactions
contemplated hereby will not, with or without the giving of notice or the lapse
of time or both, violate, contravene or conflict with or result in a breach of
or constitute a default under (i) any writ, order, judgment or decree of any
court arbitrator or governmental agency applicable to Cobra or the Merger Sub;
(ii) the Articles of Incorporation or Bylaws of Cobra or the Merger Sub; (iii)
any contract, lease or other agreement to which Cobra or the Merger Sub is a
party or by which Cobra is bound; or (iv) to the best knowledge of Cobra or
Merger Sub, any law, rule or regulation applicable to Cobra or the Merger Sub.
5.13 LITIGATION. There are no actions, suits, claims, investigations or
proceedings (legal, administrative or arbitrative) pending, asserted or, to the
knowledge of Cobra or the Merger Sub, threatened, against Cobra or the Merger
Sub, whether at law or in equity and whether civil or criminal in nature, before
any federal, state, municipal or other court, arbitrator, governmental
department, commission, agency or instrumentality, domestic or foreign, nor are
there any judgments, decrees or orders of any such court, arbitrator,
governmental department, commission, agency or instrumentality outstanding
against Cobra or the Merger Sub which have, or if adversely determined could
reasonably be expected to have, a material adverse effect on the earnings,
assets, financial condition or operations of the business conducted by Cobra, or
which seek specifically to prevent, restrict or delay consummation of the
transfer of the shares of Cobra or fulfillment of any of the conditions of this
Agreement.
5.14 NO UNDISCLOSED LIABILITIES. Cobra does not have any material
liabilities or obligations, whether absolute, accrued, contingent or otherwise,
including, without limitation, any uninsured liabilities which were not accrued
or reserved against other than those incurred in the ordinary course of business
of which in the aggregate do not or cannot reasonably be expected to have a
material adverse effect upon the earnings, assets, financial condition or
operations of Cobra.
5.15 INTELLECTUAL PROPERTY. Cobra owns or is licensed or otherwise has
the right to use all of the Intellectual Property which is being used in its
business as it is presently being conducted. There is no claim, suit, action or
proceeding, pending or, to the knowledge of Cobra, threatened, against Cobra
asserting that its use of any Intellectual Property infringes the rights of any
third party or otherwise contesting Cobra's rights with respect to any
Intellectual Property, and no third party is known to Cobra to be infringing
upon the rights of Cobra in the Intellectual Property of Cobra. Furthermore, to
the knowledge of Cobra, no party is infringing upon the rights of Cobra in
Cobra's Intellectual Property. All letters, patents, registrations and
certificates issued by any governmental agency relating to the Intellectual
Property of Cobra are valid and subsisting and have been properly maintained.
5.16 COMPLIANCE WITH APPLICABLE LAWS. To the best knowledge of Cobra,
(i) Cobra and Merger Sub are not in default in any material respect under any
executive, legislative, judicial, administrative or private (such as
arbitration) ruling, order, writ, injunction or decree; and (ii) no material
permits, licenses or approvals of any governmental or administrative authorities
are required for Cobra to own, lease and operate their properties and to carry
on its business as presently conducted.
5.17 ABSENCE OF CERTAIN CHANGES. Since May 11, 1999, there have not
been any material adverse changes in the financial condition, results of
operations or business of Cobra.
ARTICLE VI
INVESTMENT REPRESENTATIONS
The Company and Company Shareholders hereby jointly and severally
represent, warrant, acknowledge and covenant to Cobra and its officers,
directors, agents and professional advisors, as follows:
6.1 OPPORTUNITY TO EXAMINE. The Company Shareholders have examined or
have had an opportunity to examine, and to ask questions of the management of
Cobra about, all applicable documents and such applicable information as are
relevant to the transactions described herein. The Company Shareholders have
examined the Business Plan of Cobra.
