AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as
of the 1st day of March, 2000 by and between XxxxXxxxxXxxxxx.xxx Inc., an
Arizona corporation, ("ATC"), XXXXx.Xxx, Inc., a Utah corporation, ("NDSCo"),
and JK Technologies, L.L.C., a Utah limited liability company, ("JKT"),
Xxxxxxxxxx Investments L.L.C. ("Xxxxxxxxxx"), Xxxxx X. "Will" XxXxx and Xxxxx
XxXxx, as joint tenants with rights of survivorship (the "McCoys") (Xxxxxxxxxx
and the McCoys hereinafter sometimes collectively referred to as the
"Shareholders") and Information Technology International, Inc., a Delaware
corporation, ("ITI") .
R E C I T A L S:
A. ATC is a publicly-held corporation involved, among other things, in
the business of providing an on-line system for the sale of vehicles and related
services.
B. NDSCo is a privately-held corporation involved in the development of
an electronic vehicle distribution system.
C. The Shareholders own all of the issued and outstanding stock of
NDSCo.
D. The parties have agreed that ATC will acquire all of the issued and
outstanding stock of NDSCo on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, based on the foregoing recitals, which are incorporated
in the Agreement and made a part hereof, and for and in consideration of the
mutual covenants and agreements hereinafter set forth, the parties hereby agree
as follows:
ARTICLE I
DEFINITIONS
1.01 ATC. XxxxXxxxxXxxxxx.xxx Inc., an Arizona corporation. For
purposes of the representations and warranties contained in Article III, the
term "ATC" shall include ATC and its subsidiaries.
1.02 ATC COMMON STOCK. The authorized common stock of ATC, no par value
per share.
1.03 ATC PREFERRED STOCK. The authorized preferred stock of ATC, $.10
par value per share.
1.04 CLOSING. The consummation of the transactions contemplated by this
Agreement.
1.05 CLOSING DATE. The date on which Closing occurs.
1.06 CODE. The Internal Revenue Code of 1986, as amended.
1.07 EFFECTIVE DATE. The date Articles of Share Exchange are filed with
the Utah Division of Corporations and Commercial Code.
1.08 EXCHANGE ACT. The Securities Exchange Act of 1934.
1.09 EXCHANGED ATC STOCK. The shares of ATC Common Stock to be issued
and delivered by ATC pursuant to this Agreement in exchange for the NDSCo Stock
in order to consummate the share exchange contemplated by this Agreement.
1.10 GAAP. Generally accepted accounting principles, as in effect on
the date of determination, as applied on a consistent basis.
1.11 NDSCO. XXXXx.Xxx, Inc., a Utah corporation.
1.12 NDSCO STOCK. The 3,928,571 shares of NDSCo common stock, $.001 par
value, owned by the Shareholders, representing 100% of the currently issued and
outstanding securities of NDSCo, which are to be converted into shares 1,100,000
shares of Exchanged ATC Stock pursuant to the terms of this Agreement.
1.13 SEC. The United States Securities and Exchange Commission.
1.14 SECURITIES ACT. The Securities Act of 1933, as amended.
1.15 SHAREHOLDERS. JKT, Xxxxxxxxxx and the McCoys, who own 100% of the
issued and outstanding shares of NDSCo that will be converted into shares of
Exchanged ATC Stock pursuant to the terms of this Agreement.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES OF NDSCO
AND THE SHAREHOLDERS
As an inducement to, and to obtain the reliance of ATC, NDSCo and the
Shareholders represent and warrant as follows:
2.01 ORGANIZATION. NDSCo is a corporation duly organized, validly
existing and in good standing under the laws of the state of Utah. NDSCo has the
corporate power to own all of its properties and assets and to carry on its
business in all material respects as they are now being conducted, and there is
no jurisdiction in which it is not so qualified in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification, except where failure to do so would not have a
material adverse effect on the business or properties of NDSCo. Included in the
NDSCo Schedules (as hereinafter defined) are
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complete and correct copies of the Articles of Incorporation and Bylaws of NDSCo
as in effect on the date hereof. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not, violate any provision of
the Articles of Incorporation or Bylaws of NDSCo.
2.02 APPROVAL OF AGREEMENT. The Board of Directors of NDSCo and the
Shareholders have authorized the execution and delivery of this Agreement by
NDSCo and have approved the consummation of the transactions contemplated
hereby. Included in the NDSCo Schedules are signed copies of the consents duly
adopted by the Board of Directors and the Shareholders of NDSCo evidencing such
approval. NDSCo has full power, authority and legal right, and has taken all
actions required by law, its Articles of Incorporation, its Bylaws or otherwise,
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
2.03 AUTHORITY OF SHAREHOLDERS. The Shareholders have the right and
authority, without the prior consent of any other person or entity, to enter
into this Agreement and consummate the transactions contemplated hereby. There
is no lien, encumbrance or claim by any third person with respect to the NDSCo
Stock held by the Shareholders.
