ACQUISITION AGREEMENT
Agreement dated as of January 10, 2000 between GO ONLINE NETWORKS CORPORATION, a
Delaware corporation ("GONT"), and Westlake Capital Corporation, a Colorado
corporation ("Westlake").
The parties agree as follows:
1. THE ACQUISITION.
1.1_ Purchase and Sale Subject to the Terms and Conditions of this
Agreement. At the Closing to be held as provided in Section 2, GONT shall sell
the GONT Shares (defined below) to the shareholders of Westlake, and the
shareholders of Westlake shall purchase the GONT Shares from GONT, free and
clear of all Encumbrances other than restrictions imposed by Federal and State
securities laws.
1.2 Purchase Price. GONT will exchange 3,000,000 shares of its restricted
common stock (the "GONT Shares") for 2,000,000 shares of Westlake, representing
all of the outstanding common shares and preferred shares of Westlake (the
"Westlake Shares"). The GONT Shares shall be issued and delivered to the
Shareholders of Westlake as set forth in Exhibit "A" hereto.
2. THE CLOSING.
2.1 Place and Time. The closing of the sale and exchange of the GONT Shares
for the Westlake Shares (the "Closing") shall take place at Xxxxxx Law Group,
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx, XX 00000 no later than the
close of business (Orange County California time) on January 10, 2000 or at such
other place, date and time as the parties may agree in writing.
2.2 Deliveries by Westlake. At the Closing, Westlake shall deliver the
following to GONT:
1. Certificates representing the Westlake Shares, duly endorsed for transfer
to GONT and accompanied by appropriate medallion guaranteed stock powers;
Westlake shall immediately change those certificates for, and to deliver to GONT
at the Closing, a certificate representing the Westlake Shares registered in the
name of GONT (without any legend or other reference to any Encumbrance other
than appropriate federal securities law limitations).
1.
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2. The documents contemplated by Section 3.
3. All other documents, instruments and writings required by this Agreement
to be delivered by Westlake at the Closing and any other documents or records
relating to Westlake's business reasonably requested by GONT in connection with
this Agreement.
2.3 Deliveries by GONT. At the Closing, GONT shall deliver the following to
Westlake:
a The GONT Shares for further delivery to the Westlake shareholders as
contemplated by section 1.
2. The documents contemplated by Section 4.
3. All other documents, instruments and writings required by this Agreement
to be delivered by GONT at the Closing.
3. CONDITIONS TO GONT'S OBLIGATIONS.
The obligations of GONT to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by GONT:
3.1 No Injunction. There shall not be in effect any injunction, order or
decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits GONT's
acquisition of the Westlake Shares or the GONT Shares or that will require any
divestiture as a result of GONT's acquisition of the Westlake Shares or that
will require all or any part of the business of GONT to be held separate and no
litigation or proceedings seeking the issuance of such an injunction, order or
decree or seeking to impose substantial penalties on GONT or Westlake if this
Agreement is consummated shall be pending.
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3.2 Representations, Warranties and Agreements. (a) The representations and
warranties of Westlake set forth in this Agreement shall be true and complete in
all material respects as of the Closing Date as though made at such time, (b)
Westlake shall have performed and complied in all material respects with the
agreements contained in this Agreement required to be performed and complied
with by it at or prior to the Closing and (c) GONT shall have received a
certificate to that effect signed by an authorized representative of Westlake.
3.3 Regulatory Approvals. All licenses, authorizations, consents, orders
and regulatory approvals of Governmental Bodies necessary for the consummation
of GONT's acquisition of the Westlake Shares shall have been obtained and shall
be in full force and effect.
3.4 Resignations of Director. All directors of Westlake whose resignations
shall have been requested by GONT shall have submitted their resignations or
been removed effective as of the Closing Date.
4. CONDITIONS TO WESTLAKE'S OBLIGATIONS.
The obligations of Westlake to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by Westlake:
4.1 No Injunction. There shall not be in effect any injunction, order or
decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits GONT's
acquisition of the Westlake Shares or Westlake's acquisition of the GONT Shares
or that will require any divestiture as a result of GONT's acquisition of the
Shares or Westlake's acquisition of the GONT Shares or that will require all or
any part of the business of GONT or Westlake to be held separate and no
litigation or proceedings seeking the issuance of such an injunction, order or
decree or seeking to impose substantial penalties on GONT or Westlake if this
Agreement is consummated shall be pending.
4.2 Representations, Warranties and Agreements. (a) The representations and
warranties of GONT set forth in this Agreement shall be true and complete in all
material respects as of the Closing Date as though made at such time, (b) GONT
shall have performed and complied in all material respects with the agreements
contained in this Agreement required to be performed and complied with by it at
or prior to the Closing and (c) Westlake shall have received a certificate to
that effect signed by an authorized representative of GONT.
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4.3 Regulatory Approvals. All licenses, authorizations, consents, orders
and regulatory approvals of Governmental Bodies necessary for the consummation
of GONT's acquisition of the Westlake Shares and Westlake's acquisition of the
GONT Shares shall have been obtained and shall be in full force and effect.
