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EXHIBIT 10.69
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AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF REORGANIZATION
This shall constitute Amendment No. 1 to that certain Agreement and Plan of
Reorganization (the "Agreement"), dated as of October 26, 1999, by and
among, USURF America, Inc., a Nevada corporation ("Parent"), CyberHighway,
Inc., an Idaho corporation wholly owned by Parent ("Acquiror"), The
Spinning Wheel, Inc., d/b/a CyberHighway of Bear River Valley, an Idaho
corporation ("Target"), and Diggs X. Xxxxx, Xx., the controlling
shareholder of Target ("Xxxxx"), pursuant to which Target is to merge with
and into Acquiror.
The Agreement is hereby amended, as follows:
A. Section 1.6(b) of the Agreement is hereby deleted in its entirety and
replaced by the following:
"(b) each share of Target Common Stock which is outstanding immediately
prior to the Effective Time, other than those shares of Target Common Stock
cancelled as set forth in subsection (a) hereof, shall be converted into
the right to receive 604.95 shares of the $.0001 par value per share common
stock of Parent (the "Parent Common Stock"), a total of 81,063 shares of
Parent Common Stock; and"
B. New Section 2.4A shall be added to the Agreement, as follows:
2.4A Pledge Agreement; Promissory Note. Prior to or at the Closing,
Parent, Acquiror and Xxxxx shall execute a pledge agreement (the "Pledge
Agreement") substantially in the form attached to this Amendment No. 1 as
Exhibit "A".
Prior to or at the Closing, Xxxxx shall execute and deliver a promissory
note (the "Promissory Note"), face amount $11,299.00, in favor of Acquiror,
substantially in the form attached to this Amendment No. 1 as Exhibit "B".
C. Section 7.2(a) of the Agreement is hereby deleted in its entirety and
replaced by the following:
"(a) Customers of Target. The actual number of (i) dial-up customers of
Target who shall be current in their accounts as of the last billing date
30 days prior to the Closing Date shall equal or exceed 640 customers; and
(ii) frame relay customers and dedicated line customers who shall be
current in their accounts as of the last billing date immediately preceding
the Closing shall equal or exceed 6 customers. For purposes of this
Section 7.2(a), "customers" shall mean actually subscribed and paying
customers and shall exclude customers obtained through free promotions,
free bases or any other manner not requiring payment for services."
D. New Section 7.2(m) shall be added to the Agreement, as follows:
(m) Pledge Agreement; Promissory Note. Parent, Acquiror and Xxxxx shall
have executed the Pledge Agreement and Xxxxx shall have executed and
delivered the Promissory Note.
E. New Section 7.2(n) shall be added to the Agreement, as follows:
(n) Funds Delivery. Xxxxx shall have delivered a check in the amount of
$5,000, payable to Acquiror.
F. Section 10.3 of the Agreement is hereby deleted in its entirety and
replaced by the following:
"Section 10.3. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date delivered or mailed if delivered
personally or mailed by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice, except
that notices of changes of address shall be effective upon receipt):
(a) If to Parent or Acquiror: USURF America, Inc.
0000 Xxxxxxxx Xxxx Xxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
with copies to: Xxxxxx & Xxxxxx, Attorneys at Law
000 Xxxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx 00000
(b) if to Target or Xxxxx: Diggs X. Xxxxx, Xx.
The Spinning Wheel, Inc.
X.X. Xxx 0000
Xxxxxx, Xxxxxxx 00000
with copies to: Xxxxxxx X. Xxxxxxx, Esquire
McGrath, Meacham, Xxxxxx & Xxxxx
414 Xxxxx
Xxxxx Xxxxx, Xxxxx 00000"
In all other respects, the Agreement is ratified and affirmed.
USURF AMERICA, INC.
ATTEST:
By: /s/ Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx Xxxxx X. Xxxxxx, President
Xxxxxxx X. Xxxxxx
Secretary
Dated: February 1, 2000
CYBERHIGHWAY, INC.
ATTEST:
By: /s/ Xxxxxxx Xxxxx
/s/ Xxxxx X. Xxxxxx Xxxxxxx Xxxxx, President
Xxxxx X. Xxxxxx
Secretary
Dated: February 1, 2000
THE SPINNING WHEEL, INC.
ATTEST: d/b/a CyberHighway of Bear River Valley
By: /s/ Xxxxxxxx Xxxxxxx
/s/ Xxxxxxxx Xxxxxxx, President
Secretary
Dated: February 1, 2000
/s/ Diggs X. Xxxxx, Xx.
Xxxxx X. Xxxxx, Xx., individually
Dated: February 1, 2000
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of October 26, 1999 (the
"Agreement"), among USURF America, Inc., a Nevada corporation ("Parent"),
CyberHighway, Inc., an Idaho corporation wholly owned by Parent
("Acquiror"), The Spinning Wheel, Inc., d/b/a CyberHighway of Bear River
Valley, an Idaho corporation ("Target") (Acquiror and Target being
hereinafter collectively referred to as the "Constituent Corporations"),
and Diggs X. Xxxxx, Xx. ("Xxxxx"), the controlling shareholder of Target,
executing this Agreement.
WHEREAS, the Boards of Directors of Parent, Acquiror and Target have
approved the acquisition of Target by Parent;
WHEREAS, in furtherance of such acquisition, the Boards of Directors of
Parent, Acquiror and Target have each approved the merger of Target into
Acquiror (the "Merger"), pursuant to an Agreement of Merger in the form
attached hereto as Exhibit "A" (the "Merger Agreement"), and the
transactions contemplated hereby, in accordance with the applicable
provisions of the statutes of the States of Nevada and Idaho and upon the
terms and subject to the conditions set forth herein; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization with the meaning of Section 368(a)(1)(A)
and 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, each of the parties to this Agreement desires to make certain
representations, warranties and agreements in connection with the Merger
and also to prescribe various conditions thereto; and
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Acquiror, Target and Xxxxx hereby agree as follows:
ARTICLE I. THE MERGER
Section 1.1. The Merger. At the Effective Time (as defined in Section
1.2) and subject to and upon the terms and conditions of this Agreement and
the Merger Agreement, Target shall be merged with and into Acquiror, the
separate corporate existence of Target shall cease and Acquiror shall
continue as the surviving corporation, in accordance with the applicable
provisions of the Idaho Business Corporation Act (the "Idaho Law").
Acquiror, as the surviving corporation after the Merger, is hereinafter
sometimes referred to as the "Surviving Corporation".
Section 1.2. Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, and
provided that this Agreement has not been terminated or abandoned pursuant
to Article IX, the Constituent Corporations shall cause the Merger to be
consummated by filing a Certificate of Merger (the "Certificate of Merger")
with the office of the Secretary of State of the State of Idaho, in such
form as required by, and executed in accordance with, the relevant
provisions of the Idaho Law. Subject to, and in accordance with, the Idaho
Law, the Merger will become effective at the date and time the Certificate
of Merger is filed with the office of the Secretary of State of the State
of Idaho or such later time or date as may be specified in the Certificate
of Merger (the "Effective Time"). Each of the parties shall use its best
efforts to cause the Merger to be consummated as soon as practicable
following the fulfillment or waiver of the conditions specified in Article
VII hereof.
