Exhibit 2.1
SECURITIES EXCHANGE AGREEMENT
SECURITIES EXCHANGE AGREEMENT ("this Agreement") dated as of April 5,
2002 by and between FOUNTAIN PHARMACEUTICALS, INC., a Delaware corporation
("FPHI"), SIRICOMM, INC., a Missouri corporation ("SiriComm"), and the
individuals whose names appear on the signature page hereof, each being a
shareholder (the "Shareholders") of SIRICOMM, INC.
W I T N E S S E T H:
WHEREAS, as of March 14, 2002, there are 9,778 outstanding shares of
the common stock, $1.00 par value of SiriComm (the "SiriComm Stock"), all of
which are owned beneficially and of record by the Shareholders who together own
100% of the issued and outstanding shares of SiriComm Stock, each owning the
number of shares set forth opposite their respective names on the signature page
hereof.
WHEREAS, FPHI proposes to exchange all of the outstanding shares of
SiriComm Stock for the issuance of an aggregate of approximately 9,623,195
post-split shares (described below) of FPHI's common stock, $.001 par value
("FPHI Stock"), representing approximately 77% of the post-closing, post-split
issued and outstanding shares of FPHI Stock at a closing provided for in Section
2 of this Agreement.
WHEREAS, as of the date of this Agreement SiriComm has convertible
interest bearing promissory notes ("Notes") issued and outstanding in the
principal amount of $1,000,000, which convert into shares of SiriComm common
stock.
WHEREAS, FPHI proposes to issue an aggregate of approximately 1,937,136
shares ("Additional Shares") of its post-split shares (described below) of
common stock in connection with the conversion of the Notes into equity of the
combined companies.
WHEREAS, the Board of Directors of both FPHI and SiriComm have
determined that it is desirable to effect a plan of reorganization meeting the
requirements of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended, and the parties intend that the issuance of the FPHI Stock in exchange
for the SiriComm Stock shall qualify as a "tax free" reorganization as
contemplated by the provisions of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants, agreements, representations and warranties contained herein,
the parties hereto agree as follows:
ARTICLE 1
ISSUANCE AND EXCHANGE OF SHARES
1.1 Issuance and Exchange. At Closing to be held in accordance with the
provisions of Article 2 below, and subject to the terms and agreements set forth
herein, FPHI agrees to issue each of the Shareholders who agree, severally and
jointly, to exchange the number of authorized and newly issued shares of FPHI
Stock determined in Section 1.2 below for each share of SiriComm Stock owned by
them. In consideration for the shares of FPHI Stock to be exchanged, the
Shareholders shall each l deliver to FPHI the stock certificates evidencing
their ownership of SiriComm, together with duly executed stock powers to
effectuate the transfer.
1.2 Exchange Ratio.
(a) At Closing, subject to the reverse stock split discussed in
Section 4.3 below, FPHI shall exchange 984.1678 post-split
shares of FPHI Stock for each outstanding share of SiriComm
Stock in accordance with the distribution shown on the
signature page hereof and as full consideration for the
SiriComm Stock.
(b) No fractional shares of FPHI Stock will be issued to any
Shareholder. Accordingly, Shareholders who would otherwise be
entitled to receive fractional shares of FPHI Stock will, upon
surrender of their certificate representing the fractional
shares of SiriComm Stock, receive a full share if the
fractional share exceeds fifty percent (50%) and if the
fractional share is less than fifty percent (50%) the
fractional share shall be canceled.
(c) An aggregate of approximately 9,623,195 post-split shares of
FPHI Stock shall be exchanged for and issued to all of the
SiriComm Shareholders.
1.3 Conversion. At Closing, FPHI shall issue an aggregate of
approximately 1,937,136 Additional Shares in connection with
the conversion of the Notes to the note holders in accordance
with the conversion formula outlined in Schedule 4.2.
ARTICLE 2
CLOSING
2. Closing.
The consummation of the exchange by the Shareholders (the Closing")
shall occur at the offices of SiriComm, Inc., 0000 Xxxxx Xxxx., Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000, on the __ day of April, 2002, or at such other place,
date and time as the parties may agree upon (the "Closing Date"). If the Closing
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fails to occur by May 15, 2002, or by such later date to which the Closing may
be extended as provided hereinabove, this Agreement shall automatically
terminate, all parties shall pay their own expenses incurred in connection
herewith, and no party hereto shall have any further obligations hereunder;
provided, however, that no such termination shall constitute a waiver by any
party that may be in default of representations, warranties or covenants, if any
other party is in default of any representations, warranties or covenants under
this Agreement. At the Closing, as conditions thereto:
2.1 Deliveries by FPHI.
FPHI shall deliver, or cause to be delivered to the Shareholders:
(a) As soon after the Closing as is feasibly possible, and no
later than three business days from the Closing, certificates
for the shares of FPHI Stock being exchanged for their
respective accounts, in form and substance reasonably
satisfactory to the Shareholders and their counsel;
(b) The certificates, resolutions, and opinions specified in
Article 6 below; and
(c) All of the books and records of FPHI.
2.2 Shareholders' Deliveries.
The Shareholders shall deliver to FPHI:
(a) As soon after the Closing as is feasibly possible and no later
than three business days from the Closing, a stock certificate
or certificates evidencing the ownership of each Shareholder
of all shares of SiriComm Stock currently owned by them,
respectively, duly endorsed for transfer to FPHI; and
(b) The certificates, resolutions and opinions specified in
Article 5 below.
2.3 SiriComm's Deliveries.
(a) The original Notes, with a fully executed conversion notice;
(b) All of the books and records of SiriComm.
ARTICLE 3
REPRESENTATIONS OF ALL SHAREHOLDERS
All of the Shareholders hereby represent and warrant to FPHI as follows
(it being acknowledged that FPHI is entering into this Agreement in material
reliance upon each of the following representations and warranties, and that the
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truth and accuracy of each, as evidenced by their signature set forth on the
signature page, constitutes a condition precedent to the obligations of FPHI
hereunder):
3.1 Ownership of Stock. The Shareholders are the lawful owners of the
shares of SiriComm Stock to be transferred to FPHI free and clear of all
preemptive or similar rights, liens, encumbrances, restrictions and claims of
every kind, and the delivery to FPHI of the SiriComm Stock pursuant to the
provisions of this Agreement will transfer to FPHI valid title thereto, free and
clear of all liens, encumbrances, restrictions and claims of every kind. All of
the shares of SiriComm Stock to be exchanged herein have been duly authorized
and validly issued and are fully paid and nonassessable.
3.2 Authority to Execute and Perform Agreement; No Breach. Each
Shareholder has the full legal right and power and all authority and approval
required to enter into, execute and deliver this Agreement, and to sell, assign,
transfer and convey the SiriComm Stock and to perform fully their respective
obligations hereunder. This Agreement has been duly executed and delivered by
each Shareholder and, assuming due execution and delivery by, and enforceability
against FPHI, constitutes the valid and binding obligation of each Shareholder
enforceable in accordance with its terms, subject to the qualifications that
enforcement of the rights and remedies created hereby is subject to (i)
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting the rights and remedies of creditors, and (ii) general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law). No approval or consent of, or filing with, any
governmental or regulatory body, and no approval or consent of, or filing with,
any other person is required to be obtained by the Shareholders or in connection
with the execution and delivery by the Shareholders of this Agreement and
consummation and performance by them of the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by each
Shareholder and the consummation of the transactions contemplated hereby in
accordance with the terms and conditions hereof by each Shareholder will not:
(a) violate, conflict with or result in the breach of any of the
terms of, or constitute (or with notice or lapse of time or
both would constitute) a default under, any contract, lease,
agreement or other instrument or obligation to which a
Shareholder is a party or by or to which any of the properties
and assets of any of the Shareholders may be bound or subject;
(b) violate any order, judgment, injunction, award or decree of
any court, arbitrator, governmental or regulatory body, by
which a Shareholder or the securities, assets, properties or
business of any of them is bound; or
(c) violate any statute, law or regulation.
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3.3 Securities Matters.
(a) The Shareholders have been advised that the FPHI Shares have
not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or any state securities act in
reliance on exemptions there from.
(b) The FPHI Shares are being acquired solely for each
Shareholder's own account, for investment and are not being
acquired with a view to or for the resale, distribution,
subdivision or fractionalization thereof, the Shareholders
have no present plans to enter into any such contract,
undertaking, agreement, or arrangement, and each Shareholder
further understands that the FPHI Shares may only be resold
pursuant to a registration statement under the Securities Act,
or pursuant to some other available exemption.
(c) The Shareholders acknowledge, in connection with the exchange
of the FPHI Shares, that no representation has been made by
representatives of FPHI regarding its business, assets or
prospects other than that set forth herein and that each is
relying upon the information set forth in the filings made by
FPHI pursuant to Section 13 of the Securities Exchange Act of
1934, as amended, and such other representations and
warranties as set forth in this Agreement.
(d) The Shareholders acknowledge that they are either an
"accredited investor" within the meaning of Regulation D under
the Securities Act or they have sufficient knowledge and
experience in financial matters to be capable of evaluating
the merits and risks of exchanging their SiriComm Shares for
FPHI Shares and they are able to bear the economic risk of the
transactions contemplated hereby.
(e) The Shareholders agree that the certificate or certificates
representing the FPHI Shares will be inscribed with
substantially the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933. The securities have been acquired
for investment and may not be sold, transferred, or assigned in the absence of
an effective registration statement for these securities under the Securities
Act of 1933, or an opinion of FPHI's counsel that registration is not required
under said Act."
