AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
XXXXXX X. DENMARK
AND
WESTSTAR ENVIRONMENTAL, INC.,
A FLORIDA CORPORATION
DATED AS OF MARCH 10, 2000
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS........................................................1
ARTICLE 2 - REORGANIZATION.....................................................3
2.1 QUALIFYING B REORGANIZATION...........................................3
2.2 IMPLEMENTATION OF REORGANIZATION......................................3
2.3 ADDITIONAL ACTIONS AT CLOSING.........................................4
2.4 NONCOMPETE PAYMENTS...................................................4
2.5 POST-CLOSING ADJUSTMENT AND ESCROW OF CERTAIN WEI SHARES..............4
ARTICLE 3 - CLOSING............................................................4
3.1 CLOSING...............................................................4
3.2 DELIVERIES BY SELLER AT CLOSING.......................................4
3.3 DELIVERIES BY PURCHASER AT CLOSING....................................5
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF SELLER...........................6
4.1 ORGANIZATION AND POWER OF SELLER AND THE COMPANY......................6
4.2 AUTHORITY RELATIVE TO AGREEMENT.......................................6
4.3 AUTHORIZED CAPITALIZATION.............................................6
4.4 OWNERSHIP AND TRANSFER OF COMMON SHARES...............................6
4.5 ENFORCEABILITY OF AGREEMENT...........................................7
4.6 EFFECT OF AGREEMENT...................................................7
4.7 INFORMATION FURNISHED BY SELLER TO PURCHASER..........................7
4.8 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES......................7
4.9 LITIGATION............................................................7
4.10 RESTRICTIVE DOCUMENTS..............................................8
4.11 COMPLIANCE WITH LAWS...............................................8
4.12 SUBSIDIARIES.......................................................8
4.13 PROPRIETARY RIGHTS.................................................8
4.14 TAX MATTERS........................................................9
4.15 UNION CONTRACTS AND LABOR RELATIONS................................9
4.16 EMPLOYEES/EMPLOYEE BENEFIT PLANS...................................9
4.17 CONDUCT OF BUSINESS...............................................10
4.18 SOLVENCY..........................................................10
4.19 LEASES............................................................10
4.20 REAL AND PERSONAL PROPERTY........................................10
4.21 MATERIAL CONTRACTS................................................11
4.22 GOVERNMENT PERMITS................................................11
4.23 TITLE TO PROPERTIES...............................................11
4.24 INSURANCE.........................................................12
4.25 ACCOUNTS RECEIVABLE...............................................12
4.26 TRANSACTIONS WITH AFFILIATES......................................12
4.27 BANK ACCOUNTS, POWERS OF ATTORNEY AND COMPENSATION OF EMPLOYEES...12
4.28 INVENTORY.........................................................12
4.29 SUPPLIERS AND CUSTOMERS...........................................13
4.30 BOOKS AND RECORDS.................................................13
4.31 DISCLOSURE........................................................13
4.32 BROKER'S OR FINDER'S FEES.........................................13
4.33 ABSENCE OF CERTAIN EVENTS.........................................13
4.34 CUSTOMERS.........................................................14
4.35 SUBSTANTIAL SUPPLIERS.............................................14
4.36 PRODUCT WARRANTY..................................................14
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4.37 DISPOSAL OR RELEASE OF HAZARDOUS SUBSTANCES......................14
4.38 INVESTMENT REPRESENTATION........................................14
4.39 ACCOUNTS PAYABLE.................................................16
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF PURCHASER......................16
5.1 ORGANIZATION AND POWER OF PURCHASER.................................16
5.2 AUTHORITY RELATIVE TO AGREEMENT.....................................16
5.3 ENFORCEABILITY OF AGREEMENT.........................................16
5.4 EFFECT OF AGREEMENT.................................................16
5.5 RESTRICTIVE DOCUMENTS...............................................16
5.6 FULL DISCLOSURE.....................................................17
5.7 INVESTMENT REPRESENTATION...........................................17
5.8 AUTHORIZED CAPITALIZATION...........................................17
5.9 INFORMATION FURNISHED BY PURCHASER TO SELLER........................17
5.10 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES.................17
5.11 TAX MATTERS......................................................17
5.12 BROKER'S OR FINDER'S FEES........................................18
ARTICLE 6 - COVENANTS OF SELLER..............................................18
6.1 CONDUCT OF BUSINESS.................................................18
6.2 EXCLUSIVE DEALING...................................................19
6.3 REVIEW OF THE COMPANY OR ITS SUBSIDIARIES...........................19
6.4 REGULATORY APPROVALS................................................19
6.5 CHANGES IN CAPITAL STOCK............................................19
6.6 FURTHER ASSURANCES..................................................19
6.7 KEY EMPLOYEES.......................................................19
6.8 BEST EFFORTS........................................................20
6.9 NONSOLICITATION OF EMPLOYEES........................................20
ARTICLE 7 - COVENANTS OF PURCHASER...........................................20
7.1 REGULATORY APPROVALS................................................20
7.2 FURTHER ASSURANCES..................................................20
7.3 CONFIDENTIALITY.....................................................20
7.4 NONSOLICITATION OF EMPLOYEES OF PCI.................................20
ARTICLE 8 - CONDITIONS TO PURCHASER'S OBLIGATIONS............................20
8.1 NO MATERIAL ADVERSE CHANGE..........................................21
8.2 TRUTH OF REPRESENTATIONS AND WARRANTIES.............................21
8.3 PERFORMANCE OF AGREEMENTS...........................................21
8.4 NO PROCEEDINGS......................................................21
8.5 GOVERNMENTAL APPROVALS..............................................21
8.6 PROCEEDINGS.........................................................21
8.7 COMPANY'S BANKRUPTCY CASE...........................................21
8.8 OPINION OF COUNSEL..................................................22
ARTICLE 9 - CONDITIONS TO OBLIGATIONS OF SELLER..............................22
9.1 TRUTH OF REPRESENTATIONS AND WARRANTIES.............................22
9.2 PERFORMANCE OF AGREEMENTS...........................................22
9.3 NO PROCEEDINGS......................................................23
9.4 GOVERNMENTAL APPROVALS..............................................23
9.5 PROCEEDINGS.........................................................23
ARTICLE 10 - SURVIVAL OF REPRESENTATIONS; INDEMNITY..........................23
10.1 SURVIVAL OF REPRESENTATIONS......................................23
10.2 INDEMNIFICATION BY SELLER........................................23
10.3 INDEMNIFICATION BY PURCHASER.....................................24
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10.4 REDUCTION OF PAYMENTS............................................24
10.5 DEFENSE..........................................................24
10.6 TIME FOR NOTICE..................................................24
10.7 TIME FOR PAYMENT.................................................24
10.8 PURCHASER'S IPO..................................................24
ARTICLE 11 - MISCELLANEOUS...................................................25
11.1 TERMINATION OF AGREEMENT.........................................25
11.2 EXECUTION IN COUNTERPARTS........................................25
11.3 NOTICES..........................................................25
11.4 WAIVERS..........................................................26
11.5 SPECIFIC PERFORMANCE.............................................26
11.6 ENTIRE AGREEMENT.................................................26
11.7 APPLICABLE LAW...................................................26
11.8 BINDING EFFECT...................................................26
11.9 ASSIGNABILITY....................................................27
11.10 EXPENSES.........................................................27
11.11 PUBLICITY........................................................27
11.12 AMENDMENTS.......................................................27
11.13 NO THIRD PARTY BENEFICIARIES.....................................27
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SCHEDULES
Schedule 4.9 Litigation
Schedule 4.13 Proprietary Rights
Schedule 4.14 Tax Matters
Schedule 4.15 Union Contracts and Labor Relations
Schedule 4.16 Employees and Employee Benefit Plans
Schedule 4.19 Leases
Schedule 4.20 Real and Personal Property
Schedule 4.21 Material Contracts
Schedule 4.22 Permits, Licenses, Etc.
Schedule 4.24 Insurance
Schedule 4.25 Accounts Receivable
Schedule 4.26 Transactions with Affiliates
Schedule 4.27 Bank Accounts, Etc.
Schedule 4.34 Material Customers
Schedule 4.35 Material Suppliers
Schedule 4.36 Product Warranty
Schedule 4.39 Accounts Payable
EXHIBITS
Exhibit 1-A Form of Employment Agreement
Exhibit 1-B Form of Noncompetition Agreement
Exhibit 1-C Form of Lease Agreement
Exhibit 4.8 Denmark's Financial Statements
Exhibit 8.8 Form of Opinions of Denmark's Counsel
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated as of March 10, 2000,
between XXXXXX X. DENMARK ("Denmark"), and WESTSTAR ENVIRONMENTAL, INC., a
Florida corporation ("Weststar").
PRELIMINARY STATEMENT. Denmark owns 100 shares of common stock, $5.00
par value (the "PCI Shares"), of PIPELINE CONTRACTORS, INC., a Florida
corporation (document # P94000045514; the "Company" or "PCI"). The Company
specializes in commercial site preparation, underground utilities and paving.
The Company is currently Debtor and Debtor-in-Possession in its case under
Chapter 11 of the Bankruptcy Code pending in the United States Bankruptcy Court
for the Middle District of Florida, Jacksonville Division (the "Bankruptcy
Court"), Case No. 98-10256-3F1 (the "Bankruptcy Case"). Denmark desires to
transfer and exchange the PCI Shares for common stock in Weststar, and Weststar
desires to exchange certain of its common stock for the PCI Shares, pursuant to
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, and upon
the terms and subject to the conditions hereinafter set forth.
ACCORDINGLY, the parties hereby agree as follows:
ARTICLE 1 - DEFINITIONS
All terms used herein without definition that are defined in the
Uniform Commercial Code as enacted and in effect from time to time in the State
of Florida shall have the same meanings herein as they have in the Uniform
Commercial Code, unless otherwise provided herein. In addition, the following
terms shall have the meanings assigned to them below:
ACCOUNTS PAYABLE. "Accounts Payable" shall have the meaning assigned
to it in Section 4.39 hereof.
ACCOUNTS RECEIVABLE. "Accounts Receivable" shall have the meaning
assigned to it in Section 4.25 hereof.
AFFILIATE. "Affiliate" shall mean any Person that owns or controls, is
owned or controlled by or is under common ownership or control with the Person
in question.
BANKRUPTCY CASE. "Bankruptcy Case" shall have the meaning assigned to
it in the Preliminary Statement.
BANKRUPTCY COURT. "Bankruptcy Court" shall have the meaning assigned
to it in the Preliminary Statement.
CLOSING. "Closing" shall have the meaning assigned to it in Section
3.1 hereof.
CLOSING DATE. "Closing Date" shall have the meaning assigned to it in
Section 3.1 hereof.
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CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.
COMPANY. "Company" shall have the meaning assigned to it in the
Preliminary Statement.
DENMARK LIABILITIES. "Denmark Liabilities" shall have the meaning
assigned to it in Section 10.2 hereof.
EMPLOYMENT AGREEMENT. "Employment Agreement" shall mean the Employment
Agreement between Weststar and Denmark, in the form of EXHIBIT 1-A attached
hereto.