Section 1.3. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the Idaho
Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, except as otherwise provided herein, all
the property, rights, privileges, powers and franchises of Target shall
vest in the Surviving Corporation, and all debts, liabilities and duties of
Target shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.4. Articles of Incorporation; Bylaws. (a) At the Effective
Time, the Articles of Incorporation of Acquiror, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
Articles of Incorporation.
(b) The Bylaws of Acquiror, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by law, the Articles of Incorporation of the
Surviving Corporation and such Bylaws.
Section 1.5. Directors and Officers. The directors of Acquiror
immediately prior to the Effective Time shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the
Articles of Incorporation and Bylaws of the Surviving Corporation, and the
officers of Acquiror immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
Section 1.6. Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Acquiror, the following
shall occur:
(a) each share of common stock of Target (the "Target Common Stock") held
in the treasury of Target and each such share of Target Common Stock owned
by Acquiror, Parent or any direct or indirect wholly-owned subsidiary of
Parent or of Target immediately prior to the Effective Time shall be
cancelled and extinguished without any conversion thereof and no payment
shall be made with respect thereto;
(b) each share of Target Common Stock which is outstanding immediately
prior to the Effective Time, other than those shares of Target Common Stock
cancelled as set forth in subsection (a) hereof, shall be converted into
the right to receive 900 shares of the $.0001 par value per share common
stock of Parent (the "Parent Common Stock"), a total of 90,000 shares of
Parent Common Stock; and
(c) the common stock, no par value per share, of Acquiror issued and
outstanding immediately prior to the Effective Time shall remain validly
issued, fully paid and non-assessable common stock of the Surviving
Corporation.
Section 1.7. Surrender of and Exchange of Target Common Stock. (a) As
soon as practicable after the Effective Time, the stock certificates
representing Target Common Stock issued and outstanding at the Effective
Time shall be surrendered for exchange to the Surviving Corporation. Until
so surrendered for exchange, each such stock certificate nominally
representing Target Common Stock shall be deemed for all purposes (except
for payment of dividends thereon or redemption thereof) to evidence the
ownership of the number of shares of Parent Common Stock that the holder
would be entitled to receive upon surrender thereof to the Surviving
Corporation.
(b) No redemption with respect to Parent Common Stock shall be made with
respect to any unsurrendered certificates representing shares of Target
Common Stock with respect to which the shares of Parent Common Stock are to
have been issued in the Merger, until such certificates shall be
surrendered as provided herein.
(c) All rights to receive the Merger Consideration into which shares of
Target Common Stock shall have been converted pursuant to this Article I
shall be deemed to have been paid or issued, as the case may be, in full
satisfaction of all rights pertaining to such shares of Target Common Stock.
1.8. Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place (a) at the offices of
Target at 3:00 p.m., local time, on the earlier of (i) November 30, 1999,
and (ii) the third business day immediately following the date on which the
last of the conditions set forth in Article VII is fulfilled or waived, or
(b) at such other time and place and on such other date as Parent and
Target shall agree (the "Closing Date").
ARTICLE II. FURTHER AGREEMENTS
Section 2.1. Non-Competition Agreement - Xxxxx. Prior to or at the
Closing, Parent and Xxxxx shall execute a non-competition agreement (the
"Xxxxx Agreement Not to Compete") substantially in the form attached hereto
as Exhibit "B".
Section 2.2. Confidentiality Agreement - Xxxxx. Prior to or at the
Closing, Parent and Xxxxx shall execute a confidentiality agreement (the
"Xxxxx Confidentiality Agreement") substantially in the form attached
hereto as Exhibit "C".
Section 2.3. Continuity of Interest Agreement. Prior to or at the
Closing, Parent, Acquiror and Xxxxx shall execute a continuity of interest
agreement (the "Continuity of Interest Agreement") substantially in the
form attached hereto as Exhibit "D".
Section 2.4. Registration Rights Letter Agreements. Prior to or at the
Closing, Parent shall deliver to the holders of shares of Parent Common
Stock received hereunder a registration rights letter agreement (the
"Registration Agreement") substantially in the form attached hereto as
Exhibit "E".
Section 2.5. Access to Information; Confidentiality. (a) From the date
hereof to the Effective Time, each of Parent, Acquiror and Target shall,
and shall cause their respective subsidiaries, affiliates, officers,
directors, employees, auditors and agents to, afford the officers,
employees and agents of one another complete access at all reasonable times
to one another's officers, employees, agents, properties, offices, plants
and other facilities and to all books and records, and shall furnish one
another with all financial, operating and other data and information as
each, through its officers, employees or agents, may reasonably request;
provided, however, that no party shall be required to provide access or
furnish information which it is prohibited by law or contract to provide or
furnish.
(b) Each of Parent, Acquiror and Target shall, and shall cause their
respective affiliates and their respective officers, directors, employees
and agents, to hold in strict confidence all data and information obtained
by them from one another or their respective subsidiaries, affiliates,
directors, officers, employees and agents (unless such information is or
becomes readily ascertainable from public or published information or trade
sources or public disclosure or such information is required by law) and
shall insure that such officers, directors, employees and agents do not
disclose such information to others without the prior written consent of
Parent, Acquiror or Target, as the case may be.
(c) In the event of the termination of this Agreement, Parent, Acquiror
and Target shall, and shall cause their respective affiliates, officers,
directors, employees and agents to, (i) return promptly every document
furnished to them by one another or any of their respective subsidiaries,
affiliates, officers, directors, employees and agents in connection with
the transactions contemplated hereby and any copies thereof, and (ii) shall
cause others to whom such documents may have been furnished promptly to
return such documents and any copies thereof any of them may have made.
(d) No investigation pursuant to this Section II shall affect any
representations or warranties of the parties herein or the conditions to
the obligations of the parties hereto.
Section 2.6. Notification of Certain Matters. Target shall give prompt
notice to Parent, and Parent shall give prompt notice to Target, of (a) the
occurrence or non-occurrence of any event, the occurrence or non-occurrence
of which would be likely to cause any representation or warranty contained
in this Agreement to be untrue or inaccurate, and (b) any failure of
Target, Parent or Acquiror, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to
this Article II shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 2.7. Further Action. Upon the terms and subject to the
conditions hereof, each of the parties hereto shall use its best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement.
Section 2.8. Public Announcements. Parent shall have the exclusive right
to issue a press release or otherwise make any public statements with
respect to the Merger.