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ARTICLE 4
REPRESENTATIONS OF PRINCIPAL SHAREHOLDERS
The Principal Shareholders (as indicated on the signature page hereof)
hereby represent and warrant to FPHI as follows:
4.1 Existence and Good Standing. SiriComm is a corporation duly
organized, validly existing, qualified to do business, and in good standing
under the laws of the State of Missouri. SiriComm has the power to own or lease
its properties and assets and to carry on its business as now being conducted
4.2 Capital Stock. SiriComm has an authorized capitalization consisting
of 10,000 shares of Common Stock, of which 9,778 shares are issued and
outstanding. All such outstanding shares have been duly authorized and validly
issued and are fully paid and nonassessable. Except as set forth on Schedule
4.2, there are no outstanding options, warrants, rights, calls, commitments,
conversion rights, rights of exchange, plans or other agreements, commitments or
arrangements of any character providing for the purchase, subscription, issuance
or sale of any shares of the capital stock of SiriComm, other than the exchange
of the SiriComm Shares as contemplated by this Agreement.
4.3 Financial Statements and No Material Changes. Annexed hereto as
Schedule 4.3 are the audited Financial Statements for the year ended November
30, 2001, and the unaudited Financial Statements for the first quarter ended
February 28, 2002, (the "Financial Statements").
The Financial Statements were carefully prepared from the books and
records of SiriComm, and contain the footnotes which would be required in
audited financial statements, present fairly the financial position, assets and
liabilities of SiriComm and the results of its operations for the respective
periods indicated and reflect all necessary accruals, all in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis.
The Financial Statements contain all adjustments (consisting of only normal
recurring accruals) required to be made by GAAP, subject to normal year-end
adjustments.
Since the date of the Financial Statements, there has been (a) no
material adverse change in the assets or liabilities, or in the business or
condition, financial or otherwise, or in the results of operations or prospects
of SiriComm, whether as a result of any legislative or regulatory change,
revocation of any license or rights to do business, fire, explosion, accident,
casualty, labor trouble, flood, drought, riot, storm, condemnation or act of
God, or other public force or otherwise, and (b) no material adverse change in
the assets or liabilities, or in the business or condition, financial or
otherwise, or in the results of operations or prospects of SiriComm and to the
best knowledge, information and belief of SiriComm, no fact or condition exists
or is contemplated or threatened which might cause such a change in the future.
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4.4 Books and Records. The minute books of SiriComm, all the contents
of which have been previously made available to FPHI and its representatives,
contain accurate records of all meetings of and corporate action taken by
(including action taken by written consent) the shareholders and Board of
Directors of SiriComm. SiriComm does not have any of its respective 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)
which (including all means of access thereto and there from) are not under the
exclusive ownership and direct control of SiriComm.
4.5 Title to Properties; Encumbrances.
(a) SiriComm has good, valid and marketable title to (a) all of
its properties and assets (real and personal, tangible and
intangible), including, without limitation, all of the
properties and assets reflected in the balance sheet included
as part of the Financial Statements, and (b) all of the
properties and assets purchased by SiriComm since the date of
the Financial Statements all of which purchases as of a date
not more than two days prior to the date of this Agreement,
have been set forth on Schedule 4.5 attached hereto; in each
case subject to no encumbrance, lien, charge or other
restriction of any kind or character, except for (i) liens
reflected in the balance sheet, included as part of the
Financial Statements; (ii) liens consisting of zoning or
planning restrictions, easements, permits and other
restrictions or limitations on the use of real property or
irregularities in title thereto which do not materially
detract from the value of, or impair the use of, such property
by SiriComm in the operation of its business; (iii) liens for
current taxes, assessments or governmental charges or levies
on property not yet due and delinquent; and (iv) liens
described on Schedule 4.5 attached hereto (liens of the type
described in clause (i), (ii) and (iii) above are hereinafter
sometimes referred to as "Permitted Liens").
(b) The rights, properties and other assets presently owned,
leased or licensed by SiriComm reflected on the balance sheet
included in the Financial Statements or acquired since the
date of the Financial Statements include all rights,
properties and other assets necessary to permit SiriComm to
conduct its business in the same manner as its business has
heretofore been conducted. All such properties and assets
owned or leased by SiriComm are in satisfactory condition and
repair, other than ordinary wear and tear.
4.6 Leases. There are no leases to which SiriComm is a party (as lessee
or lessor). SiriComm's office facility is on a month-to-month basis under an
oral agreement.
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4.7 Material Contracts. Except as set forth on Schedule 4.7 attached
hereto, SiriComm neither has, nor is bound by:
(a) any agreement, contract or commitment relating to the
employment of any person by SiriComm, or any bonus, deferred
compensation, pension, profit sharing, stock option, employee
stock purchase, retirement or other employee benefit plan;
(b) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other
distribution in respect of its capital stock;
(c) any loan or advance to, or investment in, any individual,
partnership, joint venture, corporation, trust, unincorporated
organization, government or other entity (each a "Person") or
any agreement, contract or commitment relating to the making
of any such loan, advance or investment;
(d) any guarantee or other contingent liability in respect of any
indebtedness or obligation of any Person (other than the
endorsement of negotiable instruments for collection in the
ordinary course of business);
(e) any management service, consulting or any other similar type
contract;
(f) any agreement, contract or commitment limiting the freedom of
SiriComm to engage in any line of business or to compete with
any Person;
(g) any agreement, contract or commitment not entered into in the
ordinary course of business which involves $100,000 or more
and is not cancelable without penalty or premium within 30
days; or
(h) any agreement, contract or commitment which might reasonably
be expected to have a potential adverse impact on the business
or operations of SiriComm; or
(i) any agreement, contract or commitment not reflected in the
Financial Statements under which SiriComm is obligated to make
cash payments of, or deliver products or render services with
a value greater than $100,000 individually or $300,000 in the
aggregate, or receive cash payments of, or receive products or
services with a value greater than $100,000 individually or
$300,000 in the aggregate, and any other agreement, contract
or commitment which is material to the conduct of the business
of SiriComm.
Each contract or agreement set forth on Schedule 4.7 (or not required
to be set forth on Schedule 4.7) is in full force and effect and there exists no
default or event of default or event, occurrence, condition or act (including
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the consummation of the transactions contemplated hereby) which, with the giving
of notice, the lapse of time or the happening of any other event or condition,
would become a default or event of default thereunder. SiriComm has not violated
any of the terms or conditions of any contract or agreement set forth on
Schedule 4.7 (or not required to be set forth on Schedule 4.7) in any material
respect, and, to the best knowledge, information and belief of SiriComm, all of
the covenants to be performed by any other party thereto have been fully
performed. Except as set forth on Schedule 4.7, the consummation of the
transactions contemplated hereby does not constitute an event of default (or an
event, which with notice or the lapse of time or both would constitute a
default) under any such contract or agreement.
4.8 Restrictive Documents. Neither SiriComm, nor any Principal
Shareholder is subject to, or a party to, any charter, by-law, 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, which could materially adversely affect the business practices,
operations or condition of SiriComm or any of its assets or property, or which
would prevent consummation of the transactions contemplated by this Agreement,
compliance by the Principal Shareholders with the terms, conditions, and
provisions hereof, or the continued operation of SiriComm's business after the
date hereof or the Closing Date (as hereinafter defined) on substantially the
same basis as heretofore operated or which would restrict the ability of
SiriComm to conduct business in any area.
4.9 Litigation. There is no action, suit, proceeding at law or in
equity, arbitration or administrative or other proceeding by or before (or to
the best knowledge, information and belief of the Principal Shareholders any
investigation by) any governmental or other instrumentality or agency, pending,
or, to the best knowledge, information and belief of SiriComm, threatened
against or affecting SiriComm, or any of its respective properties or rights, or
against the Principal Shareholders, or any officer, director or employee of a
Principal Shareholder other than such items which are insignificant and
immaterial and which do not adversely affect (i) the right or ability of
SiriComm to carry on business as now conducted; (ii) the condition, whether
financial or otherwise, or properties of SiriComm; or (iii) the consummation of
the transactions contemplated hereby, and the Shareholders do not know of any
valid basis for any such action, proceeding, or investigation. There are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
governmental or regulatory body or arbitration tribunal by which either the
Principal Shareholders or SiriComm, or any officer, director or employee of
SiriComm, or the securities, assets, properties or business of any of them is
bound, other than any such items which are insignificant and immaterial and
which do not and will not adversely affect (i) the right of SiriComm to carry on
its business as now conducted and as proposed to be conducted by FPHI after the
consummation of the transactions contemplated by this Agreement; (ii) the
condition, whether financial or otherwise, of properties of SiriComm; or (iii)
the consummation of the transactions contemplated hereby.
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4.10 Taxes. Except as set forth on Schedule 4.10, SiriComm has filed or
caused to be filed, within the times and within the manner prescribed by law,
all federal, state, local and foreign tax returns and tax reports which are
required to be filed by, or with respect to SiriComm. Such returns and reports
reflect accurately all liability for taxes of SiriComm for the periods covered
thereby. Except as set forth on Schedule 4.10, all federal, state, local and
foreign income, profits, franchise, employment, sales, use, occupancy, excise
and other taxes and assessments, stock and transfer taxes (including interest
and penalties) payable by, or due from, SiriComm has been fully paid and fully
provided for in the books and financial statements of SiriComm. No examination
of any tax return of SiriComm is currently in progress. There are no outstanding
agreements or waivers extending the statutory period of limitation applicable to
any tax return of SiriComm. Schedule 4.10 lists all tax sharing contracts,
agreements or arrangements to which SiriComm is a party and all such contracts,
agreements and arrangements have been terminated prior to the Closing Date with
no liability or obligation to SiriComm.
4.11 Liabilities. SiriComm has no outstanding claims, liabilities or
indebtedness, contingent or otherwise, which are not properly reflected in the
Financial Statements in a manner consistent with past practice, other than
liabilities incurred subsequent to the date of the Financial Statements in the
ordinary course of business not exceeding $100,000 individually or $300,000 in
the aggregate; the reserves reflected in the Financial Statements are adequate,
appropriate and reasonable. SiriComm is not in default in respect of the terms
or conditions of any indebtedness.