5. REPRESENTATIONS AND WARRANTIES OF WESTLAKE.
Westlake represents and warrants to GONT that, to the Knowledge of Westlake
(which limitation shall not apply to Section 5.3), and except as set forth in
the Westlake Disclosure Letter:
5.1 Organization of Westlake; Authorization. Westlake is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Colorado with full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate action of Westlake and this Agreement constitutes a valid and binding
obligation of Westlake; enforceable against it in accordance with its terms.
5.2 Capitalization. The authorized capital stock of Westlake consists of
105,000,000 authorized shares, consisting of 100,000,000 common stock, no par
value, and 5,000,000 preferred shares, no par value, of which 2,000,000 common
shares and no preferred shares are presently issued and outstanding. No shares
have been registered under state or federal securities laws. As of the Closing
Date, all of the issued and outstanding shares of common stock of Westlake are
validly issued, fully paid and non-assessable. As of the Closing Date there
will not be outstanding any warrants, options or other agreements on the part of
Westlake obligating Westlake to issue any additional shares of common or
preferred stock or any of its securities of any kind. Except as otherwise set
forth herein, Westlake will not issue any shares of capital stock from the date
of this Agreement through the Closing Date.
5.3 No Conflict as to Westlake. Neither the execution and delivery of this
Agreement nor the consummation of the sale of the Westlake Shares to GONT will
(a) violate any provision of the certificate of incorporation or by-laws of
Westlake or (b) violate, be in conflict with, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under any agreement to which Westlake is a party or (c) violate any statute or
law or any judgment, decree, order, regulation or rule of any court or other
Governmental Body applicable to Westlake.
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5.4 Ownership of Westlake Shares. The delivery of certificates to GONT
provided in Section 2.2 will result in GONT's immediate acquisition of record
and beneficial ownership of the Westlake Shares, free and clear of all
Encumbrances subject to applicable State and Federal securities laws. There are
no outstanding options, rights, conversion rights, agreements or commitments of
any kind relating to the issuance, sale or transfer of any Equity Securities or
other securities of Westlake.
5.5 No Conflict as to Westlake and Subsidiaries. Neither the execution and
delivery of this Agreement nor the consummation of the sale of the Westlake
Shares to GONT will (a) violate any provision of the certificate of
incorporation or by-laws (or other governing instrument) of Westlake or any of
its Subsidiaries or (b) violate, or be in conflict with, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or excuse performance by any Person of any of its obligations
under, or cause the acceleration of the maturity of any debt or obligation
pursuant to, or result in the creation or imposition of any Encumbrance upon any
property or assets of Westlake or any of its Subsidiaries under, any material
agreement or commitment to which Westlake or any of its Subsidiaries is a party
or by which any of their respective property or assets is bound, or to which any
of the property or assets of Westlake or any of its Subsidiaries is subject, or
(c) violate any statute or law or any judgment, decree, order, regulation or
rule of any court or other Governmental Body applicable to Westlake or any of
its Subsidiaries except, in the case of violations, conflicts, defaults,
terminations, accelerations or Encumbrances described in clause (b) of this
Section 5.5, for such matters which are not likely to have a material adverse
effect on the business or financial condition of Westlake and its Subsidiaries,
taken as a whole.
5.6 Consents and Approvals of Governmental Authorities. Except with respect
to applicable State and Federal securities laws, no consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Body is required to be made or obtained by Westlake or GONT or any of its
Subsidiaries in connection with the execution, delivery and performance of this
Agreement by Westlake or the consummation of the sale of the Westlake Shares to
GONT.
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5.7 Other Consents. No consent of any Person is required to be obtained by
Westlake or GONT to the execution, delivery and performance of this Agreement or
the consummation of the sale of the Westlake Shares to GONT, including, but not
limited to, consents from parties to leases or other agreements or commitments,
except for any consent which the failure to obtain would not be likely to have a
material adverse effect on the business and financial condition of Westlake or
GONT.
5.8 Financial Statements. Westlake has delivered to GONT consolidated
balance sheets of Westlake and its Subsidiaries as at December 31, 1998 and
September 30, 1999, and statements of income and changes in financial position
for the period from inception to the period then ended, together with the report
thereon of Westlake's independent accountant (the "Westlake Financial
Statements"). Such Westlake Financial Statements are internally prepared and
unaudited but fairly present the consolidated financial condition and results of
operations of Westlake and its Subsidiaries as at the respective dates thereof
and for the periods therein referred to, all in accordance with generally
accepted United States accounting principles consistently applied throughout the
periods involved, except as set forth in the notes thereto.
