EXHIBIT 2.1
AGREEMENT AND
PLAN OF REORGANIZATION
by and among
LONE WOLF ENERGY, INC.
and
PRESTIGE ACQUISITION CORP.,
and
PRESTIGE INVESTMENTS, INC.,
ZENEX LONG DISTANCE, INC.,
d/b/a ZENEX COMMUNICATIONS, INC.,
XXXXX X. XXXXXX,
XXXXX X. XXXXXXXX,
FIREBALL ENTERPRISES, L.L.C.,
XXXX XXXXXX
and
XXXXX XXXXXX
Dated as of May 4, 2000
TABLE OF CONTENTS
Page
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ARTICLE I - DEFINITIONS .........................................................................................2
ARTICLE II - THE MERGER...........................................................................................5
2.1 The Merger......................................................................................5
2.2 Filing of Certificate of Merger; Effective Time.................................................5
2.3 Effect of the Merger............................................................................6
2.3.1 Name of Surviving Corporation..........................................................6
2.3.2 Certificate of Incorporation...........................................................6
2.3.3 By-Laws................................................................................6
2.3.4 Directors..............................................................................6
2.3.5 Officers...............................................................................6
2.3.6 Legal Effect of the Merger.............................................................6
2.3.7 Further Assurances and Documentation
as Necessary to Evidence the Merger....................................................7
2.3.8 Tax Consequences.........................................................................7
2.4 The Closing.....................................................................................7
2.5 Conversion of Acquisition Company Stock.........................................................7
2.6 Consideration for Exchange and Surrender of the Shares by the Shareholders......................7
2.7 Registration of the Lone Wolf Stock to be Issued to the Shareholders at Closing.................8
2.7.1 Registration Statement.................................................................8
2.7.2 Expenses of Registration...............................................................9
2.7.3 Blue Sky...............................................................................9
2.7.4 Registration Statement; Indemnification...............................................10
2.8 Zenex Employees................................................................................11
2.9 Transfer and Surrender of the Shares by the
Shareholders to Lone Wolf on the Closing Date..................................................11
2.10 Closing Date Deliveries by Lone Wolf...........................................................12
2.11 Closing Date Deliveries by Prestige, Zenex and the Shareholders................................12
ARTICLE III - REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS, PRESTIGE AND ZENEX............................................................13
3.1 Organization and Standing of Prestige and Zenex................................................14
3.2 Capitalization of Prestige and of Zenex.......................................................14
3.3 Trade Names....................................................................................15
3.4 Financial Statements...........................................................................15
3.5 Liabilities....................................................................................15
3.6 Taxes..........................................................................................16
3.7 Property and Assets............................................................................16
3.8 Litigation and Proceedings.....................................................................16
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3.9 Authority......................................................................................17
3.10 Absence of Certain Changes.....................................................................17
3.11 Employee Benefit Plans.........................................................................19
3.12 No Impending Material Adverse Events...........................................................20
3.13 Books and Records..............................................................................20
3.14 Full Disclosure................................................................................20
3.15 Significant Agreements.........................................................................20
3.16 Insurance......................................................................................21
3.17 Transactions with Affiliated Persons...........................................................21
3.18 Brokers........................................................................................21
3.19 No Default.....................................................................................21
3.20 Hazardous Materials............................................................................22
3.21 Books and Records..............................................................................22
3.22 No Injunctions or Orders.......................................................................23
3.23 Intellectual Property..........................................................................23
3.24 Tariffs........................................................................................23
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF LONE WOLF.........................................................23
4.1 Organization and Standing of Lone Wolf.........................................................23
4.2 Authority......................................................................................23
4.3 Brokers........................................................................................24
4.4 Legal Proceedings..............................................................................24
4.5 Consents and Approvals.........................................................................24
4.6 Adequate Financial Resources...................................................................25
4.7 Full Disclosure................................................................................25
4.8 Ownership of Acquisition Company; No Prior Activities..........................................25
4.9 Capitalization of Lone Wolf....................................................................25
4.10 Compliance with Laws and Orders................................................................25
4.11 No Default.....................................................................................26
4.12 Improper Payments..............................................................................26
ARTICLE V - FURTHER COVENANTS AND AGREEMENTS OF THE PARTIES......................................................26
5.1 Conduct of Business............................................................................26
5.2 Due Diligence..................................................................................28
5.3 Access and Information.........................................................................29
5.4 Cooperation....................................................................................29
5.5 Employees and Benefits.........................................................................29
5.6 Agreement Not to Negotiate.....................................................................29
5.7 Shareholders' Agreements.......................................................................30
5.8 Election of Lone Wolf, Prestige and Zenex Boards of Directors Post Closing.....................30
ARTICLE VI - CONDITIONS TO OBLIGATIONS OF LONE WOLF TO CLOSE.....................................................30
6.1 Performance of Agreements......................................................................30
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6.2 Continued Accuracy of Representations and Warranties...........................................31
6.3 Delivery of Closing Certificate by the Shareholders, Prestige and Zenex.......................31
6.4 Absence of Material Adverse Changes............................................................31
6.5 Absence of Litigation..........................................................................31
6.6 Regulatory Approvals...........................................................................31
6.7 Resignation of Directors and Officers..........................................................32
ARTICLE VII - CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS, PRESTIGE AND ZENEX.................................32
7.1 Performance of Agreements......................................................................32
7.2 Continued Accuracy of Representations and Warranties...........................................32
7.3 Delivery of Lone Wolf's Closing Certificate....................................................32
7.4 Absence of Litigation..........................................................................32
7.5 Regulatory Approval............................................................................32
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER.................................................................33
8.1 Termination by Mutual Consent..................................................................33
8.2 Termination by Lone Wolf.......................................................................33
8.3 Termination by the Shareholders................................................................33
8.4 Termination by Expiration......................................................................33
8.5 Effective Termination; Rights and Remedies of the Parties......................................34
8.6 Amendment......................................................................................34
8.7 Waiver.........................................................................................34
ARTICLE IX - FURTHER AGREEMENTS..................................................................................34
9.1 Books and Records After Closing................................................................34
9.2 Cooperation and Records Retention..............................................................35
ARTICLE X - GENERAL AND MISCELLANEOUS PROVISIONS.................................................................35
10.1 Confidentiality................................................................................35
10.2 Entire Agreement...............................................................................36
10.3 Governing Law..................................................................................37
10.4 Notices........................................................................................37
10.5 Successors.....................................................................................38
10.6 Attorney Fees, Costs and Expenses..............................................................38
10.7 Press Releases and Public Statements...........................................................38
10.8 Non-Survival of Covenants, Representations and Warranties......................................39
10.9 Assignment and Legal Effect....................................................................39
10.10 No Third-Party Beneficiaries...................................................................39
10.11 Time; Good Faith...............................................................................39
10.12 Severability...................................................................................39
10.13 Counterparts...................................................................................39
10.14 Additional Acts................................................................................39
10.15 Headings.......................................................................................40
10.16 Interpretation.................................................................................40
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into this _____ day of May, 2000, by and among LONE WOLF ENERGY, INC., a
Colorado corporation, together with its successors and assigns ("Lone Wolf") and
PRESTIGE ACQUISITION CORP., an Oklahoma corporation, a wholly-owned, direct
subsidiary of Lone Wolf ("Acquisition Company"), both with mailing address of
0000 X.X. 00xx, Xx. 000, Xxxxxxxx Xxxx, Xxxxxxxx 00000, and PRESTIGE
INVESTMENTS, INC., an Oklahoma corporation ("Prestige"), its wholly owned
subsidiary corporation, ZENEX LONG DISTANCE, INC., an Oklahoma corporation,
d/b/a ZENEX COMMUNICATIONS, INC. ("Zenex"), XXXXX X. XXXXXX, an individual
("Xxxxxx"), XXXXX X. XXXXXXXX, an individual ("Xxxxxxxx"), FIREBALL ENTERPRISES,
L.L.C., an Oklahoma limited liability company ("Fireball"), XXXX XXXXXX, an
individual ("Xxxxxx") and XXXXX XXXXXX, an individual ("Gustas") (Naylor,
Morehead, Fireball, Xxxxxx and Xxxxxx shall be sometimes collectively referred
to herein as the "Shareholders"). Prestige, Zenex and the Shareholders shall for
all purposes under this Agreement be deemed to have the mailing address of 000
X. X. 00xx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000. All of the foregoing shall
sometimes hereinafter be collectively referred to herein as the "Parties."
R E C I T A L S
A. Lone Wolf is a Colorado corporation and a publicly-held company which
files periodic reports with the Securities and Exchange Commission ("SEC"). Lone
Wolf is engaged in e-commerce and intends to acquire and put together business
units with Internet and telecommunications-centered knowledge and capabilities
similar to those of Zenex.
B. Zenex is engaged in the business of (i) providing long distance calling
cards and service in the telecommunications industry and possesses state and
federal regulatory authority to transact business in forty-nine (49) states of
the United States of America, and (ii) in the Wildfire telecommunications
products and services business at its only offices in Oklahoma City, Oklahoma
County, Oklahoma, located at 0000 Xxxx Xxxxxxxx Xxxx, Xxxxx 000-X, Xxxxxxxx
Xxxx, Xxxxxxxx 00000 (the "Business").
C. Prestige is a holding company which has as its principal asset all of
the issued and outstanding capital stock of Zenex. The Shareholders are the
holders of all of the issued and outstanding common capital stock of Prestige
(the "Shares"). Xxxxxx and Xxxxxxxx constitute all of the currently elected
officers of Prestige and all of the members of the Board of Directors of
Prestige. Prestige owns all of the issued and outstanding capital stock of its
subsidiary corporation, Zenex.
D. The Boards of Directors of each of Lone Wolf, Prestige, Zenex and the
Acquisition Company believe that it is in the best interests of each such
respective company and its respective shareholders to consummate the
reorganization provided for in this Agreement pursuant to which Lone Wolf will
directly acquire all of the Shares of Prestige (and thereby own and control its
subsidiary, Zenex) through a merger of Acquisition Company with and into
Prestige, with Prestige to be the surviving corporation.
E. For federal income tax purposes, it is intended that the foregoing
merger qualify as a reorganization under the provisions of Section 368(a)(1)(B)
and (a)(2)(E) of the United States Internal Revenue Code of 1986, as amended
(the "Code").
F. The Shareholders, Zenex and Prestige, on the one hand, and Lone Wolf and
Acquisition Company, on the other hand, desire to make certain representations,
warranties, covenants and other agreements in connection with the transactions
contemplated hereby as set forth in this Agreement below, and to enter into this
Agreement in order to evidence the terms and conditions of the proposed
acquisition by merger of Prestige by Lone Wolf (the "Merger").
NOW, THEREFORE, in consideration of the aforementioned Recitals, the
premises, and of the mutual covenants, promises, representations and warranties
set forth herein, and for such other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the Parties hereto,
the Parties hereto do hereby covenant and agree as follows.
ARTICLE I
DEFINITIONS
The terms defined in this Article I shall have the following respective
meanings for all purposes of this Agreement and all schedules and exhibits
hereto:
1.1 "Affiliate" means with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under direct or indirect common control with, such first
Person. For purposes of this definition, the term "Control" (including the
correlative meanings of the terms "Controls," Controlled by," and "under direct
or indirect Control with") as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
1.2 "Business" shall have the meaning given to that term in Paragraph B of
the Recitals above.
1.3 "Closing" means the consummation and effectuation of the transactions
contemplated herein pursuant to the terms and conditions of this Agreement and
subject to the provisions of Articles VI and VII below, which shall occur (a) at
10:00 a.m. in the offices of Fellers, Snider, Xxxxxxxxxxx, Xxxxxx & Xxxxxxx,
P.C., in Oklahoma City, Oklahoma, on a date to be specified by Lone Wolf, which
shall be no later than the third (3rd) business day after the satisfaction of
the last to occur of the conditions set forth in Article VI; or (b) on such
other date or at such other time or place as is mutually agreed upon by the
Parties hereto.
1.4 "Closing Date" means the date on which the Closing actually occurs.
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Effective Time" shall have the meaning given to that term in Section
2.2 of this Agreement, below.
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1.7 "Employee Benefits" means all wages, accrued vacation, sick leave and
personal day payments, employment contracts and collective bargaining
agreements, salary continuation (for disability or otherwise), scholarship
programs or other compensatory practices, whether formal or informal, for the
benefit of one or more present or former Employees or their beneficiaries,
medical, dental and hospitalization, Medicare premium reimbursement, sick pay,
sickness and accident benefits, short- and long-term disability benefits,
workers' compensation, life insurance (and any other death benefits) and any and
all other individual and group benefits under all Employee Plans and other
arrangements in effect or covering one or more employees or retired, disabled or
terminated Employees (including their dependents and beneficiaries).
1.8 "Employee Plans" means any of the following which is or was at any time
during the preceding seven (7) years sponsored by Zenex; any employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) or employee pension
benefit plan (within the meaning of Section 3(2) of ERISA), including all
collectively bargained plans, and all plans or policies providing for "fringe
benefits" (including, but not limited to, vacation, paid holidays, personal
leave, employee discount, educational benefits, or similar programs), and all
other bonus, incentive, compensation, profit sharing, deferred compensation,
stock, severance, retirement, health, life, disability, group insurance,
employment, stock option, stock purchase, stock appreciation rights,
supplemental unemployment, layoff, consulting, or any other similar plan,
agreement, policy or arrangement (whether written or oral, qualified or
unqualified, currently effective or terminated), and any trust, escrow or other
agreement related thereto, regardless of whether funded.
1.9 "Employees" means all present employees of Zenex whose services are or
have been used primarily by or in connection with the Business, including
part-time Employees, all of whom are listed on Exhibit 1.9, as defined below,
attached hereto. Prestige does not, and has not had, any employees.
1.10 "Environmental Laws" shall have the meaning given to that term in
Section 3.20 of this Agreement, below.
1.11 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.12 "Financial Statements" shall have the meaning given to that term in
Section 3.4 of this Agreement, below.
1.13 "Hazardous Materials" means any substance, waste or material defined
as hazardous or toxic by any Environmental Law and otherwise shall have the
meaning given to that term in Section 3.20, below.
1.14 "Intellectual Property" means all Patents, Know-How, Technology,
trademarks and copyrights which are used by Zenex in the conduct of its
Business.
1.15 "Know-How" means all technical information, know-how data, techniques,
discoveries, inventions, ideas and other information (whether or not patentable)
that (i) Prestige, Zenex or the Shareholders have or may develop or acquire; or
(ii) that Prestige, Zenex or the Shareholders control; and (iii) is necessary or
desirable in the use, including any use in connection
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with research and experimentation, manufacture, sale or other disposition or
which is otherwise essential with regard to the conduct of the Business.