4.12 Insurance. Set forth on Schedule 4.12 is a brief description of
insurance policies (specifying the insurer, the policy number or coverage note
number with respect to binders and the amount of any deductible, describing the
pending claims if such claims exceed the applicable policy limits, setting forth
the aggregate amount paid out by the insurer under each policy from December 31,
2000 through the date hereof, and the aggregate limit, if any, of the insurer's
liability thereunder) which SiriComm maintains with respect to its business,
properties or employees. Such policies are valid, binding and enforceable in
accordance with their terms and are in full force and effect and are free from
any right of termination on the part of the insurance carriers. Such policies,
with respect to their amounts and types of coverage, are adequate to insure
fully against risks to which SiriComm's property and assets are normally exposed
in the operation of its businesses. SiriComm is not in default with respect to
any material provision in any such policy or binder and has not failed to give
any notice or present any claim under any such policy or binder in due and
timely fashion, and SiriComm has not received any notice of cancellation or
non-renewal with respect to any such policy or binder. There are no outstanding
unpaid claims under any such policy or binder which have gone unpaid for more
than 45 days or as to which the carrier has disclaimed liability.
4.13 Intellectual Properties. The operation of the business of SiriComm
requires no rights under Intellectual Property (as hereinafter defined) other
than rights under Intellectual Property listed on Schedule 4.13, and rights
granted to SiriComm pursuant to agreements listed on Schedule 4.13. Within the
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three-year period immediately prior to the date of this Agreement, the business
of SiriComm did not make use of Intellectual Property rights other than rights
under Intellectual Property listed on Schedule 4.13 and rights granted to
SiriComm pursuant to agreements listed on Schedule 4.13. Except as otherwise set
forth on Schedule 4.13, SiriComm owns all right, title and interest in the
Intellectual Property listed on Schedule 4.13 including, without limitation,
exclusive rights to use and license the same. Each item of Intellectual Property
listed on Schedule 4.13 has been duly registered with, filed in, or issued by
the appropriate domestic or foreign governmental agency, to the extent required,
and each such registration, filing and issuance remains in full force and
effect. Except as set forth on Schedule 4.13, no claim adverse to the interests
of SiriComm in the Intellectual Property or agreements listed on Schedule 4.13
has been made in litigation. To the best knowledge, information and belief of
the Principal Shareholders, no such claim has been threatened or asserted, no
basis exists for any such claim, and no Person has infringed or otherwise
violated the rights of SiriComm in any of the Intellectual Property or
agreements listed on Schedule 4.13. Except as set forth on Schedule 4.13, no
litigation is pending wherein SiriComm is accused of infringing or otherwise
violating the Intellectual Property right of another, or of breaching a contract
conveying rights under Intellectual Property. To the best knowledge, information
and belief of the Principal Shareholders, no such claim has been asserted or
threatened against SiriComm, nor are there any facts that would give rise to
such a claim. For purposes of this Section 4.13, "Intellectual Property" means
domestic and foreign patents, patent applications, registered and unregistered
trademarks and service marks, trade names, registered and unregistered
copyrights, computer programs, data bases, trade secrets and proprietary
information. The Principal Shareholders will transfer any Intellectual Property
owned by them and used in SiriComm's business to FPHI.
4.14 Compliance with Laws. Neither SiriComm, nor to the knowledge of
SiriComm, any of its Principal Shareholders, officers, directors or employees of
SiriComm are in violation of any applicable order, judgment, injunction, award
or decree, related to, arising out of or affecting the business or operations of
SiriComm or its respective properties or assets. Neither the Principal
Shareholders of SiriComm, nor to the knowledge of SiriComm, any of its officers,
directors or employees of SiriComm are in violation of any federal, state, local
or foreign law, ordinance, regulation or any other requirement of any
governmental or regulatory body, court or arbitrator (including, without
limitation, laws relating to the environment and OSHA and the Americans with
Disabilities Act) other than insignificant or immaterial violations which do not
and will not adversely affect (i) SiriComm's Business or Property; (ii) the
business proposed to be conducted by FPHI after the consummation of the
transactions contemplated by this Agreement; or (iii) the consummation of the
transactions contemplated by this Agreement. Each permit, license, order or
approval of any governmental or regulatory body or other applicable authority
("Permits") that is material to the conduct of SiriComm's Business is in full
force and effect, no violations are or have been recorded in respect of any
permit and no proceeding is pending or, to the knowledge of the Principal
Shareholders or SiriComm, threatened, to revoke or limit any Permit, which
revocation or limitation could have an adverse effect on SiriComm's Business or
Property or the business to be conducted by FPHI after the consummation of the
transactions contemplated by this Agreement. Schedule 4.14 contains a list of
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all Permits. Except as set forth on Schedule 4.14, no approval or consent of any
person is needed in order that the Permits continue in full force and effect
following the consummation of the transactions contemplated by this Agreement.
4.15 Employment Relations.
(a) SiriComm is in compliance with all federal, state or other
applicable laws, domestic or foreign, respecting employment
and employment practices, terms and conditions of employment
and wages and hours, and has not and is not engaged in any
unfair labor practice;
(b) no unfair labor practice complaint against SiriComm is
currently pending before the National Labor Relations Board
nor has such a complaint been pending in the last two years;
(c) there is no labor strike, dispute, slowdown or stoppage
actually pending or threatened against or involving SiriComm
nor has one existed during the last two years;
(d) no representation question exists respecting the employees of
SiriComm ;
(e) no grievance which might have an adverse effect upon SiriComm
or the conduct of SiriComm's business exists, no arbitration
proceeding arising out of or under any collective bargaining
agreement is pending and no claim therefore has been asserted;
(f) SiriComm is not a party to, nor does there otherwise exist,
any union, collective bargaining agreement or similar
agreement with respect to the employees of SiriComm and no
collective bargaining agreement or similar agreement is
currently being negotiated by SiriComm; and
(g) SiriComm has not experienced any labor difficulty during the
last two years. There has not been, and to the best knowledge,
information and belief of the Principal Shareholders there
will not be, any adverse change in relations with employees of
SiriComm as a result of any announcement of the transactions
contemplated by this Agreement.
4.16 Employee Benefit Plans.
(a) Schedule 4.16 contains a complete list, as of December 31,
2001, of all employees, including their names, birth dates,
job titles, base salaries and dates of hire. Schedule 4.16
contains a true and complete list and accurate description of
each employee welfare benefit plan (an "Employee Welfare
Plan"), as defined in Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintained
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currently or at any time by SiriComm or any other organization
which as of the Closing Date is a member of a controlled group
of organizations within the meaning of Section 414(b), (c),
(m) or (o) of the Internal Revenue Code of 1986, as amended,
(the "Code"), of which SiriComm is a member (an "ERISA
Affiliate"), or to which SiriComm or any ERISA Affiliate
contributes or is required to contribute or contributed or was
required to contribute at any time. Schedule 4.16 contains a
true and complete list and accurate description of each
employee pension benefit plan, as defined in Section 3(2) of
ERISA (an "Employee Pension Plan"), maintained currently or at
any time by SiriComm or any ERISA affiliate or to which
SiriComm or any ERISA Affiliate contributes or is required to
contribute or contributed or was required to contribute at any
time. The Employee Welfare Plans, the Employee Pension Plans
and the other plans listed on Schedule 4.16 are collectively
referred to herein as the "Plans." Neither SiriComm nor any
ERISA Affiliate has maintained at any time, nor does it
contribute to or has it contributed to or is or was required
to contribute to: (i) any multi-employer plan (as defined in
Section 3(37) of ERISA); or (ii) any funded or unfunded
medical, health or life insurance plans or arrangements for
current or future retirees or terminated employees.
(b) With respect to each current Plan, FPHI has been provided
heretofore with true and complete copies of: (i) all Plan
documents and all documents or instruments establishing or
constituting any related trust, annuity contract or other
funding instrument, and any amendments thereto; (ii) the most
recent determination letter received from the IRS; (iii) the
most recent financial statement; (iv) the most recent IRS Form
5500; and (v) written descriptions of all non-written
agreements relating to the Plans. All current Plans, all Plan
documents and all documents or instruments establishing or
constituting any related trust, annuity contract or other
funding instrument, and any amendments thereto, comply in all
material respects with the provisions of ERISA and the Code
and applicable laws, rules and regulations. All necessary
governmental approvals for all current Plans have been
obtained and favorable determinations as to the qualification
under the Code of each of the current Plans, and for any Code
Section 501(c)(9) trust maintained in connection with any
current Employee Welfare Plan, and each amendment thereto,
have been made by the IRS, or have been applied for, and no
event has occurred and no facts or circumstances exist that
may cause the loss of any such qualification or may cause any
such application to be denied.
(c) Except as set forth on Schedule 4.16, the administration of
all Plans has been consistent with, and in compliance in all
material respects with, applicable requirements of the Code
and ERISA, including, without limitation, compliance on a
timely basis with all requirements for reporting, disclosure
and requirements for the continuation of group health
insurance. Neither SiriComm, any ERISA Affiliate nor any Plan
13
fiduciary (as defined in Section 3(21) of ERISA), with respect
to any Plan, has engaged in any transaction or acted or failed
to act in any manner that violates Section 404 or 406 of ERISA
or engaged in any prohibited transaction (as defined in
Section 4975(c)(1) of the Code) for which there exists neither
a statutory nor regulatory exemption or for which an exemption
has not been obtained. All obligations required to be
performed by SiriComm or any ERISA Affiliate under each Plan
have been performed, and SiriComm is not in violation of the
terms of any Plan, nor does SiriComm or the Principal
Shareholders have any knowledge of any existing violation by
any other party of any term or requirement of or applicable to
any current Plan. All contributions required by law to have
been made under any Plan, or to any trusts or funds
established thereunder or in connection therewith, have been
made by the due dates thereof (including any valid
extensions).