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5.9 Title to Properties. Either Westlake or one of its Subsidiaries owns
all the material properties and assets that they purport to own (real, personal
and mixed, tangible and intangible), including, without limitation, all the
material properties and assets reflected in the Westlake Financial Statements,
and all the material properties and assets purchased or otherwise acquired by
Westlake or any of its Subsidiaries since the date of the Westlake Financial
Statements. All properties and assets reflected in the Westlake Financial
Statements are free and clear of all material Encumbrances and are not, in the
case of real property, subject to any material rights of way, building use
restrictions, exceptions, variances, reservations or limitations of any nature
whatsoever except, with respect to all such properties and assets, (a) mortgages
or security interests shown on the Westlake Financial Statements as securing
specified liabilities or obligations, with respect to which no default (or event
which, with notice or lapse of time or both, would constitute a default) exists,
and all of which are listed in the Westlake Disclosure Letter, (b) mortgages or
security interests incurred in connection with the purchase of property or
assets after the date of the Westlake Financial Statements (such mortgages and
security interests being limited to the property or assets so acquired), with
respect to which no default (or event which, with notice or lapse of time or
both, would constitute a default) exists, (c) as to real property, (i)
imperfections of title, if any, none of which materially detracts from the value
or impairs the use of the property subject thereto, or impairs the operations of
Westlake or any of its Subsidiaries and (ii) zoning laws that do not impair the
present or anticipated use of the property subject thereto, and (d) liens for
current taxes not yet due. The properties and assets of Westlake and its
Subsidiaries include all rights, properties and other assets necessary to permit
Westlake and its Subsidiaries to conduct Westlake's business in all material
respects in the same manner as it is conducted on the date of this Agreement.
5.10 Buildings, Plants and Equipment. The buildings, plants, structures and
material items of equipment and other personal property owned or leased by
Westlake or its Subsidiaries are, in all respects material to the business or
financial condition of Westlake and its Subsidiaries, taken as a whole, in good
operating condition and repair (ordinary wear and tear excepted) and are
adequate in all such respects for the purposes for which they are being used.
Westlake has not received notification that it or any of its Subsidiaries is in
violation of any applicable building, zoning, anti-pollution, health, safety or
other law, ordinance or regulation in respect of its buildings, plants or
structures or their operations, which violation is likely to have a material
adverse effect on the business or financial condition of Westlake and its
Subsidiaries, taken as a whole or which would require a payment by Westlake or
GONT or any of their subsidiaries in excess of $2,000 in the aggregate, and
which has not been cured.
5.11 No Condemnation or Expropriation. Neither the whole nor any portion of
the property or leaseholds owned or held by Westlake or any of its Subsidiaries
is subject to any governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken by any Governmental Body or other Person with or
without payment of compensation therefor, which action is likely to have a
material adverse effect on the business or financial condition of GONT and its
Subsidiaries, taken as a whole.
5.12 Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending or threatened
in writing against or involving Westlake or any of its Subsidiaries which is
likely to have a material adverse effect on the business or financial condition
of Westlake, GONT and any of their Subsidiaries, taken as whole, or which would
require a payment by Westlake or its subsidiaries in excess of $2,000 in the
aggregate or which questions or challenges the validity of this Agreement.
Neither Westlake nor any or its Subsidiaries is subject to any judgment, order
or decree that is likely to have a material adverse effect on the business or
financial condition of Westlake, GONT or any of their Subsidiaries, taken as a
whole, or which would require a payment by Westlake or its subsidiaries in
excess of $2,000 in the aggregate.
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5.13 Absence of Certain Changes. Since the date of the Westlake Financial
Statements, neither Westlake nor any of its Subsidiaries has:
1. suffered the damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to the
business or financial condition of Westlake and its Subsidiaries, taken as a
whole, or made any disposition of any of its material properties or assets other
than in the ordinary course of business;
2. made any change or amendment in its certificate of incorporation or
by-laws, or other governing instruments;
3. issued or sold any Equity Securities or other securities, acquired,
directly or indirectly, by redemption or otherwise, any such Equity Securities,
reclassified, split-up or otherwise changed any such Equity Security, or granted
or entered into any options, warrants, calls or commitments of any kind with
respect thereto;
4. organized any new Subsidiary or acquired any Equity Securities of any
Person or any equity or ownership interest in any business;
5. borrowed any funds or incurred, or assumed or become subject to, whether
directly or by way of guarantee or otherwise, any obligation or liability with
respect to any such indebtedness for borrowed money;
6. paid, discharged or satisfied any material claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than in the ordinary course
of business;
7. prepaid any material obligation having a maturity of more than 90 days
from the date such obligation was issued or incurred;
8. canceled any material debts or waived any material claims or rights,
except in the ordinary course of business;
9. disposed of or permitted to lapse any rights to the use of any material
patent or registered trademark or copyright or other intellectual property owned
or used by it;
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10. granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any employee benefit plan);
11. purchased or entered into any contract or commitment to purchase any
material quantity of raw materials or supplies, or sold or entered into any
contract or commitment to sell any material quantity of property or assets,
except (i) normal contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary course business,
(ii) normal contracts or commitments for the sale of, and normal sales of,
inventory in the ordinary course of business, and (iii) other contracts,
commitments, purchases or sales in the ordinary course of business;
12. made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets (other than raw materials and
supplies) at a cost in excess of $100,000 in the aggregate;
13. written off or been required to write off any notes or accounts
receivable in an aggregate amount in excess of $2,000;
14. written down or been required to write down any inventory in an
aggregate amount in excess of $ 2,000;
15. entered into any collective bargaining or union contract or agreement;
or
16. other than the ordinary course of business, incurred any liability
required by generally accepted accounting principles to be reflected on a
balance sheet and material to the business or financial condition of Westlake
and its subsidiaries taken as a whole.