6.2 NO REPRESENTATIONS AS TO PROFIT OR LOSS. No representation or
warranty of any kind has been made to the Company or Company Shareholders with
respect to the percentage of profit and/or amount or type of consideration,
profit or loss that are to be realized, if any, as a result of entering into
this transaction. The Company Shareholders are not relying upon any information
other than that derived from the results of their own independent investigation,
or the investigation of their counsel and other professional advisors, or from
information furnished in writing by Cobra to them.
6.3 COBRA SHARES NOT REGISTERED. The Company Shareholders understand
that the Cobra shares to be issued to the Company Shareholders have not been
registered under the Act nor under the securities laws of any state in reliance
on exemptions therefrom for non-public offerings, and further understand that
the Cobra shares have not been approved or disapproved by the Securities and
Exchange Commission nor has any state securities administrator or agency passed
on the accuracy or adequacy of any written information provided by Cobra to the
Company Shareholders.
6.4 INVESTMENT INTENT. The Company Shareholders are acquiring the Cobra
shares for their own account for investment purposes only and not with a view to
the sale or other distribution thereof, in whole or in part.
6.5 RELIANCE ON REPRESENTATIONS. The Company and Company Shareholders
acknowledge that they understand the meaning and legal consequences of the
representations, warranties, acknowledgments and covenants in this Article VI
and that Cobra has relied and will rely thereon.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 CONDUCT OF BUSINESS BY COMPANY AND COBRA.
a. The Company warrants and represent that from the date
hereof until the Closing, the Company will (a) conduct its business only in the
ordinary and usual course and in a manner consistent with past practices, (b)
maintain in good repair, at its expense, all of its properties, and (c) use its
best efforts to preserve its relationship with suppliers, customers, dealers and
others having business relationships with the Company. The Company and Company
Shareholders will notify Cobra of any emergency or material change in the normal
conduct of the business or operations of the Company, the threat of or
initiation of any material litigation against the Company, and the initiation of
any investigation of the Company by any party, whether private or governmental.
b. Cobra warrants and represent that from the date hereof
until the Closing, Cobra will (a) conduct its business only in the ordinary and
usual course and in a manner consistent with past practices, (b) maintain in
good repair, at its expense, all of its properties, and (c) use its best efforts
to preserve its relationship with suppliers, customers, dealers and others
having business relationships with the Company. The Cobra will notify the
Company of any emergency or material change in the normal conduct of the
business or operations of Cobra, the threat of or initiation of any material
litigation against Cobra, and the initiation of any investigation of the Cobra
by any party, whether private or governmental.
7.2 NEGOTIATIONS WITH OTHERS. From the date hereof until the closing,
the Company will not, directly or indirectly, without the written consent of
Cobra, initiate discussions or engage and negotiate with any corporation,
partnership, person or entity, other than Cobra, concerning any sale of Shares
or of any merger, sale or assets or similar transactions involving the Company.
7.3 INVESTIGATION OF BUSINESS AND PROPERTIES BY COBRA. From the date
hereof until the Closing, the Company shall afford Cobra and its attorneys,
accountants, financial advisors and other representatives complete access at all
reasonable times to its offices, and to the officers, employees, properties,
contracts, and books and records of the Company. In addition, the Company and
Cobra will to furnish each other such financial, operating and additional data
as may reasonably be requested concerning the business, operations, properties
and personnel of the Company or of Cobra.
7.4 CONFIDENTIALITY. Pursuant to the provisions of this Agreement,
Cobra and the Company have supplied and will supply to each other certain
documents and information for use in investigating the business of Cobra and the
Company. Such material is hereinafter referred to as "Evaluation Material."