2.04 CAPITALIZATION. The authorized capital of NDSCo consists of
20,000,000 shares of common stock, $0.001 par value, of which 3,928,571 shares
are currently issued and outstanding. NDSCo does not have any other securities
authorized, issued or outstanding. All of the issued and outstanding NDSCo Stock
is held by the Shareholders. No shares of NDSCo are reserved for issuance on the
exercise of warrants or the conversion of other securities, or the exercise of
any other call, commitment or right to which NDSCo or the Shareholders are a
party or to which they are subject. All issued and outstanding shares of NDSCo
are validly authorized, legally issued, fully paid and nonassessable and not
issued in violation of the preemptive or other right of any person.
2.05 SUBSIDIARIES AND PREDECESSOR. NDSCo does not have any
subsidiaries. NDSCo does not have a "predecessor" entity as that term is defined
under GAAP within the preceding five years.
2.06 FINANCIAL STATEMENTS.
(a) Included in the NDSCo Schedules are the audited balance sheet
of NDSCo as of December 31, 1999 and the related audited statement of
operations for the period from inception through December 31, 1999.
(b) Such financial statements have been prepared in accordance
with GAAP. Such financial statements fairly and accurately reflect the
assets, liabilities and business of NDSCo. NDSCo did not have, as of
the date of the such balance sheet, except as and to the extent
reflected or reserved against therein, any liabilities or obligations
(absolute or contingent) which should be reflected in a balance sheet,
and all assets reflected therein
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present fairly the assets of NDSCo. The statement of operations
presents fairly the information required to be set forth therein and
the results of operations of NDSCo. NDSCo maintains a standard system
of accounting established and maintained in a manner permitting the
preparation of financial statements in accordance with GAAP.
(c) The books and records of NDSCo and its accounting practices
are sufficient to permit the preparation of audited financial
statements in accordance with GAAP and regulation S-K adopted under the
Exchange Act. NDSCo will maintain and preserve its books and records in
such a fashion so as to permit the preparation of historical audited
financials as may be required by the Exchange Act and the rules and
regulations adopted thereunder. NDSCo and the Shareholders will
cooperate fully and assist in the preparation of such financial
statements.
(d) NDSCo has not filed a tax return because its first fiscal year
will not end until June 30, 2000. NDSCo does not have any liabilities
with respect to the payment of any federal, state, county, local or
other taxes (including deficiencies, interest or penalties) accrued for
or applicable to the period on the date of the most recent balance
sheet included in the NDSCo Schedules and all dates and periods prior
thereto, for which NDSCo may at said date have been liable in its own
right or as transferee of the assets of, or as successor to, any other
corporation or entity, except for taxes accrued but not yet due and
payable. NDSCo has not elected to be treated as an S corporation under
section 1362(a) of the Code or a collapsible corporation under section
341(f) of the Code, nor has NDSCo made any election pursuant to the
Code (other than elections which relate solely to methods of
accounting, depreciation or amortization) which would have a material
adverse effect on NDSCo, its financial condition, its business as
presently conducted or as proposed to be conducted or any of its
properties or material assets. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any
tax return of NDSCo.
(e) The books and records, financial and otherwise, of NDSCo are
in all material respects complete and correct, have been made and
maintained in accordance with sound business and bookkeeping practices
and, in reasonable detail, accurately and fairly reflect the
transactions involving the assets of NDSCo. NDSCo has maintained a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions have been and are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit the preparation of
financial statements in conformity with GAAP or any other criteria
applicable to such statements and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals, and appropriate action is taken with respect to
any differences.
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(f) Except as set forth in the balance sheet or NDSCo Schedules,
NDSCo (i) has good and marketable title to its accounts receivable and
other debts due or recorded in the records and books of account of
NDSCo free of any security interests or liens and free of any material
defenses, counterclaims and set-offs, and all of such accounts
receivable, invoices and debts are actual and bona fide amounts due to
NDSCo for the total dollar amount thereof shown on the books of NDSCo
and resulted from the regular course of its business; and (ii) the
accounts receivable, invoices and debts set forth on the balance sheet
arose in the ordinary course of its business and are, net of any
reserves shown on the balance sheet, collectible in full in all
material respects on the continuation of reasonable collection efforts
by NDSCo or successor personnel and without resorting to litigation and
in any event not later than 90 days after the date billed.
2.07 INFORMATION. The information concerning NDSCo set forth in this
Agreement and in the NDSCo Schedules is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
2.08 OPTIONS OR WARRANTS. There are no existing warrants, calls,
commitments or other rights of any character relating to authorized and unissued
NDSCo Stock or other securities of NDSCo, except options, warrants, calls,
commitments or other rights, if any, to which NDSCo and the Shareholders are not
parties and by which they are not bound.