(d) No claims, suits or other proceedings are pending or
threatened, and no facts or circumstances exist that could
provide a basis for any such claim, suit or other proceeding,
by any of SiriComm's or any ERISA Affiliate's current or
former employees, any participant (as defined in Section 3(7)
of ERISA) to any Plan maintained at any time by SiriComm or
any ERISA Affiliate to which SiriComm contributes or has
contributed or is or was required to contribute, any fiduciary
of any Plan, any beneficiary (as defined in Section 3(8) of
ERISA) of any such person or by any governmental body, agency
or instrumentality thereof relating to or affecting any Plan,
other than usual and ordinary claims for benefits by eligible
persons. Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby
will constitute: (i) a termination of employment or other
event entitling any person to any additional or other
benefits, or that would otherwise modify any benefits or the
vesting of any benefits, under any Plan maintained at any time
by SiriComm or any ERISA affiliate, or to which SiriComm or
any ERISA Affiliate contributes or has contributed or is or
was required to contribute; or (ii) a violation of Section 404
or 406 of ERISA or a prohibited transaction (as defined in
Section 4975(c)(1) of the Code) for which there exists neither
a statutory nor regulatory exemption or for which an exemption
has not been obtained.
(e) Neither SiriComm nor any ERISA Affiliate maintains any Plans
that are subject to the requirements of Section 412 of the
Code.
4.17 Environmental Laws and Regulations.
(a) SiriComm has not generated, transported or disposed of any
hazardous material (defined below) during the past three
years.
(b) SiriComm has no Hazardous Materials at any site or facility
owned or operated presently or at any previous time by
SiriComm.
14
SiriComm is in compliance in all material respects with all applicable
federal, state and local laws and regulations relating to product registration,
pollution control and environmental contamination including, but not limited to,
all laws and regulations governing the generation, use, collection, discharge,
or disposal of Hazardous Materials and all laws and regulations with regard to
record keeping, notification and reporting requirements respecting Hazardous
Materials. SiriComm has not been alleged to be in violation of, and has not been
subject to any administrative or judicial proceeding pursuant to, such laws or
regulations either now or any time during the past three years. There are no
facts or circumstances which SiriComm or the Principal Shareholders reasonably
expects could form the basis for the assertion of any Environmental Claim (as
defined below) against SiriComm relating to environmental matters including, but
not limited to, any Environmental Claim arising from past or present
environmental practices asserted under CERCLA (as defined below) and RCRA (as
defined below), or any other federal, state or local environmental statute,
which SiriComm or the Principal Shareholders believes might have an adverse
effect on the business, results of operations, financial condition or prospects
of SiriComm.
For purposes of this Section 4.17, the following terms shall have the
following meanings: (A) "Hazardous Materials" shall mean materials defined as
"hazardous substances", "hazardous wastes" or "solid wastes" in (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. xx.xx. 9601--5657, and any amendments thereto ("CERCLA"); (ii) the
Resource Conservation and Recovery Act, 42 U.S.C. ss.ss.6901-6987 and any
amendments thereto ("RCRA"); and (iii) any similar federal, state or local
environmental statute; and (B) "Environmental Claim" shall mean any and all
claims, demands, causes of actions, suits, proceedings, administrative
proceedings, losses, judgments, decrees, debts, damages, liabilities, court
costs, attorneys' fees and any other expenses incurred, assessed or sustained by
or against SiriComm.
4.18 Interests in Clients, Suppliers, Etc. As of the date of closing no
officer or director of SiriComm possesses, directly or indirectly, any financial
interest in, or is a director, officer or employee of, any corporation, firm,
association or business organization which is a client, supplier, customer,
lessor, lessee, or competitor or potential competitor of SiriComm. Ownership of
securities of a company whose securities are registered under the Securities
Exchange Act of 1934, as amended, not in excess of 1% of any class of such
securities shall not be deemed to be a financial interest for purposes of this
Section 4.18.
4.19 Powers of Attorney and Compensation of Employees. Set forth on
Schedule 4.19 is an accurate and complete list showing (a) the names of all
persons, if any, holding powers of attorney from SiriComm and a summary
statement of the terms thereof; and (b) the names and current salaries,
including bonus and fringe benefits (other than those described on Schedule 4.16
hereto) of all officers and of all persons whose compensation from SiriComm for
the calendar year to date ended on the Financial Statement date exceeded an
annualized rate of $100,000, together with a statement of the full amount paid
or payable to each such person for services rendered during such fiscal year.
15
4.20 No Changes Since Financial Statement Date. Since the audited
Financial Statements for year ended November 30, 2001, and the unaudited interim
Financial Statements for the first quarter ended February 28, 2002, SiriComm has
not:
(a) incurred any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise), except
liabilities and obligations in the ordinary course of business
and consistent with past practice, resulting in an increase
for the liabilities shown on the Financial Statements of more
than $200,000 in the aggregate;
(b) permitted any of its assets to be subjected to any mortgage,
pledge, lien, security interest, encumbrance, restriction or
charge of any kind (other than Permitted Liens);
(c) sold, transferred or otherwise disposed of any assets except
inventory sold in the ordinary course of business and
consistent with past practice;
(d) made any single capital expenditure or commitment in excess of
$200,000 or made aggregate capital expenditures and
commitments in excess of $500,000;
(e) declared or paid any dividend or made any distribution on any
shares of its capital stock, or redeemed, purchased or
otherwise acquired any shares of its capital stock or any
option, warrant or other right to purchase or acquire any such
shares;
(f) made any bonus or profit sharing distribution or payment of
any kind;
(g) increased its indebtedness for borrowed money, or made any
loan to any Person;
(h) written off as uncollectible any notes or accounts receivable,
except immaterial write-downs or write-offs in the ordinary
course of business and consistent with past practice which do
not exceed $250,000 in the aggregate charged to applicable
reserves, and none of which individually or in the aggregate
is material to SiriComm;
(i) granted any increase in the rate of wages, salaries, bonuses
or other remuneration or benefits of any executive employee or
other employees or consultants, and no such increase is
customary on a periodic basis or required by agreement or
understanding except as set forth on Schedules 4.16 and 4.20;
16
(j) canceled or waived any claims or rights of substantial value;
(k) made any change in any method of accounting or auditing
practice;
(l) otherwise conducted its business or entered into any
transaction, except in the usual and ordinary manner and in
the ordinary course of business and consistent with past
practices;
(m) paid, discharged or satisfied any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) other
than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of
liabilities and obligations reflected and reserved against in
SiriComm's Financial Statements or incurred in the ordinary
course of business and consistent with past practice since the
date of the Financial Statements;
(n) paid, loaned or advanced any amount to, or sold, transferred
or leased any properties or assets (real, personal or mixed,
tangible or intangible to, or entered into any agreement or
arrangement of any kind with, any of its officers, directors
or shareholders or any affiliate or associate of its officers,
directors or shareholders, except compensation to officers at
rates not exceeding the rate of compensation in effect as of
the date of the Financial Statements;
(o) suffered any material adverse changes in its working capital,
financial condition, assets, liabilities (absolute, accrued,
contingent or otherwise), reserves, business operations or
prospects; or
(p) agreed, whether or not in writing, to do any of the foregoing.
4.21 Certain Business Practices. No officer, director, shareholder,
employee, agent or other representative of SiriComm, or any person acting on
behalf of SiriComm, has directly or indirectly, within the past two years, given
or agreed to give any illegal, unethical or improper gift or similar benefit to
any customer, supplier, governmental employee or other person who is or may be
in a position to help or hinder SiriComm in connection with an actual or
proposed transaction.
4.22 Subsidiaries. SiriComm has no subsidiaries or interest in any
corporation, partnership, joint venture or other entity.
4.23 Disclosure. To the best of the Principal Shareholder's knowledge
and belief, neither this Agreement, nor the Financial Statements referred to in
Section 4.3 hereof, any schedule, exhibit or certificate attached hereto or
delivered in accordance with the terms hereof, or any document or statement in
writing which has been supplied by or on behalf of the Principal Shareholders or
by or on behalf of any of SiriComm's directors or officers in connection with
the transactions contemplated by this Agreement, contains any untrue statement
17
of a material fact, or omits any statement of a material fact necessary in order
to make the statements contained herein or therein not misleading. There is no
fact known to the Principal Shareholders or SiriComm which could materially and
adversely affect the business, prospects or financial condition of SiriComm or
any of its subsidiaries or their respective properties or assets, which has not
been set forth in this Agreement, the Financial Statements referred to in
Section 4.3 hereof (including the footnotes thereto), any schedule, exhibit or
certificate attached hereto or delivered in accordance with the terms hereof or
any document or statement in writing which has been supplied by or on behalf of
a Shareholder or by or on behalf of any of SiriComm's directors or officers in
connection with the transactions contemplated by this Agreement.
4.24 Broker's or Finder's Fees. No agent, broker, person or firm acting
on behalf of the Principal Shareholders or SiriComm is, or will be, entitled to
any commission or broker's or finder's fees from any of the parties hereto, or
from any Person controlling, controlled by or under common control with any of
the parties hereto, in connection with any of the transactions contemplated by
this Agreement.
4.25 Copies of Documents. The Principal Shareholders have caused to be
made available for inspection and copying by FPHI and its advisers, true,
complete and correct copies of all documents referred to in this Article 4 or in
any Schedule attached hereto.
ARTICLE 5
REPRESENTATIONS OF FPHI
FPHI represents, warrants and agrees as follows:
5.1 Organization and Corporate Power. FPHI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. FPHI has all requisite corporate power and authority to conduct its
business as now being conducted. FPHI's Articles of Incorporation as amended to
date, certified by the Secretary of State for the State of Delaware, and the
Bylaws of FPHI as amended to date, certified by the President and the Secretary
of FPHI, which have been delivered to the Shareholders prior to the execution
hereof, are true and complete copies thereof as in effect as of the date hereof.