1.16 "Liabilities" means any direct or indirect indebtedness, liability,
claim, loss, damage, deficiency, obligation or responsibility, known or unknown,
fixed or unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, contingent or otherwise, including without
limitation, liabilities on account of Taxes, other governmental charges or
lawsuits brought, whether or not of the kind required by generally accepted
accounting principles to be set forth in a financial statement.
1.17 "Lien" means any lien, pledge, mortgage, security interest, claim,
lease, charge, option, right of first refusal, easement, servitude, transfer
restriction, or any other encumbrance, restriction or limitation whatsoever.
1.18 "Losses" means any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries and deficiencies, including
interest, penalties and attorneys' fees and disbursements and costs of
investigation.
1.19 "Machinery and Equipment" means all of the office equipment,
machinery, vehicles, equipment, desktop computers, hand-held computers
(including, without limitation, all printers, modems, terminals and controls
used in operating such desktop or hand-held computers and all spare parts of
such equipment), all software, fixtures, telephone numbers and other personal
property and fixed assets owned by Zenex and used in the Business.
1.20 "Notice" means any notice given pursuant to the terms of Section 10.4
of this Agreement, below.
1.21 "Ordinary Course of Business" means an action taken by a person which:
(i) is consistent with the past practices of such person and is taken in the
ordinary course of the normal day-to-day operations of such person; (ii) is not
required to be authorized by Board of Directors of such person (or by any person
or group of persons exercising similar authority); and (iii) is similar in
nature and magnitude to action customarily taken, without any authorization by
the Board of Directors (or by any person or group of persons exercising similar
authority), in the ordinary course of the normal day-to-day operations of such
persons that are in the same line of business as such person.
1.22 "Patents" means all patent applications (inclusive of patent
applications filed after the date of this Agreement and relating to the
Technology) and all patents (including inventor's certificates) issued at any
time throughout out the world, divisionals, continuations, reissues,
re-examinations, extensions and foreign counterparts of such patents that the
Shareholders, Prestige or Zenex have, may file or acquire prior to the Closing
Date hereunder and that relate to the Business.
1.23 "Person" means an individual, partnership, corporation, trust,
unincorporated organization, association or joint venture or government agency,
political subdivision or instrumentality thereof.
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1.24 "Regulatory Approvals" means all necessary approvals, certifications,
licenses and authorizations and all pending applications seeking such approvals,
licenses or authorizations from any local, state or federal governmental
authority necessary for the conduct of the Business of Zenex and the marketing
and sale of long distance services provided by Zenex.
1.25 "Returns" means all returns, declarations, reports, statements and
other documents required to be filed in respect of Taxes and Employee Benefit
Plans, and the term "Return" means any one of the foregoing Returns.
1.26 "Tariffs" means all state and federal tariffs, licenses, consents,
approvals, permits and authorizations owned by Zenex which are issued by the
federal or state regulatory agency having the authority to regulate long
distance telecommunications and which are necessary for Zenex to possess in
order to conduct the Business in the manner in which it is currently being
conducted.
1.27 "Taxes" means all federal, state, local, foreign and other net income,
gross income, gross receipts, sales, use, documentary, ad valorem, value-added,
transfer, franchise, profits, license, lease, real property gains or transfer,
service, service use, rental, withholding, payroll, employment, excise, worker's
compensation, Pension Benefit Guaranty Corporation premiums, severance, stamp,
occupation, premium, property, windfall profits, production, customs, duties or
other taxes, assessments, fees, levies or other governmental charges of any kind
whatever, together with any penalties, additions to tax or additional amounts
with respect thereto and the term "Tax" means any one of the foregoing Taxes.
1.28 "Technology" means, collectively, all of the right, title and interest
of Prestige, Zenex or the Shareholders in Know-How and Patents.
ARTICLE II
THE MERGER
2.1 The Merger. Subject to the terms and conditions of this Agreement and
in accordance with the applicable provisions of the Oklahoma General Corporation
Act (18 O.S. 1991 ss. 1001, et seq.) (the "OGCA"), at the Effective Time,
Acquisition Company shall merge (the "Merger") with and into Prestige, whereupon
Acquisition Company's separate corporate existence shall cease and Prestige
shall be the surviving corporation in the Merger (the "Surviving Corporation")
and shall continue its corporate existence under the laws of the State of
Oklahoma. As a result of the Merger, Prestige shall become a wholly-owned,
direct subsidiary of Lone Wolf. Zenex shall continue to be the wholly-owned,
direct subsidiary of Prestige. The effects and consequences of the Merger shall
be as set forth in Section 2.3, below.
2.2 Filing of Certificate of Merger; Effective Time. Lone Wolf shall cause
a Certificate of Merger with respect to the Merger, in form and substance
satisfactory to Lone Wolf and Prestige (the "Certificate of Merger"), to be
executed and filed on the date of the Closing of the Merger or such other date
as Lone Wolf, Acquisition Company, Prestige and the Shareholders may agree, with
the Secretary of State of the State of Oklahoma, as provided in the OGCA. The
Merger shall become effective at the time and date on which the Certificate of
Merger has been duly filed
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with the Secretary of State, or such time and date as is agreed upon by the
Parties and specified in the Certificate of Merger, and such time and date are
referred to herein as the "Effective Time."
2.3 Effect of the Merger. The Parties hereby agree to the following
provisions as to the effect of the Merger when consummated:
2.3.1 Name of Surviving Corporation. The Acquisition Company shall be
merged with and into Prestige (the Acquisition Company and Prestige shall
sometimes hereinafter be collectively referred to as the "Constituent
Corporations") at the Effective Time with Prestige to be the Surviving
Corporation. The name of the Surviving Corporation from and after the
Effective Time shall be "Prestige Investments, Inc."
2.3.2 Certificate of Incorporation. The Certificate of Incorporation
of the Surviving Corporation shall be the Certificate of Incorporation of
Prestige until thereafter amended as provided by law and such Certificate
of Incorporation.
2.3.3 By-Laws. The By-Laws of the Surviving Corporation shall, at the
Effective Time, be the By-Laws of Prestige until thereafter amended, as
provided by law and such By-Laws.
2.3.4 Directors. The Directors of Acquisition Company immediately
prior to the Effective Time shall be and become the directors of Prestige,
as the Surviving Corporation, as of the Effective Time, and until their
successors are duly appointed or elected in accordance with applicable law,
or until their earlier death, resignation or removal in accordance with the
Certificate of Incorporation and By-Laws of Prestige. All members of the
Board of Directors of Prestige and of Zenex shall tender their resignations
to Lone Wolf in form and substance satisfactory to Lone Wolf, on or before
the Closing Date, to be effective at the Effective Time ("Resignations").
2.3.5 Officers. The officers of the Acquisition Company immediately
prior to the Effective Time shall be and become the officers of Prestige,
as of the Effective Time, until their successors are duly appointed or
elected in accordance with applicable law, or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation
and By-Laws of Prestige. All persons holding offices in Prestige and in
Zenex prior to the Effective Time shall tender their Resignations to Lone
Wolf on or before the Closing Date, to be effective at the Effective Time.
2.3.6 Legal Effect of the Merger. At the Effective Time, all and
singular the rights, privileges, powers and franchises, as well of a public
as of a private nature, and all the property, real, personal and mixed, of
each of the Constituent Corporations, and all debts due to either of them
on whatever account, including subscriptions to shares and all other things
in action, or belonging to either of them, shall be taken and deemed to be
transferred to, and shall be vested in, the Surviving Corporation without
further act or deed; and all property, rights, privileges, powers and
franchises and all and every other interest shall be thereafter as
effectively the property of the Surviving Corporation as they were of the
Constituent Corporations, and the title to any real estate vested by deed
or otherwise in either of the Constituent Corporations shall not revert or
be
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in any way impaired by reason of the Merger; but the Surviving Corporation
shall thence forth be liable for all debts, liabilities, obligations,
duties and penalties of each of the Constituent Corporations and all said
debts, liabilities, obligations, duties and penalties shall thenceforth
attach to the Surviving Corporation and may be enforced against it to the
same extent as if said debts, liabilities, obligations, duties and
penalties had been incurred or contracted by it. No liability or obligation
due or to become due at the Effective Time, or any claim or demand for any
cause then existing against either of the Constituent Corporations or any
stockholder, officer or director thereof, shall be released or impaired by
the Merger, and all rights of creditors and all liens upon property of
either of the Constituent Corporations shall be preserved unimpaired.
2.3.7 Further Assurances and Documentation as Necessary to Evidence
the Merger. From time to time, as and when requested by the Surviving
Corporation, or its successors or assigns, the officers and directors of
Prestige last in office, including, without limitation, the Shareholders,
shall execute and deliver such deeds and other instruments and shall take
or cause to be taken such further action or other actions as shall be
necessary in order to vest or perfect in or to confirm of record or
otherwise the Surviving Corporation's title to, and possession of, all the
interest(s), properties, Machinery and Equipment, Intellectual Property,
assets, rights, privileges, immunities, powers, franchises and authority of
Prestige and otherwise carry out the purpose of this Agreement and
effectuate the Merger and the officers and directors of Prestige and the
officers and directors of Lone Wolf are fully authorized in the name of
Prestige or otherwise to take any and all such action.
2.3.8 Tax Consequences. It is intended by the Parties hereto that the
Merger shall constitute a reorganization within the meaning of Section
368(a)(1)(B) and (a)(2)(E) of the Code. The Parties hereto adopt this
Agreement as a "Plan of Reorganization" within the meaning of Section
1.368-2(g) and 1.368-3(a) of the United States Income Tax Regulations.
2.4 The Closing. Subject to the terms and conditions of this Agreement, the
Closing shall take place on the Closing Date at the offices of Fellers, Snider,
Xxxxxxxxxxx, Xxxxxx & Xxxxxxx, 000 X. Xxxxxxxx, Xxxxx 0000, Xxxxxxxx Xxxx,
Xxxxxxxx, at 10:00 o'clock a.m., local time, or at such other time, date or
place as the Shareholders and Lone Wolf may agree in writing.
2.5 Conversion of Acquisition Company Stock. At the Effective Time, each
share of the common stock of Acquisition Company outstanding immediately prior
to the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into and shall become one (1) share
of common stock of the Surviving Corporation to be titled in the name of Lone
Wolf.
2.6 Consideration for Exchange and Surrender of the Shares by the
Shareholders. As consideration for the Merger, Lone Wolf shall issue to the
Shareholders at Closing on the Closing Date, in exchange for all of the Shares
and in proportion to their respective ownership of the Shares, an aggregate
total of Fifteen Million Five Hundred Fifty Thousand (15,550,000) shares of Lone
Wolf Common Stock, par value, $0.001 per share ("Lone Wolf Stock"). The Lone
Wolf Stock is currently trading on the OTC Bulletin Board under the symbol
"LWEI."
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The aforesaid shares of Lone Wolf Stock shall be exchanged for all of the Shares
owned by the Shareholders. Subject to the obligations and covenants of Lone Wolf
to effect a registration of all of the Lone Wolf Stock being issued to the
Shareholders at Closing, as expeditiously as possible, in the manner required in
Section 2.7, below, the Shareholders expressly acknowledge and agree that if the
Lone Wolf Stock being issued to them pursuant hereto cannot be registered before
the Effective Time, that then, and in such event, the Lone Wolf Stock issued to
them at Closing will not be Registered Securities, as that term is defined below
in Section 2.7. In that event, the Lone Wolf Stock to be issued to the
Shareholders at the Closing hereunder (i) will not be registered under the
Securities Act of 1933, or any applicable state securities laws; (ii) will be
issued to them in reliance upon the exemption from registration contained in
Section 4(2) of the Securities Act of 1933, and similar provisions of the state
securities laws; (iii) will be so acquired by them for investment purposes only
and not with a view to, or in connection with, a distribution thereof; and (iv)
will contain standard legends restricting the transfer of said Lone Wolf Stock,
subject to compliance with all federal and state securities laws. Prestige
covenants and agrees that the stock transfer books of Prestige shall be closed
as of the date of this Agreement, and no transfer of record of any of the Shares
shall take place thereafter, nor shall any issuance of shares of the common
stock or the preferred stock of Prestige take place thereafter. Notwithstanding
anything contained in this Section 2.6.1 to the contrary, each share of Prestige
common stock issued and held in Prestige's treasury immediately prior to the
Effective Time shall, by virtue of the Merger, cease to be outstanding and shall
be cancelled and retired without payment of any consideration therefor.
2.7 Registration of the Lone Wolf Stock to be Issued to the Shareholders at
Closing.
2.7.1 Registration Statement. As a material and integral inducement to
the Shareholders to execute and enter into this Agreement and to consummate
the Merger, Lone Wolf covenants and agrees, as soon as is reasonably
practical following the execution and delivery of this Agreement, but in
all events no later than ninety (90) days after the date of this Agreement,
to file a Registration Statement with the Securities and Exchange
Commission ("SEC") on such form as determined by Lone Wolf to be
appropriate in order to permit the sale, transfer or other disposition by
the Shareholders of all of the shares of Lone Wolf Stock to be received by
them at the Closing of the Merger hereunder, subject to such other
applicable rules and regulations under the Securities Act of 1933, or the
Securities Exchange Act of 1934, which might otherwise restrict or limit
the amount of Lone Wolf Stock that can be sold by the Shareholders at such
time. The shares of the Lone Wolf Stock issued to the Shareholders pursuant
to this Agreement which are so registered in accordance with this Section
2.7 shall be hereinafter referred to as the "Registered Securities." Lone
Wolf agrees to use its best efforts to have such registration declared
effective, as expeditiously as possible, by both the SEC and the Oklahoma
Department of Securities ("Oklahoma Department"). The Shareholders and Lone
Wolf agree that if it has been successful in obtaining an effective
registration of the Lone Wolf Stock on or before the Closing Date, that
then, and in such event, the Shareholders shall be issued Registered
Securities in exchange for the Shares in substitution for and instead of
the restricted shares of Lone Wolf Stock, as described in Section 2.6.1,
above. Lone Wolf covenants and agrees to continue the registration of the
Registered Securities for a period of two (2) years after the effective
date of the applicable Registration Statement. If Lone Wolf shall at any
time amend any such Registration Statement or amend or supplement the
Prospectus included
8
therein, it will give the Shareholders owning shares of Lone Wolf Stock
covered by any such Registration Statement, reasonable notice in advance,
and will notify such Shareholders promptly of the time at which any such
Registration Statement, amendment, or supplement becomes effective.
Shareholders agree to refrain from selling any such shares of Lone Wolf
Stock covered pursuant to such Registration Statement after any
notification that an amendment or supplement is being prepared and prior to
the effectiveness thereof. After the expiration of such two (2) year period
from or after the effective date of the registration of the Lone Wolf
Stock, or any extension thereof, Lone Wolf may take such action as it
desires to cause the de-registration of any such shares not sold. All of
the obligations of Lone Wolf and the Shareholders with regard to the
registration of the Lone Wolf Stock being issued to the Shareholders at
Closing, as set forth in this Section 2.7, shall expressly survive the
Closing hereunder and the consummation of the transaction embodied by this
Agreement and shall be specifically enforceable thereafter by the Parties
hereto as their respective interests may appear.