ENVIRONMENTAL LAW. "Environmental Law" shall mean any governmental
statute, law, ordinance, code, rule, regulation, order or decree or any
decision, conclusion or determination made by a government official relating to
or imposing liability or standards of conduct as may now or at any time
hereafter be in effect regarding any air emission, water discharge or the use,
storage, handling, generation or disposal of any hazardous materials, including
without limitation the following, as the same may be amended or replaced from
time to time, and all regulations promulgated thereunder or in connection
therewith: the Superfund Amendments and Reauthorization Act of 1986 ("XXXX");
the Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"); the Clean Air Act ("CAA"); the Clean Water Act ("CWA"); the Toxic
Substances Control Act ("TSCA"); the Solid Waste Disposal Act ("SWDA"), as
amended by the Resource Conservation and Recovery Act ("RCRA"); and the
Occupational Safety and Health Act of 1970 ("OSHA").
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
GAAP. "GAAP" shall mean generally accepted accounting principles,
consistently applied.
IPO DATE. "IPO Date" shall have the meaning assigned to it Section
10.8 hereof.
IRS. "IRS" shall mean the Internal Revenue Service.
LEASE AGREEMENT. "Lease Agreement" shall mean the Lease Agreement
between Denmark and Weststar for the real property commonly known as 0000 Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxx 00000, which shall be substantially in
the form of EXHIBIT 1-C attached hereto.
NONCOMPETITION AGREEMENT. "Noncompetition Agreement" shall mean the
Noncompetition Agreement between Weststar and Denmark, substantially in the form
of EXHIBIT 1-B attached hereto.
NONCOMPETE PAYMENTS. "Noncompete Payments" shall have the meaning
assigned to it in Section 2.4 hereof.
NOTE. "Note" shall mean a term note from Weststar to Denmark in the
original principal amount of $250,000.00, payable at eight and one-half percent
(8.5%) interest per annum, given
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in payment for Denmark's obligations under the Noncompetition Agreement, which
shall be substantially in the form of the EXHIBIT attached to the Noncompetition
Agreement.
PCI SHARES. "PCI Shares" shall have the meaning assigned to it in the
Preliminary Statement.
PERSON. "Person" shall mean an individual, partnership, joint venture,
corporation, trust, business entity, unincorporated organization or government
or department or agency thereof.
REORGANIZATION. "Reorganization" shall mean the exchange of the WEI
Shares for the PCI Shares pursuant to Section 368(a)(1)(B) of the Code.
SECURITIES ACT. "Securities Act" shall have the meaning assigned to it
in Section 4.38 hereof.
SUBSIDIARY. "Subsidiary" shall mean, with respect to any corporation,
another corporation, more than 50% of whose voting securities are owned,
directly or indirectly, by the corporation in question.
WEI SHARES. "WEI Shares" shall mean approximately 100,000 shares of
Weststar's common stock, $.001 par value (valued at $6.00 per share), provided
by Weststar to Denmark in exchange for the PCI Shares. [The amount of WEI Shares
shall be reduced or increased if there is a decrease or increase in the net
worth of the Company on the Closing Date, as compared to the financial
statements attached hereto as EXHIBIT 4.8 (i.e., the number of WEI Shares shall
be decreased or increased one share for every six dollars of decrease or
increase in the Company's net worth).]
WESTSTAR'S IPO. "Weststar's IPO" shall have the meaning assigned to it
Section 10.8 hereof.
WESTSTAR SECURITIES. "Weststar Securities" shall have the meaning
assigned to it in Section 4.38 hereof.
ARTICLE 2 - REORGANIZATION
2.1 QUALIFYING "B" REORGANIZATION. Denmark and Weststar agree to
complete the Reorganization on or before the Closing Date. Pursuant to the
requirements of Section 368(a)(1)(B) of the Code and the regulations promulgated
thereunder, Weststar will issue and deliver the WEI Shares in exchange for the
PCI Shares (subject to the post-closing adjustment detailed in Section 2.5
hereinbelow). Immediately after the exchange, Weststar shall have control (as
defined in section 368(c) of the Code) of the Company.
2.2 IMPLEMENTATION OF REORGANIZATION. Denmark shall cause the Company
to (i) take all corporate actions and obtain all approvals and consents
necessary to complete the Reorganization, (ii) secure the consent of any party
(where such consent is necessary) to the
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consummation of such Reorganization, (iii) file all necessary documents,
returns, notices and/or applications with all governmental bodies necessary to
complete the Reorganization, and (iv) on the Closing Date, deliver and transfer
the certificate representing the PCI Shares, together with stock power duly
endorsed in blank.
2.3 ADDITIONAL ACTIONS AT CLOSING. In addition to the exchange of the
PCI Shares for the WEI Shares, at Closing, Weststar, Denmark and the Company
(caused by Weststar post closing), as appropriate, shall enter into the
Employment Agreement, the Noncompetition Agreement and the Lease Agreement.
2.4 NONCOMPETE PAYMENTS. In full consideration for Denmark entering
into the Noncompetition Agreement, Weststar shall deliver to Denmark at Closing
(i) immediately available funds in an amount equal to $50,000.00, and (ii) the
Note (such cash payment and the payments under the Note shall be referred to
herein collectively as the "Noncompete Payments"). The Note shall be secured by
a security interest in all of the assets of the Company (such security interest
being junior to any and all security interests on the Company's assets existing
on the Closing Date).
2.5 POST-CLOSING ADJUSTMENT AND ESCROW OF CERTAIN WEI SHARES. Weststar
and Denmark have agreed that the 100,000 shares of Weststar's common stock given
in exchange for the PCI Shares has been based upon the Company's net worth as
shown on the December 31, 1999 audited financials (NEGATIVE $30,995.12). At the
Closing, Weststar shall issue 90,000 shares of Weststar's common stock, and
shall hold 10,000 shares in escrow pending the post-closing determination of the
Company's net worth as of the Closing Date.
Within sixty (60) days following the Closing Date, Weststar and Denmark
shall use their respective reasonable best efforts to determine the net worth of
the Company as of the Closing Date. Within ten (10) days following such
determination, Weststar shall cause the remaining amount of WEI Shares to be
issued to Denmark. The number of WEI Shares shall be decreased or increased one
share for every six dollars of decrease or increase in the Company's net worth
on the Closing Date in comparison to that shown on the December 31, 1999 audited
financials.
ARTICLE 3 - CLOSING
3.1 CLOSING. Subject to the satisfaction or waiver of all of the
conditions set forth in Sections 8 and 9 hereof, the Reorganization and the
consummation of the other transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Weststar or Weststar's counsel, in
Jacksonville, Florida, at 10:00 a.m. on Friday, March 10, 2000, or at such other
place, time or date as the parties may agree (the "Closing Date").
3.2 DELIVERIES BY DENMARK AT CLOSING. At the Closing, Denmark shall
deliver to Weststar the following:
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(a) The stock certificate representing the PCI Shares, duly endorsed in
blank or accompanied by a stock power duly executed in blank, with all necessary
transfer tax and other revenue stamps paid and, if appropriate, affixed and
cancelled;
(b) (i) Copies of the Company's charter, including all amendments thereto,
certified by the Secretary of State of the State of Florida, and (ii) a
certificate from the Secretary of State of the State of Florida to the effect
that the Company is in good standing;
(c) The Company's minute book, containing all resolutions and minutes
adopted or approved by the Company's board of directors and or shareholder
though the Closing Date, along with the Company's stock transfer records and
unissued stock certificates;
(d) A Closing Certificate as to the matters specified in Sections 8.1, 8.2,
8.3, 8.4, 8.5 and 8.7 hereof;
(e) A resignation letter, whereby Denmark resigns from all positions he may
hold as an officer or director of the Company;
(f) The Employment Agreement, duly executed by Denmark;
(g) The Noncompetition Agreement, duly executed by Denmark;
(h) The Lease Agreement, duly executed by Denmark;
(i) An opinion of counsel to Denmark, as provided in Section 8.8 hereof and
(j) All other documents that are required herein to be delivered by
Denmark.
3.3 DELIVERIES BY WESTSTAR AT CLOSING. At the Closing, Weststar shall
deliver to Denmark the following:
(a) The cash portion of the Noncompete Payments;
(b) The Note, executed on behalf of Weststar;
(c) A stock certificate representing 90,000 shares of common stock of
Weststar having the appropriate restrictive legends;
(d) (i) Copies of Weststar's charter, including all amendments thereto,
certified by the Secretary of State of the State of Florida, and (ii) a
certificate from the Secretary of State of the State of Florida to the effect
that Weststar is in good standing;
(e) A Closing Certificate as to the matters specified in Sections 9.1, 9.2,
9.3 and 9.4 hereof;
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(f) A Secretary's Certificate of Weststar, certifying resolutions adopted
by the Board of Directors of Weststar, authorizing the transactions contemplated
hereby;
(g) The Employment Agreement, executed on behalf of Weststar;
(h) The Noncompetition Agreement, executed on behalf of Weststar;
(i) The Lease Agreement, executed on behalf of Weststar; and
(j) All other documents that are required herein to be delivered by
Weststar.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF DENMARK
Denmark hereby represents and warrants to Weststar that:
4.1 ORGANIZATION AND POWER OF THE COMPANY. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Florida and is duly qualified to do business as a foreign corporation
in each jurisdiction where the conduct of business or the ownership or lease of
property requires or makes it desirable for the Company to be so qualified.
4.2 AUTHORITY RELATIVE TO AGREEMENT. The execution, delivery and
performance of this Agreement by Denmark, and the consummation by Denmark of the
transactions contemplated hereby and thereby, do not require the authorization
of any third party.
4.3 AUTHORIZED CAPITALIZATION. The authorized capital stock of the Company
consists of 100 shares of common stock, $5.00 par value per share, of which all
are issued and outstanding to Denmark. There are no outstanding options,
warrants, rights, calls, commitments, conversion rights, rights of exchange,
plans or other agreements of any character providing for the purchase, issuance
or sale of any shares of the capital stock of the Company, other than as
contemplated by this Agreement.
4.4 OWNERSHIP AND TRANSFER OF PCI SHARES. All of the PCI Shares have been
duly authorized and validly issued and are fully paid and nonassessable. Denmark
is the lawful owner of the PCI Shares, free and clear of all liens,
encumbrances, restrictions and claims of every kind. Denmark has full legal
right, power and authority to enter into this Agreement and to sell, assign,
transfer and convey the PCI Shares to Weststar pursuant to this Agreement. The
delivery to Weststar of the PCI Shares pursuant to the provisions of this
Agreement will transfer to Weststar full, valid title thereto, free and clear of
all liens, encumbrances, restrictions and claims of every kind. None of the PCI
Shares is subject to any federal or state restriction on resale or transfer, and
no such restriction has been imposed by the Bankruptcy Court. The certificate
representing the PCI Shares does not bear a legend of any kind thereon.
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4.5 ENFORCEABILITY OF AGREEMENT. Denmark has duly executed and delivered
this Agreement. This Agreement constitutes a valid and binding obligation of
Denmark, enforceable in accordance with its terms.