5.2 Authorization. FPHI has full power, legal capacity and authority to
enter into this Agreement, to execute all attendant documents and instruments
necessary to consummate the transaction herein contemplated, and to exchange the
FPHI Shares with the Shareholders, and to perform all of its obligations
hereunder. This Agreement and all other agreements, documents and instruments to
be executed in connection herewith have been effectively authorized by all
necessary action, corporate or otherwise, on the part of FPHI, which
authorizations remain in full force and effect, have been duly executed and
18
delivered by FPHI, and no other corporate proceedings on the part of FPHI are
required to authorize this Agreement and the transactions contemplated hereby,
except as specifically set forth herein. This Agreement constitutes the legal,
valid and binding obligation of FPHI and is enforceable with respect to FPHI in
accordance with its terms, except as enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, priority or other laws or court
decisions relating to or affecting generally the enforcements of creditors'
rights or affecting generally the availability of equitable remedies. Neither
the execution and delivery of this Agreement, nor the consummation by FPHI of
any of the transactions contemplated hereby, or compliance with any of the
provisions hereof, will (i) conflict with or result in a breach or, violation
of, or default under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, lease, credit agreement or other agreement,
document, instrument or obligation (including, without limitation, any of its
charter documents) to which FPHI is a party or by which FPHI or any of its
assets or properties may be bound, or (ii) violate any judgment, order,
injunction, decree, statute, rule or properties of FPHI. No authorization,
consent or approval of any public body of authority or any third party is
necessary for the consummation by FPHI of the transactions contemplated by this
Agreement.
5.3 Capitalization. The authorized capital stock of FPHI consists of a
total of 57,000,000 shares, consisting of: (i) 50,000,000 shares of Common
Stock, $.001 par value, (ii) 5,000,000 shares of Class B Common Stock, $.001 par
value, and (iii) 2,000,000 shares of Preferred Stock, $.001 par value. As of the
date of Closing, there will be approximately 99,672 post-60-for-1-split shares
of FPHI's Common Stock issued and outstanding and zero shares of Preferred Stock
issued and outstanding. As of the date of Closing, the Board of Directors and a
majority of shareholders of FPHI will have duly authorized an amendment of
FPHI's Articles of Incorporation so as to approve: (i) a 1 for 60 reverse split
of its common stock, (ii) an increase in its authorized shares of Common Stock
to 100,000,000 shares; (iii) an increase in its authorized shares of Preferred
Stock to 5,000,000 shares; (iv) a change in the par value of the Common Stock
and Preferred Stock to $.001; (v) a change in the name of the company; (vi) a
change in the officers, directors, registered agent, and corporate address of
the company; (vii) a 2002 Equity Incentive Plan or an amendment to the 1998
Stock Option Plan; and (viii) a change of its accounting firm. Said amendment to
the Articles of Incorporation will be duly and properly filed as soon after
Closing as is feasibly possible. All of the outstanding shares of FPHI Common
Stock have been, and all of FPHI's Common Stock to be issued and sold to each
Shareholder pursuant to this Agreement, when issued and delivered as provided
herein will be duly authorized, validly issued, fully paid and non-assessable
and free of preemptive or similar rights. Except as set forth on Schedule 5.3
there are no options, warrants, convertible debt instruments, rights, agreements
or commitments of any character obligating FPHI contingently or otherwise to
issue any shares or to register any shares of its capital stock under any
applicable federal or state securities laws.
5.4 Financial Statements.
(a) To management's knowledge and belief, FPHI's financial
statements contained in its Form 10-KSB filing for the fiscal
year ended September 30, 2001, its Form 10-QSB filing for the
quarter period ended December 31, 2001, (collectively "FPHI's
Financial Statements") are complete in material respects and
19
have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout
the periods indicated. To management's knowledge and belief,
FPHI's Financial Statements accurately set out and describe
the financial condition and operating results of FPHI as of
the dates, and for the periods indicated therein, subject to
normal year-end audit adjustments. Except as set forth in
FPHI's Financial Statements and to management's knowledge and
belief, FPHI has no liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of
business subsequent to December 31, 2001, and (ii) obligations
under contracts and commitments incurred in the ordinary
course of business and not required under generally accepted
accounting principles to be reflected in FPHI's Financial
Statements. FPHI maintains and will continue to maintain a
standard system of accounting established and administered in
accordance with generally accepted accounting principles.
(b) To management's knowledge and belief, except as set forth in
Schedule 5.4, since December 31, 2001 there has been (i) no
material adverse change in the assets or liabilities, or in
the business or condition, financial or otherwise, or in the
results of operations or prospects, of FPHI whether as a
result of any legislative or regulatory change, revocation of
any license or rights to do business, fire, explosion,
accident, casualty, labor trouble, flood, drought, riot,
storm, condemnation or act of God or other public force or
otherwise and (ii) no material adverse change in the assets or
liabilities, or in the business or condition, financial or
otherwise, or in the results of operations or prospects, of
FPHI and to the best knowledge, information and belief of
FPHI, no fact or condition exists or is contemplated or
threatened which might cause such a change in the future.
5.5 Subsidiaries. FPHI has no subsidiaries and no investments, directly
or indirectly, or other financial interest in any other corporation or business
organization, joint venture or partnership of any kind whatsoever.
5.6. Absence of Undisclosed Liabilities. To management's knowledge and
belief, except as and to the extent reflected or reserved against in the most
recent balance sheet included in the FPHI's Financial Statements, FPHI has no
liability(s) or obligation(s) (whether accrued, to become due, contingent or
otherwise) which individually or in the aggregate could have a materially
adverse effect on the business, assets, properties, condition (financial or
otherwise) or prospects of FPHI. Except as disclosed on Schedule 5.6 hereto,
there are no material changes in the business of FPHI. At Closing, FPHI shall
have approximately $50,000 in its checking account, no other assets, and a note
due to Finter Bank in the principal amount of $100,000.
20
5.7 No Pending Material Litigation or Proceedings. There are no
actions, suits or proceedings pending or, to the best of FPHI's knowledge,
threatened against or affecting FPHI (including actions, suits or proceedings
where liabilities may be adequately covered by insurance) at law or in equity or
before or by any federal, state, municipal or other governmental department,
commission, court, board, bureau, agency or instrumentality, domestic or
foreign, or affecting any of the officers or directors of FPHI in connection
with the business, operations or affairs of FPHI, which might result in any
adverse change in the business, properties or assets, or in the condition
(financial or otherwise) of FPHI, or which might prevent the sale of the
transactions contemplated by this Agreement. FPHI is not subject to any
voluntary or involuntary proceeding under the United States Bankruptcy Code and
has not made an assignment for the benefit of creditors.
5.8 Disclosure. Neither this Agreement, nor any certificate, exhibit,
or other written document or statement, furnished to the Shareholders by FPHI in
connection with the transactions contemplated by this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to be stated in order to make the statements contained
herein or therein not misleading.
5.9 Compliance with Law and Government Regulations. To management's
knowledge and belief, FPHI is in compliance with all applicable statutes,
regulations, decrees, orders, restrictions, guidelines and standards, whether
mandatory or voluntary, imposed by the United States of America, any state,
county, municipality or agency of any thereof, and any foreign country or
government to which FPHI is subject. Without limiting the generality of the
foregoing, FPHI has filed all reports and statements required to be filed
pursuant to the Securities Act of 1933 (the "1933 Act") and Securities Exchange
Act of 1934 (the "1934 Act") including all periodic reports required under the
Section 13 or 15 of the 1934 Act and Form SR reports under Rule 463 of the 1933
Act. Each of such reports was complete, did not contain any material
misstatement of or omit to state any material fact.
5.10 Books and Records. The minute books of FPHI, all the contents of
which have been previously made available to SiriComm and its representatives,
to management's knowledge and belief, contain accurate records of all meetings
of, and corporate action taken by (including action taken by written consent)
the shareholders and Board of Directors of FPHI. FPHI does not have any of its
respective 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) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of FPHI.
5.11 Material Contracts. To management's knowledge and belief, except
as set forth on Schedule 5.11 attached hereto, FPHI does not have, nor is bound
by:
21
(a) any agreement, contract or commitment relating to the
employment of any person by FPHI, or any bonus, deferred
compensation, pension, profit sharing, stock option, employee
stock purchase, retirement or other employee benefit plan;
(b) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other
distribution in respect of its capital stock;
(c) any loan or advance to, or investment in, any individual,
partnership, joint venture, corporation, trust, unincorporated
organization, government or other entity (each a "Person") or
any agreement, contract or commitment relating to the making
of any such loan, advance or investment;
(d) any guarantee or other contingent liability in respect of any
indebtedness or obligation of any Person (other than the
endorsement of negotiable instruments for collection in the
ordinary course of business);
(e) any management service, consulting or any other similar type
contract;
(f) any agreement, contract or commitment limiting the freedom of
FPHI to engage in any line of business or to compete with any
Person;
(g) any agreement, contract or commitment not entered into in the
ordinary course of business which involves $100,000 or more
and is not cancelable without penalty or premium within 30
days; or
(h) any agreement, contract or commitment which might reasonably
be expected to have a potential adverse impact on the business
or operations of FPHI; or
(i) any agreement, contract or commitment not reflected in the
Financial Statements under which FPHI is obligated to make
cash payments of, or deliver products or render services with
a value greater than $100,000 individually or $300,000 in the
aggregate, or receive cash payments of, or receive products or
services with a value greater than $100,000 individually or
$300,000 in the aggregate, and any other agreement, contract
or commitment which is material to the conduct of the business
of FPHI.
Each contract or agreement set forth on Schedule 5.11 (or not required
to be set forth on Schedule 5.11) is in full force and effect and there exists
no default or event of default or event, occurrence, condition or act (including
the consummation of the transactions contemplated hereby) which, with the giving
of notice, the lapse of time or the happening of any other event or condition,
would become a default or event of default thereunder. To management's knowledge
22
and belief, FPHI has not violated any of the terms or conditions of any contract
or agreement set forth on Schedule 5.11 (or not required to be set forth on
Schedule 5.11) in any material respect, and, to the knowledge and belief of
FPHI, all of the covenants to be performed by any other party thereto have been
fully performed. Except as set forth on Schedule 5.11, the consummation of the
transactions contemplated hereby does not constitute an event of default (or an
event, which with notice or the lapse of time or both would constitute a
default) under any such contract or agreement.