2.09 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in this
Agreement or in the NDSCo Schedules, since the date of the balance sheet
included in the NDSCo Schedules, as the case may be:
(a) There has not been (i) any material adverse change in the
business, operations, assets or conditions of NDSCo or (ii) any damage,
destruction or loss to NDSCo (whether or not covered by insurance)
materially and adversely affecting the business, operations, assets or
condition of NDSCo;
(b) NDSCo has not (i) amended its Articles of Incorporation or
Bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed, or agreed to
purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material
considering the business of NDSCo; (iv) made any material change in its
method of management, operation or accounting; (v) entered into any
other material transactions; (vi) made any accrual or arrangement for
or payment of bonuses or special compensation of any kind or any
severance or termination pay to any present or former officer, employee
or shareholder; (vii) increased the rate of compensation payable or to
become payable by NDSCo to any of its officers or directors or any of
its employees whose monthly compensation exceeds $5,000; or (viii) made
any increase in any profit sharing, bonus, deferred compensation,
insurance, pension,
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retirement or other employee benefit plan, payment or arrangement made
to, for or with its officers, directors or employees;
(c) NDSCo has not (i) granted or agreed to grant any options,
warrants or other rights for their stocks, bonds or other corporate
securities calling for the issuance thereof; (ii) borrowed or agreed to
borrow any funds or incurred, or become subject to, any material
obligation or liability (absolute or contingent) except liabilities
incurred in the ordinary course of business; (iii) paid any material
obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the balance sheet included in the
NDSCo Schedules and current liabilities incurred since that date in the
ordinary course of business; (iv) sold or transferred, or agreed to
sell or transfer, any of its assets, properties or rights (except
assets, properties or rights not used or useful in the business which,
in the aggregate have a value of less than $10,000 or assets,
properties or rights disposed of in the ordinary course of business);
(v) made or permitted any amendment or termination of any contract,
agreement or license to which it is a party if such amendment or
termination is material, considering the business of NDSCo; or (vi)
issued, delivered or agreed to issue or deliver any stock, bonds or
other corporate securities including debentures (whether authorized and
unissued or held as treasury stock); and
(d) To the best knowledge of NDSCo and the Shareholders, NDSCo has
not become subject to any law or regulation which materially and
adversely affects the business, operations, properties, assets or
condition of NDSCo.
2.10 TITLE TO PERSONAL AND REAL PROPERTY. Except as set forth in the
NDSCo Schedules:
(a) NDSCo has good and marketable title to all its properties,
inventory, know-how, interests in properties and assets, which are
reflected in the balance sheet or acquired after that date (except
those sold or otherwise disposed of since such date in the ordinary
course of business) or are used in NDSCo's business, free and clear of
all material mortgages, security interests, royalties, liens, pledges,
charges or encumbrances, except (i) statutory liens or claims not yet
delinquent; and (ii) such imperfections of title and easements as do
not and will not materially detract from or interfere with the present
or proposed use of the properties subject thereto or affected thereby
or otherwise materially impair present business operations on such
properties. All personal property held by NDSCo is in a state of good
maintenance and repair, excepting reasonable wear and tear, and is
adequate and suitable for the purposes for which it is presently being
used.
(b) NDSCo does not own any real property.
(c) Included in the NDSCo Schedules is an accurate and complete
list of all personal property owned by NDSCo or used in its business
and having a purchase price
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of over $10,000, together with a description of any mortgages,
financing instruments or other encumbrances to the title of such
properties. Also included in the NDSCo Schedules are copies of all
leases for real and personal property to which NDSCo is a party having
a monthly obligation of over $2,000 or having an aggregate obligation
during the unexpired term thereof of over $24,000. Each such lease is
in full force and effect; all rents and additional fees due to date on
each such lease have been paid; in each case, the lessee has been in
peaceable possession since the commencement of the original term of
such lease and is not in default thereunder and not waiver, indulgence
or postponement of the lessee's obligation thereunder has been granted
by the lessor; and there exists no event of default or event,
occurrence, condition or act, which, with the giving of notice, the
lapse of time or the happening of any further event or condition, would
become a default under such lease, the occurrence of which would have a
material adverse effect on NDSCo. NDSCo has not violated any of the
terms or conditions under any such lease in any material respect, and
all of the material covenants to be performed by any other party under
any such lease have been fully performed. The property leased by NDSCo
is in a state of good maintenance and repair, except reasonable wear
and tear, and is adequate and suitable for the purposes for which it is
presently being used.
2.11 INTELLECTUAL PROPERTY. Except as set forth in the NDSCo Schedules,
NDSCo owns the entire right, title and interest in and to its proprietary
software listed in the NDSCo Schedules and to all of the trade secrets,
technology, know-how, trade names, trademarks, service marks and other
proprietary information owned by or used in connection with the business of
NDSCo, including all copyrights, patents, patent applications, registrations and
applications with respect thereto (collectively the "Intellectual Property").