Cobra and the Company agree to hold in confidence any Evaluation Material they
have received or will receive and not to disclose all or any part of such
material to anyone except their officers, directors, employees, professional
advisors, or other representatives who need such information to perform their
respective duties and who have been informed of the confidential nature of such
material and directed to treat it confidentially. If this Agreement is
terminated, Cobra and the Company will return or cause to be destroyed and will
not retain, or permit any person to whom it has given copies thereof to retain,
the originals or any copies of any documents constituting a part of the
Evaluation Material and after termination Cobra and the Company will continue to
honor the confidentiality agreement contained herein and will not disclose,
directly or indirectly, any information obtained from the Evaluation Material.
The confidentiality agreement contained in this Section 7.4 will terminate upon
the earlier of three years after the date hereof of or upon consummation of the
transactions contemplated hereby. Notwithstanding the foregoing, the parties may
use and disclose any such information to the extent that (a) it had acquired
such information on a non-confidential basis prior to receipt thereof from the
other party, (b) such information has become generally available to the public,
(c) such information is provided to a party by a third party who has obtained
such information other than as a result of a breach of this Agreement.
Furthermore, either party may disclose such information to the extent that it is
required to do so in order to comply with a governmental or judicial order or
decree, but upon receiving notice that any such order or decree is being sought,
it will promptly notify the other party.
7.5 EFFORTS TO CONSUMMATE. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate, as promptly as practicable,
the transactions contemplated hereby, including, but not limited to, the
obtaining of all necessary consents, waivers, authorizations, orders and
approvals of third parties, whether private or governmental, required of it to
enable it to comply with the conditions precedent to consummating the
transactions contemplated by this Agreement. Each party agrees to cooperate
fully with the other party in assisting it to comply with this Section.
Notwithstanding the foregoing, neither party shall be required to initiate any
litigation, make any substantial payment or incur any material economic burden,
except for a payment otherwise required of it, to obtain any consent, waiver,
authorization, order or approval, and if, despite such efforts, either party is
unable to obtain any consent, wavier, authorization, order of approval the other
party may terminate this Agreement and shall have no liability therefor.
7.6 FURTHER ASSURANCES. The parties will use reasonable efforts to
implement the provisions of this Agreement, and for such purpose, the parties
will, at the request of any other party, at or after the closing, without
further consideration, promptly execute and deliver, or cause to be executed and
delivered, such additional documents as any other party may reasonably deem
necessary or desirable to implement any provision of this Agreement.
7.7 EXPENSES. Whether or not the Merger is consummated all expenses
incurred in connection with this Agreement and the transactions contemplated
hereby will be paid by the party incurring such expenses.
7.8 PIGGYBACK REGISTRATION RIGHTS. Cobra shall advise the Company
Shareholders by written notice at least twenty (20) days prior to the filing of
any registration under the Securities Act, or any successor thereto, with
respect to the Cobra common stock. Cobra will, upon written request of the
Company Shareholders within such twenty day notice period, include among the
securities covered by such registration, a percentage of the Cobra shares owned
by Company Shareholders equal to the percentage obtained by dividing the number
of shares of common stock that are offered by the Principal Shareholders of
Cobra by the total number of shares of common stock of Cobra owned by such
Principal Shareholders at the time of registration. Cobra will include in any
such registration statement such information as may be required to permit a
public offering of the Cobra shares owned by the Company Shareholders on the
same terms applicable to the Principal Shareholders of Cobra of such
registration statement. Xxxx shall supply prospectuses and use its best efforts
to qualify the Cobra shares registered pursuant to any such registration
statement for sale in those states where Cobra is qualifying the securities
covered in such registration. The Company Shareholders shall furnish information
reasonably required by Cobra to register the Cobra shares pursuant to this
Section 7.8. The cost of such registration shall be borne by Cobra. APrincipal
Shareholders@ shall mean the five (5) shareholders of Cobra holding the highest
number of shares of capital stock of Cobra, as determined on a fully diluted
basis.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF COBRA AND MERGER SUB
The following are certain conditions precedent to the obligation of
Cobra and Merger Sub to complete this transaction.