4.6 EFFECT OF AGREEMENT. The execution, delivery and performance of this
Agreement by Denmark and the consummation by Denmark of the transactions
contemplated hereby do not and will not (i) violate any provision of law
applicable to the Company or the corporate charter or bylaws of the Company;
(ii) require the consent, waiver, approval, license or authorization of, or
filing with, any Person, including, without limitation, the Bankruptcy Court; or
(iii) with or without the giving of notice or the passage of time or both,
conflict with or result in a breach or termination of, constitute a default
under, or result in the creation of any lien, charge or encumbrance upon any of
the assets of the Company, pursuant to any provision of any mortgage, deed of
trust, indenture or other agreement or instrument, or any order, judgment,
decree or any other restriction of any kind or character, to which the Company
is a party or by which its assets may be bound.
4.7 INFORMATION FURNISHED BY DENMARK TO WESTSTAR. There is no fact that the
Denmark has not disclosed herein that materially and adversely affects the
properties, business, prospects, profits or condition (financial or otherwise)
of the Company, except that Denmark makes no representation or warranty as to
the effect of general economic conditions, the condition of the financial
markets, future legislation or future regulatory action. There has been no
materially adverse change in the assets or liabilities, the business or
condition, financial or otherwise, the results of operations or the prospects of
the Company since December 31, 1999.
4.8 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES. Denmark has
heretofore furnished to Weststar true and complete copies of (i) the audited
financial statements of the Company as of December 31, 1999, (ii) the unaudited
balance sheet of the Company at January 31, 2000, and (iii) the related
unaudited statement of income and retained earnings and statement of cash flows
for the Company as of January 31, 2000 (collectively, the "Financial
Statements," copies of which are attached hereto as EXHIBIT 4.8). The Financial
Statements were prepared in accordance with GAAP and present fairly the
financial position, results of operations and cash flow of the Company as of the
dates and for the periods indicated. The unaudited balance sheet and state of
income, although prepared in accordance with GAAP, lack footnotes and other
presentation items. Except as disclosed in the Financial Statements, the Company
has no material liabilities or obligations of any kind, whether accrued,
absolute, contingent or otherwise, whether or not such liabilities or
obligations would have been required to be disclosed on a balance sheet prepared
in conformity with GAAP. Without limiting the generality of the foregoing, to
the best of Denmark's knowledge, Denmark has no liability (and there is no basis
for any present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand against it giving rise to any liability) arising
out of any injury to persons or property as a result of the ownership,
possession or use of any product manufactured, sold, leased or delivered by
Denmark or any of its dealers or representatives.
4.9 LITIGATION. Except as disclosed in SCHEDULE 4.9 hereto, (i) there are
no claims, actions, proceedings or investigations pending or threatened against
or relating to the Company, before any court or governmental or regulatory
authority or body, and (ii) neither the Company nor
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any of its property is subject to any order, judgment, injunction or decree that
materially adversely affects the financial condition, assets, business or
prospects of the Company.
4.10 RESTRICTIVE DOCUMENTS. Except as disclosed in the Financial
Statements, the Company is not subject to, or a party to, any charter, bylaw,
mortgage, lien, lease, license, permit, agreement, contract, instrument, law,
rule, ordinance, regulation, order, judgment or decree, or other restriction of
any kind or character, that materially adversely affects the business practices,
operations or condition of the Company or any of its assets or property, or that
would prevent consummation of the transactions contemplated by this Agreement,
compliance by Denmark with the terms, conditions and provisions hereof or
thereof or the continued operation of the Company's business after the date
hereof on substantially the same basis as heretofore operated.
4.11 COMPLIANCE WITH LAWS. The Company is and at all times has been in
compliance in all material respects with all applicable statutes, laws,
regulations, rules, orders, judgments and decrees, including, without
limitation, all applicable federal, state and local laws, administrative
rulings, regulations and regulating approvals relating to (a) protection of the
environment, (b) wages, hours, hiring, non-discrimination, promotion,
retirement, benefits, pensions and working conditions, (c) air, water, toxic
substances, pesticides, noise, odor or solid gaseous or liquid waste generation,
and handling, storage, disposal or transportation thereof, (d) health and
safety, (e) zoning and building codes, (f) production, storage, processing,
advertising, sale, transportation, destruction, disposal, use and warranty of
products, and (g) trade and antitrust regulations. The Company has received no
notice from any governmental or regulatory agency or authority that it is not in
such compliance.
4.12 SUBSIDIARIES. The Company has no Subsidiaries.
4.13 PROPRIETARY RIGHTS. SCHEDULE 4.13 sets forth a correct and complete
list of all licenses (or other rights to use), copyrights, trademarks, service
marks, trade names, patents, assumed or fictitious names, logos, trade secrets,
know-how and other proprietary rights and applications therefor and
registrations thereof that are material to the conduct of the business of the
Company (collectively, "Proprietary Rights"). The Company has a right to use
such proprietary rights in connection with its business as presently being
conducted, and no claim has been made against the Company that such use violates
the rights of any third party. To the best of Denmark's knowledge, all
Proprietary Rights of the Company are free from any claim of others, security
interest, lien, encumbrance or restriction, there is no default with respect
thereto on the part of the Company, and such Proprietary Rights have not been
and are not now being challenged in any way or involved in any pending or
threatened infringement, unfair competition or other proceeding. To the best of
Denmark's knowledge, the Company is not infringing the rights of any other
Person with respect to any Proprietary Right and has not received any claim of
any such infringement or violation. To the best of Denmark's knowledge, none of
the rights of the Company to any Proprietary Right will be impaired in any way
by the transactions contemplated by this Agreement.
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4.14 TAX MATTERS. Except as may be disclosed on SCHEDULE 4.14 hereto:
(a) The Company (i) has duly and timely filed with the appropriate
governmental authorities all tax returns and reports required to be filed and
(ii) has duly paid, or arranged for payment, all taxes, interest, penalties,
assessments and deficiencies and other governmental charges upon it shown to be
due thereon and its properties, assets, income, business, sales and payrolls,
including all amounts assessed as additional taxes, penalties and interest.
(b) The Company has not been audited by the IRS during the past five (5)
years. The Company has not executed or filed with the IRS or any other taxing
authority any agreement extending the period for assessment or collection of any
income or other taxes.
(c) The Company is not a party to any pending action or proceeding nor, to
the best of Denmark's knowledge, is any action or proceeding threatened by any
governmental authority for assessment or collection of taxes, and no claim for
assessment or collection of taxes has been asserted against the Company.
(d) The Company has withheld proper and accurate amounts from its employees
in full and complete compliance with all withholding and similar provisions of
the Code and any and all other applicable United States, foreign, state or local
laws, statutes, codes, ordinances, rules and regulations. The Company has timely
filed the proper federal, foreign, state and local returns, reports and
estimates with respect to employee income tax withholding, social security taxes
and unemployment taxes (or comparable or similar taxes or charges) for all years
and periods (or portions thereof) for which such returns and reports were due,
and any and all amounts that were due and payable have been paid in full. All
payments (including interest and penalties thereon) due or to become due from
the Company with respect to its employee income tax withholding, social security
taxes and unemployment taxes (or comparable or similar taxes or charges) for any
year or period (or portions thereof) ended on or prior to or including the
Closing Date, have been paid in full or are adequately reserved for (excluding
deferred tax accounts).
4.15 UNION CONTRACTS AND LABOR RELATIONS. Except as set forth in SCHEDULE
4.15, the Company is not a party to any collective bargaining or union agreement
and there is no (i) labor strike, dispute, grievance, controversy or other labor
trouble pending or, to the best knowledge of Denmark, threatened that may
materially affect the Company, (ii) application for certification of a
collective bargaining agent pending or, to the knowledge of Denmark, threatened
or (iii) complaint pending or, to the knowledge of Denmark, threatened or on
file with any federal, state or local governmental agencies alleging employment
discrimination.
4.16 EMPLOYEES/EMPLOYEE BENEFIT PLANS. SCHEDULE 4.16 sets forth a correct
and complete list of all current employees of the Company, and all employee
benefit plans (collectively, the "Plans") maintained by the Company, in which it
participates or may be required to participate or in respect of which it may
have any liability. Except for the Plans, the Company does not have in effect,
participate in, or have any liability for any plan, fund or program as defined
in Section III(2) of the Employee Retirement Income Act of 1974, as amended
("ERISA"), and does not have an obligation to establish any such plan, fund or
program. Denmark has furnished Weststar with true
9
and complete copies of all of the Plans and the latest financial statements
therefor, which fairly represent the financial condition of the Plans at such
dates. There have been no materially adverse changes to any of the Plans since
the date of the latest financial statements. There is not outstanding any
request for information concerning the Plans by participants, beneficiaries or
government agencies. Neither the Company nor the Plans have been involved in any
transaction that would constitute a "prohibited transaction" within the meaning
of Sections 503 and 4975 of the Code or ERISA Section 406. None of the Plans has
any "accumulated funding deficiency" as described in Code Section 412, and all
required contributions to the Plans for the period through the Closing Date have
been made. All Plans are in compliance with the applicable provisions of ERISA,
the regulations issued thereunder and all other applicable statutes and
regulations. The Plans have been maintained and administered in accordance with
their separate terms. Each Plan has been issued a determination letter by the
IRS that it is qualified under Code Section 401(a) and its trust fund is exempt
from taxation under Code Section 501(a). All information submitted with the
request for such determination letters was true and accurate in all material
respects, all material information required to have been submitted to the IRS
was submitted, and no event has occurred with respect to any Plan that would
cause the loss of such qualification. Each trust fund established for any
medical or disability plan has been issued a determination letter by the IRS
that it is exempt from taxation under Code Section 501(c)(9), and no event has
occurred with respect to any such Plan that would cause the loss of such
qualification. None of the Plans has experienced a "reportable event" as
described in ERISA Section 4043(b) or is experiencing any condition that may
constitute grounds under ERISA Section 4042 for the termination of such Plan or
the appointment of a trustee to administer such Plan. The Company has not (i)
contributed or been required to contribute to any "multi-employer pension plan,"
as that term is defined in ERISA Section III(37)(A), or (ii) incurred any
withdrawal liability under subtitle E of Title IV of ERISA or has withdrawn from
any multi-employer pension plan in any manner that could result in any liability
to the Company.
4.17 CONDUCT OF BUSINESS. Between December 31, 1999, and the date of
this Agreement, the business of the Company has been conducted only in the
ordinary course and there has occurred no materially adverse change or, to the
knowledge of Denmark, any event that involved any significant possibility of a
materially adverse change, in the condition (financial or otherwise), assets,
liabilities, business, operations or affairs of the Company.
4.18 SOLVENCY. The exchange of the PCI Shares pursuant to this
Agreement will not render Denmark insolvent (within the meaning of the Uniform
Fraudulent Conveyance Act or 11 U.S.C. ss. 101(31)).
4.19 LEASES. SCHEDULE 4.19 sets forth a correct and complete list of
all leases under which the Company leases, as lessor or lessee, any real or
personal property along with the names of the parties to such leases, the
commencement and expiration dates of such leases and a summary description of
the rental under such leases and any options pertaining thereto. All such leases
are in full and force and effect and no party thereto is in material default or
breach thereunder.