Section 2.9. Registration Rights. The holders of Parent Common Stock
received hereunder shall have the registration rights with respect to their
respective shares of Parent Common Stock as are set forth in the
Registration Agreement.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUIROR
Parent and Acquiror hereby, jointly and severally, represent and warrant
to Target that, except as set forth in the Disclosure Schedule delivered
prior to the date which is three days prior to the Closing Date by Parent
and Acquiror to Target (the "Parent Disclosure Schedule"):
Section 3.1. Organization and Qualification; Subsidiaries. Each of
Parent and Acquiror and each of Parent's other subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite
corporate power and authority and is in possession of all franchises,
grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders to own, operate or lease the properties
that it purports to own, operate or lease and to carry on its business as
it is now being conducted, and is duly qualified as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned, operated or leased or the nature of its
activities makes such qualification necessary, except for such failures
which, when taken together with all other such failures, would not have a
Material Adverse Effect. Neither Parent nor any subsidiary has received
any notice of proceedings relating to revocation or modification of any
such franchises, grants, authorizations, licenses, permits, easements,
consents, certificates, approvals or orders. The term "Material Adverse
Effect", as used herein, means any change in or effect on the business of
Parent or any of its Acquirors or other subsiaries that is or is reasonably
likely to be materially adverse to the business operations, properties
(including intangible properties), prospects, condition (financial or
otherwise), assets or subsidiaries, taken as a whole. Parent has four
wholly-owned subsidiaries: (a) USURF America (Alabama), Inc., an Alabama
corporation; (b) Santa Fe Wireless Internet, Inc., a New Mexico
corporation; (c) USURF America (Utah), Inc., a Utah corporation; and (d)
CyberHighway, Inc., an Idaho corporation.
Section 3.2. Articles of Incorporation and Bylaws. Parent shall, as part
of the Parent Disclosure Schedule, furnish to Target a complete and correct
copy of the Articles of Incorporation and the Bylaws, each as amended to
date, of Parent and Acquiror. Such Articles of Incorporation and Bylaws
are in full force and effect.
Section 3.3. Capitalization. The authorized capital stock of Parent
consists of 100,000,000 shares of Parent Common Stock, $.0001 par value per
share. As of the date hereof, (a) 12,303,177 shares of Parent Common Stock
are issued and outstanding, all of which are validly issued, fully paid and
non-assessable, and (b) no shares of Parent Common Stock are held in the
treasury of Parent or by subsidiaries of Parent. Approximately 2,400,000
shares of Parent Common Stock are reserved for future issuance under
certain contracts, all as described in the Parent Disclosure Schedule.
Each of the outstanding shares of capital stock of each of Parent's
subsidiaries is duly authorized, validly issued, fully paid and
non-assessable and such shares owned by Parent are owned free and clear of
all security interests, liens, claims, pledges, agreements, limitations on
Parent's voting rights, charges or other encumbrances of any nature
whatsoever.
Section 3.4. Authority Relative to this Agreement. Each of Parent and
Acquiror has all necessary corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement by Parent and Acquiror and the consummation by
Parent and Acquiror of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and
Acquiror other than filing and recordation of appropriate merger documents
as required by the Idaho Law. This Agreement has been duly executed and
delivered by Parent and Acquiror and, assuming the due authorization,
execution and delivery by Target, constitutes a legal, valid and binding
obligation of each such corporation.
Section 3.5. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and Acquiror do not, and
the performance of this Agreement by Parent and Acquiror shall not, (i)
conflict with or violate either the Articles of Incorporation or Bylaws of
Parent or the Articles of Incorporation or Bylaws of Acquiror, (ii)
conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Parent or Acquiror or by which either of them or their
respective properties is bound or affected, or (iii) result in any breach
of or constitute a default (or an event which with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the property or assets of
Parent or Acquiror pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument
or obligation to which Parent or Acquiror is a party or by which Parent or
Acquiror or any of their respective properties is bound or affected, except
for any such breaches, defaults or other occurrences which would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and Acquiror
does not, and the performance of this Agreement by Parent and Acquiror
shall not, require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except for applicable requirements of the Securities
Act of 1933, as amended (the "Securities Act"), the Securities Exchange Act
of 1934 (the "Exchange Act") and State securities laws ("Blue Sky Laws").
Section 3.6. Compliance. Neither Parent nor any of its subsidiaries is
in conflict with, or in default or violation of, (a) its Articles of
Incorporation or Bylaws or equivalent organizational documents, (b) any
law, rule, regulation, order, judgment or decree applicable to Parent or
any of its subsidiaries or by which its or any of their respective
properties is bound or affected, including, without limitation, health and
safety, environmental, civil rights laws and regulations and zoning
ordinances and building codes, or (c) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, easement, consent,
order or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries or
its or any of their respective properties is bound or affected, except for
any such conflicts, defaults or violations which would not, individually or
in the aggregate, have a Material Adverse Effect.
Section 3.7. SEC Filings; Financial Statements. (a) Parent has filed
all forms, reports and documents required to be filed with the SEC and has
heretofore delivered to Target, in the form filed with the SEC, (i) its
Annual Report on Form 10KSB for the year ended December 31, 1998; (ii) its
Quarterly Report on Form 10-QSB for the period ended June 30, 1999, (iii)
all other reports or registration statements filed by Parent with the SEC
since June 30, 1999, and (iv) all amendments and supplements to all such
reports and registration statements filed by Parent with the SEC since June
30, 1999 (collectively, the "Parent SEC Reports"). The Parent SEC Reports
(x) were, and will be, prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (y) did not,
and will not, at the time they were, or will be, filed, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(b) Each consolidated financial statement (including, in each case, any
related notes thereto) contained in the Parent SEC Reports has been, and
will be, prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto) and each fairly presents,
and will present, the financial position of Parent and its subsidiaries as
at the respective dates thereof and the results of its operations and
changes in financial position for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be
material in amount.
(c) Except as and to the extent set forth on the consolidated balance
sheet of Parent and its subsidiaries as at June 30, 1999, including the
notes thereto (the "1999 Balance Sheet"), neither Parent nor any of its
subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which would be required to be
reflected on a balance sheet, or in the notes thereto, prepared in
accordance with generally accepted accounting principles, except for
liabilities or obligations incurred in the ordinary course of business
since June 30, 1999, which would not, individually or in the aggregate,
have a Material Adverse Effect.
(d) Parent has heretofore furnished to Target a complete and correct copy
of any amendments or modifications, which have not yet been filed with the
SEC, to agreements, documents or other instruments which previously had
been filed by Parent with the SEC pursuant to the Securities Act or the
Exchange Act.
Section 3.8. Absence of Litigation. Except as disclosed in the Parent
Disclosure Schedule, there are no claims, actions, proceedings or
investigations pending or, to the best knowledge of Parent, threatened
against Parent or any of its subsidiaries, or any properties or rights of
Parent or any of its subsidiaries, before any court, arbitrator, or
administrative, governmental or regulatory authority or body, domestic or
foreign, that, individually or in the aggregate, would have a Material
Adverse Effect. As of the date hereof, neither Parent nor any of its
subsidiaries nor any of their properties is subject to any order, writ,
judgment, injunction, decree, determination or award having a Material
Adverse Effect.