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company herein contained shall be true on and as of Closing
with the same force and effect as though made on and as of Closing, except as
affected by transactions contemplated hereby and except to the extent that such
representations and warranties were made as of a specified date and as to such
representations and warranties the same shall have been true as of the specified
date.
8.2 ABSENCE OF DEFAULT. No condition or event which constitutes an
event of default hereunder by the Company or Company Shareholders which, after
notice and lapse of time, or both, would constitute an event of default
hereunder by the Company shall have occurred and be continuing.
8.3 ABSENCE OF MATERIAL DAMAGE TO OR EXPROPRIATION OF PROPERTY. Between
the date of this Agreement and the Closing, there shall not have occurred (1)
any material casualty to any facility, property, equipment or inventory owned by
the Company, or (2) any material condemnation, seizure, expropriation or
liquidation by any governmental authority or any officer or instrumentality
thereof of facilities, property, equipment or inventory owned by the Company.
8.4 ABSENCE OF LIENS. There will have been no liens recorded after the
execution of this Agreement but prior to Closing with respect to any personal,
real or mixed property owned by the Company.
8.5 ACTIONS, PROCEEDINGS, ETC. All actions, proceedings, instruments
and documents required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related legal matters shall have
been satisfactory to and approved by counsel for Cobra, and such counsel shall
have been furnished with such certified copies of actions and proceedings and
such other instruments and documents as they shall have reasonably requested.
8.6 ACCOUNTANTS' LETTER. Cobra shall have received a letter dated as of
Closing, in form and substance satisfactory to Cobra, to the effect that on the
basis of a review of the accounting records of the Company, consultations with
officers of the Company, and other procedures and inquiries deemed appropriate
by such accountants, nothing has come to their attention which indicates that
during the period since May 11, 1999, to a specified date not more than five
days prior to the Closing there has been any material adverse change in the
financial condition or results of operations of the Company.
8.7 LEGAL OPINION. Cobra shall have received the legal opinion of the
Company's counsel in accordance with Section 3.11 hereto.
8.8 SATISFACTION WITH RESPECT TO FINANCIAL CONDITION AND PERFORMANCE.
Cobra must be satisfied that each and every representation made by the Company
regarding the Financial Statements and the financial condition of the Company
shall be true, complete and accurate in all respects as of Closing. Without
limiting the foregoing, Cobra must be satisfied that: (i) the Financial
Statements shall have been prepared on an accrual basis of accounting,
consistent with prior years, and in accordance with generally accepted
accounting principles; and (ii) except as specifically disclosed in the
Financial Statements, there has been no distribution to shareholders or others
or bonuses made to employees.
8.9 CONTINUITY OF BUSINESS RELATIONSHIPS. Cobra shall be satisfied that
the Company=s customer, vendor, financial institution(s), insurance carrier and
employee relations are satisfactory as at the Closing Date.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY SHAREHOLDERS
The following are certain conditions precedent to the obligation of the
Company Shareholders to complete this transaction.
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Cobra and Merger Sub herein contained shall be true on and as of
Closing with the same force and effect as though made on and as of Closing,
except as affected by transactions contemplated hereby and except to the extent
that such representations and warranties were made as of a specified date and as
to such representations and warranties the same shall have been true as of the
specified date.
9.2 ABSENCE OF DEFAULT. No condition or event which constitutes an
event of default hereunder by Cobra or Merger Sub which, after notice and lapse
of time, or both, would constitute an event of default hereunder by Cobra or
Merger shall have occurred and be continuing.
9.3 ABSENCE OF MATERIAL DAMAGE TO OR EXPROPRIATION OF PROPERTY. Between
the date of this Agreement and the Closing, there shall not have occurred (1)
any material casualty to any facility, property, equipment or inventory owned by
Cobra, or (2) any material condemnation, seizure, expropriation or liquidation
by any governmental authority or any officer or instrumentality thereof of
facilities, property, equipment or inventory owned by Cobra.