2.7.2 Expenses of Registration. Lone Wolf shall bear all expenses of
any registration of the Registered Securities including, without
limitation: (i) any required special audits of Lone Wolf, Prestige, Zenex
or any affiliate not useable in Lone Wolf's annual audit and necessitated
by this requirement for registration; (ii) any underwriter's discount or
commission that may be owing, if at any time or times an underwriter is
employed by Lone Wolf; (iii) any broker or dealer charges that may be owing
in conjunction with the registration; and (iv) all counsel fees and
expenses of the Shareholders, the underwriters and Lone Wolf in conjunction
therewith. Lone Wolf will furnish each Shareholder whose shares are
registered, copies of preliminary prospectuses, final prospectuses
(together with supplements thereto) and other documents necessary or
incidental to the offerings and dispositions pursuant to such registrations
in such quantities as Shareholders may reasonably request. Shareholders
shall notify Lone Wolf when a Prospectus relating to the shares of such
Shareholder is required to be delivered under the 1933 Act, of the
happening of any event relating to (i) such Shareholder, (ii) the
Registered Securities held by such Shareholder, or (iii) such Shareholder's
intended method of disposition of the Registered Securities, as a result of
which such Prospectus includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances
then existing, and to furnish Lone Wolf such information regarding the
Shareholder, the Registered Securities held by such Shareholder and the
intended method of disposition of such shares of Lone Wolf Stock as Lone
Wolf shall reasonably request.
2.7.3 Blue Sky. In connection with the registration of the shares held
by the Shareholders, Lone Wolf will prepare and file such documents as may
be necessary to register or qualify such shares under the Securities or
Blue Sky laws of such states as the Shareholder reasonably requests and
utilize reasonable efforts to cause such shares to be qualified for public
sale in such state; provided, however, that Lone Wolf shall not be required
to qualify as a foreign corporation or to file a general consent to service
of process in any such state by reason thereof.
9
2.7.4 Registration Statement; Indemnification.
(a) With regard to the registration of the Registered Securities, Lone
Wolf will indemnify each of the Shareholders who participates therein and
hold them harmless against any loss, claim, liability, damage or action
arising out of or based on any untrue statement of a material fact
contained in the Registration Statement when it becomes effective or in any
preliminary or final Prospectus, or amendment or supplement thereto, or any
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
the indemnified person for any attorney fees, court costs or other legal
expenses reasonably incurred in investigating or defending any such action
or claim, except: (a) to the extent that the untrue statement or omission
was made in reliance upon and in conformity with information, written or
oral, furnished to Lone Wolf by the indemnified person for use in or which
could reasonably be expected to be used or relied upon in the Registration
Statement, preliminary or final Prospectus, or amendment or supplement
thereto; or (b) if the indemnified person failed to send a final Prospectus
to the purchaser of the shares and the loss, claim, liability, damage or
action for which indemnification is claimed would not have existed if such
purchaser had received a final Prospectus.
(b) Each of the Shareholders agrees to indemnify Lone Wolf, each of
its directors, each of its officers who sign the Registration Statement,
each person who controls Lone Wolf, and each counsel and auditor to or for
any of the foregoing against any loss, claim, liability, damage or action
arising out of or based on any untrue statement of a material fact
furnished by the Shareholders and included in the Registration Statement
when the same becomes effective or in any preliminary or final Prospectus
or amendment or supplement thereto, or any omission to state therein a
material fact required to be stated therein by the Shareholders or
necessary to make the statements therein not misleading as to the facts
furnished by the selling Shareholder, respectively, and to reimburse the
indemnified person for any attorney fees, court costs or other legal
expenses reasonably incurred in investigating or defending any such action
or claim, but only to the extent that the untrue statement or omission was
made in reliance upon and in conformity with information, written or oral,
furnished to Lone Wolf by the indemnifying party for use in or which could
reasonably be expected to be used or relied upon in the Registration
Statement, preliminary or final Prospectus, or amendment or supplement
thereto.
(c) Promptly after notice that any action for which indemnification is
available under this Section 2.7.4 is threatened or pending (but in no
event later than thirty (30) days), the indemnified party shall notify the
indemnifying party, who shall be entitled to assume and control the defense
of the action at its sole expense. If the indemnifying party gives notice
to the indemnified party of its election to assume and control the defense,
the indemnifying party shall not be liable to the indemnified party for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense or investigation of the action. If the
indemnified party fails to notify the indemnifying party of the threatened
or pending action in accordance with this Section, the indemnifying party
10
shall have no liability to indemnified party with respect to the action but
shall remain liable hereunder to all other indemnified persons.
2.7.5 The obligation of Lone Wolf to register the shares of Lone Wolf
Stock being issued to the Shareholders under this Agreement shall
automatically inure to the benefit of the heirs and personal
representatives of the Shareholders, but are not otherwise transferable.
2.7.6 Lone Wolf further covenants and agrees to take any and all
necessary actions to cause the Registered Securities to comply with all
rules and requirements of the Oklahoma Department or any other applicable
state securities laws with regard to the issuance and sale of the shares of
Lone Wolf Stock issued to the Shareholders at Closing hereunder.
2.8 Zenex Employees. Prestige does not have any employees. Unless otherwise
expressly provided herein, Lone Wolf shall have the right to cause Zenex to
terminate or to retain any of the Employees of Zenex after the Closing, in its
sole and absolute discretion. Any Employees who are terminated from employment
by Zenex shall be subject to appropriate treatment accorded by any existing
severance policy of Zenex (a copy of which has previously been provided to Lone
Wolf by the Shareholders). Employees who continue employment with Zenex at the
discretion of Lone Wolf after the Closing shall continue to be eligible for all
employment benefits plans maintained by Zenex for the benefit of its employees,
to the same extent and on the same basis as they enjoyed prior to the Merger
under the specific provisions of each of Zenex's respective Employee Plans. Lone
Wolf does not maintain any Employee Plans. Accordingly, Zenex Employees will not
receive any additional or supplemental Employee Benefits by reason of the
Merger. There will also be no reduction in the existing salary or wages of the
Employees whose employment with Zenex is continued by Lone Wolf, after Closing,
by reason of the Closing, and such retained Employees will continue to be paid
at their then current salary and wages (i.e., in the same amounts paid to them
by Zenex on the day prior to the Closing Date), subject to Lone Wolf's absolute
right in its sole discretion to cause Zenex to increase or decrease such wages
and salaries of such Employees after the Closing in any amount it sees fit, from
time to time.
2.9 Transfer and Surrender of the Shares by the Shareholders to Lone Wolf
on the Closing Date. At the Closing on the Closing Date, Lone Wolf shall act as
the exchange agent (the "Exchange Agent") to effect the exchange of the Shares
owned by the Shareholders. Each of the Shareholders holding a Prestige stock
certificate or certificates being converted to Lone Wolf Stock pursuant to the
Merger shall, on the Closing Date, surrender such certificate or certificates to
the Exchange Agent (or, if such certificate or certificates shall have been lost
or destroyed, shall deliver to the Exchange Agent an Affidavit to such effect
and a bond or indemnity agreement in form and substance satisfactory to the
Exchange Agent with regard thereto), and each such holder shall be entitled upon
such surrender (or upon such delivery) to receive from Lone Wolf, in exchange
therefor their proportionate amount of the shares of Lone Wolf Stock to be
exchanged for the Shares so surrendered by the Shareholders pursuant to the
terms and provisions of Section 2.6, above. All of the Prestige stock
certificates representing all of the issued and outstanding Shares shall be
delivered by the Shareholders to the Exchange Agent on the Closing Date, duly
endorsed in blank for transfer by each of the Shareholders, as to each of their
respective share certificates, or accompanied by stock powers duly executed in
blank for transfer, by each of the Shareholders as to
11
each of their respective stock certificates representing all of the Shares owned
by the Shareholders. Notwithstanding the tender or non-tender of the stock
certificates by the Shareholders on the Closing Date, all Shares shall be and
become void and shall cease to evidence any ownership interest or rights in
Prestige on the Closing Date, having been converted pursuant to Oklahoma law to
a right to receive the consideration expressly provided for in Section 2.6,
above.
2.10 Closing Date Deliveries by Lone Wolf. At the Closing, Lone Wolf shall
execute and deliver to the Shareholders, or cause Acquisition Company to execute
and deliver to the Shareholders, the following:
2.10.1 The issuance and delivery of the Lone Wolf Stock to the
Shareholders in proportion to their ownership of the Shares, in the manner
and at the times required, pursuant to Section 2.6, above;
2.10.2 A copy of the respective Board of Directors' Resolutions of
Lone Wolf and of the Acquisition Company approving this Agreement and
authorizing the Merger;
2.10.3 A copy of the respective adopted By-Law Amendments and enacted
Board of Directors' Resolution, each in form acceptable to the
Shareholders, of Lone Wolf, Prestige and Zenex, respectively, as required
by the provisions of Section 5.8 of this Agreement, below, to be provided
to the Shareholders, on or before the Closing Date.
2.10.4 Closing Certificate of Lone Wolf, as hereinafter defined, and
required to be provided in Section 7.3 of this Agreement, below;
2.10.5 The Certificate of Merger to be filed by Lone Wolf with the
Oklahoma Secretary of State to evidence the consummation of the Merger of
Acquisition Company with and into Prestige, with Prestige to be the
Surviving Corporation; and
2.10.6 Such other documents, assignments, transfers or officer's
certificates as the Shareholders may deem reasonable and necessary for Lone
Wolf to execute or deliver in order to fully effectuate the Merger
contemplated by this Agreement under the circumstances.
2.11 Closing Date Deliveries by Prestige, Zenex and the Shareholders. At
the Closing, Prestige, Zenex and the Shareholders shall execute and deliver to
Lone Wolf the following respective items, as stated below:
2.11.1 Closing Certificate of Prestige, Zenex and of the Shareholders,
respectively, as hereinafter defined, as required to be provided in Section
6.3 of this Agreement, below;
2.11.2 Certified copies of the Resolutions of the Board of Directors
and of the Shareholders of Prestige and of Zenex, respectively, as required
and represented by the provisions of Sections 3.1, 3.2 and 3.9,
respectively, and pursuant to Section 6.1 of this Agreement, below;
12
2.11.3 The Stock Certificates representing all of the issued and
outstanding Shares, duly endorsed in blank for transfer, or accompanied by
stock powers duly endorsed in blank for transfer, by each of the
Shareholders as to their respective common stock certificates collectively
representing all of the Shares owned by each of the Shareholders;
2.11.4 Copies certified by the Oklahoma Secretary of State of the
Certificate of Incorporation of Prestige and of Zenex, respectively, and
copies of the By-Laws of Prestige and Zenex, respectively, certified to be
true and correct by the Secretary of Prestige and of Zenex, respectively,
as required to be provided by Prestige and Zenex, respectively, to Lone
Wolf pursuant to Sections 3.1 and 3.2, respectively, of this Agreement;
2.11.5 Copies of all insurance policies required to be provided by
Prestige and Zenex to Lone Wolf pursuant to Section 3.16 of this Agreement;
2.11.6 The Resignations executed by all of the respective members of
the Board of Directors and all respective officers of Prestige and Zenex
prior to the Closing Date, resigning from membership on Prestige's and
Zenex's respective Board of Directors and from all of the officer positions
held by them, respectively, in Prestige and Zenex, effective at the
Effective Time;
2.11.7 Certificate of Merger to be filed with the Oklahoma Secretary
of State to evidence the consummation of the Merger pursuant hereto, as
required by the applicable provisions of the OGCA, duly executed by Lone
Wolf and Prestige; and
2.11.8 Such other documents, assignments, transfers or officers'
certificates as Lone Wolf may deem reasonable and necessary for Prestige,
Zenex or the Shareholders to execute or deliver in order to fully
effectuate the Merger contemplated by this Agreement under the
circumstances.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS, PRESTIGE AND ZENEX
The Shareholders, Prestige and Zenex, respectively, do each hereby
specifically covenant and agree to prepare and deliver to Lone Wolf, on or
before the date of this Agreement, complete and correct copies of each of the
Exhibits required to be provided to Lone Wolf by the terms and provisions of
this Article III, below, namely, Exhibits 3.2, 3.5-3.12, 3.15-3.17, 3.20 and
3.24. The Shareholders, Prestige and Zenex also do each, respectively, to the
extent applicable below, as the case may be, represent and warrant to Lone Wolf,
as of the date of this Agreement and as of the Closing Date hereunder, as
follows:
3.1 Organization and Standing of Prestige and Zenex. Each of Prestige and
of Zenex is a corporation duly organized, validly existing and in good standing
under the laws of the State of Oklahoma, and has all requisite power and
authority (corporate and other), and is duly qualified and licensed and possess
all respective licenses, franchises, permits and other governmental
13
authorizations necessary to own, lease and operate its respective assets and
properties and to conduct its respective business as now being conducted by it,
including, without limitation, the full power and authority for Zenex to provide
long distance calling cards and service in the telecommunications industry and
for Prestige and Zenex, respectively to enter into and perform its respective
obligations under this Agreement and the transactions contemplated hereby. Each
of Prestige and Zenex is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which its respective ownership or leasing
of property or the conduct of its respective business requires such licensing or
qualification and where the failure to be so licensed, qualified or in good
standing would have a material adverse effect on the financial condition,
operations, business or prospects of Prestige or Zenex, respectively. Other than
Prestige's ownership of all of the issued and outstanding capital stock of
Zenex, neither Prestige nor Zenex owns any equity interest, directly or
indirectly, in any corporation, limited liability company, partnership, joint
venture, firm or other entity, of any kind or nature. All approvals for this
Agreement and the Merger required to be obtained from the Board of Directors or
the Shareholders of Prestige or of Zenex under their respective Certificates of
Incorporation or By-Laws, or under the OGCA or other applicable law, have been
obtained. Each of Prestige and Zenex has delivered to Lone Wolf complete and
correct copies of its respective Certificate of Incorporation, as certified to
by the Secretary of State of Oklahoma, and of its respective By-Laws, as
certified to by the Secretary or Assistant Secretary of Prestige or Zenex,
respectively, as in effect on the Closing Date.