5.14 No Material Adverse Change. Since the date of the Westlake Financial
Statements, there has not been any material adverse change in the business or
financial condition of Westlake and its Subsidiaries taken as a whole, other
than changes resulting from economic conditions prevailing in the United States
precious coins, collectibles and metals industry.
5.15 Contracts and Commitments. Neither Westlake nor any of its Subsidiaries
is a party to any:
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1. Contract or agreement (other than purchase or sales orders entered into
in the ordinary course of business) involving any liability on the part of
Westlake or one of its Subsidiaries of more than $25,000 and not cancelable by
Westlake or the relevant Subsidiary (without liability to Westlake or such
Subsidiary) within 60 days;
2. Except with respect to the lease on its business location, lease of
personal property involving annual rental payments in excess of $25,000 and not
cancelable by Westlake or the relevant Subsidiary (without liability to Westlake
or such Subsidiary) within 90 days;
3. Except with respect to the options referenced above, Employee bonus,
stock option or stock purchase, performance unit, profit-sharing, pension,
savings, retirement, health, deferred or incentive compensation, insurance or
other material employee benefit plan (as defined in Section 2(3) of ERISA) or
program for any of the employees, former employees or retired employees of
Westlake or any of its Subsidiaries;
4. Commitment, contract or agreement that is currently expected by the
management of Westlake to result in any material loss upon completion or
performance thereof;
5. Contract, agreement or commitment that is material to the business of
Westlake and its Subsidiaries, taken as a whole, with any officer, employee,
agent, consultant, advisor, salesman, sales representative, value added
reseller, distributor or dealer; or
6. Employment agreement or other similar agreement that contains any
severance or termination pay, liabilities or obligations.
All such contracts and agreements are in full force and effect. Neither Westlake
nor any or its Subsidiaries is in breach of, in violation of or in default
under, any agreement, instrument, indenture, deed of trust, commitment, contract
or other obligation of any type to which Westlake or any of its Subsidiaries is
a party or is or may be bound that relates to the business of Westlake or any
of its Subsidiaries or to which any of the assets or properties of Westlake or
any of its Subsidiaries is subject, the effect of which breach, violation or
default is likely to materially and adversely affect the business or financial
condition of Westlake and its Subsidiaries, taken as a whole. GONT has not
guaranteed or assumed and specifically does not guarantee or assume any
obligations of Westlake or any of its Subsidiaries.
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5.16 Labor Relations. Neither Westlake nor any of its Subsidiaries is a
party to any collective bargaining agreement. Except for any matter which is not
likely to have a material adverse effect on the business or financial condition
of Westlake and its Subsidiaries, taken as a whole, (a) Westlake and each of its
Subsidiaries is in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practice, (b) there is no unfair labor
practice complaint against Westlake or any of its Subsidiaries pending before
the National Labor Relations Board, (c) there is no labor strike, dispute,
slowdown or stoppage actually pending or threatened against Westlake or any of
its Subsidiaries, (d) no representation question exists respecting the employees
of Westlake or any of its Subsidiaries, (e) neither Westlake nor any of its
Subsidiaries has experienced any strike, work stoppage or other labor
difficulty, and (f) no collective bargaining agreement relating to employees of
Westlake or any of its Subsidiaries is currently being negotiated.
5.17 Employee Benefit Plans. No material employee pension and welfare
benefit plans covering employees of Westlake is (1) a multi-employer plan as
defined in Section 3(37) of ERISA, or (2) a defined benefit plan as defined in
Section 3(35) of ERISA, any listed individual account pension plan is duly
qualified as tax exempt under the applicable sections of the Code, each listed
benefit plan and related funding arrangement, if any, has been maintained in all
material respects in compliance with its terms and the provisions of ERISA and
the Code.
5.18 Compliance with Law. The operations of Westlake and its Subsidiaries
have been conducted in accordance with all applicable laws and regulations of
all Governmental Bodies having jurisdiction over them, except for violations
thereof which are not likely to have a material adverse effect on the business
or financial condition of Westlake and its Subsidiaries, taken as a whole, or
which would not require a payment by Westlake or its Subsidiaries in excess of
$2,000 in the aggregate, or which have been cured. Neither Westlake nor any of
its Subsidiaries has received any notification of any asserted present or past
failure by it to comply with any such applicable laws or regulations. Westlake
and its Subsidiaries have all material licenses, permits, orders or approvals
from the Governmental Bodies required for the conduct of their businesses, and
are not in material violation of any such licenses, permits, orders and
approvals. All such licenses, permits, orders and approvals are in full force
and effect, and no suspension or cancellation of any thereof has been
threatened.
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5.19 Tax Matters.