Such Intellectual Property is not subject to the payment of royalties or any
other obligation to any other person or entity. Neither the Shareholders nor any
employee or former employee of NDSCo owns, directly or indirectly, any right,
title or interest in or to the Intellectual Property. None of the Intellectual
Property is subject to any material order, decree, judgment, stipulation,
settlement, encumbrance or attachment. There are no pending or threatened
proceedings, litigation or other adverse claims of which NDSCo or the
Shareholders are aware affecting or with respect to the Intellectual Property.
The Intellectual Property does not infringe on the copyright, patent, trade
secret, know-how or other proprietary right of any other person or entity and
comprises all such rights necessary to permit the operation of the business of
NDSCo, as now being conducted and as proposed to be conducted.
2.12 LITIGATION AND PROCEEDINGS. Except as set forth in the NDSCo
Schedules, there are no actions, suits or proceedings pending or, to the
knowledge of NDSCo or the Shareholders threatened by or against NDSCo or
affecting NDSCo or its properties, at law or in equity, before any court or
other governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. NDSCo is not in material default with respect to any
judgment, order, writ, injunction, decree or award applicable to it of any
court, arbitrator or judicial agency.
2.13 CONTRACTS.
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(a) Included in the NDSCo Schedules is a description of every
contract, agreement, distributorship, franchise, license or other
agreement, arrangement or commitment to which NDSCo is a party or by
which its assets or properties are bound, which calls for the payment
by NDSCo of more than $2,000 a month, or $24,000 in the aggregate.
(b) Except as described in this Agreement or in the NDSCo
Schedules, NDSCo is not a party to or bound by, and the properties of
NDSCo is not subject to, any contract, agreement, other commitment or
instrument or any charter or other corporation restriction or any
judgment, order, writ, injunction, decree or award which materially and
adversely affects, or in the future may (as far as NDSCo can now
foresee) materially and adversely affect, the business operations,
properties, assets or condition of NDSCo; and
(c) Except as included or described in the NDSCo Schedules or
reflected in the balance sheet included therein, NDSCo is not a party
to any oral or written (i) contract for the employment of any officer,
director or employee, whose compensation is greater than $5,000 per
month, which is not terminable on 30 days (or less) notice; (ii) profit
sharing, bonus, deferred compensation, stock option, severance pay,
pension benefit or retirement plan, agreement or arrangement covered by
Title IV of the Employee Retirement Income Security Act, as amended;
(iii) agreement, contract or indenture relating to the borrowing of
money in amounts greater than $1,000 in the aggregate; (iv) guarantee
of any obligation for the borrowing of money or otherwise, excluding
endorsements made for collection and other guarantees of obligations,
which, in the aggregate do not exceed $1,000; (v) consulting or other
similar contract with an unexpired term of more than one year or
providing for payments in excess of $1,000 in the aggregate; (vi)
collective bargaining agreement; (vii) agreement with any present or
former officer or director of NDSCo whose compensation was or is
greater than $5,000 per month; or (viii) other contract, agreement or
other commitment, except normal ongoing monthly operating expenses,
involving payments by NDSCo in the future of more than $25,000 in the
aggregate per contract.
2.14 MATERIAL CONTRACT DEFAULTS. Except as set forth in the NDSCo
Schedules, NDSCo is not in default in any material respect under the terms of
any outstanding contract, agreement, lease or other commitment which is material
to the business, operations, properties, assets or condition of NDSCo, and there
is no event of default or other event which, with notice or lapse of time or
both, would constitute a default in any material respect under any such
contract, agreement, lease or other commitment in respect of which NDSCo has not
taken adequate steps to prevent such a default from occurring.
2.15 INSURANCE CLAIMS. Except as set forth in the NDSCo Schedules,
since inception NDSCo has not received, or informed its insurance carriers of
any claims for damages, whether or not covered by insurance for amounts greater
than $5,000. NDSCo is not currently aware of any pending or unasserted claims.
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2.16 NO CONFLICT WITH OTHER INSTRUMENTS. Except as set forth in the
NDSCo Schedules, the execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in the breach of any
term or provision of, or constitute an event of default under, any material
indenture, mortgage, deed of trust or other material contract, agreement or
instrument to which NDSCo is a party or to which any of its properties or
operations is subject, which would have a material adverse effect on NDSCo.
2.17 GOVERNMENTAL AUTHORIZATIONS. To the best knowledge of NDSCo and
the Shareholders, NDSCo has all licenses, franchises, permits and other
governmental authorizations that are legally required to enable it to conduct
its business in all material respects as conducted on the date hereof or as
presently contemplated. Except for compliance with federal and state securities
and corporation laws, as hereinafter provided, no authorization, approval,
consent or order of, or registration, declaration or filing with, any court or
other governmental body is required in connection with the execution and
delivery by NDSCo of this Agreement and the consummation of the transactions
contemplated hereby.