4.20 REAL AND PERSONAL PROPERTY. SCHEDULE 4.20 sets forth a correct and
complete list and summary description of all real and material personal
property, tangible or intangible (other than inventory), owned by the Company
or, whether or not owned, used in its business. Except as
10
disclosed on SCHEDULE 4.20, the Company owns the property set forth in SCHEDULE
4.20 free and clear of all liens, charges, mortgages, security interests,
pledges and encumbrances of any nature whatsoever. Substantially all such
tangible personal property is in satisfactory condition and is suitable for the
purpose for which it is being used, subject in each case to consumption in the
ordinary course, to ordinary wear and tear and to ordinary repair, maintenance
and periodic replacement.
4.21 MATERIAL CONTRACTS. SCHEDULE 4.21 sets forth a correct and
complete list as of the date hereof of all written or material oral agreements,
contracts and commitments of the following types to which the Company or by
which the Company is bound or otherwise affected as of the date hereof,
including, without limitation: (i) mortgages, indentures, security agreements,
loan and credit agreements and other agreements and instruments relating to the
borrowing of money or evidence of credit, (ii) contracts or options to purchase
or sell real property, (iii) contracts for the purchase or sale of materials,
supplies or equipment or for providing services, that individually involve
payments to be made of more than $1,000, (iv) contracts between the Company and
Denmark, (v) agreements and instruments representing loans or commitments to
loan to officers, directors, employees or agents of the Company, (vi) contracts
of any kind to which the United States Government or any of its agencies or any
state or local municipality is a party or under which the Company is a
contractor or subcontractor under any federal, state or local law, regulation or
executive order, (vii) partnership or joint venture agreements of any kind,
(viii) management, employment, consulting, service and independent contractor
agreements, (ix) development, production, financing and similar agreements, (x)
license agreements, (xi) confidentiality and nondisclosure agreements, (xii)
agreements relating to a merger or to the acquisition or disposition of stock or
assets, (xiii) distribution agreements, and (xiv) other agreements, contracts
and commitments (other than those previously set forth in Schedules hereto).
Denmark has delivered or made available to Weststar complete and correct copies
of all such written agreements, contracts and commitments, together with all
amendments thereto and waivers and consents with respect thereto. Except as
disclosed in SCHEDULE 4.21 hereto, all of such agreements, contracts and
commitments referred to are in full force and effect and all parties to such
agreements, contracts and commitments have performed in all material respects
all of the obligations required to be performed by them to date and are not in
default thereunder in any material respect. No agreement, contract or commitment
to which the Company is a party, or by which it or any of its properties is
bound, specifically limits its freedom to compete in any line of business or
with any person or entity.
4.22 GOVERNMENT PERMITS. Except as set forth in SCHEDULE 4.22 hereto,
the Company has and is in substantial compliance with all material permits,
licenses, orders and approvals of all federal, state, local or foreign
governmental or regulatory bodies required for it to carry out its business as
presently conducted, all of which are listed in SCHEDULE 4.22. All such permits,
licenses, orders and approvals are in full force and effect, and no suspension
or cancellation, nor any proposed adverse modification of any of them is pending
or, to the knowledge of Denmark, threatened. No consent of any governmental or
regulatory body issuing such permits, licenses, orders and approvals is
necessary for the consummation of the transactions contemplated by this
Agreement.
4.23 TITLE TO PROPERTIES. The Company has good title to all of the
properties and assets reflected in the January 31, 2000 balance sheet as owned
by it (other than assets disposed of in the
11
ordinary course of business, since January 31, 2000, or as disclosed in the
notes to the financial statements), free and clear of all restrictions,
conditions, liens, mortgages, encumbrances and similar claims (Liens") other
than (a) Liens reflected in such financial statements and notes, (b) Liens for
taxes and betterment assessments contested in good faith in appropriate
proceedings or that are not yet due and payable, (c) Liens reflected in SCHEDULE
4.20, and (d) and such other Liens, if any, as do not materially detract from
the value of or interfere with the present or future use of the properties or
assets affected thereby.
4.24 INSURANCE. Set forth in SCHEDULE 4.24 hereto is a complete list of
insurance policies that the Company maintains with respect to its businesses,
properties or employees. Such policies are in full force and effect free from
any right of termination on the part of the insurance carriers. Since January
31, 2000, there has not been any material adverse change in the Company's
relationship with its insurers or in the premiums payable pursuant to such
policies.
4.25 ACCOUNTS RECEIVABLE. Set forth in SCHEDULE 4.25 hereto is a complete
list of the Company's accounts receivables, unbilled invoices and other debts
due to the Company (the "Accounts Receivable") as of January 31, 2000. The
amount of all Accounts Receivable recorded in the records and books of account
of the Company, at the Closing Date (less the amount of any provision or reserve
therefor made in the respective records and books of account of the Company),
are and at the Closing will be good and collectible in full in the ordinary
course of business, and in any event not later than 60 days after the Closing
Date, except as described in SCHEDULE 4.25 hereto. None of such Accounts
Receivable is or will at the Closing Date be subject to any counterclaim or
set-off except to the extent of any such provision or reserve.
4.26 TRANSACTIONS WITH AFFILIATES. Except as set forth in SCHEDULE 4.26
hereto, the Company is not a party to any transaction with Denmark or any
officer, director, employee or Affiliate thereof.
4.27 BANK ACCOUNTS, POWERS OF ATTORNEY AND COMPENSATION OF EMPLOYEES. Set
forth in SCHEDULE 4.27 is an accurate and complete list showing (a) the name and
address of each bank in which the Company has an account or safe deposit box,
the number of any such account or any such box and the names of all persons
authorized to draw thereon or to have access thereto, (b) the names of all
persons, if any, holding powers of attorney from the Company and a summary
statement of the terms thereof and (c) the names of all persons whose
compensation from the Company for the recent calendar year ended exceeded an
annualized rate of $20,000, together with a statement of the full amount paid or
payable to each such person for services rendered during such calendar year.
4.28 INVENTORY. All items of the Company's inventory and related supplies
(including raw materials, work-in-progress and finished goods) are (a) usable
for the purpose intended, (b) of quality suitable and usable for the production
or completion of merchantable products, for sale in the ordinary course of
business as first quality goods at normal xxxx-ups, (c) not obsolete or below
market standards, except for those items which have been written off or written
down to net realizable value, as reflected on the Financial Statements, and (d)
in conformity with all applicable government requirements. Each item of such
inventory reflected in the Company's financial statements and the books and
records of the Company is valued at the lower of historical cost or market
value.
12
4.29 SUPPLIERS AND CUSTOMERS. The Company's current relationships with its
suppliers and customers is good, and, to the best of Denmark's knowledge, there
is no indication of any intention to terminate or modify in a manner adverse to
the Company any of such relationships. To the best of Denmark's knowledge, no
material adverse change in relations with the Company's suppliers or customers
will occur as a result of the announcement or consummation of the transactions
contemplated by this Agreement.
4.30 BOOKS AND RECORDS. The minute books of the Company, as previously made
available to Weststar, contain accurate records of all meetings of and corporate
actions or written consents of the stockholders and the Board of Directors of
the Company. The Company has no records, systems, controls, data or information
recorded, stored, maintained, operated or otherwise wholly or partly dependent
upon or held by any means (including any electronic, mechanical or photographic
process, whether computerized or not) that (including all means of access
thereto and therefrom) are not under the exclusive ownership and direct control
of the Company.
4.31 DISCLOSURE. Denmark has caused to be made available for inspection and
copying by Weststar and its advisers, true, complete and correct copies of all
documents referred to in this Article 4 or in any Schedule furnished to Weststar
by Denmark. No representation or warranty contained in this Agreement, and no
statement, certificate, schedule, list or other information furnished or to be
furnished by or on behalf of Denmark to Weststar in connection with this
Agreement, contains or will contain any untrue statement of a material fact, or
omits to state or will omit to state a material fact necessary in order to make
the statements herein or therein not misleading.
4.32 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting on
behalf of Denmark or the Company, is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any Affiliate
of the parties hereto, in connection with any of the transactions contemplated
herein.
4.33 ABSENCE OF CERTAIN EVENTS. Since December 31, 1999, there has not been
(a) any damage, destruction or casualty loss, whether covered by insurance or
not, materially and adversely affecting either the business, operations or
financial condition of the Company; (b) any material increase in the rate or
terms of compensation payable or to become payable by the Company to its
directors, officers or key employees, except increases occurring in the ordinary
course of business in accordance with its customary practices; (c) any material
increase in the rate or terms of any bonus, insurance, pension or other employee
benefit plan, payment or arrangement made to, for or with any such directors,
officers or key employees except salary increases occurring in the ordinary
course of business in accordance with its customary practices; (d) any entry
into any material agreement, commitment or transaction (including without
limitation any borrowing, capital expenditure or capital financing) by the
Company, except agreements, commitments or transactions entered into in the
ordinary course of business or as contemplated by or referred to in this
Agreement or the Schedules hereto; or (e) any material change by the Company in
its accounting method, principles or practices.
13
4.34 CUSTOMERS. Listed in SCHEDULE 4.34 are the material customers of the
Company for the twelve-month period ended January 31, 2000, and the type of
service provided to each such customer during such period.
4.35 SUBSTANTIAL SUPPLIERS. Listed in SCHEDULE 4.35 are the material
suppliers to the Company for the twelve-month period ended January 31, 2000.
4.36 PRODUCT WARRANTY. Each product manufactured, sold, leased or delivered
by the Company, or service provided by the Company, has been in conformity with
all applicable contractual commitments and all express and implied warranties,
and the Company has no liability (and there is no basis for any present or
future charge, complaint, action, suit, proceeding, hearing, investigation,
claim or demand against it giving rise to any liability) for replacement or
repair thereof or other damages in connection therewith. Except as provided on
SCHEDULE 4.36 hereto, no product manufactured, sold, leased or delivered by the
Company, or service provided by the Company, is subject to any guaranty,
warranty or other indemnity beyond the applicable standard terms and conditions
of sale or lease. The Company has delivered to Weststar copies of all contracts
to which the Company is a party containing guaranties, warranties or indemnities
to which the Company may become liable).
4.37 DISPOSAL OR RELEASE OF HAZARDOUS SUBSTANCES. No part of any of the
premises owned, leased or used by the Company (including without limitation any
leased property) has been used by the Company or any other person or entity for
the disposal, burial or placement (other than in tanks or other containers
authorized by law) of hazardous substances (as defined in or pursuant to CERCLA)
or any petroleum products, pollutants or contaminants. The Company has not
caused or permitted the release of any hazardous substances (as defined in or
pursuant to CERCLA), petroleum products, pollutants or contaminants onto the
premises or into the subsurfaces thereof, including, without limitation, surface
waters and groundwaters. The Company is not in violation of any applicable laws,
statutes, rules, regulations or ordinances in connection with the
transportation, disposal, storage, treatment, processing, release and other
handling of hazardous substances (as defined in or pursuant to CERCLA) or any
petroleum products, pollutants or contaminants or the emission or release of any
hazardous substance (as defined in or pursuant to CERCLA), effluent,
contaminant, pollutant or other material, and no other person has used all or
part of the premises owned, leased or used by the Company in violation of any of
those requirements of law.