Section 3.9. Absence of Certain Changes or Events. Since June 30, 1999,
except as contemplated or permitted by this Agreement or disclosed in
Parent SEC Reports filed since that date and through the date hereof,
Parent and its subsidiaries have conducted their businesses only in the
ordinary course and in a manner consistent with past practice and, since
such date, there has not been (a) any change in the financial condition,
results of operations, business or prospects of Parent or any of its
subsidiaries having a Material Adverse Effect, (b) any damage, destruction
or loss (whether or not covered by insurance) with respect to any assets of
Parent or any of its subsidiaries having a Material Adverse Effect, (c) any
material change by Parent in its accounting methods, principles or
practices, (d) any revaluation by Parent of any of its assets, including,
without limitation, writing down the value of inventory or any notes,
accounts receivable or other investments which would, individually or in
the aggregate, exceed five percent of the total assets of Parent and its
subsidiaries as reflected on the consolidated balance sheets in Parent's
Annual Report on Form 10-KSB for the period ended December 31, 1998, and
Quarterly Report on Form 10-QSB for the period ended June 30, 1999; (e) any
declaration, setting aside or payment of any dividends or distributions in
respect of shares of Parent Common Stock or any redemption, purchase or
other acquisition of any of its securities; (f) any change in the Federal
Communications Commission rules, regulations and orders affecting the
business of Parent or any of its subsidiaries which shall have a Material
Adverse Effect; or (g) any change in the status of any litigation, claims,
actions, proceedings or investigations pending or, to the best knowledge of
Parent, threatened against Parent or any of its subsidiaries, which, as a
result of such change, will have a Material Adverse Effect.
Section 3.10. Environmental Matters. To the best of Parent's knowledge,
there are no environmental liabilities (whether accrued, absolute,
contingent or otherwise) of Parent or any subsidiary.
Section 3.11. Labor Matters. Except as set forth in the Parent
Disclosure Schedule, (a) there are no controversies pending or, to the
knowledge of Parent or any of its subsidiaries, threatened, between Parent
or any of its subsidiaries and any of their respective employees, which
controversies have a Material Adverse Effect; (b) neither Parent nor any of
its subsidiaries is a party to any collective bargaining agreement or other
labor union contract applicable to persons employed by Parent or its
subsidiaries nor does Parent or any of its subsidiaries know of any
activities or proceedings of any labor union to organize any such
employees; (c) neither Parent nor any of its subsidiaries has breached or
otherwise failed to comply with any provision of any such agreement or
contract and there are no grievances outstanding against any such parties
under any such agreement or contract; (d) there are no unfair labor
practice complaints pending against Parent or any of its subsidiaries
before the National Labor Relations Board or any current union
representation questions involving employees of Parent or any of its
subsidiaries; and (e) neither Parent nor any of its subsidiaries has any
knowledge of any strikes, slowdowns, work stoppages, lockouts, or threats
thereof, by or with respect to any employees of Parent or any of its
subsidiaries.
Section 3.12. Contracts. Except as described in the Parent Disclosure
Schedule, all material contracts and arrangements to which Parent or any
subsidiary is a party, or by which it is bound, are in full force and
effect and there has been no notice of termination or threatened
termination with respect to any such contracts and arrangements, whether or
not termination is permitted by the terms thereof, and no event has
occurred which, with the giving of notice or the lapse of time, or both,
would constitute a breach or default under any such contract or
arrangement, except for such breaches, defaults and events as to which
requisite waivers or consents have been obtained.
Section 3.13. Title to Properties. Parent has, and at the Effective Time
will have, good and marketable title to the equipment and other property
shown as assets on its records and books of account as of June 30, 1999,
free and clear of all liens, encumbrances and charges, except as reflected
in the such records and books of account and in the 1999 Balance Sheet.
Section 3.14. Patents. To the best knowledge of Parent, Parent or its
subsidiaries own or possess adequate licenses or other valid rights to use
all patents, patent rights, inventions, designs, processes, formulae and
other proprietary information used or held for use in connection with the
business of Parent or any of its subsidiaries as currently being, or
proposed to be, conducted and is unaware of any assertions or claims
challenging the validity of any of the foregoing which would have a
Material Adverse Effect. The conduct of the business of Parent and its
subsidiaries as now conducted or proposed to be conducted does not and will
not conflict with any patents, patent rights, licenses, trademarks,
trademark rights, trade names, trade name rights or copyrights of others in
any way which would have a Material Adverse Effect. No material
infringement of any proprietary right owned by or licensed by or to Parent
or any of its subsidiaries is known to Parent which would have a Material
Adverse Effect.
Section 3.15. Taxes. Parent and its subsidiaries have filed all federal
and state tax returns and reports and, to the best of Parent's knowledge,
all state, local and foreign tax returns and reports required to be filed
by them and have paid and discharged all taxes, including sales and use
tax, shown as due thereon and have paid all applicable state and local ad
valorem taxes as are due, except such as are being contested in good faith
by appropriate proceedings and except for such filings, payments or other
occurrences which would not have a Material Adverse Effect. Neither the
IRS nor any other taxing authority or agency is now asserting or, to the
best of Parent's knowledge, threatening to assert against parent or any of
its subsidiaries any deficiency or claim for additional taxes or interest
thereon or penalties in connection therewith. Neither Parent nor any of
its subsidiaries has granted any waiver of any statute of limitations with
respect to, or any extension of a period for the assessment of, any
federal, state, county, municipal or foreign income tax.
Section 3.16. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of Parent or Acquiror.
Section 3.17. Full Disclosure. No statement contained in any document,
certificate or other writing furnished or to be furnished by Parent or
Acquiror to Target pursuant to the provisions of this Agreement contains or
shall contain any untrue statement of a material fact or omits or shall
omit to state any material fact necessary, in light of the circumstances
under which it was or may be made, in order to make the statements herein
or therein not misleading.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF TARGET
Target and Xxxxx, and each of them, hereby, jointly and severally,
represent and warrant to Parent and Acquiror that, except as set forth in
the Disclosure Schedule delivered prior to the date which is three days
prior to the Closing Date by Target to Parent (the "Target Disclosure
Schedule"):
Section 4.1. Organization and Qualification; Subsidiaries. Target is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Idaho and has the requisite corporate power and
authority and is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
to own, operate or lease the properties that it purports to own, operate or
lease and to carry on its business as it is now being conducted, and is
duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
operated or leased or the nature of its activities makes such qualification
necessary, except for such failures which, when taken together with all
other such failures, would not have a Material Adverse Effect. Target has
not received any notice of proceedings relating to the revocation or
modification of any such franchises, grants, authorizations, licenses,
permits, easements, consents, certificates, approvals or orders. The term
"Material Adverse Effect" as used in this Article IV, means any change in
or effect on the business of Target that is or is reasonably likely to be
materially adverse to the business, operations, properties (including
intangible properties), prospects, condition (financial or otherwise),
assets or liabilities of Target taken as a whole. Target has no subsidiaries.