3.2 Capitalization of Prestige and of Zenex. The authorized capital stock
of Prestige consists of Fifty Thousand (50,000) Shares of Common Stock, par
value, $1.00 per share, ("Prestige Stock"), of which Ten Thousand (10,000)
shares are issued and outstanding (the "Shares") and are all owned by the
Shareholders. None of the capital stock of Prestige is held in its treasury. The
authorized capital stock of Zenex consists of 4,000,000 shares, divided into
1,000,000 shares designated as Common Stock, par value, $0.01 per share, and
3,000,000 shares designated as Preferred Stock, par value, $0.001 per share. Six
Hundred Thirty-Five Thousand Two Hundred Ninety-Five (635,295) shares of the
Zenex Common Stock are issued and outstanding ("Zenex Stock") and are all owned
by Prestige. None of the shares of Zenex Preferred Stock have ever been issued.
Twenty-Nine Thousand Seven Hundred Five (29,705) shares of Zenex Stock are held
in its treasury. No share of the capital stock of Prestige or of Zenex has been
reserved for any purpose. All of the issued and outstanding Shares of the
Prestige Stock and all of the Zenex Stock, respectively, are duly and validly
authorized and issued, fully paid and non-assessable and have not been issued in
violation of any pre-emptive rights. The Shareholders are the record and
beneficial owners of all of the issued and outstanding Shares of the Prestige
Stock. Except as set forth and fully described on Exhibit 3.2, which is attached
hereto, all of the Shares are held by the Shareholders and all of the Zenex
Stock is held by Prestige, respectively, free and clear of all liens,
encumbrances, pledges, options, charges, claims, security interests, agreements,
equities and assessments whatsoever, with the Shareholders having full right and
authority to sell, assign, transfer and deliver the Shares as herein provided.
The Shareholders own the Shares of Stock in the respective amounts and in the
manner respectively set forth and described opposite their names on Exhibit 3.2,
which is attached hereto. There are no outstanding securities convertible into
or exchangeable for the capital stock of either Prestige or Zenex, respectively,
and there are no outstanding options, rights (pre-emptive or otherwise), or
warrants to purchase or to subscribe for any equity securities of either
Prestige or Zenex, respectively. There are no outstanding agreements,
arrangements, commitments or understandings of any kind affecting or relating to
the voting, issuance, purchase, redemption,
14
repurchase or transfer of the capital stock of either Prestige or Zenex,
respectively, or any equity securities of either Prestige or Zenex,
respectively, except as expressly provided for and described in this Agreement.
3.3 Trade Names. No other person, firm or corporation is presently using or
claiming, or has the right to use or claim, any of the following trade names:
"Prestige Investments, Inc.," Zenex Long Distance, Inc." or "Zenex
Communications, Inc.," or to any of the trademarks, logos or symbols used by
either Prestige or Zenex in conjunction with said trade names, respectively.
Neither Prestige nor Zenex have conferred any right or license to use any of the
aforesaid trade names, trademarks, logos, or symbols on any other person, firm
or corporation. After the Closing Date, the Shareholders shall forego and not
make a claim to any right, title or interest in or to the use of the trade names
listed above in this Section, or any trademarks, logos or symbols currently used
or previously used by Prestige, Zenex or the Shareholders in conjunction with
any of those said trade names or otherwise in any manner in conjunction with the
business being currently conducted by Zenex.
3.4 Financial Statements. Prestige has delivered to Lone Wolf and
identified by reference to this Section 3.4, each of the following financial
statements: (i) the unaudited annual financial statements of Prestige and of
Zenex, respectively (consisting of a balance sheet and the related income
statements), prepared internally by Prestige and Zenex, respectively, as of and
for the fiscal year ending December 31, 1999; and (ii) the unaudited internal
financial statements of Prestige and Zenex, respectively (consisting of a
balance sheet and the related income statements) as of and for the period ending
March 31, 2000 (collectively, the "Financial Statements"). The Financial
Statements fairly present the financial condition and results of operations of
Prestige and Zenex, respectively, as of the dates and for the periods indicated
therein, were prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
otherwise set forth therein, and in accordance with the books and records of
Prestige and Zenex, respectively. The Financial Statements contain certain
estimates of expenses pertaining to carrier-related charges that are material to
those Statements. The respective books and records of Prestige and Zenex, on the
basis of which such Financial Statements were prepared, fully and fairly reflect
all of the respective transactions of Prestige and Zenex, and are complete and
correct in all material respects. The respective books of account of Prestige
and Zenex reflect substantially all of their respective, material items of
income and expense, and substantially all of their respective, material assets,
liabilities and accruals, and are maintained in form and substance adequate for
preparing audited Financial Statements in accordance with generally accepted
accounting principles.
3.5 Liabilities. To the knowledge of Prestige, Zenex or the Shareholders,
neither Prestige nor Zenex has indebtedness, obligation or liability, contingent
or otherwise, i.e. Liabilities, whether due or to become due, which is required
by generally accepted accounting principles to be reflected in the Financial
Statements, or which is material, except (i) those reflected in their respective
Financial Statements, (ii) those individual Liabilities subsequently,
respectively, incurred by them in the Ordinary Course of Business, or (iii)
those set forth in Exhibit 3.5 to this Agreement. All deposit accounts and notes
payable, and other Liabilities of Prestige or of Zenex, respectively, are
current and not in default.
3.6 Taxes. Except for calendar year 1999, to the best of the knowledge and
belief of Prestige and Zenex, each has fully filed with the appropriate
governmental agencies, all tax
15
reports and returns required to be filed, including, without limitation, all
federal, state and local income, franchise, sales and property tax returns. A
complete and accurate copy of the 1998 Return has previously been provided to
Lone Wolf. Each of Prestige and Zenex has duly paid in full, or made adequate
provision for the payment of, all taxes and other charges shown on all Returns
to be due or claimed to be due in regard to such tax returns by federal, state
or local taxing authorities. There are no federal, state or local tax liens upon
any of the Property or assets of either Prestige or Zenex. All of such reports
and Returns are true, correct and complete in all material respects. All of the
tax liabilities of Prestige and Zenex for the current year to date and all prior
years, whether or not they have become due and payable, have been paid in full
and to the extent tax liabilities have accrued but not become payable, they are
properly reflected on the books of Prestige and Zenex, respectively, or in the
Financial Statements. No income, franchise, sales or property tax return of
either Prestige or Zenex is currently being audited by the Internal Revenue
Service or any other taxing authority having jurisdiction over Prestige or
Zenex. Except as set forth on Exhibit 3.6 hereto, neither Prestige nor Zenex is
a party to, or bound by, or has any obligation under any tax sharing or similar
agreement. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any state or federal income tax
return of either Prestige or Zenex for any period. Neither Prestige nor Zenex is
a party to any action or proceeding by any governmental authority for assessment
or collection of taxes, and no claim for assessment or collection of taxes by
any governmental authority has been asserted against either Prestige or Zenex.
All federal or state income taxes that either Prestige or Zenex is or was
required by applicable laws to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper governmental
body or other Person who is entitled by law to receive such withholding.
3.7 Property and Assets. Neither Prestige nor Zenex owns any real property
and the real property leased by Zenex has never been owned by Zenex. Prestige
and Zenex each has good and marketable title to all of its respective Property.
The Property is in good operating condition and repair, normal wear and tear
excepted. Other than the Tariffs set forth on Exhibit 3.24 hereto, the assets
set forth on Exhibit 3.7 attached hereto, is a complete and accurate listing of
all of the Property of Prestige and Zenex, respectively.
3.8 Litigation and Proceedings. Except as set forth in Exhibit 3.8 hereto,
(i) there is not pending any legal, administrative, arbitration, governmental or
other proceeding to which any of the Shareholders, Prestige or Zenex is a party,
or, to the knowledge of the Shareholders, or of Prestige or Zenex, is threatened
to be made a party; (ii) none of the Shareholders, Prestige or Zenex is under
any investigation to their respective knowledge with respect to, or is charged
with any violation or alleged violation of, any federal, state, local or other
law or regulation; (iii) neither any of the Shareholders, Prestige nor Zenex,
respectively, is subject to any order of any federal, state, or local court or
other governmental agency not generally applicable to entities engaged in the
same business as Zenex; (iv) no one has asserted, and to the knowledge of the
Shareholders, Prestige or of Zenex, no one has grounds to assert any material
claims against any of the Shareholders, Prestige or Zenex, based upon the
wrongful action or inaction of any of the Shareholders, Prestige or Zenex, or
any of the respective officers, directors, agents or employees of Prestige or
Zenex; and (v) no one has asserted and, to the knowledge of the Shareholders,
Prestige or Zenex, there do not exist grounds for any claims against any of the
Shareholders, Prestige or Zenex which have resulted or may
16
result in litigation that will prevent or delay the consummation of the
transactions contemplated by this Agreement.
3.9 Authority. Each of the Shareholders, Prestige and Zenex, respectively,
has full power and authority to carry out the transactions provided for in this
Agreement on the terms and conditions set forth herein. The respective execution
and delivery by Prestige and Zenex of this Agreement and the consummation by
each of them of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action. This Agreement constitutes a valid
and legally binding obligation of Prestige, Zenex, and each of the Shareholders,
respectively, in accordance with its terms, except that the enforcement of the
rights and remedies created hereby is subject to bankruptcy, insolvency,
reorganization and similar laws of general application affecting the rights and
remedies of creditors and that the availability of the remedy of specific
performance or of injunctive or other equitable relief is subject to the
discretion of the court before which any proceeding therefor may be brought.
Except as listed on Exhibit 3.9 hereto, neither the execution and delivery of
this Agreement, nor the consummation by the Shareholders, Prestige or Zenex,
respectively, of the transactions contemplated hereby in accordance with the
terms and conditions hereof, nor the respective compliance by the Shareholders,
Prestige and Zenex with any of the provisions hereof, will violate, conflict
with, result in a breach of, constitute a default under, accelerate the
performance required by the terms of, or permit the termination of any order,
writ, injunction, decree, statute, rule, regulation or policy guidelines
applicable to the Shareholders, Prestige or Zenex, respectively, or any
contract, agreement, indenture or instrument to which any of the Shareholders,
Prestige or Zenex is a party or by which any of the Shareholders, Prestige or
Zenex is bound or committed or the respective Certificate of Incorporation or
Bylaws of Prestige or Zenex. Except for the approvals contemplated by this
Agreement, none of the Shareholders, nor Prestige nor Zenex is required to
obtain any consent, approval, order or authorization of, or to effect any
registration, declaration or filing with, any governmental authority, or court,
or under any contract, agreement, indenture or instrument to which any of the
Shareholders or Zenex is a party, or by which any of them is bound or committed
in connection with the execution and delivery of this Agreement, or the
consummation of the Merger or the other transactions contemplated hereby.
3.10 Absence of Certain Changes. Except as set forth in Exhibit 3.10 hereto
or permitted by this Agreement, since March 31, 2000, none of the following
actions, changes or matters has been taken by or transpired with regard to
either Prestige or Zenex:
3.10.1 any material adverse change in the financial condition,
operations, business or prospects of either Prestige or Zenex,
respectively, either individually or taken as a whole, other than changes
which are the result of changes in laws or regulations, conditions
affecting the economy generally or other factors affecting the medical
technology industry in general;
3.10.2 any sale, assignment, transfer, purchase or other disposition
of any tangible or intangible asset of either Prestige or Zenex, except in
the Ordinary Course of Business consistent with past practice, and for fair
and adequate consideration;
3.10.3 any suffering of any damage, destruction, or loss, whether as
the result of fire, explosion, tornado, earthquake, accident, casualty,
labor trouble, requisition or
17
taking of property by any government or any agency of any government,
flood, windstorm, embargo, riot or act of God or the enemy, or other
similar or dissimilar casualty or event or otherwise, and whether or not
covered by insurance, materially and adversely affecting the business,
property, or assets of either Prestige or Zenex;
3.10.4 any increase in the compensation payable or to become payable
by either Prestige or Zenex to any of its directors, officers, employees,
agents, consultants, or any bonus granted to any such persons, except in
the Ordinary Course of Business consistent with past practice;
3.10.5 any material change in the method of recordkeeping employed by
either Prestige or Zenex;
3.10.6 any issuance or sale by either Prestige or Zenex of any
corporate debt securities, or any borrowings of money or other pledging of
any of their respective credit except in the Ordinary Course of Business
consistent with past practice;
3.10.7 any occurrence of any other material obligation or liability
(absolute or contingent), except normal trade or business obligations or
liabilities incurred in the Ordinary Course of Business;
3.10.8 any mortgage, pledge, or subjecting to Lien, claim, security
interest, charge, Encumbrance, or restriction (other than Permitted Title
Exceptions) of any of the assets or properties of either Prestige or Zenex;
3.10.9 any discharge or satisfaction of any Lien, mortgage, pledge,
claim, security interest, charge, Encumbrance, or restriction or payment of
any obligation or liability (absolute or contingent), of either Prestige or
Zenex, other than in the Ordinary Course of Business;
3.10.10 any declaration or payment of dividends by either Prestige or
Zenex on its respective capital stock;
3.10.11 any cancellation or compromise by either Prestige or Zenex of
any material debt or claim, other than in the Ordinary Course of Business
or upon payment in full;
3.10.12 any waiver by either Prestige or Zenex of any material rights
of value, other than in the Ordinary Course of Business or upon payment in
full;
3.10.13 except in the Ordinary Course of its Business, any entering
into, or agreeing to enter into, any agreement or arrangement granting any
preferential right to purchase any of their respective assets, properties,
or rights or requiring the consent of any party to the transfer and
assignment of any such respective assets, properties, or rights;
18
3.10.14 any entering into of any material transaction, contract, or
commitment outside the Ordinary Course of its Business;
3.10.15 any introduction of any material change with respect to the
operation of its Business, including, without limitation, its method of
accounting (exclusive of changes generally applicable to the
telecommunications industry such as, without limitation, changes in
licensing statutes, rules and regulations, changes in accounting
principles, rules and practices and changes in tax laws and regulations,
and the prevailing interpretation of any thereof);
3.10.16 any receipt of notice or knowledge of, or reason to believe
that any labor unrest exists among any of the Employees, or that any group,
organization or union has attempted to organize any of the Employees;
3.10.17 any failure to keep and operate Zenex's business organization
intact and to seek to preserve the goodwill of its customers, suppliers and
others with whom it has business relations;
3.10.18 any making by either Prestige or Zenex of any capital
expenditure or capital addition or betterment in excess of $10,000 per
respective project;
3.10.19 any making by either Prestige or Zenex of any loan or discount
or entering into a financing lease (A) which has not been made for good,
valuable and adequate consideration in the Ordinary Course of Business, and
(B) which has not been evidenced by notes or other evidences of
indebtedness which are true, genuine and what they purport to be;
3.10.20 any agreement to do any of the foregoing; or
3.10.21 any issuance, transfer, sale, assignment or conveyance of any
shares of either Prestige's or Zenex's capital stock.