9.4 ABSENCE OF LIENS. There will have been no liens recorded after the
execution of this Agreement but prior to Closing with respect to any personal,
real or mixed property owned by Cobra.
9.5 ACTIONS, PROCEEDINGS, ETC. All actions, proceedings, instruments
and documents required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related legal matters shall have
been satisfactory to and approved by counsel for Company Shareholders, and such
counsel shall have been furnished with such certified copies of actions and
proceedings and such other instruments and documents as they shall have
reasonably requested.
9.6 LEGAL OPINION. Company Shareholders shall have received the legal
opinion of the Cobra's counsel in accordance with Section 3.12 hereto.
9.7 SATISFACTION WITH RESPECT TO FINANCIAL CONDITION AND PERFORMANCE.
The Company Shareholders must be satisfied that each and every representation
made by Cobra regarding the Financial Statements and the financial condition of
Cobra shall be true, complete and accurate in all respects as of Closing.
Without limiting the foregoing, the Company Shareholders must be satisfied that:
(i) the Financial Statements shall have been prepared on an accrual basis of
accounting, consistent with prior years, and in accordance with generally
accepted accounting principles; and (ii) except as specifically disclosed in the
Financial Statements, there has been no distribution to shareholders or others
or bonuses made to employees.
9.8 CONTINUITY OF BUSINESS RELATIONSHIPS. The Company Shareholders
shall be satisfied that the Cobra=s customer, vendor, financial institution(s),
insurance carrier and employee relations are satisfactory as at the Closing
Date.
ARTICLE X
INDEMNIFICATION
10.1 COBRA'S RIGHT TO INDEMNIFICATION. The Company and Company
Shareholders jointly and severally undertake and agree to hold Cobra and/or the
shareholders of Cobra harmless against any and all losses, costs, liabilities,
claims, obligations and expenses, including reasonable attorneys' fees, incurred
or suffered by Cobra arising from (i) the breach, misrepresentation or other
violation of any covenants, warranty or representation of or by the Company
contained in this Agreement, and (ii) all liabilities of the Company, not
disclosed in writing to Cobra prior to the execution of this Agreement. This
indemnity provision shall survive Closing for a period of one (1) year.
10.2 COMPANY SHAREHOLDERS RIGHT TO INDEMNIFICATION. Cobra and the
Merger Sub jointly and severally undertake and agree to hold the Company and/or
the Company Shareholders harmless against any and all losses, costs,
liabilities, claims, obligations and expenses, including reasonable attorneys'
fees, incurred or suffered by the Company or Company Shareholders arising from
the breach, misrepresentation or other violation of any covenants, warranty or
representation of or by Cobra or the Merger Sub contained in this Agreement.
This indemnity provision shall survive Closing for a period of one (1) year.
10.3 PROCEDURE. If any claim or proceeding covered by the foregoing
agreements to indemnify and hold harmless shall arise, the party who seeks
indemnification, (the "Indemnified Party") shall be given written notice thereof
to the other party (the "Indemnitor") promptly (but in no event more than ten
(10) days) after it learns of the existence of such claim or proceeding. Any
claim for indemnification hereunder shall be accompanied by evidence
demonstrating the Indemnified Party's right or possible right to
indemnification, including a copy of all supporting documents relevant thereto.