Section 4.2. Articles of Incorporation and Bylaws. Target shall, as part
of the Target Disclosure Schedule, furnish to Parent a complete and correct
copy of the Articles of Incorporation and the Bylaws, each as amended to
date, of Target. Such Articles of Incorporation and Bylaws are in full
force and effect.
Section 4.3. Capitalization. The authorized capital stock of Target
consists of 100 shares of Target Common Stock, with no par value. As of
the date hereof, (a) 100 shares of Target Common Stock are issued and
outstanding, all of which are validly issued, fully paid and
non-assessable, and (b) no shares of Target Common Stock are held in the
treasury of Target or by any subsidiary of Target. Except as set forth in
the Target Disclosure Schedule, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character relating
to the issued or unissued capital stock of Target or obligating Target to
issue or sell any shares of capital stock of, or other equity interests in,
Target. All shares of Target Common Stock subject to issuance shall be
duly authorized, validly issued, fully paid and non-assessable. There are
no outstanding contractual obligations of Target to repurchase, redeem or
otherwise acquire any shares of Target Common Stock.
Section 4.4. Authority Relative to this Agreement. Target has all
necessary corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement by Target and the consummation by Target of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Target subject to the approval of the Merger and
adoption of this Agreement by its shareholders in accordance with the Idaho
Law. This Agreement has been duly executed and delivered by Target and,
assuming the due authorization, execution and delivery by Parent and
Acquiror, constitutes a legal, valid and binding obligation of Target.
Section 4.5. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Target does not, and the
performance of this Agreement by Target shall not, (i) conflict with or
violate the Articles of Incorporation or Bylaws of Target, (ii) conflict
with or violate any law, rule, regulation, order, judgment or decree
applicable to Target or by which its properties are bound or affected, or
(iii) result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any
of the properties or assets of Target pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Target is a party or by which
Target or its properties are bound or affected, except for such breaches,
defaults or other occurrences which would not, individually or in the
aggregate have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by Target does not, and
the performance of this Agreement shall not, require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign.
Section 4.6. Compliance. Target is not in conflict with, or in default
or violation of, (a) its Articles of Incorporation or Bylaws or equivalent
organizational documents, (b) any law, rule, regulation, order, judgment or
decree applicable to Target or by which its properties are bound or
affected, including, without limitation, health and safety, environmental
and civil rights laws and regulations and zoning ordinances and building
codes, or (c) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise, easement, consent, order or other
instrument or obligation to which Target is a party or by which Target or
its properties are bound or affected, except for any such conflicts,
defaults or violations which would not, individually or in the aggregate,
have a Material Adverse Effect.
Section 4.7. Financial Statements. Target has delivered to Parent and
Acquiror copies of the its unaudited financial statements for the years
ended December 31, 1998, 1997 and 1996, and a statement of operations and
balance sheet as at September 30, 1999. All of such statements are true
and complete and have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods
indicated, except as indicated in the notes thereto. Each of such balance
sheets presents a true and complete statement, as of its date, of the
financial condition and assets and liabilities of Target. Except to the
extent reflected or reserved against therein (including the notes thereto),
Target did not have, as of the date thereof, any liabilities or obligations
(whether accrued, absolute, contingent or otherwise) of a nature
customarily reflected in a corporate balance sheet or notes thereto,
prepared in accordance with generally accepted accounting principles. Each
of such statements of operations presents a true and complete statement of
the results of operations of Target.
Section 4.8. Bank Account Statements. Target has delivered to Parent and
Acquiror copies of its bank account statements, for each of its bank
accounts, for the months of January, February, March, April, May, June,
July, August and September 1999. All of such statements are true and
complete and reflect all revenues received and all expenses incurred by
Target in its business; except as disclosed in the Target Disclosure
Schedule, no such statement reflects revenues or expenses from any other
source.
Section 4.9. Absence of Certain Changes or Events. Since September 30,
1999, except as contemplated by this Agreement or disclosed in the Target
Disclosure Schedule, Target has conducted its business only in the ordinary
course and in a manner consistent with past practice and, since such date,
there has not been (a) any change in the financial condition, results of
operations, business or prospects of Target having a Material Adverse
Effect, (b) any damage, destruction or loss (whether or not covered by
insurance) with respect to any assets of Target having a Material Adverse
Effect, (c) any material change by Target in its accounting methods,
principles or practices, (d) any revaluation by Target of any of its
assets, including, without limitation, writing down the value of inventory
or any notes, accounts receivable or other investments which would,
individually or in the aggregate, exceed five percent of the total assets
of Target as reflected on the financial statements for the period ended
September 30, 1999, or (e) any declaration, setting aside or payment of any
dividends or distributions in respect of shares of Target Common Stock or
any redemption, purchase or other acquisition of any of its securities,
except in the ordinary course of business consistent with past practice.
Section 4.10. Absence of Litigation. Except as disclosed in Target
Disclosure Schedule, there are no claims, actions, proceedings or
investigations pending or, to the best knowledge of Target, threatened
against Target, or any properties or rights of Target, before any court,
arbitrator, or administrative, governmental or regulatory authority or
body, that, individually or in the aggregate, would have a Material Adverse
Effect. As of the date hereof, neither Target nor its properties is
subject to any order, writ, judgment, injunction, decree, determination or
award having a Material Adverse Effect.
Section 4.11. Labor Matters. Except as set forth in the Target
Disclosure Schedule, (a) there are no controversies pending or, to the
knowledge of Target, threatened, between Target and any of its employees,
which controversies have a Material Adverse Effect; and (b) Target is not a
party to any collective bargaining agreement or other labor union contract.
Section 4.12. Contracts. The Target Disclosure Schedule lists or
describes all contracts, authorizations, approvals or arrangements to which
Target is a party, or by which it is bound, as of the date hereof, and
which (a) obligates or may obligate Target to pay more than $500; or (b)
are financing documents, loan agreements or agreements providing for the
guarantee of the obligations of any party in each case involving an
obligation in excess of $1,000.
Section 4.13. Title to Property and Leases. (a) Each asset owned or
leased by Target is owned or leased free and clear of any mortgages,
pledges, liens, security interests, conditional and installment sale
agreements, encumbrances, charges or other claims of third parties of any
kind.
(b) All leases of real property leased for the use or benefit of Target to
which Target is a party, and all amendments and modifications thereof are
in full force and effect and have not been modified or amended and there
exists no material default under the leases by Target, nor any event which,
with the giving of notice or lapse of time, or both, would constitute a
material default thereunder by Target.
(c) A statement describing all assets and liabilities of Target is
included in the Target Disclosure Schedule.
Section 4.14. Insurance. All material properties and risks of Target are
covered by valid and currently effective insurance policies issued in favor
of Target, in such amounts and against such risks and losses as are
customary in their locales of operation for companies operating similar
businesses and operations, and Target is included as an insured party under
such policies, with full rights as a loss payee. Copies of all such
insurance policies shall be included in the Target Disclosure Schedule.