3.11 Employee Benefit Plans. Unless disclosed in Exhibit 3.11 hereto,
neither Prestige nor Zenex has any Employee Plans. Except as is disclosed in
this Agreement, there are no pending or, to the knowledge of either Prestige or
Zenex, any threatened claims by or on behalf of Prestige or Zenex, by any
employee involving the alleged breach of fiduciary duties or violations of other
applicable state or federal law which could result in liability on the part of
Prestige or Zenex under ERISA or any other law, nor, to the knowledge of
Prestige or Zenex, is there any basis for such a claim.
3.12 No Impending Material Adverse Events. Unless disclosed in Exhibit 3.12
attached hereto, as of the date hereof, neither the Shareholders, Prestige nor
Zenex has knowledge of any impending loss of Zenex's business, or of any other
presently existing facts or circumstances which would be reasonably likely to
have a material adverse effect upon the financial condition,
19
results of operations, business, or prospects of Zenex, other than changes which
are the result of changes in laws or regulations or other factors affecting the
telecommunications industry in general
3.13 Books and Records. The minute books of Prestige and of Zenex,
respectively, reflect accurately all significant action ever taken by the
respective Shareholders and Board of Directors (or any committee thereof), of
Prestige or Zenex.
3.14 Full Disclosure. None of the information concerning Prestige or Zenex
contained in this Agreement and the Exhibits and schedules hereto, or in any of
the lists, documents or instruments attached hereto or to be delivered to Lone
Wolf by or on behalf of Prestige, Zenex or the Shareholders, as contemplated by
any provision of this Agreement, or in any of the applications or documents to
be filed with governmental agencies in connection with obtaining the Tariffs, or
for the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make the statements contained herein or therein, taken as a whole
with all other such lists, documents, instruments or other information so
furnished in light of the circumstances in which they are made, not misleading.
3.15 Significant Agreements. Except as set forth in Exhibit 3.15 hereto,
neither Prestige nor Zenex is a party to (in its own name or as a successor in
interest) nor bound by any written or oral:
3.15.1 contracts or commitments involving employment, consulting,
deferred compensation, profit sharing, pension, bonus, retirement,
percentage compensation, incentive compensation, service award, severance
payment, employee benefit, or stock options or warrants;
3.15.2 leases or licenses with respect to any property, real or
personal, as lessor, lessee, licensor, or licensee, except leases of
personal property with either Prestige or Zenex, as lessee, with rental
payments of less than $5,000 per annum in the aggregate;
3.15.3 contract or commitment for capital expenditures in excess of
$50,000 for any one project;
3.15.4 material contract or commitment made other than in the Ordinary
Course of Business for the purchase of materials or supplies or for the
performance of services for a period extending beyond June 30, 2000;
3.15.5 contract or option for the purchase of any real or personal
property other than in the Ordinary Course of Business;
3.15.6 letter of credit or guarantee agreement;
3.15.7 collective bargaining or other agreement entered into with any
union or other entity representing employees;
20
3.15.8 contract or commitment to (a) acquire investment securities in
excess of $5,000, or (b) to extend credit in excess of $5,000, in each case
for any one contract or commitment; or
3.15.9 contracts, commitments, or agreements not otherwise described
in Subsections 3.15.1 - 3.15.8, above, made other than in the Ordinary
Course of Business, in an amount with a value of more than $5,000 in the
aggregate.
Each of Prestige and Zenex has performed in all material respects all
material obligations required to be performed by it to date, and is not in
default under, and no event has occurred which, with the lapse of time or action
by a third party, would result in a default under, any presently outstanding
indenture, mortgage, lease, contract, commitment, or agreement to which either
Prestige or Zenex is a party, or by which either is bound and which is material,
or is set forth in Exhibit 3.15 hereto, and each such presently outstanding
indenture, mortgage, lease, contract, commitment, or agreement is a valid,
legally binding obligation of either Prestige or Zenex, and the other party or
parties thereto.
3.16 Insurance. Exhibit 3.16 hereto lists the insurance policies which
either Prestige or Zenex has in full force and effect with respect to its
respective assets and business. Unless disclosed in Exhibit 3.16, since March
31, 2000, neither Prestige nor Zenex has received any notice of cancellation
with respect to any of its respective insurance policies or bonds, and within
the last three (3) years neither Prestige nor Zenex has been refused any
insurance coverage sought or applied for (except where the refusal of coverage
relates to an insurer's ceasing generally to offer a particular type of
coverage), and it has no reason to believe that existing insurance coverage
cannot be renewed as and when the same shall expire.
3.17 Transactions with Affiliated Persons. Except as listed in Exhibit 3.17
hereto, or elsewhere in this Agreement, no"Affiliate" of either Prestige or
Zenex has engaged in any material transactions with either Prestige or Zenex.
3.18 Brokers. None of the Shareholders nor Zenex has retained or otherwise
engaged or employed any broker, finder or any other person, or paid or agreed to
pay any fee or commission to any agent, broker, finder or other person, for or
on account of such person's acting as a broker, finder or otherwise in
connection with this Agreement, the Merger or the other transactions
contemplated hereby.
3.19 No Default. None of the Shareholders, nor Prestige, nor Zenex, is in
default under and no event has occurred which, with the lapse of time or action
by a third party, would result in a default under the terms of (i) any judgment,
decree, order, or writ of any agency of any government or court, whether
federal, state or local and whether at law or in equity, or (ii) any license,
permit, rule or regulation of any federal or state or local governmental agency
which default would have a materially adverse effect upon the financial
condition, results of operation, business, properties or marketing efforts of
Zenex.
21
3.20 Hazardous Materials. Except as set forth on Exhibit 3.20, attached
hereto, to the best knowledge of Prestige or Zenex, no "Hazardous Materials" (as
hereinafter defined) has been disposed of, buried beneath, or percolated beneath
the real property, or improvements thereon, owned or leased now or during the
last five years by Prestige or Zenex, respectively (the "Real Property"), nor
has any Hazardous Materials ever been removed from and stored off-site of the
Real Property. Further, to the best knowledge of Prestige or Zenex, there has
been no "Release" (as hereinafter defined) of any Hazardous Materials on or from
the Real Property or any improvements thereon. To the best of its respective
knowledge, each of Prestige and Zenex is in material compliance with all
applicable federal, state and local laws, administrative rulings, and
regulations of any court, administrative agency or other governmental or
quasi-governmental authority, relating to the protection of the environment
(including, but not limited to, laws prohibiting the creation of a public
nuisance). Neither Prestige nor Zenex has received notification from any
governmental entity or a private citizen acting in the public interest that it
is a potentially responsible party under Section 107 of the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended
("CERCLA") or Section 7003 of the Resource Conservation and Recovery Act of
1976, as amended ("RCRA") and none of them has received notification from any
federal, state, or local government agency, or regulatory body, of a violation.
The term "Environmental Laws" for the purposes of this Agreement, shall include,
without limitation, the Clean Air Act, 42 U.S.C. ss.7401, et seq.; the Clean
Water Act, 33 U.S.C. ss.1251, et seq., and the Water Quality Act of 1981; the
Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C. ss.136 et
seq.; the Marine, Protection, Research and Sanctuaries Act, 33 U.S.C. ss.1401,
et seq.; the National Environmental Policy Act, 42 U.S.C. ss.4321, et seq.; the
Noise Control Act, 42 U.S.C. ss.4901, et seq.; the Occupational Safety and
Health Act, 29 U.S.C. ss.651, et seq.; the RCRA, 42 U.S.C. ss.6901, et seq.; as
amended by the Hazardous and Solid Waste Amendments of 1984; the Safe Drinking
Water Act, 42 U.S.C. ss.300f, et seq.; CERCLA, 42 U.S.C. ss.9601, et seq., as
amended by the Superfund Amendments and Reauthorization Act, and the Emergency
Planning and Community-Right-to-Know Act; the Toxic Substance Control Act
("TSCA"), 15 U.S.C. ss.2601, et seq. and the Atomic Energy Act, 42 U.S.C.
ss.2011, et seq., all as may have been amended as of the date of this Agreement,
together with their implementing regulations and guidelines as of the date of
this Agreement. The term "Environmental Laws" shall also include all state,
regional, county, municipal and other local laws, regulations and ordinances
that are equivalent or similar to the federal laws recited above or that purport
to regulate Hazardous Materials. The term "Hazardous Materials" shall include,
without limitation, any hazardous substance, pollutant, or contaminants
regulated under CERCLA; oil and petroleum products and natural gas, natural gas
liquids, liquified natural gas, and synthetic gas usable for fuel; pesticides
regulated under FIFRA; asbestos, polychlorinated biphenyls, and other substances
regulated under TSCA; source material; special nuclear material, and by-product
materials regulated under the Atomic Energy Act; and industrial process and
pollution control wastes to the extent regulated under applicable Environmental
Laws. The term "Release" shall have the meaning given to such term in Section
101(22) of CERCLA.
3.21 Books and Records. The books of account, minutes books, stock record
books and other records of Prestige and of Zenex, all of which have been made
available to Lone Wolf, are complete and correct and have been maintained in
accordance with sound business practices. At the Closing hereunder, all of those
books and records will be in possession of Prestige and delivered to Lone Wolf.
22
3.22 No Injunctions or Orders. Neither Prestige nor Zenex is a party to any
agreement, and neither Prestige nor Zenex is subject to nor, to the knowledge of
either Prestige or Zenex, respectively, threatened with, any injunctions of any
court or orders of any federal, state or municipal court, governmental
department, commission, board, bureau, agency or instrumentality, which would
limit or otherwise adversely affect Zenex's ability to conduct its business in
the ordinary course, or would limit or otherwise adversely affect Lone Wolf's
ability to conduct the Business of Zenex after the Closing substantially as it
is currently being conducted by Prestige and Zenex.
3.23 Intellectual Property. Zenex owns, or has licenses to use, any and all
Know-How, Patents, Technology, trademarks, copyrights or other Intellectual
Property rights required for the operation of the Business.
3.24 Tariffs. Exhibit 3.24 attached hereto, sets forth a list of all
tariffs, licenses, consents, permits, approvals and authorizations of all
governmental authorities (collectively, the "Tariffs") owned by Zenex. All
Tariffs are in full force and effect and are all of such authorizations required
for the operation of Zenex's Business. Zenex has complied with the terms of the
Tariffs and there are no pending matters or actions which could adversely affect
the operation of Zenex's Business. The change in ownership of the stock of
Prestige from the Shareholders to Lone Wolf will require the consent and
approval of most of the governmental authorities which regulate the Tariffs.
Neither Prestige nor Zenex knows of any reason why such approvals will not be
granted by all such governmental authorities as to all of the respective Tariffs
in the ordinary course of business. The Tariffs, and all amendments thereto,
will be delivered to Lone Wolf at the Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LONE WOLF
Lone Wolf hereby makes the following representations and warranties to each
of the Shareholders as of the date of this Agreement, and as of the Closing
Date, as follows:
4.1 Organization and Standing of Lone Wolf. Lone Wolf is a corporation
organized, validly existing and in good standing under the laws of the State of
Colorado. Lone Wolf has all requisite corporate power and authority and is duly
qualified and licensed and possesses all licenses, franchises, permits and other
governmental authorizations necessary to own, lease and operate its assets and
properties and to conduct its business as now being conducted, including,
without limitation, the full power and authority to enter into and perform under
this Agreement and the transactions contemplated hereby. All approvals, if any,
required to be obtained from the Board of Directors of Lone Wolf under Lone
Wolf's Certificate of Incorporation and By-laws or applicable law have been
obtained or will be obtained prior to the Closing Date. All of the shares of
Lone Wolf Common Stock to be issued to the Shareholders on the Closing Date
hereunder by Lone Wolf pursuant to Section 2.6, above, shall not have been
issued in violation of any pre-emptive rights, and shall be free and clear of
all liens, encumbrances, pledges, options, charges, claims, security interests,
agreements, equities and assessments whatsoever.
4.2 Authority. Each of Lone Wolf and Acquisition Company has full corporate
power and authority to carry out the transactions provided for in this Agreement
on the terms and
23
conditions set forth herein. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by Lone Wolf and by
Acquisition Company, respectively, have been, or will be prior to the Closing
Date, duly and validly authorized by all necessary respective, corporate action.
This Agreement constitutes a valid and legally binding obligation of Lone Wolf
and of Acquisition Company, enforceable against Lone Wolf and Acquisition
Company, respectively, in accordance with its terms, except that the enforcement
of the rights and remedies created hereby is subject to bankruptcy, insolvency,
reorganization and similar laws of general application affecting the rights and
remedies of creditors and that the availability of the remedy of specific
performance or of injunctive relief is subject to the discretion of the court
before which any proceeding therefor may be brought. Neither the execution and
delivery of this Agreement, nor the consummation by Lone Wolf of the Merger and
the other transactions contemplated hereby, will conflict with, require a
consent under, or result in a breach of, any terms, condition or provision of,
or constitute a default under, (a) the Certificate of Incorporation or Bylaws of
Lone Wolf, (b) any agreement, indenture, mortgage, deed of trust, lease, license
or other instrument to which Lone Wolf is a party or by which it is bound, or
any license, permit or certificate held by it, or (c) any applicable provision
of law or any rule or regulation of any federal, state or local administrative
agency or governmental authority applicable to Lone Wolf, or material order,
judgment or decree to which Lone Wolf is subject.
4.3 Brokers. Lone Wolf has not retained or otherwise engaged or employed
any broker, finder or any other person, or paid or agreed to pay any fee or
commission to any agent, broker, finder or other person, for or on account of
such person's acting as a broker or finder in connection with this Agreement, or
the Merger or the other transactions contemplated hereby.
4.4 Legal Proceedings. Lone Wolf is not engaged in, nor is there pending
or, to Lone Wolf's knowledge, threatened, any action, dispute, claim,
litigation, arbitration, investigation or other proceeding at law or equity or
before any governmental or other administrative agency which could materially
and adversely affect Lone Wolf's ability to perform any of its payment or other
obligations hereunder or the transactions contemplated by this Agreement, or
which would otherwise materially adversely affect the financial well being of
Lone Wolf, or its opportunity to successfully operate from and after the Closing
Date. Lone Wolf is not under any investigation to its knowledge with respect to,
or is charged with any violation or alleged violation of, any federal, state,
local or other law or regulation including, without limitation, any securities
laws, or SEC regulations. Lone Wolf is not subject to any order of any federal,
state or local court or any other governmental agency not generally applicable
to entities engaged in the same business as Lone Wolf. No one has asserted, and
to the knowledge of Lone Wolf, no one has grounds to assert any material claims
against Lone Wolf based upon the wrongful action or inaction of any of Lone
Wolf's officers, directors, agents or employees.
4.5 Consents and Approvals. No consents or approvals of or filings or
registrations with, or notices to any governmental agency, commission or
authority are necessary, and no waiting periods related thereto are required to
expire, in connection with (i) the execution and delivery by Lone Wolf of this
Agreement and (ii) the consummation by Lone Wolf of the transactions
contemplated hereby.