2.18 COMPLIANCE WITH LAWS AND REGULATIONS. Except as set forth in the
NDSCo Schedules, NDSCo has complied with all applicable statutes and regulations
of any federal, state or other governmental entity or agency thereof, except to
the extent that noncompliance would not materially and adversely affect the
business, operations, properties, assets or condition of NDSCo or except to the
extent that noncompliance would not result in the incurrence of any material
liability for NDSCo. Included in the NDSCo Schedules is a copy of each letter of
inquiry, review or investigation or other writing from or to any governmental
authority subsequent to October 22, 1999 evidencing a violation or possible or
alleged violation of any of the foregoing.
2.19 INSURANCE. Included in the NDSCo Schedules is a complete list of
all business liability, casualty, automobile, extended coverage and other
insurance policies that NDSCo maintains respecting its products, services,
business, properties and employees, showing for each type of coverage the policy
limits, principal exclusions, deductibles, insurer and other relevant
information. Such policies are in full force and effect. All of the insurable
properties of NDSCo are insured for its benefit in the amount of their full
replacement value (subject to reasonable deductibles) against losses due to fire
and other casualty, with extended coverage, and other risks customarily insured
against by persons operating similar properties in the localities where such
properties are located and under valid and enforceable policies issued by
insurers of recognized responsibility.
2.20 TRANSACTIONS WITH AFFILIATES. Set forth in the NDSCo Schedules is
a description of every contract, agreement or arrangement between NDSCo and any
person who is or has ever been during the period since inception an officer or
director of NDSCo or person owning of record or known to NDSCo to own
beneficially, five percent (5%) or more of the issued and outstanding common
stock of NDSCo and which is to be performed in whole or in part after the date
hereof. In all of such circumstances, the contract, agreement or arrangement was
for a bona
9
fide business purpose of NDSCo and the amount paid or received, whether in cash,
in services, in common stock or in kind, was, has been during the full term
thereof, and is required to be during the unexpired portion of the term thereof,
no less favorable to NDSCo than the terms available from otherwise unrelated
parties in arm's length transactions. Except as disclosed in the NDSCo Schedules
or otherwise disclosed herein, no officer or director of NDSCo or 5% shareholder
of NDSCo has, or has had during the period since inception, an interest,
directly or indirectly, in any material transaction with NDSCo. The NDSCo
Schedules also include a description of any commitment by NDSCo, whether written
or oral, to lend any funds to, borrow any money from or enter into any other
material transaction with, any such affiliated person.
2.21 LABOR AGREEMENTS AND ACTIONS. NDSCo is not bound by or subject to
(and none of its assets or properties is bound by or subject to) any written or
oral, express or implied, contract, commitment or arrangement with any labor
union, and no labor union has requested or sought to represent any of the
employees, representatives or agents of NDSCo. There is no strike or other labor
dispute involving NDSCo pending or threatened, which could have a material
adverse effect on the assets, properties, financial condition, operating results
or business of NDSCo (as such business is presently conducted and as it is
proposed to be conducted), and NDSCo is not aware of any labor organization
activity involving its employees. NDSCo is not aware that any officer or key
employee, or that any group of key employees, intends to terminate their
employment with NDSCo, and NDSCo does not have a present intention to terminate
the employment of any of the foregoing. Except as set forth in the NDSCo
Schedules, the employment of each officer and employee of NDSCo is terminable at
the will of NDSCo.
2.22 PENSION REFORM ACT OF 1974. NDSCo does not have any unfunded
pension liability to the Pension Benefit Guaranty Corporation or to any other
person or entity in connection with any retirement or pension plan or similar
arrangement.
2.23 HAZARDOUS SUBSTANCES.
(a) The following words and phrases shall have the meanings
indicated:
(i) "Current Actual Knowledge" shall mean that no information
that would give NDSCo current actual knowledge of the inaccuracy
of any statements has come to the attention of NDSCo and/or its
directors and officers; however, no special or independent
investigation has been undertaken to determine the accuracy of
such statements.
(ii) "Environment" shall mean soil, surface waters, ground
waters, land, stream sediments, surface or subsurface strata,
ambient air and any environmental medium.
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(iii) "Environmental Law" shall mean any environmental
related law, regulation, rule, ordinance or bylaw at the federal,
state or local level existing as of the date hereof.
(iv) "Hazardous Material" shall mean any pollutant, toxic
substance, hazardous waste, hazardous material, hazardous
substance or oil as currently defined in the Resource Conservation
and Recovery Act, as amended; the Comprehensive Environmental
Response, Compensation and Liability Act, as amended; the Federal
Clean Water Act, as amended; or any other federal, state or local
environmental law, regulation, ordinance, rule or bylaw, existing
as of the date hereof.