Section 4.15. Taxes. Target has filed all federal and state tax returns
and reports and, to the best of Target's knowledge, all state, local and
foreign tax returns and reports required to be filed have been filed and
Target has paid and discharged all taxes, including sales and use taxes,
shown as due thereon and has paid all applicable state and local ad valorem
taxes as are due, except such as are being contested in good faith by
appropriate proceedings and except for such filings, payments or other
occurrences which would not have a Material Adverse Effect. Neither the
IRS nor any other taxing authority or agency is now asserting or, to the
best of Target's knowledge, threatening to assert against Target any
deficiency or claim for additional taxes or interest thereon or penalties
in connection therewith. Target has not granted any waiver of any statute
of limitations with respect to, or any extension of a period for the
assessment of, any federal, state, county, municipal or foreign income tax.
Section 4.16. Full Disclosure. No statement contained in any document,
certificate or other writing furnished or to be furnished by Target or
Xxxxx to Parent and Acquiror pursuant to the provisions of this Agreement
contains or shall contain any untrue statement of a material fact or omits
or shall omit to state any material fact necessary, in light of the
circumstances under which it was or may be made, in order to make the
statements herein or therein not misleading.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF XXXXX
Xxxxx hereby represents and warrants to Parent and Acquiror that:
Section 5.1. No Legal Disability. Xxxxx is under no legal disability
with respect to entering into this Agreement.
Section 5.2. Receipt of Disclosure. Xxxxx hereby represents and warrants
that he has received and reviewed all of the information concerning Parent
required to be delivered by Parent hereunder. With respect to such
information, Xxxxx further represents and warrants that he has had an
opportunity to ask questions of, and to receive answers from, the officers
of Parent.
Section 5.3. Representations Relating to Parent Common Stock. Xxxxx
represents and warrants to Parent that the shares of Parent Common Stock he
is acquiring pursuant to this Agreement are being acquired for his own
account and for investment and not with a view to the public resale or
distribution of such shares and further acknowledges that the shares being
issued have not been registered under the Securities Act or any state
securities law and are "restricted securities", as that term is defined in
Rule 144 promulgated by the SEC, and must be held indefinitely, unless they
are subsequently registered or an exemption from such registration is
available.
Section 5.4. Consent to Legend. Xxxxx consents to the placement of a
legend restricting future transfer on the share certificates representing
the Parent Common Stock delivered hereunder, which legend shall be in the
following, or similar, form:
"THE STOCK REPRESENTED BY THIS CERTIFICATE HAS BEEN ISSUED IN RELIANCE
UPON THE EXEMPTION FROM REGISTRATION AFFORDED BY SECTION 4(2) OF THE
SECURITIES ACT OF 1933, AS AMENDED. THE STOCK MAY NOT BE TRANSFERRED
WITHOUT REGISTRATION EXCEPT IN TRANSACTIONS EXEMPT FROM SUCH REGISTRATION."
ARTICLE VI. CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1. Conduct of Business by Target Pending the Merger. Target
covenants and agrees that, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, the
business of Target shall be conducted only in, and Target shall not take
any action except in, the ordinary course of business and in a manner
consistent with past practice; and Target shall use its best efforts to
preserve substantially intact the business organization of Target, to keep
available the services of the present officers, employees and consultants
of Target and to preserve the present relationships of Target with
customers, suppliers and other persons with which Target has significant
business relations. By way of amplification and not limitation, except as
contemplated by this Agreement, Target shall not, directly or indirectly,
do, or propose to do, any of the following without the prior written
consent of Parent, which consent shall not be unreasonably withheld:
(a) amend or otherwise change its Articles of Incorporation or Bylaws or
equivalent organizational documents;
(b) issue, sell, pledge, dispose of, encumber or authorize the issuance,
sale, pledge, disposition or encumbrance of (i) any shares of capital stock
of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest, of Target or (ii) any assets of Target or any other
material assets of Target other than in the ordinary course of business
consistent with past practices;
(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guaranty or endorse or otherwise as an
accommodation become responsible for, the obligations of any person, or
make any loans or advances, except in the ordinary course of business and
consistent with past practice; (iii) authorize any single capital
expenditure which is in excess of $1,000 or capital expenditures which are,
in the aggregate, in excess of $3,000 for Target; or (iv) enter into or
amend any contract, agreement, commitment or arrangement to any of the
effects set forth in this paragraph (e) of Section 6.1;
(f) increase the compensation payable or to become payable to its officers
or employees, except for increases in salary or wages of employees of
Target who are not officers of Target in accordance with past practices, or
grant any severance or termination pay to, or enter into any employment or
severance agreement with, any director or officer of Target, or establish,
adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the benefit
of any directors, officers or employees;
(g) take any action other than in the ordinary course of business and in a
manner consistent with past practice with respect to accounting policies or
procedures (including, without limitation, procedures with respect to the
payments of accounts payable and collection of accounts receivable);
(h) settle or compromise any material federal, state, local or foreign
income tax liability; or
(i) pay, discharge, compromise or consent to any arrangements concerning
or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge, compromise, settlement, arrangement or satisfaction in the
ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements of
Target or incurred in the ordinary course of business and consistent with
past practice.
Section 6.2. Conduct of Business by Parent and Acquiror Pending the
Merger. Parent and Acquiror covenant and agree that, between the date of
this Agreement and the Effective Time, Parent shall not sell or otherwise
dispose of all or substantially all of its assets.
Section 6.3. Approval of Shareholders. Target shall secure the written
consent of all of the shareholders of Target to this Agreement, the Merger
Agreement and the Merger.
Section 6.4. Securities Law Compliance. Parent shall take any action
required to be taken under applicable Federal and/or state securities laws
applicable to (a) the Merger and (b) the issuance of Parent Common Stock
pursuant to the Merger. Parent shall promptly deliver to Target copies of
any filings made by Parent and/or Acquiror pursuant to this Section 6.4.
Section 6.5. Third Party Consents. Each party to this Agreement shall
use its best efforts to obtain, as soon as reasonably practicable, all
permits, authorizations, consents, waivers and approvals from third parties
or governmental authorities necessary to consummate this Agreement and the
Merger Agreement and the transactions contemplated hereby and thereby,
including, without limitation, any permits, authorizations, consents,
waivers and approvals required in connection with the Merger.
ARTICLE VII. CONDITIONS OF MERGER
Section 7.1. Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment of all of the following conditions precedent at
or prior to the Effective Time:
(a) Shareholder Approval. This Agreement shall have been approved and
adopted by the shareholder of Target.
(b) No Order. No United States or state governmental authority or other
agency or commission or United States or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and has the effect
of making the conversion of Target Common Stock into the Merger
Consideration illegal or otherwise prohibiting consummation of the
transactions contemplated by this Agreement.
(c) No Challenge. There shall not be pending or threatened any action,
proceeding or investigation before any court or administrative agency by
any government agency or any other person challenging, or seeking material
damages in connection with the conversion of Target Common Stock into the
Merger Consideration pursuant to the Merger or otherwise materially
adversely affecting the business, assets, prospects, financial condition or
results of operations of Target, Acquiror, Parent or any of their
respective subsidiaries or affiliates.