24
4.6 Adequate Financial Resources. The financial resources of Lone Wolf are
sufficient to allow Lone Wolf to fund all of its obligations under this
Agreement.
4.7 Full Disclosure. None of the information concerning Lone Wolf contained
in this Agreement and the schedules hereto, or in any of the lists, documents or
instruments attached hereto or to be delivered by or on behalf of Lone Wolf as
contemplated by a provision of this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary to make the statements contained herein or therein, taken as a
whole with all other such lists, documents, instruments or other information so
furnished in light of the circumstances in which they are made, not misleading.
4.8 Ownership of Acquisition Company; No Prior Activities. Acquisition
Company is a wholly-owned direct subsidiary of Lone Wolf created solely for the
purpose of effecting the Merger. As of the date hereof and the Effective Time,
except for the obligations or liabilities incurred in connection with its
incorporation and organization and the transactions contemplated by this
Agreement, and except for this Agreement and any other agreements or
arrangements contemplated by this Agreement, Acquisition Company has not or will
not have incurred, directly or indirectly, through any subsidiary or Affiliate,
any material obligations or liabilities, or engaged in any material business
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person.
4.9 Capitalization of Lone Wolf. The authorized capital stock of Lone Wolf
consists of One Hundred Million (100,000,000) Shares of Common Stock, par value
$0.001 per share ("Lone Wolf Common Stock"), of which Seventeen Million Two
Hundred Seventy Thousand (17,270,000) Shares are issued and outstanding, and
Twenty Million (20,000,000) Shares of Preferred Stock, par value $0.001 per
share, of which none are issued and outstanding. None of the capital stock of
Lone Wolf is held in its treasury. No share of the capital stock of Lone Wolf
has been reserved for any purpose. All of the issued and outstanding shares of
Lone Wolf Common Stock are duly and validly authorized and issued, fully paid
and non-assessible and have not been issued in violation of any pre-emptive
rights. There are no outstanding securities convertible into or exchangeable for
the capital stock of Lone Wolf, and there are no outstanding options, rights
(pre-emptive or otherwise), or warrants to purchase or to subscribe for any
equity securities of Lone Wolf, except for an aggregate of (i) 500,000 shares of
Common Stock issuable to XxxxxxXxxx.xxx, Inc., (ii) 2,000,000 shares of Common
Stock issuable to Ensynq, Inc., (iii) 500,000 shares issuable pursuant to an
option granted to Federal Bank Centre; (iv) 600,000 shares issuable to Xxxxx
Xxxxx, and (v) 750,000 shares of Common Stock possibly issuable to Xxxx Xxxxx.
There are no outstanding agreements, arrangements, commitments or understandings
of any kind affecting or relating to the voting, issuance, purchase, redemption,
repurchase or transfer of the capital stock of Lone Wolf, or any equity
securities of Lone Wolf, except as expressly provided for and described in this
Agreement.
4.10 Compliance with Laws and Orders. Lone Wolf has duly filed with the
SEC, and any other applicable federal or state regulatory authorities, as the
case may be, in correct form the reports required to be filed by, and is in
material compliance in all material respects with all federal and state laws,
rules, regulations, policy guidelines, orders and requirements applicable to it
to include, without limitation, all federal and state securities laws and
regulations and all such
25
reports were in all material respects true, correct, complete and accurate and
in compliance with the requirements of applicable laws and regulations, provided
that information as of a later date shall be deemed to modify information as of
an earlier date; and Lone Wolf has previously delivered or made available to
Prestige and Zenex accurate and complete copies of all such reports.
4.11 No Default. Lone Wolf is not in default under and no event has
occurred which, with the lapse of time or action by a third party, would result
in a default under the terms of (i) any judgment, decree, order, or writ of any
agency of any government or court, whether federal, state or local and whether
at law or in equity, or (ii) any license, permit, rule or regulation of any
federal or state or local government agency which default would have a
materially adverse effect upon the financial condition, results of operation,
business, properties, assets or marketing efforts of Lone Wolf.
4.12 Improper Payments. None of the officers, directors, agents or
employees of Lone Wolf, nor, to the knowledge of Lone Wolf, any other person or
entity (including, without limitation, any Affiliate of Lone Wolf) acting on
behalf of Lone Wolf, in any case for which such action may be attributable to
Lone Wolf, has directly or indirectly, on behalf of or with respect to Lone
Wolf, (i) made any political contributions with funds of Lone Wolf, (ii) made
any payment which was not legal to make or which was not legal for the payee to
receive, (iii) received any payment which was not legal to receive or which was
not legal for the payor to make, (iv) executed any material transaction or
payment which is not properly booked in accordance with generally accepted
accounting principles, or (v) had any off-book bank or cash accounts of which
Lone Wolf was the beneficial owner.
ARTICLE V
FURTHER COVENANTS AND AGREEMENTS OF THE PARTIES
5.1 Conduct of Business. The Shareholders, Prestige and Zenex,
respectively, warrant and covenant to Lone Wolf that, between the date of this
Agreement and the Closing Date, the Business of Zenex shall (except with the
prior written approval of Lone Wolf) be conducted in accordance with the
following provisions:
5.1.1 Except as contemplated by this Agreement, Zenex shall not engage
in any transaction or incur any obligations except in the Ordinary Course
of Business consistent with good corporate and telecommunications industry
practices. Zenex shall use its best efforts to maintain in effect all
approvals, licenses and authorizations from all federal and state
regulatory bodies and officials, including, without limitation, the FCC,
and all other rights, approvals and consents required to carry on their
respective business as now being conducted it.
5.1.2 The Shareholders, Prestige and Zenex shall each use their
respective best efforts to maintain and preserve the business organization
of Zenex intact (including, to the extent consistent with good business
practice under the circumstances, the retention of Zenex's Employees) and
maintain Zenex's relationships and goodwill with suppliers, borrowers,
Employees and others having business relationships with Zenex so that they
will be preserved for Lone Wolf and Zenex on and after the Closing Date.
26
5.1.3 Each of Prestige and Zenex shall be maintained at all times as a
corporation duly organized, validly existing and in good standing and each
shall be qualified to conduct its respective business as now being
conducted in accordance with all applicable laws.
5.1.4 Prestige and Zenex, respectively, shall take all steps
reasonably necessary to maintain in force all of Zenex's existing casualty,
liability and other insurance policies and fidelity bonds with respect to
its Business, properties, employees and agents, or replace them with
substantially similar policies and bonds providing substantially the same
coverage.
5.1.5 Neither Prestige nor Zenex shall make any change in its method
of accounting or in its applications of generally accepted accounting
principles from the methods consistently applied throughout the periods
covered by the Financial Statements referred to in Section 3.4 of this
Agreement, except for changes required by changes in generally accepted
accounting principles and changes in applicable regulatory requirements.
5.1.6 The Shareholders, Prestige and Zenex shall, at their sole cost
and expense, maintain all of Zenex's properties in their present repair,
order and condition, ordinary wear and tear excepted.
5.1.7 Neither Prestige nor Zenex shall (i) amend its Certificate of
Incorporation or Bylaws, except as specified herein, or as consented to in
advance by Lone Wolf, (ii) or merge or consolidate with or into any other
corporation, (iii) effect any stock split, or change in any manner the
rights of the holders of its capital stock or the character of its business
or (iv) elect any additional directors or officers.
5.1.8 Neither Prestige nor Zenex shall redeem or issue any of its
capital stock or securities or enter into any agreement providing for or
granting any option, warrant, call, commitment or any agreement of any
character relating to the purchase, sale, redemption or issuance of the
equity or debt securities of Prestige or Zenex, respectively, nor shall
either Prestige or Zenex declare or pay any cash or stock dividends on any
of their respective shares of issued and outstanding capital stock.
5.1.9 Neither the Shareholders, Prestige nor Zenex shall take any
action or omit to take any action which, to their respective knowledge,
will cause a material breach of any of their respective contracts,
commitments or obligations, including, but not limited to, their respective
obligations under this Agreement.
5.1.10 Except as set forth on Exhibit 5.1, neither the Shareholders,
Prestige nor Zenex will (i) grant any increase in compensation or pay any
bonus to any of their respective officers or other employees except in the
Ordinary Course of Business and in accordance with past practices and/or
except as provided for by contracts in existence as of the date of this
Agreement; or (ii) enter into, amend or alter any bonus, incentive
compensation, profit sharing, stock purchase, stock option, retirement,
pension, group insurance, death benefit or other fringe benefit,
arrangement or trust agreement for the
27
benefit of officers or other employees of Zenex, or any employment or
consulting agreement thereof; or (iii) increase the staff of Zenex, or (iv)
pay any deferred compensation to any of the directors, officers or
employees of Zenex.
5.1.11 Each of the Shareholders, Prestige and Zenex shall exercise
good faith and use their respective best efforts to duly comply with all
laws and regulations applicable to them and to the conduct of Zenex's
Business, including the applicable FCC and state telecommunications
regulatory rules and regulations, and all applicable equal opportunity,
anti-discrimination and sexual harassment statutes and regulations
regarding employment practices. Prestige and Zenex shall each file all of
its tax returns and pay all of the respective taxes required of them when
due and shall not extend or agree to the extension of any statutes of
limitations with regard to such returns or taxes.
5.1.12 Without limiting any of the foregoing covenants, the
Shareholders, Prestige and Zenex shall conduct the Business and affairs of
Zenex until the Closing hereunder in such manner that all of the
representations and warranties contained in Article III of this Agreement
required to be true at such time shall be true at such time, and so that
all of their agreements and conditions contained in this Agreement required
to be performed by such time are so performed.
5.1.13 Neither Prestige nor Zenex shall (i) incur, or guarantee any
additional borrowings of any person or (ii) pledge any of its respective
assets, except, in each such case in the Ordinary Course of Business and
consistent with current business practice, and good corporate and
telecommunications industry practices.
5.1.14 Zenex shall not purchase, or sell, or contract to sell any of
its assets except in the Ordinary Course of Business, consistent with its
current business practice.
5.1.15 Between the date of this Agreement and the Closing Date,
neither Prestige nor Zenex shall take any of the actions, or allow any of
the changes or matters to transpire which are set forth above in Section
3.10 of this Agreement.
5.2 Due Diligence. Lone Wolf will have the right to perform its due
diligence on Prestige and Zenex until May 1, 2000 ("Due Diligence Period").
During the Due Diligence Period, the Shareholders, Prestige and Zenex will
provide Lone Wolf free and complete access during all of its regular business
hours to all material information in their possession and control with regard to
the ownership and operation of Zenex, including, without limitation, all audited
and unaudited financial statements of Prestige and Zenex, all contracts, leases
and other material agreements to which Prestige or Zenex is a party, all
employment agreements of Zenex, any and all consulting agreements of Zenex, all
files pertaining to any and all real estate leased by Zenex, complete copies of
any and all title insurance policies, casualty insurance policies, and all other
insurance policies of any kind or nature maintained by Prestige or Zenex, all
inspections, reports, environmental audits or other analyses of any kind or
nature pertaining in any manner to any assets of Prestige or Zenex, full and
complete disclosure of any and all litigation in which Prestige or Zenex is
involved either as a plaintiff or defendant, the complete minutes of all of the
Board of Directors' and Shareholders' meetings of Prestige or Zenex, and any and
all other documents pertaining to the business, the
28
operation and the ownership of Prestige or Zenex, as may be reasonably requested
by Lone Wolf, from time to time, during the Due Diligence Period.
5.3 Access and Information.
5.3.1 Consistent with applicable law, from and after the end of the
Due Diligence Period and continuing until the Closing Date, Prestige and
Zenex will permit Lone Wolf, through its designated agents, accountants,
counsel, auditors, and other representatives (collectively referred to as
"Agents") to make or cause to be made such continuing investigation of the
business, properties and personnel of Prestige and Zenex, as Lone Wolf may
reasonably deem necessary or advisable prior to the Closing under the
circumstances. Lone Wolf and its Agents shall, at all reasonable times and
with reasonable notice given to Prestige and Zenex, without unduly
interfering with the normal business operations of Zenex, have full access
to Zenex's premises and to all of the respective properties, books,
contracts, commitments, and records of Prestige and Zenex. Prestige and
Zenex shall also authorize and direct its respective agents, auditors,
accountants, and counsel, to fully cooperate with Lone Wolf and its Agents
in making available to them all financial and other information requested,
including, without limitation, providing them with the right to examine all
working papers pertaining to audits made and to make copies and extracts
thereof, and full and complete access to all information concerning any
litigation in which any of them is currently involved.
5.3.2 Commencing with the date of this Agreement and continuing until
the first to occur of the Closing Date or the termination of this Agreement
in accordance with the terms and provisions hereof, the Shareholders,
Prestige and Zenex shall promptly advise Lone Wolf in writing of any matter
relating to Zenex's financial condition, operations, assets, liabilities or
business which arises or is discovered after the date of this Agreement,
and which if existing or known on the date hereof would have been required
to be set forth and described herein or in one of the Exhibits to this
Agreement.
5.4 Cooperation. The Parties hereto shall cooperate in good faith with each
other in every way in carrying out the transactions contemplated hereby, in
obtaining all Regulatory Approvals and any other approvals and authorizations
therefor, and in executing and delivering all documents, instruments or copies
thereof deemed necessary or useful by either party hereto. Each party shall have
the right to review and approve in advance all characterizations of the
information relating to it and made by the other party which appear in any
filing made in connection with the transactions contemplated by this Agreement.
This Section 5.4 shall expressly survive the Closing of the transaction
contemplated by this Agreement.
5.5 Employees and Benefits. All Employees of Zenex will, upon the Closing
Date, continue as the Employees of Zenex, but the continuation of said
employment thereafter shall be within the sole and absolute discretion of the
officers and directors of Lone Wolf or Zenex.
5.6 Agreement Not to Negotiate. As a material inducement to cause Lone Wolf
to enter into this Agreement, each of the Shareholders, Prestige and Zenex
hereby agree that during the term of this Agreement they will not, either
themselves, itself, or through their respective officers,
29
directors, employees, agents, accountants, counsel, representatives or others,
(i) solicit any other acquisition proposals or offers, whether for the sale of
the stock or assets of Prestige or Zenex, or engage in any discussions
concerning, or negotiate with other persons or entities regarding, any other
acquisition proposals, or the sale, purchase, merger or other corporate
reorganization of Prestige or Zenex, or any of their respective material assets,
with any other person or entity, whether formally or informally, or (ii) provide
(except as may be required by law) any non-public information documents or
materials to any person or entity (other than Lone Wolf), or its agents, in
connection with such proposals.
5.7 Shareholders' Agreements. Each of the Shareholders agree that they
shall not, prior to the Closing hereunder or the earlier termination of this
Agreement in accordance with its terms, sell, pledge, transfer or otherwise
dispose of any of their respective Shares.