1. Westlake and each of its Subsidiaries (1) has filed all nonconsolidated
and noncombined Tax Returns and all consolidated or combined Tax Returns that
include only Westlake and/or its Subsidiaries and not Seller or its other
Affiliates (for the purposes of this Section 5.19, such tax Returns shall be
considered nonconsolidated and noncombined Tax Returns) required to be filed
through the date hereof and has paid any Tax due through the date hereof with
respect to the time periods covered by such nonconsolidated and noncombined Tax
Returns and shall timely pay any such Taxes required to be paid by it after the
date hereof with respect to such Tax Returns and (2) shall prepare and timely
file all such nonconsolidated and noncombined Tax Returns required to be filed
after the date hereof and through the Closing Date and pay all Taxes required to
be paid by it with respect to the periods covered by such Tax Returns; (B) all
such Tax Returns filed pursuant to clause (A) after the date hereof shall, in
each case, be prepared and filed in a manner consistent in all material respects
(including elections and accounting methods and conventions) with such Tax
Return most recently filed in the relevant jurisdiction prior to the date
hereof, except as otherwise required by law or regulation. Any such Tax Return
filed or required to be filed after the date hereof shall not reflect any new
elections or the adoption of any new accounting methods or conventions or other
similar items, except to the extent such particular reflection or adoption is
required to comply with any law or regulation.
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2. All consolidated or combined Tax Returns (except those described in
subparagraph (a) above) required to be filed by any person through the date
hereof that are required or permitted to include the income, or reflect the
activities, operations and transactions, of Westlake or any of its Subsidiaries
for any taxable period have been timely filed, and the income, activities,
operations and transactions of Westlake and Subsidiaries have been properly
included and reflected thereon. Westlake shall prepare and file, or cause to be
prepared and filed, all such consolidated or combined Tax Returns that are
required or permitted to include the income, or reflect the activities,
operations and transactions, of Westlake or any Subsidiary, with respect to any
taxable year or the portion thereof ending on or prior to the Closing Date,
including, without limitation, Westlake's consolidated federal income tax return
for such taxable years. Westlake will timely file a consolidated federal income
tax return for the taxable year ended December 31, 1998 and such return shall
include and reflect the income, activities, operations and transactions of
Westlake and Subsidiaries for the taxable period then ended, and hereby
expressly covenants and agrees to file a consolidated federal income tax return,
and to include and reflect thereon the income, activities, operations and
transactions of Westlake and Subsidiaries for the taxable period through the
Closing Date. All Tax Returns filed pursuant to this subparagraph (b) after the
date hereof shall, in each case, to the extent that such Tax Returns
specifically relate to Westlake or any of its Subsidiaries and do not generally
relate to matters affecting other members of Westlake's consolidated group, be
prepared and filed in a manner consistent in all material respects (including
elections and accounting methods and conventions) with the Tax Return most
recently filed in the relevant jurisdictions prior to the date hereof, except as
otherwise required by law or regulation. Westlake has paid or will pay all
Taxes that may now or hereafter be due with respect to the taxable periods
covered by such consolidated or combined Tax Returns.
3. Neither Westlake nor any of its Subsidiaries has agreed, or is required,
to make any adjustment (x) under Section 481(a) of the Code by reason of a
change in accounting method or otherwise or (y) pursuant to any provision of the
Tax Reform Act of 1986, the Revenue Act of 1987 or the Technical and
Miscellaneous Revenue Act of 1988.
4. Neither Westlake nor any of its Subsidiaries or any predecessor or
Affiliate of the foregoing has, at any time, filed a consent under Section
341(f)(1) of the Code, or agreed under Section 341(f)(3) of the Code, to have
the provisions of Section 341(f)(2) of the Code apply to any sale of its stock.
5. There is no (nor has there been any request for an) agreement, waiver or
consent providing for an extension of time with respect to the assessment of any
Taxes attributable to Westlake or its Subsidiaries, or their assets or
operations and no power of attorney granted by Westlake or any of its
Subsidiaries with respect to any Tax matter is currently in force.
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6. There is no action, suit, proceeding, investigation, audit, claim,
demand, deficiency or additional assessment in progress, pending or threatened
against or with respect to any Tax attributable to Westlake, its Subsidiaries or
their assets or operations.
7. All amounts required to be withheld as of the Closing Date for Taxes or
otherwise have been withheld and paid when due to the appropriate agency or
authority.
8. No property of Westlake is "tax-exempt use property " within the meaning
of Section 168(h) of the Code nor property that Westlake and/or its Subsidiaries
will be required to treat as being owned by another person pursuant to Section
168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect
immediately prior to the enactment of the Tax Reform Act of 1986.
9. There have been delivered or made available to GONT true and complete
copies of all income Tax Returns (or with respect to consolidated or combined
returns, the portion thereof) and any other Tax Returns requested by GONT as may
be relevant to Westlake, its Subsidiaries, or their assets or operations for any
and all periods ending after December 31, 1998, or for any Tax years which are
subject to audit or investigation by any taxing authority or entity.
10. There is no contract, agreement, plan or arrangement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of Westlake or its Subsidiaries that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to Section 280G or 162 of the Code.