4.38 INVESTMENT REPRESENTATION. The Note and the WEI Shares (collectively,
the "Weststar Securities") are being acquired for the account of Denmark and not
with a view to, nor for sale in connection with, any distribution thereof, and
without any present intention of selling the same. The Weststar Securities will
not be sold or otherwise disposed of in the absence of a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), covering
the Note or the WEI Shares, respectively, or an exemption from the registration
requirements of the Securities Act.
Denmark hereby acknowledges that (i) the Weststar Securities may not be
sold or otherwise transferred unless they are registered under the Securities
Act or an exemption from such registration is available; (ii) any sales of the
Weststar Securities made in reliance upon Rule 144 promulgated under the
Securities Act can be made only in accordance with the terms and conditions
14
of Rule 144 and, further, that if Rule 144 is not applicable, any resale of such
securities under circumstances in which Denmark or the person through whom the
sale is made may be deemed to be an underwriter, as that term is defined in the
Securities Act, may require compliance with some other exemption under the
Securities Act or the rules and regulations of the Securities and Exchange
Commission or other governmental authority substituted therefor; and (iii)
Weststar is under no obligation to register any of the Weststar Securities under
the Securities Act or to comply with the terms and conditions of any exemption
thereunder.
The instruments evidencing the Weststar Securities may bear a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer thereof):
THE SECURITIES REPRESENTED HEREBY WERE NOT REGISTERED UNDER, AND ARE
SUBJECT TO, THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"),
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED, AND THE COMPANY IS NOT
REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE, TRANSFER OR ASSIGNMENT,
EXCEPT (I) PURSUANT TO A CURRENT REGISTRATION UNDER THE 1933 ACT; (II)
IN A TRANSACTION PERMITTED BY RULE 144 UNDER THE 1933 ACT AND AS TO
WHICH THE COMPANY HAS RECEIVED REASONABLY SATISFACTORY EVIDENCE OF
COMPLIANCE WITH THE PROVISIONS OF RULE 144; OR (III) UPON RECEIPT OF A
LEGAL OPINION RENDERED BY COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT THE TRANSACTION DOES NOT REQUIRE
REGISTRATION UNDER THE 1933 ACT.
If a legal opinion complying with clause (iii) of the legend set forth
above indicates that the legend and stop-transfer order may be removed, Weststar
will substitute unlegended instruments for and remove the stop-transfer order
from the instruments described in the opinion.
In connection with any Weststar IPO (as defined in Section 10.8 hereof) or
any other offering involving an underwriting of shares being issued by Weststar,
Weststar shall not be required to include any of the WEI Shares in such
underwritings unless other similarly situated shareholders of Weststar are being
permitted to include some or all of their shares in the underwritings, in which
case Denmark shall be permitted to include some or all of the WEI Shares on an
equivalent basis; HOWEVER, should Weststar agree to include a portion of the WEI
shares in such underwriting, following Denmark's request to do so, Denmark must
accept the terms of the underwriting (to the extent applicable to the WEI
Shares) as agreed upon between Weststar and the underwriters selected by
Weststar (all costs of registering the WEI Shares shall be borne by Weststar).
Furthermore, in connection with any registration of the WEI Shares, Denmark
agrees, if requested by Weststar or the underwriters managing any underwritten
offering of the WEI Shares, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any of the WEI Shares (other
than that included in the registration) without the prior written consent of
Weststar or such underwriters, as the case may be, for such period of time after
the effective date of such registration as Weststar or the underwriters may
specify, which, in any event, shall be a minimum of twelve (12) months following
any Weststar IPO; but in any event, shall be no longer than the time period
required by
15
the underwriter for similarly situated shareholders of Weststar. Denmark shall
receive treatment no less favorably than any other similarly situated
shareholder of Weststar at the time of any offering involving an underwriting of
shares being issued by Weststar.
4.39 ACCOUNTS PAYABLE. Set forth in SCHEDULE 4.39 hereto is a complete list
of the Company's accounts payables ("Accounts Payable") as of January 31, 2000.
All such Accounts Payable were incurred by the Company in the ordinary course of
its business, and each represents the fair market value for services or
materials rendered to or received by the Company.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF WESTSTAR
Weststar hereby represents and warrants to Denmark that:
5.1 ORGANIZATION AND POWER OF WESTSTAR. Weststar is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida and has all requisite corporate power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
5.2 AUTHORITY RELATIVE TO AGREEMENT. The execution, delivery and
performance of this Agreement by Weststar, and the consummation by Weststar of
the transactions contemplated hereby and thereby, have been duly authorized by
all necessary corporate action on the part of Weststar.
5.3 ENFORCEABILITY OF AGREEMENT. Weststar has duly executed and delivered
this Agreement. This Agreement constitutes a valid and binding obligation of
Weststar, enforceable in accordance with its terms.
5.4 EFFECT OF AGREEMENT. The execution, delivery and performance of this
Agreement by Weststar, and the consummation by Weststar of the transactions
contemplated hereby and thereby, do not and will not (i) violate any provision
of law applicable to Weststar or the corporate charter or bylaws of Weststar;
(ii) require the consent, waiver, approval, license or authorization of, or
filing with, any Person; provided that Weststar makes no representation to the
extent any of the foregoing is required as the result of the nature of the
business or assets of the Company; or (iii) with or without the giving of notice
or the passage of time or both, conflict with or result in a breach or
termination of, constitute a default under or result in the creation of any
lien, charge or encumbrance upon any of the assets of Weststar pursuant to, any
provision of any mortgage, deed of trust, indenture or other agreement or
instrument, or any order, judgment, decree or other restriction of any kind or
character, to which Weststar is a party or by which Weststar or any of its
assets may be bound.
5.5 RESTRICTIVE DOCUMENTS. Weststar is not subject to, or a party to, any
charter, bylaw, mortgage, lien, lease, license, permit, agreement, contract,
instrument, law, rule, ordinance, regulation, order, judgment or decree, or any
other restriction of any kind or character that would prevent consummation of
the transactions contemplated by this Agreement.
16
5.6 FULL DISCLOSURE. No representation or warranty contained in this
Agreement, and no statement, certificate, schedule, list or other information
furnished or to be furnished by or on behalf of Weststar to Denmark in
connection with this Agreement, contains or will contain any untrue statement of
a material fact, or omits to state or will omit to state a material fact
necessary in order to make the statements herein or therein not misleading.
5.7 INVESTMENT REPRESENTATION. The PCI Shares are being acquired for the
account of Weststar and not with a view to, nor for sale in connection with, any
distribution thereof, and without any present intention of selling the same. The
PCI Shares will not be sold or otherwise disposed of (except to an Affiliate of
Weststar) in the absence of a registration statement under the Securities Act
covering the PCI Shares, or any exemption from the registration requirements of
the Securities Act.
5.8 AUTHORIZED CAPITALIZATION. The authorized capital stock of Weststar
consists of 10,000,000 shares of common stock, $.001 par value per share.
5.9 INFORMATION FURNISHED BY WESTSTAR TO DENMARK. There is no fact that
Weststar has not disclosed herein that materially and adversely affects the
properties, business, prospects, profits or condition (financial or otherwise)
of Weststar, except that Weststar makes no representation or warranty as to the
effect of general economic conditions, the condition of the financial markets,
future legislation or future regulatory action. There has been no materially
adverse change in the assets or liabilities, the business or condition,
financial or otherwise, the results of operations or the prospects of Weststar
since December 31, 1999.
5.10 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES. Weststar has
heretofore furnished to Denmark true and complete copies of the INITIAL DRAFT of
the audited financial statements of Weststar as of December 31, 1999 (the
"Weststar Financial Statements"). The Weststar Financial Statements were
prepared in accordance with GAAP and present fairly the financial position,
results of operations and cash flow of Weststar as of the date and for the
period indicated. Except as disclosed in the Weststar Financial Statements,
Weststar has no material liabilities or obligations of any kind, whether
accrued, absolute, contingent or otherwise, whether or not such liabilities or
obligations would have been required to be disclosed on a balance sheet prepared
in conformity with GAAP. Without limiting the generality of the foregoing, to
the best of Weststar's knowledge, Weststar has no liability (and there is no
basis for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim or demand against it giving rise to any liability)
arising out of any injury to persons or property as a result of the ownership,
possession or use of any product manufactured, sold, leased or delivered by
Weststar or any of its dealers or representatives.
5.11 TAX MATTERS.
(a) Weststar (i) has duly and timely filed with the appropriate
governmental authorities all tax returns and reports required to be filed and
(ii) has duly paid, or arranged for payment, all taxes, interest, penalties,
assessments and deficiencies and other governmental charges upon it shown to be
due thereon and its properties, assets, income, business, sales and payrolls,
including all amounts assessed as additional taxes, penalties and interest.
17
(b) Weststar has not been audited by the IRS during the past five (5)
years. Weststar has not executed or filed with the IRS or any other taxing
authority any agreement extending the period for assessment or collection of any
income or other taxes.
(c) Weststar is not a party to any pending action or proceeding nor, to the
best of Weststar's knowledge, is any action or proceeding threatened by any
governmental authority for assessment or collection of taxes, and no claim for
assessment or collection of taxes has been asserted against Weststar.
(d) Weststar has withheld proper and accurate amounts from its employees in
full and complete compliance with all withholding and similar provisions of the
Code and any and all other applicable United States, foreign, state or local
laws, statutes, codes, ordinances, rules and regulations. Weststar has timely
filed the proper federal, foreign, state and local returns, reports and
estimates with respect to employee income tax withholding, social security taxes
and unemployment taxes (or comparable or similar taxes or charges) for all years
and periods (or portions thereof) for which such returns and reports were due,
and any and all amounts that were due and payable have been paid in full. All
payments (including interest and penalties thereon) due or to become due from
Weststar with respect to its employee income tax withholding, social security
taxes and unemployment taxes (or comparable or similar taxes or charges) for any
year or period (or portions thereof) ended on or prior to or including the
Closing Date, have been paid in full or are adequately reserved for (excluding
deferred tax accounts).
5.12 BROKER'S OR FINDER'S FEES. Except for a commission to be paid by
Weststar to Environmental & Financial Consulting, Inc., a Florida corporation,
no agent, broker, person or firm acting on behalf of Weststar, is, or will be,
entitled to any commission or broker's or finder's fees from any of the parties
hereto, or from any Affiliate of the parties hereto, in connection with any of
the transactions contemplated herein.
ARTICLE 6 - COVENANTS OF DENMARK
Denmark hereby covenants and agrees with Weststar as follows:
6.1 CONDUCT OF BUSINESS. During the period from the date of this Agreement
to the Closing Date, Denmark shall cause the Company to conduct operations in
the ordinary and usual course of business and shall use best efforts to preserve
intact business organizations, keep available the services of officers and
employees and maintain satisfactory relationships with licensors, suppliers,
distributors, clients and others having business relationships with the it.