5.8 Election of Lone Wolf, Prestige and Zenex Boards of Directors Post
Closing. As a material inducement to the Shareholders to enter into this
Agreement and to effectuate the Merger, Lone Wolf covenants and agrees that from
and after the Closing Date, the number of members of the Board of Directors of
Lone Wolf, Prestige and Zenex will each be set at five (5) members. The
Shareholders shall be entitled to elect two (2) of the members of Lone Wolf's,
Prestige's and Zenex's Board of Directors, respectively, on the Closing Date and
at the annual meeting of Lone Wolf's, Prestige's and Zenex's Shareholders,
respectively, each year thereafter. The persons who were the shareholders of
Lone Wolf prior to the Effective Date of the Merger shall be entitled to elect
the remaining three (3) members of Lone Wolf's, Prestige's and Zenex's Board of
Directors, respectively, on the Closing Date and at the annual meeting of Lone
Wolf's, Prestige's and Zenex's Shareholders, respectively, each year thereafter.
Each of Lone Wolf, Prestige and Zenex shall amend its respective By-Laws to make
them provide for the election of its Board of Directors in a manner which
complies with the foregoing covenant on or before the Closing Date, subject to
the Shareholders' prior approval of the form of each such amended By-Laws. In
addition, Lone Wolf hereby expressly covenants and agrees to designate and elect
Xxxxx X. Xxxxxxxx to serve as the Vice President of Lone Wolf, Prestige and
Zenex, respectively, on and as of the Closing Date, and shall evidence that
election by the appropriate Board of Directors' resolutions of Lone Wolf,
Prestige and Zenex, respectively, in form acceptable to the Shareholders, on or
before the Closing Date. This Section 5.8 shall expressly survive the Closing of
the transaction contemplated by this Agreement and may thereafter be
specifically enforced by the Parties hereto.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF LONE WOLF TO CLOSE
The obligations of Lone Wolf to complete and consummate the Merger and the
other transactions provided for in this Agreement shall be subject to the
complete satisfaction, on or prior to the Closing Date, of each of the following
conditions precedent, provided that any such condition may be expressly waived
in writing by Lone Wolf.
6.1 Performance of Agreements. Each of the Shareholders, Prestige and Zenex
shall have performed all of their respective conditions, duties and obligations
contained in this Agreement required to be performed by each of them prior to
the Closing and specifically shall have obtained, on or before the date of this
Agreement, the resolutions of the respective Board of
30
Directors of Prestige and Zenex and of Prestige's and Zenex's Shareholders
authorizing and approving this Agreement. Each of the Shareholders shall be
prepared to transfer and convey to the Acquisition Company, or to Lone Wolf, as
directed by Lone Wolf, all of the Shares which they own on the Closing Date in
the manner required by this Agreement.
6.2 Continued Accuracy of Representations and Warranties. The respective
representations and warranties of the Shareholders, Prestige and Zenex
(considered individually and collectively) contained in Article III of this
Agreement must have been accurate in all material respects as of the date of the
execution of this Agreement and must be accurate in all material respects on and
as of the Closing Date with the same effect as if made on that date.
6.3 Delivery of Closing Certificate by the Shareholders, Prestige and
Zenex. Lone Wolf shall have received a certificate, dated the Closing Date, in
form satisfactory to Lone Wolf, of the Shareholders, Prestige and Zenex,
respectively, executed by each of the Shareholders and on behalf of Prestige and
Zenex by its respective President and Chief Executive Officer, certifying to the
satisfaction of the conditions set forth in Sections 6.1, 6.2, 6.4 and 6.5 of
this Article VI to the best of each of the signers' knowledge, information and
belief (the "Shareholders Closing Certificate" and the "Prestige and Zenex
Closing Certificates").
6.4 Absence of Material Adverse Changes. There shall have been no material
adverse change in the business, assets, prospects or financial condition of
either Prestige or Zenex, taken as a whole, since March 31, 2000, other than
changes which are the result of changes in laws or regulations or other factors
affecting the telecommunications business, in general, and except for changes
not prohibited by this Agreement.
6.5 Absence of Litigation. There shall not be pending any action in any
court of competent jurisdiction seeking to enjoin consummation of the Merger or
the other transactions contemplated by this Agreement, or any action which, in
the opinion of counsel for Lone Wolf, after an independent review of readily
available facts and applicable law, poses a significant risk of resulting in the
divestiture by Lone Wolf of Prestige or Zenex, or of any material portion of the
assets of Zenex, or otherwise threatens to significantly impair the value of the
assets of Zenex, or jeopardizes its ability to conduct the telecommunications
business of Zenex, or poses the possible assessment of significant damages
against, or the imposition of any other materially adverse consequences upon,
Prestige or Zenex.
6.6 Regulatory Approvals. To the extent required by applicable law and
regulations, Zenex shall have obtained the consent and approval of the Federal
Communications Commission ("FCC") to the change in stock ownership of its parent
company, Prestige, being effectuated by the Merger. In addition, Zenex shall use
its best efforts to obtain the approval of the change in stock ownership of
Prestige from as many state public utilities commissions, as possible, of any
state that has supervisory powers over Zenex (to the extent required by the
applicable law and regulations of such state) on or before the Closing Date;
provided, however, that obtaining such approvals from all of the states having
such jurisdiction over Zenex shall not be a condition precedent to the Closing
of the Merger, so long as Zenex has proceeded in good faith and in a timely
manner to seek to obtain all such requisite approvals, and the majority of such
requisite state approvals have been obtained by Zenex, on or before the Closing
Date.
31
6.7 Resignation of Directors and Officers. Lone Wolf shall have received
the currently dated original, executed Resignations of all the current members
of the Board of Directors and all of the current officers of Prestige and Zenex,
respectively (effective at the Effective Time).
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE
SHAREHOLDERS, PRESTIGE AND ZENEX
The respective obligations of the Shareholders, Prestige and Zenex to
complete the transactions provided for in this Agreement shall be subject to the
reasonable satisfaction, at or prior to the Closing Date, of each of the
following conditions precedent by Lone Wolf, provided that any such condition
may be expressly waived in writing by the Shareholders.
7.1 Performance of Agreements. Lone Wolf shall have performed all
conditions, agreements, duties and obligations contained in this Agreement
required to be performed by it prior to the Closing Date (including, without
limitation, enactment of the amendments to the By-Laws of Lone Wolf, Prestige
and Zenex, respectively, and the resolutions to be enacted by the respective
Boards of Directors of Lone Wolf, Prestige and Zenex, as required by Section
5.8, above, in form and substance satisfactory to the Shareholders), and shall
be prepared to issue all of the requisite shares of Lone Wolf Stock to the
Shareholders, in proportion to their respective ownership of the Shares, on the
Closing Date in order to fully consummate the Merger pursuant to Section 2.6 of
this Agreement. In particular, Lone Wolf shall have obtained, on or before the
date of this Agreement, the resolutions of the Board of Directors of Lone Wolf
authorizing and approving this Agreement and shall provide the Shareholders with
satisfactory proof thereof.
7.2 Continued Accuracy of Representations and Warranties. The
representations and warranties of Lone Wolf contained in Article IV of this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same effect as if made on that date.
7.3 Delivery of Lone Wolf's Closing Certificate. The Shareholders shall
have received a certificate, dated the Closing Date, of Lone Wolf's President,
and of Lone Wolf's Chief Financial Officer, each certifying to the satisfaction
of the conditions set forth in Sections 7.1, 7.2 and 7.4 of this Article VII
("Lone Wolf's Closing Certificate").
7.4 Absence of Litigation. There shall be no pending or, to the knowledge
of Lone Wolf, threatened litigation or administrative proceeding against Lone
Wolf seeking to restrain, prevent, rescind or change the terms of the
transaction contemplated by this Agreement or to obtain damages in connection
therewith or any preliminary injunction restraining such transactions, or any
other such proceeding which if adjudicated against Lone Wolf could have a
materially adverse effect on the financial condition or prospects of Lone Wolf.
7.5 Regulatory Approval. To the extent required by applicable law and
regulations, Zenex shall have obtained the approval of the FCC and of at least a
majority of the state
32
public utility commissions which have supervisory powers over Zenex, on or
before the Closing Date, to the change in stock ownership of its parent company,
Prestige, being effected by the Merger pursuant to this Agreement.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination by Mutual Consent. This Agreement may be terminated prior
to the Closing Date by the mutual written consent of Lone Wolf and Prestige.
8.2 Termination by Lone Wolf. Lone Wolf may terminate this Agreement by
giving written notice to the Shareholders (i) if any material condition in
Article VI hereof which must be fulfilled shall not have been fulfilled on or
before the date specified for the fulfillment thereof; provided, however, that
such notice shall include a statement of the grounds thereof and the
Shareholders, Prestige or Zenex shall have thirty (30) days thereafter to cure
the events or conditions cited in such notice (to the extent curable) and if the
Shareholders, Prestige or Zenex cure the events or conditions giving the rise to
such grounds to the satisfaction of Lone Wolf, in its reasonable discretion,
Lone Wolf shall not have any right to terminate this Agreement based upon such
specified events or conditions. If Lone Wolf does elect to terminate this
Agreement, pursuant to this Section, and the Shareholders, Prestige and Zenex
are unable to timely cure such default or breach within the said thirty (30) day
period, then, in such event, this Agreement shall be null, void and of no
further force and effect and none of the Parties hereto shall have any further
rights, duties or liabilities hereunder unless otherwise expressly provided in
this Agreement.
8.3 Termination by the Shareholders. The Shareholders may terminate this
Agreement by giving written notice to Lone Wolf if any material condition in
Article VII hereof which must be fulfilled before the Shareholders, Prestige and
Zenex are obligated to consummate the transactions contemplated hereby shall not
have been fulfilled on or before the date specified for the fulfillment thereof;
provided, however, that such notice shall include a statement of the grounds
thereof and Lone Wolf shall have thirty (30) days thereafter to cure the events
or conditions cited in such notice (to the extent curable) and if Lone Wolf
cures the events or conditions giving rise to such grounds to the satisfaction
of the Shareholders, in their reasonable discretion, the Shareholders shall not
have any right to terminate this Agreement based upon such specified events or
conditions. If the Shareholders do elect to terminate this Agreement, pursuant
to this Section, and Lone Wolf is unable to timely cure its breach or default
within said thirty (30) day period of time, then, and in such event, this
Agreement shall be null, void and of no further force and effect, and none of
the Parties hereto shall have any further rights, duties or liabilities
hereunder, unless otherwise expressly provided in this Agreement.
8.4 Termination by Expiration. If the transactions contemplated by this
Agreement have not been consummated prior to August 31, 2000, any party hereto
may elect to terminate this Agreement by giving written notice to the other
party hereto; provided that this right to terminate shall not be available to
any party hereto whose failure to perform an obligation under the Agreement has
been the cause of, or has resulted in, the failure of the transactions
contemplated herein to be consummated by August 31, 2000.
33
8.5 Effective Termination; Rights and Remedies of the Parties. Upon
termination of this Agreement by reason of the default or breach of Lone Wolf or
of the Shareholders, Prestige or Zenex, respectively, as the case may be,
pursuant to the provisions of Section 8.2 or Section 8.3, above, then, and in
such event, the non-defaulting party who so terminated this Agreement pursuant
to the authorization granted to that party in said respective Section, shall
also be entitled to pursue any and all remedies which may then be available to
it or them, whether at law or in equity, as the result of the default or breach
of the defaulting party to include, without limitation, the right, in lieu of
termination, to seek the specific performance of the obligations of the
defaulting party under the Agreement in which event, the defaulting party agrees
that damages will not adequately compensate the non-defaulting party for the
breach or default of the defaulting party hereunder and that the non-defaulting
party is entitled to seek equitable relief and the specific performance of the
obligations of the defaulting party under this Agreement. All of the
non-defaulting party's remedies hereunder shall be deemed cumulative and not
exclusive and the exercise of any one of such remedies shall not be deemed to be
a waiver of any other right, remedy or privilege provided for herein or at law
or in equity to the non-defaulting party.
8.6 Amendment. This Agreement may be amended or modified in whole or in
part at any time by an agreement in writing executed by all of the Parties
hereto.
8.7 Waiver. At any time prior to the Closing Date, any of the Parties may,
on their own respective behalf:
8.7.1 waive any inaccuracies in the representations and warranties by
the other party contained herein or in any document delivered by the other
party pursuant hereto; or
8.7.2 waive compliance by the other party with the covenants,
agreements or conditions contained herein.
8.7.3 Any agreement to such waiver shall be valid only if set forth in
an instrument in writing executed by a duly authorized officer or
representative of the party granting such waiver.
34
ARTICLE IX
FURTHER AGREEMENTS
9.1 Books and Records After Closing. From and after the Closing, Lone Wolf
shall obtain possession and ownership of all books and records of Prestige and
Zenex pertaining to the Business of Prestige or Zenex, or relating in any manner
to the assets and operations of Prestige or Zenex prior to the Closing, but, for
three (3) years after the Closing, the Shareholders shall have the right, from
time to time and at any time, to examine and copy, at their own expense and upon
request during normal business hours, the books and records of either Prestige
or Zenex pertaining to its business and relating to any period prior to the
Closing. The only expenses that will be charged to the Shareholders in
connection with examining the respective books and records of Prestige or Zenex
pertaining to its business and relating to any period prior to the Closing
pursuant to this Section 9.1, shall be the copying expenses for any of such
books and records which the Shareholders request be copied. This Section 9.1
shall expressly survive the Closing of the transaction contemplated by this
Agreement and shall be fully enforceable by the Parties thereafter.
9.2 Cooperation and Records Retention. After Closing, each Party
(considering, for purposes of this Section 9.2., the Shareholders, as one Party,
and Lone Wolf, as the other Party) shall (i) each provide to the other such
assistance as may reasonably be requested by any of them in connection with the
preparation of any income tax return, audit or other examination by any taxing
authority or judicial or administrative proceedings relating to liability for
taxes, (ii) each retain and provide the other with any records or other
information which may be relevant to such tax return, audit or examination,
proceeding or determination, and (iii) each provide the other with any final
determination of any such audit or examination, or proceeding or determination
that affects any amount required to be shown on any income tax return of the
other for any period. Without limiting the generality of the foregoing, Lone
Wolf shall retain, and the Shareholders shall retain, until the applicable
statutes of limitations (including any extensions) have expired, copies of all
income tax returns, supporting work schedules and other records or information
which are relevant to such income tax return filed for all tax periods or
portions thereof ending before or including the Closing Date, and shall not
destroy or otherwise dispose of any such records without first providing the
other Party with a reasonable opportunity to review and copy the same. This
Section 9.2 shall expressly survive the Closing of the transaction contemplated
by this Agreement and shall be fully enforceable thereafter by the Parties.