The Indemnitor shall have the right to employ counsel reasonably acceptable to
the Indemnified Party to defend against any such claim or proceeding, or to
compromise, settle or otherwise dispose of the same; provided, however, that no
settlement or compromise shall be effected without the consent of the
Indemnified Party, which consent shall not be unreasonably withheld, and
PROVIDED FURTHER THAT IN THE EVENT THE INDEMNIFIED PARTY DOES NOT CONSENT TO A
BONA FIDE offer of settlement made by a third party and the settlement involves
only the payment of money, then the Indemnitor may, in lieu of payment of such
settlement to such third party, pay such amount to the Indemnified Party. After
the payment to the Indemnified Party, the Indemnitor shall have no further
liability with respect to such claim or proceeding and the Indemnified Party
shall assume full responsibility to defend the same. After notice from the
Indemnitor to the Indemnified Party of its election to assume the defense of
such claim or proceeding, the Indemnitor shall not be liable to the Indemnified
Party under this paragraph for any legal or other expenses subsequently incurred
by the Indemnified Party in connection with the defense thereof; provided,
however, that the Indemnified Party shall have the right to employ counsel to
represent it if, in the Indemnified Party's sole judgment, it is advisable for
the Indemnified Party to be represented by separate counsel, and in that event
the fees and expenses of such separate counsel shall be paid by the Indemnified
Party. The parties will fully cooperate in any such action, making available to
each other books or records for the defense of any such claim or proceeding. If
the Indemnitor fails to acknowledge in writing its obligation to defend against
or settle such claim or proceeding within ten (10) days after receiving notice
of the claim or proceeding from the Indemnified Party (or such shorter time
specified in the notice as the circumstances of the matter may dictate), the
Indemnified Party shall be free to dispose of the matter, at the expense of the
Indemnitor (but subject to the Indemnitor's right subsequently to contest
through appropriate proceedings its obligation to provide indemnification), in
any way which the Indemnified Party deems in its best interest.
10.4 LIMITATIONS ON INDEMNIFICATION RIGHTS. Indemnification shall be
due only to the extent of the loss or damage actually suffered (i.e., reduced by
any offsetting or related asset or service received and by any recovery from any
third party, such as an insurer), net after the amount equal to any reduction in
federal, state or local income, franchise or other taxes occasioned by such loss
or damage (even though the tax return by which such reduction would have been
realized is not yet due), but including an amount equal to any increase in
federal, state and local income, franchise or other taxes occasioned by the
indemnification payment and then only to the extent of the excess over the
Agreed De Minimis Amount (hereinafter defined). The Indemnitor shall be
subrogated to all rights of the Indemnified Party against any third party with
respect to any claim for which indemnification is paid. Notwithstanding the
foregoing, the Indemnitor shall not be liable to the Indemnified Party for any
individual misrepresentation, breach of warranty or violation of a covenant
where the otherwise indemnifiable amount does not exceed $500.00 and, as regards
all such indemnifiable misrepresentations or breaches of warranty that do not
exceed $500, the Indemnitor shall not be liable except to the extent that the
aggregate amount thereof exceeds $1,000 (such sum being herein referred to as
the "Agreed De Minimis Amount"); provided, however, that the Agreed De Minimis
Amount shall not apply with respect to the indemnification otherwise due for any
third-party claims.
ARTICLE XI
GENERAL PROVISIONS
11.1 EXPENSES. Each party shall pay its own expenses incident to the
negotiation and preparation of this Agreement and the transactions contemplated
hereby. All other recording costs for bills of sale and other instruments of
transfer, and all stamp, sales, use and transfer taxes in connection with the
purchase and sale of shares shall be paid by the transferring party.
11.2 NOTICES. All notices, requests, demands and other communications
pertaining to this Agreement shall be in writing and shall be deemed duly given
when delivered personally with a receipt, when delivered by an overnight courier
service or mailed by certified mail, return receipt requested, postage prepaid,
addressed as follows:
a. To: Cobra & Merger Sub: Cobra Technologies, Inc.
0000 X. Xxxxxxxx Xxxx Xxxx
Xxxxx 000
Xxxx Xxxxx, XX 00000
With a copy to: Xxxxxxx Xxxxxxx, Esq.
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
b. To: The Company : Pinnacle East, Inc.
And Company c/o Xxxxxxxx Xxxxx
Shareholders 0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxxxxx, XX 00000
WITH A COPY TO:
Either party may change its address for notices by written notice to the other
given pursuant to this paragraph.