Without limiting the generality of the foregoing, Denmark shall cause the
Company to (a) maintain its Articles of Incorporation and Bylaws in their
respective forms on the date of this Agreement, (b) maintain the compensation
payable or to become payable by the Company to any officer, employee or agent
being paid $20,000 per year or more at their levels on the date of this
Agreement, (c) refrain from making any bonus, pension, retirement or insurance
payment or arrangement with any such person except those that already have been
accrued, (d) refrain from entering into any contract or commitment except
contracts in the ordinary course of business, (e) refrain from making any change
affecting any bank, safe deposit or power of attorney arrangements, and (f)
refrain from
18
declaring or paying any dividend or distribution of cash, stock or other
property. Denmark shall notify Weststar of any unexpected emergency or other
change in the normal course of business or in the operation of the properties of
the Company and of any governmental complaints, investigations or hearings (or
communication indicating that the same may be contemplated), adjudicatory
proceedings or submissions involving any material property of the Company, and
shall keep Weststar fully informed of such events and permit its representatives
prompt access to all materials prepared in connection therewith.
6.2 EXCLUSIVE DEALING. During the period from the date of this Agreement
through Xxxxx 00, 0000, Xxxxxxx shall not take any action, directly or
indirectly, to encourage, initiate or engage in discussions or negotiations
with, or provide any information to, any Person other than Weststar, concerning
any purchase of the PCI Shares or any merger, sale of assets (except in the
ordinary and usual course of business of the Company) or similar transaction
involving the Company.
6.3 REVIEW OF THE COMPANY. Denmark shall permit Weststar and its employees,
agents, attorneys, accountants and other representatives to have, after the date
of execution hereof, full access to the premises and to all of the books,
records, facilities and properties of the Company and shall, and shall cause the
officers and employees of the Company to, furnish Weststar with such financial
and operating data and other information with respect to the Company and its
business operations, financial condition and prospects as Weststar from time to
time shall reasonably request. Such review shall not, however, affect or limit
the representations and warranties made by Denmark hereunder.
6.4 REGULATORY APPROVALS. Denmark shall, and shall use all reasonable
efforts to cause its Affiliates to, apply for all applicable federal and state
regulatory approvals required of them to effectuate the provisions of this
Agreement.
6.5 CHANGES IN CAPITAL STOCK. Prior to the Closing, Denmark shall not take
any action that would permit the Company to make or commit to make any change in
its issued and outstanding capital stock, issue any options, warrants or
convertible securities or make any commitments for the issuance of shares,
options, warrants or convertible securities.
6.6 FURTHER ASSURANCES. Denmark shall deliver or cause to be delivered such
additional instruments and take such additional actions on the Closing Date and
at such other times and places before or after Closing as Weststar reasonably
may request for the purpose of carrying out the provisions of this Agreement.
6.7 KEY EMPLOYEES. From the date of execution of this Agreement until the
Closing Date, Denmark shall cause the Company to make its key employees
available to confer on a regular and frequent basis with one or more designated
representatives of Weststar to report material operational matters and to report
the general status of ongoing operations. Denmark shall exercise all reasonable
efforts to encourage each of these employees to continue in the employ of
Weststar after the Closing Date. Denmark promptly shall advise Weststar of any
resignation by one of these employees that is effective on or before the Closing
Date or that is effective after the Closing Date if notice is given prior to the
Closing Date.
19
6.8 BEST EFFORTS. Denmark shall use all reasonable efforts to fulfill all
of the conditions set forth in this Agreement over which it has control or
influence (including obtaining any authorizations, consents, approvals or
waivers hereunder) and to consummate the transactions contemplated herein.
6.9 NONSOLICITATION OF EMPLOYEES. For the period commencing on the date of
execution of this Agreement and continuing for a period of two years after the
Closing Date, Denmark shall refrain and shall cause its Affiliates to refrain
from directly or indirectly soliciting for employment any individual who
formerly was employed by the Company or who is in the employ of Weststar or one
of its Affiliates, without Weststar's prior written consent.
ARTICLE 7 - COVENANTS OF WESTSTAR
7.1 REGULATORY APPROVALS. Weststar shall, and shall use all reasonable
efforts to cause its Affiliates to, apply for all applicable federal and state
regulatory approvals required of Weststar to effectuate the provisions of this
Agreement. Weststar shall, and shall use all reasonable efforts to cause its
Affiliates to, reasonably provide information to and otherwise reasonably
cooperate with Denmark and its Affiliates in order to allow them to comply with
the requirements of Section 6.4 hereof.
7.2 FURTHER ASSURANCES. Weststar shall deliver or cause to be delivered
such additional documents, and take such additional actions on the Closing Date
and at such other times and places, before or after Closing, as Denmark
reasonably may request for the purpose of carrying out the provisions of this
Agreement.
7.3 CONFIDENTIALITY. Except as may be required by law, Weststar shall
maintain in strict confidence, and shall not disclose, any information regarding
the Company delivered to Weststar pursuant to this Agreement, unless and until
the Closing Date; provided that, this restriction shall not apply to (i)
information in the public domain; (ii) information in the possession of Weststar
without restriction as to use or disclosure and not acquired from Denmark; and
(iii) information obtained from third parties lawfully in possession of it and
were under no obligation of secrecy with respect thereto.
7.4 NONSOLICITATION OF EMPLOYEES OF PCI. Should the closing of this
transaction fail to occur, for a period of two years after the date of this
Agreement, Weststar shall refrain and shall cause its Affiliates to refrain from
directly or indirectly soliciting for employment any individual who formerly was
employed by the Company or who is in the employ of the Company or one of its
Affiliates, without Denmark's prior written consent.
ARTICLE 8 - CONDITIONS TO WESTSTAR'S OBLIGATIONS
The obligations of Weststar contained herein are subject to the
satisfaction or waiver of the following conditions precedent on or prior to the
Closing Date:
20
8.1 NO MATERIAL ADVERSE CHANGE. From December 31, 1999, through the Closing
Date, (i) there shall have been no material adverse change in the assets or
liabilities, the business or condition, financial or otherwise, the results of
operations or the prospects of the Company, (ii) there shall have been no
increase in the compensation, bonuses or benefits payable to employees generally
or to any members of management of the Company, (iii) there shall have been no
payment on or distribution in respect of the capital stock of the Company, (iv)
there shall have been no amendment to the Articles of Incorporation or Bylaws of
the Company and (v) there shall have been no, and no agreement in respect of, a
merger or sale of a material portion of the assets of the Company. Denmark shall
have delivered to Weststar a Certificate, dated the Closing Date, to such
effect.
8.2 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Denmark contained in this Agreement or in any Schedule delivered
pursuant hereto shall be true and correct on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of such date, and Denmark shall have delivered to Weststar on the Closing
Date a certificate, dated the Closing Date, to such effect.
8.3 PERFORMANCE OF AGREEMENTS. Each and all of the acts of Denmark to be
performed on or before the Closing Date pursuant to the terms hereof shall have
been duly performed, and Denmark shall have delivered to Weststar evidence
reasonably satisfactory to Weststar, including a certificate, dated the Closing
Date, to such effect.
8.4 NO PROCEEDINGS. No action or proceeding shall have been instituted or,
to the best knowledge, information and belief of Denmark, threatened before or
by any governmental body or agency, or by any third party, to restrain or
prohibit any of the transactions contemplated hereby, and there shall not be in
effect any injunction or order enjoining or restraining the consummation of the
transactions contemplated hereby, and Denmark shall have delivered to Weststar a
certificate, dated the Closing Date, to the best of Denmark's knowledge, to such
effect.
8.5 GOVERNMENTAL APPROVALS. All governmental and other consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received.
8.6 PROCEEDINGS. All proceedings to be taken in connection with the
transactions contemplated by this Agreement, and all documents incident hereto
and thereto, shall be reasonably satisfactory in form and substance to Weststar
and its counsel, and Weststar shall have received copies of all such documents
and other evidence as it or its counsel reasonably may request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
8.7 COMPANY'S BANKRUPTCY CASE. (i) All fees payable to the U.S. Trustee in
the Bankruptcy Case, both before and after confirmation of the Company's Plan of
Reorganization dated April 9, 1999, as confirmed by the Bankruptcy Court's Order
Confirming Plan dated October 19, 1999 (the "Plan of Reorganization"), shall
have been paid, (ii) there shall have been no modifications or attempts to
modify the Plan of Reorganization, (iii) the Bankruptcy Court shall
21
have issued its Final Decree, or, in the alternative, at the election of
Weststar, the Company shall have filed a Certificate of Substantial
Consummation, and have applied for the entry of a Final Decree, and (iv) all
actions to be performed under the Plan of Reorganization shall have been
performed in accordance with the Plan of Reorganization. In the event that the
Bankruptcy Court shall not have issued its Final Decree within one hundred and
eighty (180) days of the Closing, Weststar, at its option, shall have the right
to rescind the purchase and transfer of the PCI Shares to Weststar and the
transfer of the WEI Shares to Denmark. Such notice of rescission shall be
provided by Weststar to Denmark in writing. Following Denmark's receipt of
Weststar's notice of rescission, both parties shall use their good-faith efforts
to place each party in substantially the position it was in immediately prior to
the Closing, including, without limitation, taking the following actions: (i)
Denmark shall return to Weststar the Note and the WEI Shares, (ii) Denmark shall
reimburse Weststar for any contributions to capital made to the Company
following the Closing Date, (iii) (a) Denmark shall pay Weststar for any
increase in the Company's net worth since the Closing Date, or (b) Weststar
shall pay Denmark for any decrease in the Company's net worth since the Closing
Date, whichever may be the case, (iv) Denmark shall reimburse Weststar for any
loans made by Weststar to the Company following the Closing Date, (v) Denmark
shall reimburse Weststar for any equipment purchased by or leased to the Company
following the Closing Date, or, in the alternative, transfer and assign such
equipment to Weststar, (vi) Weststar shall indemnify and hold Denmark harmless
from any federal tax liability (including penalties and interest) of the
consolidated group of corporations of which Weststar is a member, excluding such
portions as the Company may be responsible for, and (vii) both parties shall be
responsible for their own respective attorney's fees and costs incurred in
placing the parties in their respective positions prior to the Closing.
8.8 OPINION OF COUNSEL. Denmark shall have furnished Weststar with a
favorable opinion, dated the Closing Date, of its counsel, Xxxxxx & Xxxxxxxxx,
P.A., in form and substance reasonably satisfactory to Weststar and its counsel
substantially in the form of EXHIBIT 8.8 hereto.
ARTICLE 9 - CONDITIONS TO OBLIGATIONS OF DENMARK
The obligations of Denmark contained herein are subject to the satisfaction
or waiver of the following conditions precedent on or prior to the Closing Date:
9.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Weststar contained in this Agreement shall be true and correct on
and as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of such date, and Weststar shall have
delivered to Denmark on the Closing Date a certificate, dated the Closing Date,
to such effect. There shall have been no material adverse change to Weststar
since December 31, 1999.
9.2 PERFORMANCE OF AGREEMENTS. Each and all of the agreements to be
performed by Weststar on or before the Closing Date pursuant to the terms hereof
shall have been duly performed, and Weststar shall have delivered to Denmark
evidence reasonably satisfactory to Denmark, including a certificate, dated the
Closing Date, to such effect.
22
9.3 NO PROCEEDINGS. No action or proceeding shall have been instituted or,
to the best knowledge, information and belief of Weststar, threatened before or
by a governmental body or agency or by any third party to restrain or prohibit
any of the transactions contemplated hereby, and there shall not be in effect
any injunction or order enjoining or restraining the consummation of the
transactions contemplated hereby. Weststar shall have delivered to Denmark a
certificate, dated the Closing Date, to the best of Weststar's knowledge, to
such effect.