5.20 Environmental Matters.
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1. At all times prior to the date hereof, Westlake and its Subsidiaries have
complied in all material respects with applicable environmental laws, orders,
regulations, rules and ordinances relating to the Properties (as hereinafter
defined), the violation of which would have a material adverse effect on the
business or financial condition of Westlake and its Subsidiaries, taken as a
whole, or which would require a payment by Westlake or its Subsidiaries in
excess of $2,000 in the aggregate, and which have been duly adopted, imposed or
promulgated by any legislative, executive, administrative or judicial body or
officer of any Governmental Body.
2. The environmental licenses, permits and authorizations that are material
to the operations of Westlake and its Subsidiaries, taken as a whole, are in
full force and effect.
3. Neither Westlake nor any of its Subsidiaries has released or caused to
be released on or about the properties currently owned or leased by Westlake or
any of its Subsidiaries (the "Properties") any (i) pollutants, (ii)
contaminants, (iii) "Hazardous Substances," as that term is defined in Section
101(14) of the Comprehensive Environmental Response Act, as amended or (iv)
"Regulated Substances," as that term in defined in Section 9001 of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended,
which would be required to be remediated by any governmental agency with
jurisdiction over the Properties under the authority of laws, regulations and
ordinances as in effect and currently interpreted on the date hereof, which
remediation would have a material adverse effect on the business or financial
condition of Westlake and its Subsidiaries, taken as a whole.
5.21 Brokers or Finders. Other than Xxxxx Xxxxxxx, Westlake has not employed
any broker or finder or incurred any liability for any brokerage or finder's
fees or commissions or similar payments in connection with the sale of the
Westlake Shares to GONT.
5.22 Absence of Certain Commercial Practices. Neither Westlake nor any of
its Subsidiaries has, directly or indirectly, paid or delivered any fee,
commission or other sum of money or item of property, however characterized, to
any finder, agent, government official or other party, in the United States or
any other country, which is in any manner related to the business or operations
of Westlake or its Subsidiaries, which Westlake or one of its Subsidiaries
knows or has reason to believe to have been illegal under any federal, state or
local laws of the United States or any other country having jurisdiction; and
neither Westlake nor any of its Subsidiaries has participated, directly or
indirectly, in any boycotts or other similar practices affecting any of its
actual or potential customers in violation of any applicable law or regulation.
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5.23 Transactions with Directors and Officers. Westlake and its
Subsidiaries do not engage in business with any Person in which any of
Westlake's directors or officers has a material equity interest. No director or
officer of Westlake owns any property, asset or right which is material to the
business of Westlake and its Subsidiaries, taken as a whole.
5.24 Borrowing and Guarantees. Westlake and its Subsidiaries (a) do not have
any indebtedness for borrowed money, (b) are not lending or committed to lend
any money (except for advances to employees in the ordinary course of business),
and (c) are not guarantors or sureties with respect to the obligations of any
Person.
6. REPRESENTATIONS AND WARRANTIES OF GONT.
GONT represents and warrants to Westlake that, to the Knowledge of GONT (which
limitation shall not apply to Section 6.3), and except as set forth in the GONT
Disclosure Letter:
6.1 Organization of GONT; Authorization. GONT is a corporation duly
organized, validly existing and in good standing under the laws of Delaware with
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action of
GONT and this Agreement constitutes a valid and binding obligation of GONT;
enforceable against it in accordance with its terms.
6.2 Capitalization. The authorized capital stock of GONT consists of
100,000,000 shares of common stock, par value $.001 per share, and 10,000,000
shares of preferred stock, par value $.001 per share. As of October 1, 1999,
GONT had 70,052,677 shares of common stock issued and outstanding and 499,333
shares of Series A Preferred Stock issued and outstanding. As of the Closing
Date, all of the issued and outstanding shares of common stock of GONT are
validly issued, fully paid and non-assessable. The Common Stock of GONT is
presently listed and trading on the Nasdaq Over-the-Counter Bulletin Board under
the symbol "GONT."
6.3 Ownership of GONT Shares. The delivery of certificates to Westlake
provided in Section 2.3 will result in the Shareholders' of Westlake immediate
acquisition of record and beneficial ownership of the GONT Shares, free and
clear of all Encumbrances other than as required by Federal and State securities
laws.
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6.4 No Conflict as to GONT and Subsidiaries. Neither the execution and
delivery of this Agreement nor the consummation of the sale of the GONT Shares
to Westlake will (a) violate any provision of the certificate of incorporation
or by-laws (or other governing instrument) of GONT or any of its Subsidiaries
or (b) violate, or be in conflict with, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
excuse performance by any Person of any of its obligations under, or cause the
acceleration of the maturity of any debt or obligation pursuant to, or result in
the creation or imposition of any Encumbrance upon any property or assets of
GONT or any of its Subsidiaries under, any material agreement or commitment to
which GONT or any of its Subsidiaries is a party or by which any of their
respective property or assets is bound, or to which any of the property or
assets of GONT or any of its Subsidiaries is subject, or (c) violate any
statute or law or any judgment, decree, order, regulation or rule of any court
or other Governmental Body applicable to GONT or any of its Subsidiaries except,
in the case of violations, conflicts, defaults, terminations, accelerations or
Encumbrances described in clause (b) of this Section 6.4, for such matters which
are not likely to have a material adverse effect on the business or financial
condition of GONT and its Subsidiaries, taken as a whole.