(d) Tax Opinions. Target and Xxxxx shall receive an opinion of Xxxxxxx
Xxxxxxx, Esquire, to the effect that under the provisions of United States
federal income tax laws, rules and regulations, provided that the Merger
qualifies as a statutory merger under the applicable laws of the State of
Idaho, it will be a reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(D) of the Code and that, with respect to the
Parent Common Stock to be issued to the shareholders in the Merger, the
exchange provided for in Section 1.7 will not result in current income to
Target or Xxxxx.
Section 7.2. Additional Conditions to Obligations of Parent and Acquiror.
The obligations of Parent and Acquiror to effect the Merger are also
subject to the fulfillment of all of the following conditions precedent at
or prior to the Effective Time:
(a) Customers of Target. The actual number of (i) dial-up customers of
Target who shall be current in their accounts as of the last billing date
30 days prior to the Closing Date shall equal or exceed 725 customers; and
(ii) wireless-access customers of Target who shall be current in their
accounts as of the last billing date immediately preceding the Closing Date
shall equal or exceed 5 customers. For purposes of this Section 7.2(a),
"customers" shall mean actually subscribed and paying customers and shall
exclude customers obtained through free promotions, free bases or any other
manner not requiring payment for services.
(b) Representations and Warranties. The representations and warranties of
Target and Xxxxx contained in this Agreement shall be true and correct in
all material respects on and as of the Effective Time, except for changes
contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date), with the same force and effect as
if made on and as of the Effective Time, and Parent and Acquiror shall have
received a Certificate of the President of Target which is to that effect,
which certificate shall be in the form attached hereto as Exhibit "F".
(c) Agreements and Covenants. Target and Xxxxx shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or
prior to the Effective Time, and Parent and Acquiror shall have received a
Certificate of the President of Target to that effect, which certificate
shall be in the form attached hereto as Exhibit "F".
(d) Consents Obtained. All consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be made, by
Target for the authorization, execution and delivery of this Agreement and
the consummation by it of the transactions contemplated hereby shall have
been obtained and made by Target.
(e) Non-Competition Agreement - Xxxxx. Parent and Xxxxx shall have
executed the Xxxxx Agreement Not to Compete.
(f) Confidentiality Agreement - Xxxxx. Parent and Xxxxx shall have
executed the Xxxxx Confidentiality Agreement.
(g) Continuity of Interest Agreement. Parent, Acquiror and Xxxxx shall
have executed the Continuity of Interest Agreement.
(h) Registration Agreements. Parent shall have delivered a Registration
Agreement to each of the persons receiving shares of Parent Common Stock
hereunder.
(i) Opinion of Counsel. Parent and Acquiror shall have received, from
counsel for Target, an opinion substantially in the form attached hereto as
Exhibit "G", dated as of the Closing Date.
(l) No Material Adverse Change. There shall have been no material adverse
change in the condition, financial or otherwise, of Target.
Section 7.3. Additional Conditions to Obligation of Target. The
obligation of Target to effect the Merger is also subject to fulfillment of
all of the following conditions precedent, at or prior to the Effective Time:
(a) Representations and Warranties. The representations and warranties of
Parent and Acquiror contained in the Agreement shall be true and correct in
all material respects on and as of the Effective Time, except for changes
contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date), with the same force and effect as
if made on and as of the Effective Time, and Target shall have received a
Certificate of the President of Parent which is to that effect, which
certificate shall be in the form attached hereto as Exhibit "H".
(b) Agreements and Covenants. Parent and Acquiror shall have performed or
complied in all material respects with all agreements and convenants
required by this Agreement to be performed or complied with by them on or
prior to the Effective Time, and Target shall have received a Certificate
of the President of Parent which is to that effect, which certificate shall
be in the form attached hereto as Exhibit "H".
(c) Consents Obtained. All consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be made, by
Parent and Acquiror for the authorization, execution and delivery of this
Agreement and the consummation by them of the transactions contemplated
hereby shall have been obtained and made by Parent and Acquiror.
(d) Non-Competition Agreement - Xxxxx. Parent and Xxxxx shall have
executed the Xxxxx Agreement Not to Compete.
(e) Confidentiality Agreement - Xxxxx. Parent and Xxxxx shall have
executed the Xxxxx Confidentiality Agreement.
(f) Continuity of Interest Agreement. Parent, Acquiror and Xxxxx shall
have executed the Continuity of Interest Agreement.
(g) Registration Agreements. Parent shall have delivered a Registration
Agreement to each of the persons receiving shares of Parent Common Stock
hereunder.
(h) Opinion of Counsel. Target shall have received from Xxxxxx & Xxxxxx,
counsel for Parent and Acquiror, an opinion in substantially the form
attached hereto as Exhibit "I", dated as of the Closing Date.
(i) No Material Adverse Change. There shall have been no material adverse
change in the condition, financial or otherwise, of Parent.
ARTICLE VIII. INDEMNIFICATION
Section 8.1. General Indemnification Covenants. Xxxxx shall indemnify,
save and keep Parent and its affiliates, agents, attorneys, successors and
permitted assigns (including the Surviving Corporation) (the "Parent
Indemnitees"), harmless against and from all liability, demands, claims,
actions or causes of action, assessments, losses, fines, penalties, costs,
damages and expenses, including reasonable attorneys' fees, disbursements
and expenses (collectively, the "Damages"), sustained or incurred by any of
the Parent Indemnitees as a result of, arising out of or by virtue of any
misrepresentation, breach of any warranty or representation or
non-fulfillment of any agreement or covenant on the part of Target or
Xxxxx, whether contained in this Agreement or the Merger Agreement or any
exhibit or schedule hereto or thereto or any written statement or
certificate furnished or to be furnished to Parent or Acquiror pursuant
hereto or in any closing document delivered by Target or Xxxxx to Parent or
Acquiror in connection herewith.
Section 8.2. Tax Indemnity. (a) Xxxxx hereby agrees to pay, indemnify,
defend and hold Parent and Acquiror harmless from and against any and all
taxes of Target with respect to any period (or any portion thereof) up to
and including the Effective Time, except for taxes of Target which are
reflected as current liabilities for taxes that exist as of the Effective
Time ("Current Tax Liabilities") on the financial statements delivered to
Parent and Acquiror hereunder, together with all reasonable legal fees,
disbursements and expenses incurred by Parent and Acquiror in connection
therewith.
(b) Xxxxx shall prepare and file, or cause to be prepared and filed, any
tax return of Target required to be filed after the Effective Time and
which relates to any period or portion thereof up to and including the
Effective Time.
(c) The indemnity provided for in this Section 8.2 shall be independent of
any other indemnity provision hereof and, anything in this Agreement to the
contrary notwithstanding, shall survive until the expiration of the
applicable statutes of limitation for the taxes referred to herein, and any
taxes subject to the indemnification for taxes set forth in this Section
8.2 shall not be subject to the provisions of Sections 9.1 or 9.4 hereof.