11.3 CERTAIN BREACHES. Neither party shall have any liability to the
other party with respect to a breach by a party of which the other party has
received written notice at or prior to Closing.
11.4 PRIOR NEGOTIATIONS. This Agreement supersedes in all respects all
prior and contemporaneous oral and written negotiations, understandings and
agreements between the parties with respect to the subject matter hereof. All of
said prior and contemporaneous negotiations, understandings and agreements are
merged herein and superseded hereby.
11.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the Exhibits to
this Agreement set forth the entire understanding between the parties in
connection with the transaction contemplated herein, there being no terms,
conditions, warranties or representations other than those contained herein,
referenced herein or provided for herein. Neither this Agreement nor any term or
provision hereof may be altered or amended in any manner except as an instrument
in writing signed by the party against whom the enforcement of any such change
is sought.
11.6 EXHIBITS. The Exhibits attached hereto or referred to herein are a
material part of this Agreement, as if set forth in full herein.
11.7 SEVERABILITY. If any term of this Agreement is illegal or
enforceable at law or in equity, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby. Any illegal or unenforceable term shall be deemed to be void
and of no force and effect only to the minimum extent necessary to bring such
term within the provisions of any applicable law or laws and such term, as so
modified, and the balance of this Agreement shall then be fully enforceable.
11.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Unless otherwise
specifically noted herein, the several representations, warranties and covenants
of the parties contained herein shall survive the closing for a period of one
(1) year from the Closing date. Thereafter neither party shall have any
liability to the other based upon any of the representations, warranties and
covenants set forth herein.
11.9 WAIVER. Unless otherwise specifically agreed in writing to the
contrary: (i) the failure of either party at any time to require performance by
the other of any provision of this Agreement shall not affect such party's right
thereafter to enforce the same, (ii) no waiver by either party of any default by
the other shall be taken or held to be a waiver by such party of any other
preceding or subsequent default, and (iii) no extension of time granted by
either party for the performance of any obligation or act by the other party
shall be deemed to be an extension of time for the performance of any other
obligation or act hereunder.
11.10 NUMBER AND GENDER. Whenever the context so requires, words used
in the singular shall be construed to mean or include the plural and vice versa,
and pronouns of any gender shall be construed to mean or include any other
gender or genders.
11.11 HEADINGS AND CROSS-REFERENCES. The headings of this Agreement are
included for convenience of reference only, and shall in no way limit or affect
the meaning or interpretation of the specific provisions hereof. All
cross-references to paragraphs herein shall mean the paragraphs of this
Agreement unless otherwise stated or clearly required by the context. All
references to Exhibits herein shall mean the Exhibits to this Agreement. Words
such as "herein" and "hereof" shall be deemed to refer to this Agreement as a
whole and not to any particular provision of this Agreement unless otherwise
stated or clearly required by the context.
11.12 CHOICE OF LAWS. This Agreement is to be construed and governed by
the laws of the State of Florida, except for the choice of law rules utilized in
that jurisdiction.
11.13 ARBITRATION. Any dispute arising under or related to this
Agreement that the parties are unable to resolve by themselves shall be settled
by arbitration in Broward County, Florida, by a panel of three arbitrators.
Cobra together with the Company shall each designate one disinterested
arbitrator and the two arbitrators so designated shall select the third
arbitrator. The persons selected as arbitrators need not be professional
arbitrators, and persons such as accountants, appraisers and bankers shall be
acceptable. Before undertaking to resolve the dispute, each arbitrator shall be
duly sworn faithfully and fairly to hear and examine the matters in controversy
and to make a just award according to the best of his or her understanding. The
arbitration hearing shall be conducted in accordance with the rules of the
American Arbitration Association. The written decision of a majority of the
arbitrators shall be final and binding on the parties. Costs and expenses of the
arbitration proceeding shall be assessed between the parties in a manner to be
decided by a majority of the arbitrators, and the assessment shall be set forth
in the decision and award of the arbitrators. No action at law or suit in equity
based upon any claim arising out of or relating to this Agreement shall be
instituted in any court by a party against another except an action to compel
arbitration pursuant to this paragraph, an action to enforce the award of the
arbitration panel rendered in accordance with this paragraph, or a suit for
specific performance as may be specifically provided herein.