6.5 Consents and Approvals of Governmental Authorities. No consent, approval
or authorization of, or declaration, filing or registration with, any
Governmental Body is required to be made or obtained by GONT or Westlake or any
of either of their Subsidiaries in connection with the execution, delivery and
performance of this Agreement by GONT or the consummation of the sale of the
GONT Shares to Westlake.
6.6 Other Consents. No consent of any Person is required to be obtained by
Westlake or GONT to the execution, delivery and performance of this Agreement or
the consummation of the sale of the GONT Shares to Westlake, including, but not
limited to, consents from parties to leases or other agreements or commitments,
except for any consent which the failure to obtain would not be likely to have a
material adverse effect on the business and financial condition of Westlake or
GONT.
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6.7 Financial Statements. GONT has delivered to Westlake consolidated
balance sheets of GONT and its Subsidiaries as at December 31, 1998 and
September 30, 1999, and statements of income and changes in financial position
for each of the years in the two-year period then ended, together with the
report thereon of GONT's independent accountant (the "GONT Financial
Statements"). Such GONT Financial Statements and notes fairly present the
consolidated financial condition and results of operations of GONT and its
Subsidiaries as at the respective dates thereof and for the periods therein
referred to, all in accordance with generally accepted United States accounting
principles consistently applied throughout the periods involved, except as set
forth in the notes thereto, and shall be utilizable in any SEC filing in
compliance with Rule 310 of Regulation S-B promulgated under the Securities Act.
6.8 Brokers or Finders. GONT has not employed any broker or finder or
incurred any liability for any brokerage or finder's fees or commissions or
similar payments in connection with the sale of the GONT Shares to Westlake.
6.9 Purchase for Investment. GONT is purchasing the Westlake Shares solely
for its own account for the purpose of investment and not with a view to, or for
sale in connection with, any distribution of any portion thereof in violation of
any applicable securities law.
7. Access and Reporting; Filings With Governmental Authorities; Other
Covenants.
7.1 Access Between the date of this Agreement and the Closing Date. Each of
Westlake and GONT shall (a) give to the other and its authorized representatives
reasonable access to all plants, offices, warehouse and other facilities and
properties of Westlake or GONT, as the case may be, and to its books and
records, (b) permit the other to make inspections thereof, and (c) cause its
officers and its advisors to furnish the other with such financial and operating
data and other information with respect to the business and properties of such
party and its Subsidiaries and to discuss with such and its authorized
representatives its affairs and those of its Subsidiaries, all as the other may
from time to time reasonably request.
7.3 Exclusivity. From the date hereof until the earlier of the Closing or
the termination of this Agreement, Westlake shall not solicit or negotiate or
enter into any agreement with any other Person with respect to or in furtherance
of any proposal for a merger or business combination involving, or acquisition
of any interest in, or (except in the ordinary course of business) sale of
assets by, Westlake, except for the exchange of the GONT Shares for the Westlake
Shares from Westlake's shareholders.
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7.4 Regulatory Matters. Westlake and GONT shall (a) file with applicable
regulatory authorities any applications and related documents required to be
filed by them in order to consummate the contemplated transaction and (b)
cooperate with each other as they may reasonably request in connection with the
foregoing.
8. CONDUCT OF WESTLAKE'S BUSINESS PRIOR TO THE CLOSING.
8.1 Operation in Ordinary Course. Between the date of this Agreement and the
Closing Date, Westlake shall cause conduct its businesses in all material
respects in the ordinary course.
8.2 Business Organization. Between the date of this Agreement and the
Closing Date, Westlake shall (a) preserve substantially intact the business
organization of Westlake; and (b) preserve in all material respects the present
business relationships and good will of Westlake and each of its Subsidiaries.
8.3 Corporate Organization. Between the date of this Agreement and the
Closing Date, Westlake shall not cause or permit any amendment of its
certificate of incorporation or by-laws (or other governing instrument) and
shall not:
1. issue, sell or otherwise dispose of any of its Equity Securities, or
create, sell or otherwise dispose of any options, rights, conversion rights or
other agreements or commitments of any kind relating to the issuance, sale or
disposition of any of its Equity Securities;
2. create or suffer to be created any Encumbrance thereon, or create, sell
or otherwise dispose of any options, rights, conversion rights or other
agreements or commitments of any kind relating to the sale or disposition of any
Equity Securities;
3. reclassify, split up or otherwise change any of its Equity Securities;
4. be party to any merger, consolidation or other business combination;
5. sell, lease, license or otherwise dispose of any of its properties or
assets (including, but not limited to rights with respect to patents and
registered trademarks and copyrights or other proprietary rights), in an amount
which is material to the business or financial condition of Westlake and its
Subsidiaries, taken as a whole, except in the ordinary course of business; or
6. organize any new Subsidiary or acquire any Equity Securities of any
Person or any equity or ownership interest in any business.