5.12 Taxes. To management's knowledge and belief, except as set forth
on Schedule 5.12, FPHI has filed or caused to be filed, within the times and
within the manner prescribed by law, all federal, state, local and foreign tax
returns and tax reports which are required to be filed by, or with respect to,
FPHI. Such returns and reports reflect accurately all liability for taxes of
FPHI for the periods covered thereby. Except as set forth on Schedule 5.12, all
federal, state, local and foreign income, profits, franchise, employment, sales,
use, occupancy, excise and other taxes and assessments, stock and transfer taxes
(including interest and penalties) payable by, or due from, FPHI have been fully
paid and fully provided for in the books and financial statements of FPHI. No
examination of any tax return of FPHI is currently in progress. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any tax return of FPHI. Schedule 5.12 attached hereto lists all
tax sharing contracts, agreements or arrangements to which FPHI is a party and
all such contracts, agreements and arrangements have been terminated prior to
the Closing Date with no liability or obligation to FPHI.
5.13 Compliance with Laws. FPHI is not, nor to the knowledge of FPHI,
any of its officers, directors or employees of FPHI, are in violation of any
applicable order, judgment, injunction, award or decree, related to, arising out
of or affecting the business or operations of FPHI or its properties or assets.
FPHI is not, nor to the knowledge of FPHI, any of its officers, directors or
employees of FPHI, are in violation of any federal, state, local or foreign law,
ordinance, regulation or any other requirement of any governmental or regulatory
body, court or arbitrator (including, without limitation, laws relating to the
environment and OSHA and the Americans with Disabilities Act) other than
insignificant or immaterial violations which do not and will not adversely
affect (i) FPHI's business or property; (ii) the business proposed to be
conducted by SiriComm after the consummation of the transactions contemplated by
this Agreement; or (iii) the consummation of the transactions contemplated by
this Agreement. Each permit, license, order or approval of any governmental or
regulatory body or other applicable authority ("Permits") that is material to
the conduct of FPHI's Business is in full force and effect, no violations are or
have been recorded in respect of any permit and no proceeding is pending or, to
the knowledge of FPHI, threatened, to revoke or limit any Permit, which
revocation or limitation could have an adverse effect on FPHI's business or
property or the business to be conducted by FPHI after the consummation of the
transactions contemplated by this Agreement. Schedule 5.13 contains a list of
all Permits. Except as set forth on Schedule 5.13, no approval or consent of any
person is needed in order that the Permits continue in full force and effect
following the consummation of the transactions contemplated by this Agreement.
23
5.14 Employment Relations. FPHI is in compliance with all federal,
state or other applicable laws, domestic or foreign, respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and has not and is not engaged in any unfair labor practice.
5.15 Employee Benefit Plans. FPHI has no employee welfare benefit plan
(an "Employee Welfare Plan"), as defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and no employee
pension benefit plan, as defined in Section 3(2) of ERISA (an "Employee Pension
Plan").
5.16 Other Assets, Encumbrances, and Business Practices. FPHI has no
title to properties, leases, restrictive covenants, material contracts,
insurance policies, intellectual properties, and has not, within the past three
years, generated, transported, or disposed of any hazardous material. No officer
or director of FPHI has directly or indirectly, within the past two years, given
or agreed to give any illegal, unethical or improper gift or benefit to any
customer, supplier, governmental employee or other person who was in a position
to help and hinder FPHI in connection with an actual or proposed transaction.
5.17 Broker's or Finder's Fees. No agent, broker, person or firm acting
on behalf of FPHI is, or will be, entitled to any commission or broker's or
finder's fees from SiriComm or from any Person controlling, controlled by or
under common control with any of the parties hereto, in connection with any of
the transactions contemplated herein.
5.18 Copies of Documents. FPHI has caused to be made available for
inspection and copying by SiriComm and its advisors, true, complete and correct
copies of all documents referred to in this Article 5 or in any Schedule
attached hereto.
ARTICLE 6
CONDITIONS TO FPHI's OBLIGATIONS
The exchange of the SiriComm Shares by FPHI on the Closing Date is
conditioned upon satisfaction, on or prior to such date, of the following
conditions:
6.1 Opinion of SiriComm's Counsel. SiriComm shall have furnished FPHI
with a favorable opinion, dated the Closing Date, of SiriComm's counsel, in form
and substance satisfactory to FPHI and their counsel, to the effect set forth in
Schedule 6.1.
6.2 Good Standing and Other Certificates. SiriComm shall have delivered
to FPHI:
(a) copies of certificates or articles of incorporation, all
amendments thereto, in each case certified by the Secretary of
State or other appropriate official of its jurisdiction of
incorporation;
24
(b) a certificate from the Secretary of State or other appropriate
official of their respective jurisdictions of incorporation to
the effect that SiriComm is in good standing or subsisting in
such jurisdiction and listing all charter documents including
all amendments thereto, on file;
(c) a copy of the Bylaws of SiriComm, certified by its respective
Secretary as being true and correct and in effect on the
Closing Date.
(d) a resolution of the Shareholders of SiriComm, and a resolution
of SiriComm's Board of Directors certified by its Secretary
approving the transactions contemplated hereby and authorizing
the President and Secretary to execute this Agreement and all
documents necessary to consummate the sale of the Shares.
6.3 Officer Certificate. SiriComm shall deliver a certificate of its
President stating the following:
(a) Certain Agreements. Except as listed on Schedule 4.7 hereto
there are no management or consulting agreements with any
third parties to provide these services to SiriComm.
(b) No Material Adverse Change. Prior to the Closing Date, there
shall be no material adverse change in the assets or
liabilities, the business or condition, financial or
otherwise, the results of operations, or prospects of
SiriComm, whether as a result of any legislative or regulatory
change, revocation of any license or rights to do business,
fire, explosion, accident, casualty, labor trouble, flood,
drought, riot, storm, condemnation or act of God or other
public force or otherwise.
(c) Truth of Representations and Warranties. The representations
and warranties of SiriComm contained in this Agreement or in
any schedule attached 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.
(d) Performance of Agreements. All of the agreements of SiriComm
to be performed on or before the Closing Date pursuant to the
terms hereof shall have been duly performed.
(e) No Litigation Threatened. No action or proceedings shall have
been instituted or threatened before a court or other
government body or by any public authority to restrain or
prohibit any of the transactions contemplated hereby.
6.4 Chief Financial Officer's Letter. In the absence of a Chief
Financial Officer of SiriComm, the President of SiriComm shall have delivered to
FPHI a letter, dated the Closing Date, in form and substance satisfactory to
them, to the effect set forth in Schedule 6.4.
25
6.5 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.
6.6 Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be satisfactory in form and substance to FPHI and their counsel, and FPHI
shall have received copies of all such documents and other evidences as they or
their counsel may reasonably request in order to establish the consummation of
such transactions and the taking of all proceedings in connection therewith.
6.7 Audited Financial Statements. The completion and delivery of
SiriComm's consolidated financial statements together with an unqualified
auditors' report (except as to going concern).
6.8 Closing. The transactions contemplated by this Agreement shall have
been consummated by May 15, 2002.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF
THE SHAREHOLDERS AND SIRICOMM
The obligations of the Shareholders and SiriComm on the Closing Date
are conditioned upon satisfaction, on or prior to such date, of the following
conditions:
7.1 Opinion of FPHI's Counsel. FPHI shall have furnished the
Shareholders and SiriComm with an opinion, dated the Closing Date, as to the
effect set forth in Exhibit 4 attached hereto.
7.2 Good Standing Certificates. FPHI shall have delivered to the
Shareholders:
(a) copies of the Articles of Incorporation of FPHI, including all
amendments thereto, certified by the Secretary of State of the
State of Delaware;
(b) certificates from the Secretary of State of the State of
Delaware to the effect that FPHI is in good standing in such
State and listing all charter documents, including all
amendments thereto, of FPHI on file;
(c) a copy of the Bylaws of FPHI, certified by its Secretary, as
being true and correct and in effect on the Closing Date; and
26
(d) a resolution of FPHI's sole director approving the
transactions contemplated hereby and authorizing the
President/Secretary to execute this Agreement and all
documents necessary to consummate the transaction.
7.3 Truth of Representations and Warranties. The representations and
warranties of FPHI 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 FPHI shall have delivered
to SiriComm a certificate, dated the Closing Date, to such effect.
7.4 Governmental Approvals. All governmental consents and approvals, if
any, necessary to permit the consummation of the transactions contemplated by
this Agreement shall have been received.
7.5 Performance of Agreements. All of the agreements of FPHI to be
performed on or before the Closing Date pursuant to the terms hereof shall have
been duly performed, and FPHI shall have delivered to SiriComm a certificate,
dated the Closing Date, to such effect.
7.6 Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to SiriComm and its
counsel, and SiriComm shall have received copies of all such documents and other
evidences as they or their counsel may reasonably request in order to establish
the consummation of such transactions and the taking of all proceedings in
connection therewith.
7.7 Closing. The transactions contemplated by this Agreement shall have
been consummated by May 15, 2002.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS; INDEMNITY; SET-OFF
8.1 Survival of Covenants and Agreements. The respective
representations, warranties, covenants and agreements of the Shareholders,
SiriComm, and FPHI contained in this Agreement, or any schedule attached hereto
or any agreement or document delivered pursuant to this Agreement shall survive
for a period of one year from the consummation of the transactions contemplated
hereby; provided, however, that the representations, warranties and agreements
made with regard to taxes and ERISA matters shall survive until the applicable
statutes of limitations have expired; and provided further, however, that with
respect to any covenant, term or provision to be performed hereunder or in any
of the schedules hereto or any documents or agreements delivered hereunder, the
right of indemnification under this Article 8 shall survive until such covenant,
term or provision has been fully paid, performed or discharged.