Notwithstanding anything in this Agreement to the contrary, Xxxxx will not
be obligated to indemnify Parent and Acquiror under any provision of this
Agreement, with respect to taxes or other liabilities that arise as a
direct result of a failure of the Merger to qualify as a reorganization
within the meaning of Section 368(a)(1)(A) and 368(a)(2)(D) of the Code,
provided that Xxxxx is not in breach of any of his representations,
covenants or agreements contained in the Continuity of Interest Agreement.
Section 8.3. Release by Xxxxx. Xxxxx hereby releases and discharges
Parent and Acquiror and each of its officers, directors, agents and
attorneys from, and agree and covenant that, in no event, xxxx Xxxxx
commence any litigation or other legal or administrative proceeding against
Parent, Acquiror or any of their officers, directors, agents or attorneys,
whether in law or equity, relating to any and all claims and demands, known
and unknown, suspected and unsuspected, disclosed and undisclosed, for
damages, actual or consequential, past, present and future, arising out of
or in any way connected with his ownership of Target Common Stock prior to
the Effective Time, other than claims or demands arising out of the
transactions contemplated by this Agreement and the Merger Agreement.
ARTICLE IX. TERMINATION, AMENDMENT AND WAIVER
Section 9.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
shareholders of Target:
(a) By mutual consent of the Boards of Directors of Parent and Target.
(b) By either Parent or Target, if (i) the Merger shall not have been
consummated by November 30, 1999 (the "Termination Date"); (ii) the
requisite consent of the shareholders of Target to approve this Agreement,
the Merger Agreement and the transactions contemplated hereby and thereby
shall not be obtained; (iii) any governmental or regulatory body, the
consent of which is a condition to the obligations of Parent, Acquiror and
Target to consummate the transactions contemplated hereby or by the Merger
Agreement, shall have been unsuccessful, or (iv) any court of competent
jurisdiction in the United States or any state shall have issued an order,
judgment or decree (other than a temporary restraining order) restraining,
enjoining or otherwise prohibiting the Merger and such order, judgment or
decree shall have become final and non-appealable; provided, however, that
the right to terminate this Agreement under this Section 9.1(b) shall not
be available to any party whose willful failure to fulfill any material
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date.
Section 9.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith become
void and there shall be no liability on the part of either Parent, Acquiror
or Target or their respective officers or directors, except that nothing in
this Section 9.2 shall relieve any party from liability for any breach of
this Agreement.
Section 9.3. Expenses. Unless otherwise provided herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby shall be paid by the party incurring such
expenses, whether or not the Merger is consummated.
Section 9.4. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time. This Agreement may not
be amended except by an instrument in writing signed by each of the parties
hereto.
Section 9.5. Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (c) waive compliance with any of
the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
ARTICLE X. GENERAL PROVISIONS
Section 10.1. Survival of Representations, Warranties and Agreements.
The representations, warranties and agreements in this Agreement shall
survive the Merger indefinitely.
Section 10.2. Publicity. There shall be no public announcements with
respect to the Merger made by Target. The right to publicize the execution
of this Agreement and the Merger Agreement, as well as the consummation of
the Merger, shall be that of Parent.
Section 10.3. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date delivered or mailed if delivered
personally or mailed by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice, except
that notices of changes of address shall be effective upon receipt):
(a) If to Parent or Acquiror:
USURF America, Inc.
0000 Xxxxxxxx Xxxx Xxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
with copies to:
Xxxxxx & Xxxxxx, Attorneys at Law
000 Xxxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx 00000
(b) if to Target or Xxxxx:
Diggs X. Xxxxx, Xx.
The Spinning Wheel, Inc.
X.X. Xxx 0000
Xxxxxx, Xxxxxxx 00000
with copies to:
Xxxxxxx Xxxxxxx, Esquire
0000 Xxxx 00xx Xxxxxx
Xxxxx 000
Xxxxx Xxxxx, Xxxxx 00000
Section 10.4. Non-Waiver. The failure in any one or more instances of a
party to insist upon performance of any of the terms, covenants or
conditions of this Agreement, to exercise any right or privilege conferred
in this Agreement, or the waiver by said party of any breach of any of the
terms, covenants or conditions of this Agreement, shall not be construed as
a subsequent waiver of any such terms, covenants, conditions, rights or
privileges, but the same shall continue and remain in full force and effect
as if no such forbearance or waiver had occurred. No waiver shall be
effective unless it is in writing and signed by an authorized
representative of the waiving party.
Section 10.5. Arbitration. Any dispute arising under this Agreement
and/or the Merger Agreement, as well as any of the transactions
contemplated hereby and thereby, shall be resolved by arbitration in
Dallas, Texas, under the Rules of the American Arbitration Association, as
then in effect. The determination and award of the arbitrator, which aware
may include punitive damages, shall be final and binding on the parties and
may be entered as a judgment in any court of competent jurisdiction. It is
expressly agreed that the arbitrators, as part of their award, can award
attorneys' fees to the prevailing party.
Section 10.6. Binding Effect; Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their successors and
permitted assigns. Nothing in this Agreement, express or implied, is
intended to confer on any person other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, including,
without limitation, third party beneficiary rights.
Section 10.7. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
Section 10.8. Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings, both oral
and written, among the parties, or any of them, with respect to the subject
matter hereof and, except as otherwise expressly provided herein, are not
intended to confer upon any other person any rights or remedies hereunder.
Section 10.9. Assignability. This Agreement shall not be assignable by
either party or by operation of law, except with the express written
consent of each other party.
Section 10.10. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Nevada applicable to
contracts executed in and to be performed in such State.
Section 10.11. Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section10.12. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Parent, Acquiror and Target, by their respective
officers thereunto duly authorized, and Xxxxx have caused this Agreement to
be executed as of the date first written above.
USURF AMERICA, INC.
ATTEST:
By: /s/ Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx President
Secretary
CYBERHIGHWAY, INC.
ATTEST:
By: /s/ Xxxxxxx Xxxxx
/s/ Xxxxxxx Xxxxx
Secretary President
THE SPINNING WHEEL, INC.
ATTEST: d/b/a CyberHighway of Bear River Valley
By: /s/ Xxxxxxxx Xxxxxxx
/s/ Xxxxxxxx Xxxxxxx
Secretary President
/s/ Diggs X. Xxxxx, Xx.
Xxxxx X. Xxxxx, Xx., individually
ACKNOWLEDGMENT
The undersigned, a person having an ownership interest, a community
property interest or otherwise, in the shares of capital stock of The
Spinning Wheel, Inc., an Idaho corporation (Target), which shares are owned
by Diggs X. Xxxxx, Xx. and the undersigned, hereby acknowledges that I have
read the foregoing Agreement and Plan of Reorganization and that I
understand each of the terms contained therein. In consideration of my
obtaining an ownership interest, a community property interest or
otherwise, in the capital stock of USURF America, Inc., a Nevada
corporation (Parent), I hereby agree to be bound by the terms and
conditions of the foregoing Agreement and Plan of Reorganization.
Dated: October 26, 1999.
/s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx