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8.4 Other Restrictions. Between the date of this Agreement and the Closing
Date, Westlake shall not:
1. borrow any funds or otherwise become subject to, whether directly or by
way of guarantee or otherwise, any indebtedness for borrowed money;
2. create any material Encumbrance on any of its material properties or
assets;
3. increase in any manner the compensation of any director or officer or
increase in any manner the compensation of any class of employees;
4. create or materially modify any material bonus, deferred compensation,
pension, profit sharing, retirement, insurance, stock purchase, stock option, or
other fringe benefit plan, arrangement or practice or any other employee benefit
plan (as defined in section 3(3) of ERISA);
5. make any capital expenditure or acquire any property or assets;
6. enter into any agreement that materially restricts GONT, Westlake or any
of their Subsidiaries from carrying on business;
7. pay, discharge or satisfy any material claim, liability or obligation,
absolute, accrued, contingent or otherwise, other than the payment, discharge or
satisfaction in the ordinary course of business of liabilities or obligations
reflected in the Westlake Financial Statements or incurred in the ordinary
course of business and consistent with past practice since the date of the
Westlake Financial Statements; or
8. cancel any material debts or waive any material claims or rights.
9. DEFINITIONS.
As used in this Agreement, the following terms have the meanings specified or
referred to in this Section 9.
9.1 "Business Day" C Any day that is not a Saturday or Sunday or a day
on which banks located in the City of New York are authorized or required to be
closed.
9.2 "Code" C The Internal Revenue Code of 1986, as amended.
9.3 "Encumbrances" C Any security interest, mortgage, lien, charge, adverse
claim or restriction of any kind, including, but not limited to, any restriction
on the use, voting, transfer, receipt of income or other exercise of any
attributes of ownership, other than a restriction on transfer arising under
Federal or state securities laws.
9.4 "Equity Securities" C See Rule 3aB11B1 under the Securities Exchange Act
of 1934.
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9.5 "ERISA" C The Employee Retirement Income Security Act of 1974, as
amended.
9.6 "Governmental Body" C Any domestic or foreign national, state or
municipal or other local government or multi-national body (including, but not
limited to, the European Economic Community), any subdivision, agency,
commission or authority thereof.
9.7 "Knowledge" C Actual knowledge, after reasonable investigation.
9.8 "Person" C Any individual, corporation, partnership, joint venture,
trust, association, unincorporated organization, other entity, or Governmental
Body.
9.9 "Subsidiary" C With respect to any Person, any corporation of which
securities having the power to elect a majority of that corporation's Board of
Directors (other than securities having that power only upon the happening of a
contingency that has not occurred) are held by such Person or one or more of its
Subsidiaries.
10. TERMINATION.
10.1 Termination. This Agreement may be terminated before the Closing
occurs only as follows:
1. By written agreement of Westlake and GONT at any time.
2. By GONT, by notice to Westlake at any time, if one or more of the
conditions specified in Section 4 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1) would otherwise occur or
if satisfaction of such a condition is or becomes impossible.
3. By Westlake, by notice to GONT at any time, if one or more of the
conditions specified in Section 3 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1), would otherwise occur
of if satisfaction of such a condition is or becomes impossible.
4. By either Westlake or GONT, by notice to the other at any time after
January 31, 2000.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, this Agreement shall terminate without any liability or further
obligation of any party to another.
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13. NOTICES. All notices, consents, assignments and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given when (a) delivered by hand, (b) sent by telex or facsimile (with receipt
confirmed), provided that a copy is mailed by registered mail, return receipt
requested, or (c) received by the delivery service (receipt requested), in each
case to the appropriate addresses, telex numbers and facsimile numbers set forth
below (or to such other addresses, telex numbers and facsimile numbers as a
party may designate as to itself by notice to the other parties).
(a) If to GONT:
0000 Xxxxx Xxxx., Xxxxx 000/000
Xxxxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
Copy to:
Xxxxxx Law Group
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: M. Xxxxxxx Xxxxxx, Esq.
(b) If to Westlake:
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
00. MISCELLANEOUS.
14.2 Expenses. Each party shall bear its own expenses incident to the
preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder.
14.3 Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
agreement.
14.4 No Waiver. The failure of a party to insist upon strict adherence
to any term of this Agreement on any occasion shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
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14.5 Exclusive Agreement; Amendment. This Agreement supersedes all
prior agreements among the parties with respect to its subject matter with
respect thereto and cannot be changed or terminated orally.
14.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
14.7 Governing Law. This Agreement and (unless otherwise provided) all
amendments hereof and waivers and consents hereunder shall be governed by the
internal law of the State of California, without regard to the conflicts of law
principles thereof.
14.8 Binding Effect. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and assigns,
provided that neither party may assign its rights hereunder without the consent
of the other, provided that, after the Closing, no consent of Westlake shall be
needed in connection with any merger or consolidation of GONT with or into
another entity.
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IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be executed by their respective offi-cers, hereunto duly authorized, and
entered into as of the date first above written.
ATTEST: GO ONLINE NETWORKS CORPORATION
A DELAWARE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
Secretary Xxxxxx X. Xxxxxxxx, Chief Executive Officer
ATTEST: WESTLAKE CAPITAL CORP.
A COLORADO CORPORATION
By: /s/ JJ. Xxxxxx
Secretary Xxxxxx X. Xxxxxx, President
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