(v) "Permit" shall mean environmental permit, license,
approval, consent or authorization issued by a federal, state or
local governmental entity.
(vi) "Release" shall mean any releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping into the environment.
(vii) "Threat of Release" shall mean a substantial likelihood
of a Release which requires action to prevent or mitigate damage
to the environment which may result from such Release.
(b) To its Current Actual Knowledge, NDSCo does not have any
material liability under any Environmental Law applicable to its
operations.
(c) NDSCo has not violated any Environmental Law applicable to its
operations, the violation or noncompliance with which would have a
material adverse effect upon NDSCo.
(d) NDSCo has not:
(i) Entered into or been subject to any consent decree,
compliance order or administrative order with respect to its
properties or any facilities or operations thereon;
(ii) Received written notice under the citizen suit provision
of any violation of any Environmental Law in connection with its
properties or any facilities or operations thereon;
(iii) Received any written request for information, notice,
demand letter, administrative inquiry or claim with respect to a
violation of any
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Environmental Law relating to its properties or any facilities or
operations thereon; or
(iv) Been subject to or threatened in writing with any
governmental or citizen enforcement action with respect to a
violation of any Environmental Law relating to its properties or
any facilities or operations thereon.
2.24 NDSCO SCHEDULES. NDSCo and the Shareholders have delivered to ATC
the following schedules, which are collectively referred to as the "NDSCo
Schedules". The NDSCo Schedules shall be updated through the date of Closing and
shall be certified by the chief executive officer of NDSCo as complete, true and
accurate:
(a) A schedule including copies of the Articles of Incorporation
and Bylaws of NDSCo in effect as of the date of this Agreement as
referred to in Section 2.01;
(b) A schedule containing copies of resolutions adopted by the
Board of Directors of NDSCo approving this Agreement and the
transactions herein contemplated as referred to in Section 2.02;
(c) A schedule including the financial statements identified in
section 2.06;
(d) A schedule including copies of all federal tax returns
identified in section 2.06;
(e) A schedule listing the accounts receivable and note and other
obligations receivable of NDSCo as of the date of the balance sheet
included in the NDSCo Schedules or that arose thereafter other than in
the ordinary course of business, indicating the debtor and amount,
classifying the accounts to show in reasonable detail the length of
time, if any, overdue, and stating the nature and amount of any
refunds, setoffs, reimbursements, discounts or other adjustments, which
in the aggregate are greater than $1,000, due to or claims by such
debtors;
(f) A schedule listing the accounts payable and notes and other
obligations payable of NDSCo as of the date of the balance sheet
included in the NDSCo Schedules or that arose thereafter other than in
the ordinary course of business of NDSCo, indicating the creditor and
amount, classifying the accounts to show in reasonable detail the
length of time, if any, overdue, and stating the nature and amount of
any refunds, setoffs, reimbursements, discounts or other
(g) A schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets or
conditions of NDSCo since the balance sheet included in the NDSCo
Schedules, required to be provided pursuant to section 2.09 hereof;
12
(h) Copies of all agreements or arrangements and all written
statements of practice followed with regard to the payment of
compensation, bonuses, deferred compensation, profit sharing, pension,
vacation, retirement or other compensation benefits to officers,
directors or employees whose monthly compensation exceeds $5,000 (and
descriptions of any such agreements, arrangements or practices which
are not in writing), together with a schedule setting forth the name or
identification of each officer, director or employee whose monthly
compensation exceeds $5,000 and of each former officer or former
employee of NDSCo who is currently being paid or who is entitled to, or
may become entitled to, compensation in amounts greater than $5,000 per
month of any such compensation benefits and the rate or amounts thereof
and showing the nature of any family relationship of such person to
each stockholder owning 5% or more of the common stock of NDSCo;
(i) A schedule containing a description of all personal property
owned by NDSCo or used in its business and having a purchase price of
over $10,000, including a description of every material mortgage,
financing instrument or encumbrance to which such personal property is
subject (except statutory liens or claims not yet delinquent and except
liens, claims, encumbrances or equities which do not or in the future
will not materially detract from or interfere with the present or
proposed use of the property subject thereto or affected thereby);
(j) A schedule containing a description of each lease, rental
agreement or similar instrument, including a description of each oral
arrangement, having monthly obligations of over $2,000 or having
aggregate obligations during the unexpired term thereof of over
$24,000;
(k) A schedule setting forth the litigation and proceedings as
referred to in section 2.12;
(l) A schedule listing all material contracts, agreements,
franchises, license agreements or other commitments to which NDSCo is a
party or by which its properties are bound, as referred to in section
2.14, but excluding those with affiliates which are described in
section 2.21;
(m) A schedule of any insurance claims as referenced in section
2.15;
(n) Copies of all licenses, permits and other governmental
authorizations (or requests or applications therefor) pursuant to which
NDSCo carries on or proposes to carry on its business (except those
which are immaterial to the present or proposed business of NDSCo), as
referred to in section 2.17;
(o) A schedule describing the matters regarding compliance with
laws and regulations, as referred to in section 2.18;
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(p) A schedule showing details of all insurance coverage as
referred to in section 2.19;
(q) A schedule containing a description of all material contracts,
leases, agreements and other instruments between NDSCo and any
affiliates, as referred to in section 2.20;
(r) A schedule showing the name and location of each bank or other
institution in which NDSCo has an account or safe deposit box, and the
names of all persons authorized to draw thereon or to have access
thereto;
(s) Copies of all powers of attorney given by NDSCo now in effect
or to be in effect; and
(t) A schedule setting forth any other information, together with
any required copies of documents, required to be disclosed in the NDSCo
Schedules by sections 2.01 through 2.23.
ARTICLE III
REPRESENTATIONS, COVENANTS AND WARRANTIES OF ATC
As an inducement to, and to obtain the reliance of NDSCo and the
Shareholders, ATC represents and warrants as follows:
3.01 ORGANIZATION. ATC is a corporation duly organized, validly
existing and in good standing under the laws of the state of Arizona. ATC has
the corporate power to own all of its properties and assets and to carry on its
business in all material respects as they are now being conducted, and there is
no jurisdiction in which it is not so qualified in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification, except where failure to do so would not have a
material adverse effect on the business or properties of ATC. Included in the
ATC Schedules (as hereinafter defined) are complete and correct copies of the
Articles of Incorporation and Bylaws of ATC as in effect on the date hereof. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement in accordance with the terms hereof
will not, violate any provision of the Articles of Incorporation or Bylaws of
ATC.
3.02 APPROVAL OF AGREEMENT. The Board of Directors of ATC has
authorized the execution and delivery of this Agreement by ATC and has approved
the consummation of the transactions contemplated hereby. Included in the ATC
Schedules are signed copies of the consents duly adopted by the Board of
Directors of ATC evidencing such approval. ATC has full power, authority and
legal right, and has taken all actions required by law, its Articles of
Incorporation, its Bylaws or otherwise, to execute and deliver this Agreement
and to consummate the transactions contemplated hereby.
14
3.03 CAPITALIZATION. The authorized capital of ATC consists of
100,000,000 shares of common stock, no par value, of which 21,628,599 shares
were issued and outstanding as of February 8, 2000, and 1,000,000 shares of
preferred stock, $.10 par value, of which 20,800 shares of Series C convertible
preferred stock and 31,200 shares of Series D convertible preferred stock were
issued and outstanding as of February 8, 2000. The Series D preferred stock is
convertible at a 35% discount to the 10-day average bid price of the common
stock. In addition, ATC has reserved 12,286,470 shares of common stock for
issuance on the exercise of outstanding and committed options, the conversion of
issued and outstanding Series C preferred stock and exercise of options pursuant
to an employee stock purchase plan. ATC does not have any other securities
authorized, issued or outstanding. No shares of ATC are reserved for issuance on
the exercise of warrants or the conversion of other securities, or the exercise
of any other call, commitment or right to which ATC or the Shareholders are a
party or to which they are subject. All issued and outstanding shares of ATC are
validly authorized, legally issued, fully paid and nonassessable and not issued
in violation of the preemptive or other right of any person. All shares of ATC
Exchanged Stock to be issued pursuant to this Agreement are validly authorized
and will be, when issued, legally issued, fully paid and nonassessable and not
issued in violation of the preemptive right of any person.
3.04 SUBSIDIARIES AND PREDECESSOR. Except as shown on the ATC
Schedules, ATC does not have any subsidiaries. ATC does not have a "predecessor"
entity as that term is defined under GAAP within the preceding five years.
3.05 FINANCIAL STATEMENTS.
(a) Included in the ATC Schedules are the audited balance sheet of
ATC as of March 31, 1999 and 1998, and the related audited statements
of income, stockholders' equity and cash flows for each of the two
fiscal years ended March 31, 1998 and 1999, including the notes
thereto, together with the related opinions of the independent public
accountants of ATC. Also included are the unaudited balance sheets as
of June 30, September 30 and December 31, 1999 and the related
unaudited statements of income, stockholders' equity and cash flows for
the three, six and nine months ended December 31, 1999 and 1998.