9.4 GOVERNMENTAL APPROVALS. All governmental and other consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been obtained.
9.5 PROCEEDINGS. All proceedings to be taken in connection with the
transactions contemplated by this Agreement, and all documents incident hereto
and thereto, shall be reasonably satisfactory in form and substance to Denmark
and its counsel, and Denmark shall have received copies of all such documents
and other evidence as it or its counsel reasonably may request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
ARTICLE 10 - SURVIVAL OF REPRESENTATIONS; INDEMNITY
10.1 SURVIVAL OF REPRESENTATIONS. The respective representations and
warranties of the parties contained in this Agreement or in any Schedule
delivered pursuant hereto shall survive the consummation of the transactions
contemplated hereby and continue for a period of three (3) years thereafter;
provided, however, that all representations and warranties of Denmark relating
to ownership of the PCI Shares shall continue indefinitely.
10.2 INDEMNIFICATION BY DENMARK. Denmark shall indemnify Weststar, its
Affiliates and their respective officers, directors and agents (collectively,
the "Weststar Indemnified Parties") against and hold them harmless from all
damages, losses, expenses, claims, demands, suits, causes of action,
proceedings, judgments and liabilities, including reasonable counsel fees and
court costs, assessed, incurred or sustained by or against the Weststar
Indemnified Parties or the Company in excess of $10,000 in the aggregate, with
respect to or arising out of (i) the failure of any representation or warranty
made by Denmark in this Agreement or in any Schedule delivered pursuant hereto
to be true and correct in all material respects as of the date of this Agreement
and as of the Closing Date, (ii) the failure of Denmark to fulfill any of its
covenants or agreements hereunder, and (iii) any action or inaction of the
Company prior to the Closing Date (collectively, "Denmark Liabilities").
In addition to, and not in limitation of, Weststar's rights pursuant to
this Agreement or by law, Weststar shall have the right (i) to offset any
amounts owed to Denmark under the Note for any Denmark Liabilities incurred by
Weststar or the Company prior to the satisfaction of the Note, and (ii) from the
Closing Date until twelve (12) months following Weststar's IPO (as defined in
Section 10.8 hereinbelow), to cause Weststar's transfer agent to stop transfer
of any of the WEI Shares from Denmark to any third party, and Weststar shall
have the right to redeem (without requirement of any payment) such number of WEI
Shares from Denmark (at a value of $6.00 per share) in an amount
23
of Denmark Liabilities incurred by Weststar or the Company. Nothing in this
paragraph shall be interpreted to be a reduction in time of any statute of
limitations afforded Weststar for indemnification by Denmark for Denmark
Liabilities.
10.3 INDEMNIFICATION BY WESTSTAR. Weststar shall indemnify Denmark and
Denmark's agents (collectively, the "Denmark Indemnified Parties") against and
hold them harmless from all damages, losses, expenses, claims, demands, suits,
causes of action, proceedings, judgments and liabilities, including reasonable
counsel fees and court costs, assessed, incurred or sustained by or against the
Denmark Indemnified Parties in excess of $10,000 in the aggregate, with respect
to or arising out of (i) the failure of any representation or warranty made by
Weststar in this Agreement to be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date, (ii) the failure of
Weststar to fulfill any of its covenants or agreements contained herein or in
the Note, and (iii) any action or inaction of the Company after the Closing
Date.
10.4 REDUCTION OF PAYMENTS. If a payment by either party gives rise to a
loss, damage or expense that is subject to indemnification by the other party
hereto, the amount for which the damaged party may receive indemnification shall
be reduced by any insurance proceeds or other payments received by the damaged
party in respect thereof.
10.5 DEFENSE. Each party hereto shall give the indemnifying party prompt
written notice of any claim, assertion, event or proceeding by or in respect of
a third party of which it has knowledge concerning any liability or damage as to
which it may request indemnification hereunder. The party providing
indemnification shall have the right at all times to control the defense or
settlement of any such claim or proceeding through counsel of its own choosing,
and to settle any and all such claims made.
10.6 TIME FOR NOTICE. Any party claiming indemnification hereunder with
respect to the falsity of any representations or warranties herein must give
notice to the other party of its claim for indemnification within the time
period, if any, specified in Section 10.1 hereof for the survival of the
applicable representation or warranty.
10.7 TIME FOR PAYMENT. All indemnification payments required to be made
pursuant to this Article 10 shall be made promptly after demand for payment has
been made by the indemnified party upon the indemnifying party.
10.8 WESTSTAR'S IPO. Weststar anticipates that it will go public and
provide its initial public offering ("Weststar's IPO") within twelve (12) months
of the Closing Date (the "IPO Date"). Should Weststar's IPO not be offered at or
prior to the IPO Date, Denmark shall have the option for a period of thirty (30)
days commencing on the IPO Date to rescind the sale and transfer of the PCI
Shares to Weststar. Such notice of rescission shall be provided by Denmark to
Weststar in writing. Following Weststar's receipt of Denmark's notice of
rescission, both parties shall use their good-faith efforts to place each party
in substantially the position it was in immediately prior to the Closing,
including, without limitation, taking the following actions: (i) Denmark shall
return to Weststar the Note and the WEI Shares, (ii) Denmark shall reimburse
Weststar for any contributions to capital made to the Company following the
Closing Date, (iii) (a) Denmark shall pay Weststar for any increase in the
Company's net worth since the Closing Date, or (b) Weststar shall pay Denmark
24
for any decrease in the Company's net worth since the Closing Date, whichever
may be the case, (iv) Denmark shall reimburse Weststar for any loans made by
Weststar to the Company following the Closing Date, (v) Denmark shall reimburse
Weststar for any equipment purchased by or leased to the Company following the
Closing Date, or, in the alternative, transfer and assign such equipment to
Weststar, (vi) Weststar shall indemnify and hold Denmark harmless from any
federal tax liability (including penalties and interest) of the consolidated
group of corporations of which Weststar is a member, excluding such portions as
the Company may be responsible for, and (vii) Weststar shall be responsible for
Denmark's reasonable attorney's fees and costs incurred in placing the parties
in their positions prior to the Closing. Notwithstanding anything contained
herein to the contrary, the cash portion of the Noncompete Payments shall be
nonrefundable to the benefit of Denmark.
ARTICLE 11 - MISCELLANEOUS
11.1 TERMINATION OF AGREEMENT. The parties hereto shall use all reasonable
efforts to consummate the transactions contemplated hereby as soon as
practicable. If any condition to the performance of a party's obligations herein
is not fulfilled or waived on or prior to March 31, 2000, either party may
terminate this Agreement, and this Agreement (other than the confidentiality
provisions hereof) shall be null and void and have no further effect, provided
that no party in breach of its obligations hereunder shall have the right to
terminate this Agreement. All rights or remedies of a party that accrue as a
result of the breach of any provision of the Agreement shall survive any
termination of this Agreement.
11.2 EXECUTION IN COUNTERPARTS. For the convenience of the parties, this
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same document.
11.3 NOTICES. All notices that are required or may be given pursuant to the
terms of this Agreement shall be in writing and shall be sufficient in all
respects if given in writing and delivered either personally or sent by first
class mail, certified, return receipt requested, postage prepaid, or by
overnight courier service, addressed as follows:
If to the Denmark: Xxxxxx X. Denmark
0000 Xxxxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000
with copy to: Xxxxxx & Xxxxxxxxx, P.A.
000 Xxxxx Xxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
If to Weststar: Weststar Environmental, Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Chief Executive Officer
25
with copy to: Xxxxxxxx & Thames, P.A.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
or to such other address as the party to receive any such communication or
notice may have designated by notice to the other party. Any notices delivered
personally shall become effective at the time of receipt by the person to whom
they are given. Notices sent by certified mail, return receipt requested, or by
overnight courier service shall become effective on the earlier of (i) the date
on which they are accepted or rejected by the person to whom they are addressed,
or (ii) three (3) business days after being deposited in the mails or delivered
to the courier service.
11.4 WAIVERS. Either party hereto may, by written notice to the other
parties hereto, (a) extend the time for the performance of any of the
obligations or other actions of the other under this Agreement; (b) waive any
inaccuracies in the representations or warranties of the other party contained
in this Agreement or in any document delivered pursuant to this Agreement; (c)
waive compliance with any of the conditions to its obligations contained in this
Agreement; or (d) waive or modify performance of any of the obligations of the
other party under this Agreement. Except as provided in the preceding sentence,
no action taken pursuant to this Agreement, including without limitation any
investigation by or on behalf of either party, shall be deemed to constitute a
waiver by either party taking such action of compliance with any representation,
warranty, covenant or agreement contained in this Agreement. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach.
11.5 SPECIFIC PERFORMANCE. Each party hereto acknowledges and agrees that
the remedy at law for any breach of this Agreement would be inadequate, and
agrees and consents that temporary and permanent injunctive and other relief may
be granted without proof of actual damage or inadequacy of legal remedy in any
proceeding that may be brought to enforce any of the provisions of this
Agreement.
11.6 ENTIRE AGREEMENT. This Agreement, together with the Exhibits and
Schedules hereto, constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof and supersedes all prior representations,
agreements and understandings, oral and written, by or among the parties hereto
with respect to the subject matter hereof.
11.7 APPLICABLE LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Florida applicable to contracts made and performed in Florida.
11.8 BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
26
11.9 ASSIGNABILITY. Neither this Agreement nor any of the parties' rights
or obligations hereunder shall be assignable by any party hereto without the
prior written consent of the other parties hereto, except that Weststar may
transfer all or part of its rights and obligations under this Agreement to one
or more of its Affiliates, provided that Weststar shall remain liable for its
obligations hereunder.
11.10 EXPENSES. The parties hereto shall pay all of their own expenses
relating to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel, accountants and
financial advisers. In the event of litigation or other adversary proceeding
with respect to this Agreement or the transactions contemplated hereby, the
nonprevailing party shall reimburse the prevailing party for all reasonable
attorneys' fees and court costs incurred in connection therewith.
11.11 PUBLICITY. Except as may be required by law, no party hereto shall
issue any press release or make any other public statement, and each party shall
keep confidential all matters, relating to or connected with or arising out of
this Agreement or the matters contained herein, unless it obtains the prior
approval of the other party hereto, which approval shall not be unreasonably
withheld; PROVIDED THAT, this restriction does not apply to (i) information in
the public domain, (ii) information in the possession of Denmark or Weststar, as
the case may be, prior to receipt from the other parts; and (iii) information
obtained from a third party lawfully in possession of it and under no obligation
of secrecy as to it.
11.12 AMENDMENTS. This Agreement may not be changed orally, but only by an
agreement in writing signed by the parties hereto. Any provision of this
Agreement can be waived, amended, supplemented or modified by agreement of the
parties hereto.
11.13 NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to, and
shall not, create any rights in any Person other than Weststar and Denmark.
[END OF PAGE]
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
have been duly executed and delivered on the date first above written.
/s/ XXXXXX X. DENMARK
---------------------------------------
XXXXXX X. DENMARK
"Denmark"
WESTSTAR ENVIRONMENTAL, INC.