35
ARTICLE X
GENERAL AND MISCELLANEOUS PROVISIONS
10.1 Confidentiality.
10.1.1 Lone Wolf acknowledges and agrees that the information to be
provided by the Shareholders, Prestige and Zenex to Lone Wolf under this
Agreement and with regard to the transactions contemplated by this
Agreement will contain information, reports and financial data which are
confidential in nature and the property of the Shareholders, Prestige and
Zenex, as the case may be (the "Confidential Information"). Accordingly,
Lone Wolf agrees that it, and any of its directors, officers, attorneys,
accountants, employees or other agents that are given access to the
Confidential Information, agree to be bound by the terms and provisions of
this Section 10.1 of the Agreement. In consideration of the Shareholders,
Prestige and Zenex providing Lone Wolf with the Confidential Information,
Lone Wolf agrees to keep the Confidential Information in strict confidence,
except as otherwise provided by this Agreement, and in order to maintain
its confidentiality, Lone Wolf agrees that it will not use or allow the use
for any purpose of any Confidential Information other than in connection
with preparing, evaluating and performing the transaction to be consummated
pursuant to this Agreement. Lone Wolf will not disclose or allow disclosure
to others of any of the Confidential Information, except as provided herein
and except to officers, employees, directors, attorneys, accountants or
agents of Lone Wolf who are actively and directly participating in Lone
Wolf's work in connection with its Due Diligence and the consummation of
the transaction contemplated by this Agreement. Lone Wolf will use its best
efforts to cause all such officers, employees, directors, attorneys,
accountants or agents to observe the terms of this section. Finally, Lone
Wolf agrees not to make or allow to be made copies of any of the
Confidential Information except as necessary to perform the work to be
performed by Lone Wolf in conjunction with its evaluating and consummating
the transaction contemplated by this Agreement.
10.1.2 The provisions of this Section 10.1 shall be inoperative as to
particular portions of the Confidential Information if such information (i)
becomes generally available to the public other than as a result of a
disclosure by Lone Wolf, its officers, directors, attorneys, accountants,
employees or agents; (ii) was available to Lone Wolf on a non-confidential
basis prior to its disclosure to Lone Wolf by the Shareholders, Prestige or
Zenex or their respective officers, employees, directors, accountants,
counsel, agents, advisors or representatives under this Agreement, (iii)
becomes available to Lone Wolf on a non-confidential basis from a source
other than the Shareholders, Prestige or Zenex or their respective
officers, employees, directors, accountants, counsel, agents, advisors or
representatives, unless Lone Wolf knows, after due inquiry, that such
source is not entitled to make the disclosure of such information to it; or
(iv) is disclosed to the FCC, SEC, EPA, or any other federal or state
regulatory authority having jurisdiction over Lone Wolf, or any of the
Shareholders, Prestige or Zenex, upon a proper and valid request being made
therefor by such agency, or by Lone Wolf, with regard to any required
securities filing made by Lone Wolf with the SEC or any stock exchange upon
which Lone Wolf's stock is listed and/or the Oklahoma Securities Commission
or with its public shareholders. The provisions of this Section 10.1 shall
be binding upon Lone Wolf and its directors, officers, employees,
36
accountants, attorneys and agents until May 31, 2001, or until the Closing
Date, if the transaction contemplated by this Agreement is consummated,
whichever shall first occur. If Lone Wolf is requested by any court or
governmental agency or authority (other than the aforesaid state or federal
regulatory authorities) to disclose any of the Confidential Information,
then it will provide the Shareholders and Zenex with prompt notice of such
request or requirement. The Shareholders and Zenex may then either seek
appropriate protective or other injunctive relief from all or part of such
request or requirement or waive Lone Wolf's compliance with the provisions
of this Section 10.1 pertaining to the Confidential Information so sought
with respect to all or any part of such request or requirement to produce
such Confidential Information. If, after the Shareholders and Zenex have
had a reasonable opportunity to seek such protective or injunctive relief,
the Shareholders and Zenex have failed to obtain such relief, and, in the
opinion of Lone Wolf's counsel, Lone Wolf believes it is legally compelled
to disclose any of the Confidential Information to such court, agency,
arbitrator or authority, then Lone Wolf may disclose that portion of the
Confidential Information which its counsel advises it that it is so
compelled to disclose. In no event will Lone Wolf oppose any action by the
Shareholders, Prestige or Zenex to obtain injunctive or other appropriate
protective relief and/or other reliable assurance that confidential
treatment will be accorded to the Confidential Information disclosed to
such court, agency, arbitrator or other authority in such instances.
10.2 Entire Agreement. The terms and conditions of this Agreement (i)
constitute the entire agreement and understanding between Lone Wolf and the
Shareholders, Prestige and Zenex; (ii) supersede all prior agreements and
understandings, written or oral, between Lone Wolf and the Shareholders,
Prestige and Zenex, to include, without limitation, the March 28, 2000 letter of
intent entered into by and among the Parties; and (iii) may not be modified or
amended except by an instrument mutually executed and delivered by Lone Wolf and
the Shareholders, Prestige and Zenex.
10.3 Governing Law. The terms and conditions of this Agreement shall be
governed by and construed in accordance with the laws and decisions of the State
of Oklahoma and by federal law, to the extent applicable.
10.4 Notices. Any notice or other communication required or permitted under
this Agreement, or convenient to Lone Wolf or the Shareholders, Prestige and
Zenex in the consummation of the transactions contemplated hereby, shall be
deemed delivered when (i) three days after deposited in a receptacle of the
United States Postal Service, as registered or certified mail, return receipt
requested, postage prepaid, (ii) sent by electronic facsimile transmission (if
receipt is verified), (iii) personally delivered, or (iv) one (1) day after
received by an overnight courier service (which obtains a receipt evidencing
delivery) and shall be addressed as follows:
37
(i) If to Lone Wolf: Xxxx Xxxxxx, President
and Chief Executive Officer
Lone Wolf Energy, Inc.
0000 X. X. 00xx Xxxxxx, Xx. 000
Xxxxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (405) ________
with a copy to: H. Xxxxx Xxxxxx, Esq.
Doerner, Saunders, Xxxxxx & Xxxxxxxx
Suite 500, 000 Xxxxx Xxxxxx Xxxxxx
Xxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) If to the Shareholders, Xxxxx X. Xxxxxx, President and
Prestige or Zenex: Chief Executive Officer
Prestige Investments, Inc.
000 X. X. 00xx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxxx X. Xxxx, Esq.
Fellers, Snider, Xxxxxxxxxxx,
Xxxxxx & Xxxxxxx
Bank One Tower
000 X. Xxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Notwithstanding the foregoing, a notice of a change of address by a party
hereto shall not be effective until received by the party to whom such notice of
a change of address is sent. In addition, notwithstanding the foregoing, with
respect to any Notice given or made by electronic facsimile transmission or
similar device, such Notice shall not be effective unless and until (i) the
electronic facsimile machine being used prints a written confirmation of the
successful completion of such communication by the party sending the Notice, and
(ii) a copy of such Notice is deposited in first class mail to the appropriate
address for the party to whom the Notice is sent.
10.5 Successors. The terms and conditions hereof shall be binding upon and
inure to the benefit of the respective successors, assigns, heirs and personal
representatives of the Shareholders, Prestige, Zenex and Lone Wolf.
10.6 Attorney Fees, Costs and Expenses. Except as otherwise expressly
provided herein, Lone Wolf and Zenex, on behalf of the Shareholders and
Prestige, shall each pay its own
38
respective legal and accounting fees and all other expenses and fees incurred by
it in connection with the consummation of the transactions contemplated by this
Agreement and the negotiation and execution thereof. Provided, however, to the
extent there are any closing costs associated with the closing of the
transaction contemplated by this Agreement, those shall be shared evenly by Lone
Wolf and Zenex. Should either Lone Wolf or the Shareholders, Prestige or Zenex
employ an attorney or attorneys to enforce any of the terms and conditions
hereof, or to protect any right, title or interest created or evidenced hereby,
the non-prevailing party in any action pursued in courts of competent
jurisdiction shall pay to the prevailing party all reasonable costs, damages,
and expenses, including reasonable attorneys' fees, expended or incurred by the
prevailing party.
10.7 Press Releases and Public Statements. No party to this Agreement shall
make, issue or release any public announcement, statement or acknowledgment of
the existence of, or publicly reveal the terms, conditions or the status of, the
transactions provided for herein without first obtaining the consent to such
announcement, statement, acknowledgment, or revelation from the other Parties
hereto, provided, however, that Lone Wolf, or its Affiliates, may make any such
release or announcement which, in the opinion of counsel for Lone Wolf, is
necessary or appropriate for Lone Wolf, or its Affiliates, to make in order to
comply with applicable laws or regulations, to include, without limitation, any
such release, announcement or filing which Lone Wolf, or its Affiliates are
required to make pursuant to the applicable provisions of federal or state
securities laws, or the rules and requirements of the SEC or any exchange upon
which the stock of Lone Wolf is listed.
10.8 Non-Survival of Covenants, Representations and Warranties. Except as
otherwise expressly provided in this Agreement, all of the representations,
warranties, covenants and agreements made by the Shareholders, Prestige and
Zenex, and by Lone Wolf, respectively, in this Agreement shall expire and be of
absolutely no further force and effect on the Closing Date hereunder as fully as
if never made by the respective Party making that representation, warranty,
covenant or agreement hereunder.
10.9 Assignment and Legal Effect. Lone Wolf shall not be entitled to assign
any part or all of its right, title, interest, duties or obligations under this
Agreement to any other person or entity without the prior written consent of the
Shareholders, Prestige and Zenex thereto. Neither the Shareholders, Prestige nor
Zenex shall be entitled to assign any part or all of their respective right,
title, interest, duties or obligations under this Agreement to any other person
or entity without the prior written consent of Lone Wolf thereto. Anything in
this Agreement to the contrary notwithstanding, the Parties hereto shall not be
required to take any action under this Agreement which is found by the final
decision of appropriate federal or state governmental authorities to be
inconsistent or in conflict with applicable federal or state laws or regulations
pertaining to any of the Parties hereto.
10.10 No Third-Party Beneficiaries. Execution of this Agreement by the
Parties hereto is not intended to and does not confer any benefits or rights on
(contractually or otherwise) any person or entity not a party to this Agreement.
10.11 Time; Good Faith. Time is of the essence to the performance of all of
the terms and conditions of this Agreement, provided, however, that if the final
date of any period which
39
is set for a time provision under this Agreement falls on a Saturday, Sunday or
legal holiday under the laws of the United States of America or the State of
Oklahoma, in such event the time of such period shall be extended to the next
day which is not a Saturday, Sunday or legal holiday. The Parties covenant and
agree to act in good faith to expeditiously perform all of their respective
duties and obligations under this Agreement and to achieve the consummation of
the Merger hereunder.
10.12 Severability. If any of the terms and conditions of this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other of the terms and conditions hereof and the terms and conditions hereof
shall be thereafter construed as if such invalid, illegal or unenforceable term
or conditions had never been contained herein.
10.13 Counterparts. This Agreement may be executed in any number of
counterparts, and each counterpart hereof shall be deemed to be an original
instrument, but all counterparts hereof taken together shall constitute one and
the same instrument.
10.14 Additional Acts. In addition to the acts and deeds recited herein and
contemplated hereby to be performed, executed and/or delivered by them, each of
the Shareholders, Prestige and Zenex, hereby agree to perform, execute and/or
deliver or cause to be performed, executed and/or delivered at the Closing
hereunder and thereafter any and all such further acts, deeds and assurances as
Lone Wolf may reasonably require to (i) invest in Lone Wolf or Zenex the
complete ownership of and clear title to all assets of Zenex, and (ii) to
consummate the Merger and all of the other transactions contemplated by this
Agreement.
10.15 Headings. The headings herein are for reference purposes only and
shall not affect the meanings or interpretation of the terms and conditions of
this Agreement.
10.16 Interpretation. Whenever the context hereof shall so require, the
singular shall include the plural, the male gender shall include the female
gender and neuter, and vice-versa.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
40
IN WITNESS WHEREOF, this Agreement has been executed and delivered by one
to the other by the Shareholders, Prestige and Zenex and by Lone Wolf,
respectively, on the date first recited, effective as of the date last executed
by any party hereto.
SHAREHOLDERS: /s/ Xxxxx X. Xxxxxx
---------------------------------------------
XXXXX X. XXXXXX
Date: 5/4/00
--------------------------------------
/s/ Xxxxx X. Xxxxxxxx
---------------------------------------------
XXXXX X. XXXXXXXX
Date: 5/4/00
--------------------------------------
FIREBALL ENTERPRISES, L.L.C.,
an Oklahoma limited liability company,
By: /s/ Xxx Xxxxxxxx, Member
----------------------------------------
Xxx Xxxxxxxx, Member
Date: 5/4/00
--------------------------------------
- and -
By: /s/ Xxxxxxx X. Xxxxxxxx, Member
----------------------------------------
Xxxxxxx X. Xxxxxxxx, Member
Date: 5/4/00
--------------------------------------
/s/ Xxxx Xxxxxx
---------------------------------------------
XXXX XXXXXX
Date: 5/4/00
--------------------------------------
/s/ Xxxxx Xxxxxx
---------------------------------------------
XXXXX XXXXXX
Date: 5/4/00
--------------------------------------
41
PRESTIGE: PRESTIGE INVESTMENTS, INC.,
an Oklahoma corporation
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxx, President
Date: 5/4/00
--------------------------------------
ZENEX: ZENEX LONG DISTANCE, INC.,
d/b/a Zenex Communications, Inc.,
an Oklahoma corporation
By: /s/ Xxxxx Xxxxxx
--------------------------------------
Name: Xxxxx Xxxxxx
Title: President
Date: 5/4/00
--------------------------------------
LONE WOLF: LONE WOLF ENERGY, INC.,
a Colorado corporation
By: /s/ Xxxx Xxxxxx
--------------------------------------
Name: Xxxx Xxxxxx
Title: President and Chief Executive Officer
Date: 5/4/00
--------------------------------------
42
LIST OF EXHIBITS
Exhibit 1.9 List of All Employees of Zenex
Exhibit 3.2 List of Shareholders and Common Stock
Exhibit 3.5 Liabilities
Exhibit 3.6 List of Tax Liabilities
Exhibit 3.7 List of All Real Estate Property
Exhibit 3.8 Pending Litigation and Proceedings
Exhibit 3.9 Authority
Exhibit 3.10 Change in Financial Condition
Exhibit 3.11 Employee Benefit Plans
Exhibit 3.12 Material Adverse Events
Exhibit 3.15 Significant Agreements
Exhibit 3.16 Insurance
Exhibit 3.17 Transactions with Affiliated Persons
Exhibit 3.20 Environmental Matters
Exhibit 3.24 Tariffs
Exhibit 5.1 New Zenex Employee Bonus Plan