27
8.2 Indemnification.
(a) SiriComm agrees to indemnify and hold FPHI and its officers,
directors, shareholders, employees, affiliates and agents
harmless from damages, losses, liabilities, assessments,
judgments, costs or expenses (including, without limitation,
penalties, interest and reasonable counsel fees and expenses),
(each a "Claim"), in excess of $100,000 in the aggregate, as a
result of or arising out of the breach of any representation
or warranty made by the Shareholders and/or SiriComm or the
failure of any representation or warranty made by Shareholders
and/or SiriComm in this Agreement or in any schedule attached
hereto or any document or agreement delivered hereunder to be
true and correct in all respects as of the date of this
Agreement and as of the Closing Date or the non-performance by
the Shareholders and/or SiriComm of any covenant, term or
provision to be performed by it hereunder or in any of the
documents or agreements delivered hereunder which may be
imposed or sought to be imposed on FPHI or SiriComm.
(b) FPHI's right to indemnification as provided in this Section
8.2 shall not be eliminated, reduced or modified in any way as
a result of the fact that (i) FPHI has notice of a breach or
inaccuracy of any representation, warranty or covenant
contained herein; (ii) FPHI has been provided with access, as
requested by FPHI, to officers and employees of SiriComm and
such of SiriComm's books, documents, contracts and records as
has been provided to FPHI in response to FPHI's requests.
8.3 Conditions of Indemnification.
(a) A party entitled to indemnification hereunder (the
"Indemnified Party") shall notify the party or parties liable
for such indemnification (the "Indemnifying Party") in writing
of any Claim or potential liability for Taxes ("Tax Claim")
which the Indemnified Party has determined has given or could
give rise to a right of indemnification under this Agreement.
Such notice shall be given within a reasonable (taking into
account the nature of the Claim or Tax Claim) period of time
after the Indemnified Party has actual knowledge thereof. The
Indemnifying Party shall satisfy its obligations under this
Article 8 within forty days after receipt of subsequent
written notice from the Indemnified Party if an amount is
specified therein, or promptly following receipt of subsequent
written notice or notices specifying the amount of such Claim
or Tax Claim additions thereto; provided, however, that for so
long as the Indemnifying Party is in good faith defending a
Claim or Tax Claim pursuant to Section 8.3(b) hereof, its
obligation to indemnify the Indemnified Party with respect
thereto shall be suspended (other than with respect to any
costs, expenses or other liabilities incurred by the
Indemnified Party prior to the assumption of the defense by
28
the Indemnifying Party). Failure to provide a notice of Claim
or Tax Claim within the time period referred to above shall
not constitute a defense to a Claim or Tax Claim or release
the Indemnifying Party from any obligation hereunder to the
extent that such failure does not prejudice the position of
the Indemnifying Party.
(b) If the facts giving rise to any such indemnification involve
any actual, threatened or possible Claim or demand or Tax
Claim by any person not a party to this Agreement against the
Indemnified Party, the Indemnifying Party shall be entitled to
contest or defend such Claim or demand or Tax Claim at its
expense and through counsel of its own choosing, which counsel
shall be reasonably acceptable to the Indemnified Party, such
right to contest or defend shall only apply if the
Indemnifying Party gave written notice of its intention to
assume the contest and defense of such Claim or demand or Tax
Claim to the Indemnified Party as soon as practicable, but in
no event more than thirty days after receipt of the notice of
such Claims or demand or Tax Claim, and provided the
Indemnified Party with appropriate assurances as to the
creditworthiness of the Indemnifying Party, and that the
Indemnifying Party will be in a position to pay all fees,
expenses and judgments that might arise out of such Claim or
demand or Tax Claim. The Indemnified Party shall have the
obligation to cooperate in the defense of any such Claim or
demand or Tax Claim and the right, at its own expense, to
participate in the defense of any Claim or demand or Tax
Claim. So long as the Indemnifying Party is defending in good
faith any such Claim or demand or Tax Claim asserted by a
third party against the Indemnified Party, the Indemnified
Party shall not settle or compromise such Claim or demand or
Tax Claim. The Indemnifying Party shall have the right to
settle or compromise any such Claim or demand or Tax Claim
without the consent of the Indemnified Party at any time
utilizing its own funds to do so if in connection with such
settlement or compromise the Indemnified Party is fully
released by the third party and is paid in full any
indemnification amounts due hereunder. The Indemnified Party
shall make available to the Indemnifying Party or its agents
all records and other materials in the Indemnified Party's
possession reasonably required by it for its use in contesting
any third party Claim or demand or Tax Claim and shall
otherwise cooperate, at the expense of the Indemnifying Party,
in the defense thereof in such manner as the Indemnifying
Party may reasonably request. Whether or not the Indemnifying
Party elects to defend such Claim or demand or Tax Claim, the
Indemnified Party shall have no obligation to do so.
29
ARTICLE 9
MISCELLANEOUS
9.1 Knowledge of the Shareholders, SiriComm or FPHI. Where any
representation or warranty contained in this Agreement is expressly qualified by
reference to the knowledge, information and belief of the Shareholders, SiriComm
or FPHI and the Shareholders and FPHI, as the case may be, confirm that they
have made reasonable due and diligent inquiry as to the matters that are the
subject of such representations and warranties.
9.2 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 and financial
advisers.
9.3 Governing Law. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of Delaware applicable to agreements executed and to be performed solely
within such State without regard to any state's conflicts of laws provisions.
9.4 Jurisdiction. Any judicial proceeding brought against any of the
parties to this Agreement on any dispute arising out of this Agreement or any
matter related hereto may be brought in the courts of the State of Missouri,
County of Jasper, or in the United States District Court for the Western
District of Missouri, Southwestern Division, and, by execution and delivery of
this Agreement, each of the parties to this Agreement accepts the exclusive
jurisdiction of such courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement. The prevailing party or
parties in any such litigation shall be entitled to receive from the losing
party or parties all costs and expenses, including reasonable counsel fees,
incurred by the prevailing party or parties.
9.5 Captions. The Article and Section captions are used herein for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
9.6 Publicity. Except as otherwise required by law, none of the parties
hereto shall issue any press release or make any other public statement, in each
case relating to, connected with or arising out of this Agreement or the matters
contained herein, without obtaining the prior approval of FPHI and SiriComm to
the contents and the manner of presentation and publication thereof. The parties
hereto agree that the execution of this Agreement requires the release of
information to the financial press concerning this acquisition and accordingly
agree to promptly issue a press release mutually acceptable to SiriComm and FPHI
and to file a Form 8-K report with the Securities and Exchange Commission
containing this Agreement and all exhibits and schedules hereto.
30
9.7 Notices. Any notice or other communication required or permitted
hereunder shall be deemed sufficiently given when delivered in person, one
business day after delivery to a reputable overnight carrier, four business days
if delivered by registered or certified mail, postage prepaid or when sent by
telecopy with a copy following by hand or overnight carrier or mailed, certified
or registered mail, postage prepaid, addressed as follows:
If to FPHI:
Xxxxxxx X. Xxxxxxx, President
Fountain Pharmaceuticals, Inc.
000 Xxxxx Xxxxxxxx, Xxxxx X
Xxxxx, Xxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a required copy to:
Xxxxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to SiriComm:
Xx. Xxxx Xxxxxxx, President SiriComm, Inc.
0000 Xxxxx Xxxx., Xxxxx 000 Xxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a required copy to:
Xxx Xxxxxx
General Counsel for SiriComm, Inc.
0000 X. Xxxx
Xxxxxxxxxxx, XX 00000
9.8 Parties in Interest. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
31
9.9 Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
9.10 Entire Agreement. This Agreement, including the schedules hereto
and the other documents referred to herein which form a part hereof, contain the
entire understanding of the parties hereto with respect to the subject matter
contained herein and therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
9.11 Amendments. This Agreement may not be changed orally, but only by
an agreement in writing signed by FPHI, the Shareholders, and SiriComm.
9.12 Severability. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
9.13 Third Party Beneficiaries. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereof.
9.14 Cooperation After Closing.From and after the Closing Date, each of
the parties hereto shall execute such documents and other papers and take such
further actions as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby.
ARTICLE 10
COVENANTS
10.1 Access to Information. Each of SiriComm and FPHI agrees that,
prior to the Closing Date, the other party hereto shall be entitled, through its
officers, employees and representatives (including, without limitation, its
legal and financial advisors and accountants), to make such investigation of the
properties, businesses and operations of SiriComm or FPHI, and such examination
of the books, records and financial condition of SiriComm or FPHI, as such other
party reasonably requests and to make copies of such books and records. Any such
investigation and examination shall be conducted during regular business hours
and under reasonable circumstances, and each of SiriComm and FPHI shall
cooperate fully therein. No investigation by SiriComm or FPHI prior to or after
the date of this Agreement shall diminish or obviate any of the representations,
warranties, covenants or agreements of the other party thereto contained in this
Agreement or any other agreements or certificates in connection with the
transactions contemplated by this Agreement. In order that each of FPHI and
SiriComm may have full opportunity to make such physical, business, accounting
and legal review, examination or investigation as it may reasonably request of
32
the affairs of SiriComm or FPHI, SiriComm and FPHI shall cause the officers,
employees, consultants, agents, accountants, attorneys and other representatives
of SiriComm or FPHI, to cooperate fully with such representatives in connection
with such review and examination.
10.2 Conduct of FPHI's and SiriComm's Respective Businesses Pending the
Closing.