By: /s/ XXXXXXX X. XXXXX
-----------------------------------
Xxxxxxx X. Xxxxx, Chief Executive
Officer
"Weststar"
STATE OF FLORIDA
COUNTY OF XXXXX
The foregoing instrument was acknowledged before me this 10th day of
March, 2000, by Xxxxxx X. Denmark, who (check one) ____ is personally known to
me or ____ has produced _________________ as identification and who did/did not
take an oath.
/s/ XXXXX XXXXXX XXXXXXXX
-----------------------------------------
Print Name: Xxxxx Xxxxxx Xxxxxxxx
Notary Public, State and County Aforesaid
My commission expires:
[Notarial Seal]
28
STATE OF FLORIDA
COUNTY OF XXXXX
The foregoing instrument was acknowledged before me this 10th day of March,
2000, by Xxxxxxx X. Xxxxx, as Chief Executive Officer of Weststar Environmental,
Inc., a Florida corporation, on behalf of the corporation, who (check one) ____
is personally known to me or ____ has produced _________________ as
identification and who did/did not take an oath.
/s/ XXXXX XXXXXX XXXXXXXX
-----------------------------------------
Print Name: Xxxxx Xxxxxx Xxxxxxxx
Notary Public, State and County Aforesaid
My commission expires:
[Notarial Seal]
29
SCHEDULE 4.9
LITIGATION
None
SCHEDULE 4.13
PROPRIETARY RIGHTS
1. Pipeline Contractors
SCHEDULE 4.14
TAX MATTERS
1. The Company was audited by the IRS in September 1999, the results of which
have been provided by Denmark to Weststar prior to the date hereof.
2. The Company has a note payable with the IRS as outlined in the Company's
December 31, 1999 audited financial statements.
SCHEDULE 4.15
UNION CONTRACTS AND LABOR RELATIONS
None
SCHEDULE 4.16
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
I. EMPLOYEES (AS OF 1/10/00).
NAME HOURLY/SALARY RATE
---- ------------- ----
Xxxxx X. Xxxxxx Salary 40,300.00
Xxxxx X. Xxxxxx Salary 32,500.00
Xxxxxx X. Denmark Salary 25,000.00
Xxxxxxxx X. Best Salary 23,920.00
Xxx X. Xxxxxxxx Salary 12,000.00
Xxxxxxx X. Xxxxxxxx Hourly 15.00
Xxxxxxx X. Xxxxxxx Hourly 15.00
Xxxx X. X'Xxxxxx Hourly 14.00
Xxxxxxx X. Xxxxx Hourly 11.00
Xxxx X. Xxxxxx Hourly 11.00
Xxxxxx Xxxxxx Hourly 10.50
Xxx Xxxxxx Hourly 10.50
Xxxxxx Xxxxx Hourly 10.00
Xxxxxx X. Xxxxxxx Hourly 9.50
Xxxxx X. XxXxxxx Hourly 8.50
Xxxxx Xxxxx Hourly 8.50
Xxxxxxx X. Xxxxxxxx Hourly 7.50
II. EMPLOYEE BENEFIT PLANS.
See Exhibit A attached to this Schedule 4.16.
SCHEDULE 4.19
LEASES
1. Month to month office lease between the Company and Xxx Denmark.
2. Equipment lease between the Company and Xxx Denmark (commenced 6/95)
for four pieces of equipment (see Schedule 4.20) which expires at the
Closing, as such equipment will be assigned at the Closing to the
Company by Denmark.
3. Key Bank - 1998 Ford Explorer - Commenced 8/27/98 and expires
10/28/2001 having monthly lease payments of $528.00.
SCHEDULE 4.20
REAL AND PERSONAL PROPERTY
I. No real property.
II. Material personal property.
A. EQUIPMENT
YEAR MAKE MODEL SERIAL NO. REMARKS
---- ---- ----- ---------- --------
1988 Caterpillar 215 CLC Excavator 4HG02188 XxxXxxxx Xxxx
0000 Xxxxxxxxxxx 120G Grader 4HD01745 SunTrust Lien **
1994 Caterpillar 928F Loader 2XL00783 XxxXxxxx Xxxx
0000 Xxxxxxxxxxx X0XXXXX Dozer 6SL00762 XxxXxxxx Xxxx
0000 Xxxxxxxxxxx D4H Dozer 8PJ01156 SunTrust Lien **
1997 Caterpillar 950F Loader 5SK02279 Lien - Ring Power**
1997 Caterpillar 325 BL Excavator 2JR00499 Lien - Caterpillar**
? ? IR SP 48 Roller NA SunTrust Lien
B. AUTOMOBILES/TRUCKS/TRAILERS
YEAR MAKE MODEL SERIAL NO. REMARKS
---- ---- ----- ---------- --------
1977 High Trailer 7H719740 Xx Xxxx
0000 Xxxx X-000 0XXXX0000XXX00000 Xx Xxxx
0000 Xxxx X-000 0XXXX00XXXXX00000 No Lien
1988 Ford F-250 0XXXX00X0XXX00000 No Lien
1988 International Tractor Trailer 0XXXXXXX0XX000000 No Lien
1994 Ford F-150 0XXXX00X0XXX00000 No Lien
1995 Ford F-250 1FTHF25HOSNB00049 No Lien
1996 Ford F-150 0XXXX00XXXXX00000 Nationsbank Lien
1996 Land Trailer 0XX0X00XX0X000000 SunTrust Lien
1997 Ford F-150 0XXXX000XXXX00000 SunTrust Lien
1998 Ford Explorer 0XXX000X0XXX00000 Leased - Keybank
SCHEDULE 4.21
MATERIAL CONTRACTS
1. Master Contract between Jacksonville Electric Authority and Pipeline
Contractors, Inc. dated March 16, 1998.
2. Agreement between State of Florida Department of Corrections and Pipeline
Contractors, Inc. dated November 16, 1998 (re pump station and forcemain
at Lawtey Correctional Institution).
3. Agreement between Xxxxx X. Xxxxx, Trustee, as Owner, and Pipeline
Contractors, Inc., as Contractor, dated Xxxxx 0, 0000 (XXX Document
A101-1997) (re Hidden Hills Unit #5).
4. Sub-Contract Agreement between Vercon Construction, Inc. and Pipeline
Contractors, Inc. dated August 31, 1999 (re Xxxxxxxxx Xxxx Apartnments
Phase II, III, IV).
5. Sub-Contract between Xxxxx Xxxxxxxx Construction and Pipeline Contractors,
Inc. dated March 6, 2000 (ref. F.A.N.G. Construct Supply Shed).
SCHEDULE 4.22
PERMITS, LICENSES, ETC.
1. State of Florida Department of Business and Professional Regulation
Construction Industry Licensing Board license number CU-C056685 dated
September 15, 1998, having an expiration date of August 31, 2000, for
underground utility and excavation, under the name Xxxxx Xxxxx Xxxxxx at
Pipeline Contractors, Inc.
2. Xxxxx County Occupational License (Account Number 028395-0000-5 dated
September 23, 1999, for "Contractor, All Types," provided to Pipeline
Contractors, Inc.
SCHEDULE 4.24
INSURANCE
1. X.X. Xxxxx Insurance, Inc., as agent for National Trust Insurance Company,
as provided under Xxxxx Certificate of Property Insurance showing an
expiration date of policies of November 29, 2000. [General Liability and
Leased or rented equipment coverage under policy no. CPP0100004490; and
automobile and excess liability under policy no. 0100004490.]
2. Xxxxxx Insurance Company Performance and Payment Bonds provided under bond
nos. 102761 (Lawtey Correctional Institute), 103021 (University of St.
Augustine School of Physical Therapy), and 103931 (JEA - San Xxxx
Boulevard water main installation).
3. Xxxxx Xxxxxx and Company as agent for Amcomp (Workmans Compensation
Insurance Policy Number 4073248).
SCHEDULE 4.25
ACCOUNTS RECEIVABLE
(Exhibit begins on next page)
SCHEDULE 4.26
TRANSACTIONS WITH AFFILIATES
1. Month to month office lease between the Company and Xxx Denmark at a rate
of $8,100 per annum.
2. Equipment lease between the Company and Xxx Denmark for four pieces of
equipment, as described on Schedule 4.19.
SCHEDULE 4.27
BANK ACCOUNTS, ETC.
TYPE OF ACCOUNT FINANCIAL INSTITUTION ACCOUNT NUMBER BALANCE AS OF 12/31/99
---------------- --------------------- -------------- ----------------------
Business Checking SunTrust Bank, North Florida, N.A. 0070003770796 $47,834.02
Tax Account SunTrust Bank, North Florida, N.A. 0070003770800 122.04
Payroll Account SunTrust Bank, North Florida, N.A. 0070003771369 36.84
POWERS OF ATTORNEY
------------------
None
CERTAIN COMPENSATED EMPLOYEES
-----------------------------
See Schedule 4.16
SCHEDULE 4.34
MATERIAL CUSTOMERS
SCHEDULE 4.35
MATERIAL SUPPLIERS
TYPE SUPPLIER TELEPHONE NUMBER CONTACT ALTERNATE CONTACT
------------------- -------------------------- ------------------- ------------ ------------------
STORM Southern Precast 0-000-000-0000 Gene Xxxxxx
Xxxxxx Precast 0-000-000-0000 Xxx Xxxxxxx
------------------- -------------------------- ------------------- ------------ ------------------
PIPE Florida Pipe & Concrete 0-000-000-0000 Xxxxxx
Xxxxx Pipe 0-000-000-0000 Whit
------------------- -------------------------- ------------------- ------------ ------------------
WATER & SEWER Xxxxxx Supply 0-000-000-0000 Xxx Xxxx;Xxxxxx
Xxxxxxxx 0-000-000-0000 Blake
------------------- -------------------------- ------------------- ------------ ------------------
PUMP STATIONS Barney's Pump 0-000-000-0000 Xxxx
Xxxxxx Pump 0-000-000-0000 Don
Custom Pump 0-000-000-0000 Xxxxxxxx Xxxxxxxx Hal
------------------- -------------------------- ------------------- ------------ ------------------
LIMEROCK Mid Florida 496-2251 Xxxxxxx Xx. Xxxxxx (Tue)
Liberty 496-1991 Mr. Xxxxxxx Xxx
------------------- -------------------------- ------------------- ------------ ------------------
ASPHALT Atlantic Coast 0-000-000-0000 Xxxxxx Xxxxx Xxxx Xxxxxxx
J.S.D. Paving 0-000-000-0000 Xxx Xxxxxx
Xxxxx Asphalt 0-000-000-0000 Xxxx Xxxx
------------------- -------------------------- ------------------- ------------ ------------------
SCHEDULE 4.36
PRODUCT WARRANTY
SCHEDULE 4.39
ACCOUNTS PAYABLE
(Exhibit begins on next page)
EXHIBIT I-A
EMPLOYMENT AGREEMENT
(Exhibit begins on next page)
EXHIBIT I-B
NONCOMPETITION AGREEMENT
(Exhibit begins on next page)
EXHIBIT I-C
LEASE AGREEMENT
(Exhibit begins on next page)
EXHIBIT 4.8
FINANCIAL STATEMENTS
(Exhibit begins on next page)
EXHIBIT 8.8
OPINION OF DENMARK'S COUNSEL
(Exhibit begins on next page)