11.14 SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns.
11.15 THIRD PARTIES. Nothing in this Agreement, whether expressed or
implied, is intended to (i) confer any rights or remedies on any person other
than the parties and their respective successors and assigns, (ii) relieve or
discharge the obligation or liability of any third party, or (iii) give any
third party any right of subrogation or action against any party hereto.
11.16 NO INFERENCES. This agreement is the result of negotiations
between the parties, and no inferences shall be drawn by reason of its having
been prepared by any one of the parties.
11.17 COUNTERPARTS. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were on the same
instrument. Each of the counterparts, when signed, shall be deemed to be an
original, and all of the signed counterparts together shall be deemed to be one
and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date and year first above written.
WITNESS/ATTEST: COBRA TECHNOLOGIES, INC.
__________________________ Secretary
By: Xxxx Xxxxxxxxxxx, President
PINNACLE EAST, INC.
Xxxxxxxx X. Xxxxx, Secretary By: Xxxxxx X. Xxxxxxxxxx,President
Witness Xxxxxxxx X.
Xxxxx, Individually
Witness Xxxxxx X. Xxxxxxxxxx, Individually
STATE OF FLORIDA :
: ss.
COUNTY OF :
I CERTIFY that on , 1999,
personally appeared before me, and this person acknowledged, to my satisfaction,
that:
(a) this person is the secretary of COBRA TECHNOLOGIES, INC., the
corporation named in this document;
(b) this person is the attesting witness to the signing of this
document by the proper corporate officer, XXXX XXXXXXXXXXX, who is the President
of the corporation;
(c) this document was signed and delivered by the corporation as its
voluntary act duly authorized by a proper resolution of its Board of Directors;
(d) this person knows the proper seal of the corporation which was
affixed to this document; and
(e) this person signed this proof to attest to the truth of these
facts.
----------------------------
Signed and sworn to before me
on , 0000
XXXXX XX XXXXX XXXXXXXX:
: ss.
COUNTY OF :
I CERTIFY that on , 1999,
XXXXXXXX X. XXXXX
personally appeared before me, and this person acknowledged, to my satisfaction,
that:
(a) this person is the secretary of PINNACLE EAST, INC., the
corporation named in this document;
(b) this person is the attesting witness to the signing of this
document by the proper corporate officer, XXXXXX X. XXXXXXXXXX, who is the
President of the corporation;
(c) this document was signed and delivered by the corporation as its
voluntary act duly authorized by a proper resolution of its Board of Directors;
(d) this person knows the proper seal of the corporation which was
affixed to this document; and
(e) this person signed this proof to attest to the truth of these
facts.
----------------------------
Xxxxxxxx X. Xxxxx
Signed and sworn to before me
on , 0000
XXXXX XX X0XXX XXXXXXXX:
: ss.
COUNTY OF :
BE IT remembered that on this day of , 1999, before me, the undersigned
authority, personally appeared XXXXXX X. XXXXXXXXXX, who, I am satisfied, is the
person mentioned in the within instrument, to whom I first made known the
contents thereof, and thereupon he signed, sealed, and delivered the same as his
voluntary act and deed, for the uses and purposes therein expressed.
----------------------------
STATE OF SOUTH CAROLINA:
: ss.
COUNTY OF :
BE IT remembered that on this day of , 1999, before me, the undersigned
authority, personally appeared XXXXXXXX X. XXXXX, who, I am satisfied, is the
person mentioned in the within instrument, to whom I first made known the
contents thereof, and thereupon he signed, sealed, and delivered the same as his
voluntary act and deed, for the uses and purposes therein expressed.
----------------------------