(a) Prior to the Closing Date, except as otherwise expressly
contemplated by this Agreement, SiriComm and FPHI shall:
(i) conduct its business only in the ordinary course
consistent with past practice;
(ii) use its best efforts to (A) preserve its present
business operations, organization (including, without
limitation, management and the sales force) and
goodwill, (B) preserve its present relationship with
Persons having business dealings with it;
(iii) maintain (A) all its assets and properties in their
current condition, ordinary wear and tear excepted,
and (B) insurance upon all of its properties and
assets in such amounts and of such kinds comparable
to that in effect on the date of this Agreement;
(iv) (A) maintain its books, accounts and records in the
ordinary course of business consistent with past
practices, (B) continue to collect accounts
receivable and pay accounts payable utilizing normal
procedures and without discounting or accelerating
payment of such accounts (other than in the ordinary
course of business), and (C) comply with all
contractual and other obligations applicable to its
operations; and
(v) comply in all material respects with applicable laws.
(b) Prior to the Closing Date, except as otherwise expressly
contemplated by this Agreement, SiriComm and FPHI shall not:
(i) declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock;
(ii) (a) in the case of FPHI, transfer, issue (except
issuances of shares upon the exercise of outstanding
warrants, options and convertible debentures), sell
or dispose of any shares of its capital stock or
other securities of itself or grant options,
warrants, calls or other rights to purchase or
otherwise acquire shares of the capital stock or
other securities of itself;
33
(b) in the case of SiriComm, issue, sell or dispose
of any shares of its capital stock or other
securities of itself, or grant options, warrants,
calls or other rights to purchase any capital stock
of itself.
(iii) effect any recapitalization, reclassification, stock
split or like change in its capitalization except, in
the case of FPHI, as is required pursuant to this
Agreement, or authorize the issuance of the Shares
(including securities convertible into shares of FPHI
Stock);
(iv) amend its certificate of incorporation, by-laws,
memorandum or articles of association or similar
organizational documents, except that FPHI may amend
its certificate of incorporation solely for the
purposes of reverse splitting and authorizing the
Shares as contemplated by this Agreement, or changing
the name of FPHI so as to add the word "SiriComm"
thereto and FPHI may amend its certificate of
incorporation to increase the number of authorized
shares as necessary to permit FPHI to consummate the
transactions contemplated hereby;
(v) (A) materially increase the annual level of
compensation of any employee, (B) increase the annual
level of compensation payable or to become payable by
it to any of their respective executive officers, (C)
grant any bonus, benefit or other direct or indirect
compensation to any employee, director or consultant,
other than in the ordinary course consistent with
past practice, (D) increase the coverage or benefits
available under any (or create any new) severance
pay, termination pay, vacation pay, company awards,
salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee
benefit plan or arrangement made to, for, or with any
of its directors, officers, employees, agents or
representatives or otherwise modify or amend or
terminate any such plan or arrangement;
(vi) except (A) for trade payables and (B) for pledges of
assets and indebtedness for borrowed money which do
not exceed, individually or in the aggregate,
$1,000,000 (it being understood that (1) such amount
shall not include indebtedness existing or assets
pledged prior to the date of this Agreement and (2)
the transaction value of any asset pledges shall be
deemed to be equal to the fair market value of the
assets pledged in such transaction), borrow monies
for any reason or draw down on any line of credit or
debt obligation, or become the guarantor, surety,
endorser or otherwise liable for any debt, obligation
or liability (contingent or otherwise) of any other
Person;
34
(vii) except as may be permitted pursuant to clause (vi)
above, subject to any lien (except for leases that do
not materially impair the use of the property subject
thereto in their respective businesses as presently
conducted and in the ordinary course of business),
any of its properties or assets (whether tangible or
intangible);
(viii) acquire any material properties or assets or sell,
assign, transfer, convey, lease or otherwise dispose
of any material properties or assets, or its rights
to any of the foregoing (except for fair
consideration in the ordinary course of business
consistent with past practice);
(ix) cancel or compromise any debt or claim or waive or
release any material right except in the ordinary
course of business consistent with past practice;
(x) enter into any commitment for capital expenditures in
excess of $250,000 for any individual commitment and
$1,000,000 for all commitments in the aggregate;
(xi) enter into, modify or terminate any labor or
collective bargaining agreement or, through
negotiation or otherwise, make any commitment or
incur any liability to any labor organization;
(xii) enter into any transaction or make or enter into any
Contract which by reason of its size or otherwise is
not in the ordinary course of business consistent
with past practice.
(xiii) transfer any funds or assets to any of its officers
and directors, which funds and assets are, in the
aggregate, worth in excess of $25,000, except for the
purchase of goods and services from any such officer
or director in the ordinary course of business at the
fair market value for such goods and services;
(xiv) agree to do anything prohibited by this Section 10.2
or anything that would make any of the
representations and warranties of FPHI or the
SiriComm in this Agreement or FPHI documents or
SiriComm documents untrue or incorrect in any
material respect as of any time through and including
the Closing Date.
35
10.3 Consents and Approvals.
(a) SiriComm and FPHI shall use their respective best efforts, and
shall cooperate with each other, to obtain at the earliest
practicable date all consents and approvals required to
consummate the transactions contemplated by this Agreement;
provided however, that neither SiriComm nor FPHI shall be
obligated to pay any consideration (except for filing fees)
therefor to any third party from whom consent or approval is
requested.
(b) Promptly following the date of this Agreement, FPHI shall
prepare and file with the Securities and Exchange Commission
an information statement and related solicitation materials
relating to taking corporate actions without the benefit of a
meeting to approve the issuance of FPHI Shares pursuant hereto
(such information statement, as amended or supplemented from
time to time, being hereinafter referred to as the
"Information Statement"), and shall use its best efforts to
cause the Information Statement to be mailed to its
shareholders at such time and in such manner as permits the
notification to be sent as promptly as practicable. SiriComm
shall furnish all information as may be reasonably requested
by FPHI and, in any case, as required with respect to FPHI by
Regulation 14A under the Securities Exchange Act of 1934, as
amended, for inclusion in the Information Statement. The
information provided by FPHI and SiriComm, respectively, for
use in the Information Statement shall, on the date when the
Information Statement is first mailed to FPHI's stockholders,
be true and correct in all material respects and shall not
omit to state any material fact required to be stated therein
or necessary in order to make the statements contained therein
not misleading, and FPHI and SiriComm each agree to promptly
correct any information provided by it for use in the
Information Statement which shall have become false or
misleading.
(c) FPHI shall notify its shareholders that the Board of Directors
has approved, among other matters, the issuance of the FPHI
Shares pursuant hereto. FPHI, through its Board of Directors,
shall recommend to its shareholders to vote their stock for
approval of the foregoing. The Information Statement shall
comply as to form in all material respects with all applicable
requirements of the Securities Exchange Act of 1934, as
amended, and no amendment or supplement to the Information
Statement shall be made by FPHI without the prior written
approval of SiriComm unless FPHI determines such amendment or
supplement is required by law.
36
10.4 Other Actions.
(a) Each of SiriComm and FPHI shall use its best efforts to (i)
take all actions necessary or appropriate to consummate the
transactions contemplated by this Agreement and (ii) cause the
fulfillment at the earliest practicable date of all of the
conditions to their respective obligations to consummate the
transactions contemplated by this Agreement.
(b) FPHI shall use its best efforts to assure that, prior to the
Closing, the FPHI Shares have remained quoted on the NASDAQ
OTC-Bulletin Board, subject to official notice of issuance.
10.5 Tax and Accounting Matters. Within 60 days following the date
hereof, SiriComm will deliver to FPHI (i) the Interim Statements, together with
an unqualified audit report thereon by SiriComm's independent public accountants
and (ii) an unaudited pro forma consolidated balance sheet of SiriComm, after
giving effect to the transactions contemplated by this Agreement.
[SIGNATURE PAGE TO FOLLOW]
37
IN WITNESS WHEREOF, each of FPHI, SiriComm, and the Shareholders of
SiriComm have executed this Agreement, all as of the day and year first above
written.
FOUNTAIN PHARMACEUTICALS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
President and Sole Director
SIRICOMM, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx
President and Director
THE PRINCIPAL SHAREHOLDERS: No. of Shares of SiriComm
/s/ Xxxxx X. Xxxxxxx 5,855
-----------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxx Xxxxxx 1,116
-----------------------------
Xxxxx Xxxxxx
/s/ Xxxx Xxxxxxx 1,040
-----------------------------
Xxxx Xxxxxxx
THE SHAREHOLDERS:
/s/ Xxxxxx X. Xxxxx 445
-----------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxx Xxxxx 444
-----------------------------
Xxxxx Xxxxx
Xxxx X. Xxxxxxx Trust
By: Xxxx X. Xxxxxxx, Trustee 80
-----------------------------
Xxxx X. Xxxxxxx, Trustee
38
THE SHAREHOLDERS:
/s/ Xxxxxxx X. Xxxxx 40
-----------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx
-----------------------------
Xxxxx X. Xxxxx
Cornerstone Resources Management
By: /s/ illegible 20
-----------------------------
/s/ Xxxx X. Xxxxxxx 100
-----------------------------
Xxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxxx
-----------------------------
Xxxxxx X. Matlcock
Xxxxxxx X. Xxxx Revocable Trust
By: /s/ Xxxxxxx X. Xxxx 20
-----------------------------
Xxxxxxx X. Xxxx, Trustee
/s/ Xxxxxx X. Xxxxxx 10
-----------------------------
Xxxxxx X. Xxxxxx
/s/ G. Xxxxx Xxxxx 200
-----------------------------
G. Xxxxx Xxxxx
/s/ Xxxxxx Xxxxx
-----------------------------
Xxxxxx Xxxxx
/s/ Xxxxx Xxxxx 40
-----------------------------
Xxxxx Xxxxx
/s/ Xxxxx Xxxxx
-----------------------------
Xxxxx Xxxxx
39
THE SHAREHOLDERS:
/s/ Xxx Xxxx 28
-----------------------------
Xxx Xxxx
/s/ Xxxxx Xxxx
-----------------------------
Xxxxx Xxxx
/s/ Xxxxx X. Xxxxxxx
-----------------------------
Xxxxx X. Xxxxxxx 40
/s/ Xxxxxx X. Xxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxx Xxxxxx 300
-----------------------------
Xxx Xxxxxx
40