(b) All such financial statements have been prepared in accordance
with GAAP consistently applied throughout the periods involved. The
balance sheets of ATC present fairly, as of their respective dates, the
financial position of ATC. ATC did not have, as of the date of any of
such ATC balance sheets, except as and to the extent reflected or
reserved against therein, any liabilities or obligations (absolute or
contingent) which should be reflected in a balance sheet or the notes
thereto prepared in accordance with GAAP, and all assets reflected
therein present fairly the assets of ATC, in accordance with GAAP. The
statements of operations, stockholders' equity and cash flows present
fairly the information required to be set forth therein under GAAP. ATC
has maintained and will continue to maintain a standard system of
accounting established
15
and maintained in a manner permitting the preparation of financial
statements in accordance with GAAP.
(c) All such financial statements have been prepared in accordance
with regulation S-K promulgated by the SEC regarding the form and
content of and requirements for financial statements to be filed with
the SEC.
(d) ATC has filed all tax returns and reports as required by law.
All such returns and reports are accurate and correct in all material
respects. ATC has no material liabilities with respect to the payment
of any federal, state, county, local or other taxes (including
deficiencies, interest or penalties) accrued for or applicable to the
period on the date of the most recent ATC balance sheets and all such
dates and years and periods prior thereto and for which ATC may at said
date have been liable in its own right or as transferee of the assets
of, or as successor to, any other corporation or other entity, except
for taxes accrued but not yet due and payable. None of the federal
income tax returns of ATC has been audited or is currently being
audited by the Internal Revenue Service. ATC has not elected to be
treated as an S corporation under section 1362(a) of the Code or a
collapsible corporation under section 341(f) of the Code, nor has ATC
made any election pursuant to the Code (other than elections which
relate solely to methods of accounting, depreciation or amortization)
which would have a material adverse effect on ATC, its financial
condition, its business as presently conducted or as proposed to be
conducted or any of its properties or material assets. There are no
outstanding agreements or waivers extending the statutory period of
limitation applicable to any tax return of ATC.
(e) The books and records, financial and otherwise, of ATC are in
all material respects complete and correct, have been made and
maintained in accordance with sound business and bookkeeping practices
and, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of ATC. ATC has maintained
a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions have been and are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit the preparation of
financial statements in conformity with GAAP or any other criteria
applicable to such statements and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals, and appropriate action is taken with respect to
any differences.
(f) Except as set forth in the balance sheets of ATC or in the
notes thereto, ATC (i) has good and marketable title to its receivables
and other debts due or recorded in the records and books of account of
ATC, free of any security interests or liens and free of any material
defenses, counterclaims and set-offs, and all of such receivables are
actual and bona fide amounts due to ATC for the total dollar amount
thereof shown on the
16
books of ATC and resulted from the regular course of its businesses;
and (ii) the accounts receivable set forth on the balance sheet of ATC
arose in the ordinary course of its business and are, net of any
reserves shown on the balance sheet, collectible in full in all
material respects on the continuation of reasonable collection efforts
by ATC without resorting to litigation and in any event not later than
90 days after the date billed.
3.06 INFORMATION. The information concerning ATC set forth in this
Agreement and in the ATC Schedules is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
3.07 OPTIONS OR WARRANTS. Except as set forth in this Agreement or in
the ATC Schedules, there are no existing warrants, calls, commitments or other
rights of any character relating to authorized and unissued ATC Common Stock or
other securities of ATC, except (a) options, warrants, calls, commitments or
other rights, if any, to which ATC is not a party and by which it is not bound;
(b) options to acquire 6,122,620 shares of ATC Common Stock; (c) conversion
rights held by the holders of ATC Series C Preferred Stock to convert such stock
into an aggregate of 1,664,000 shares of ATC Common Stock; (d) other commitments
to issue an aggregate of 4,499,850 shares of ATC Common Stock; and (e)
conversion rights held by the holders of the ATC Series D Preferred Stock.
3.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in this
Agreement or in the ATC Schedules, since the date of the most recent ATC balance
sheet described in section 3.05 and included in the ATC Schedules:
(a) There has not been (i) any material adverse change in the
business, operations, assets or conditions of ATC or (ii) any damage,
destruction or loss to ATC (whether or not covered by insurance)
materially and adversely affecting the business, operations, assets or
condition of ATC;
(b) ATC has not (i) amended its Articles of Incorporation or
Bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed, or agreed to
purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material; (iv)
made any material change in its method of management, operation or
accounting which is material to ATC; or (v) entered into any other
transaction which is material to ATC;
(c) ATC has not (i) granted or agreed to grant any options,
warrants or other rights for their stocks, bonds or other corporate
securities calling for the issuance thereof; (ii) made or permitted any
amendment or termination of any contract, agreement or license to which
it is a party if such amendment or termination is material, considering
the business of ATC; or (vi) issued, delivered or agreed to issue or
deliver any stock,
17
bonds or other corporate securities including debentures (whether
authorized and unissued or held as treasury stock); and
(d) To the best knowledge of ATC, ATC has not become subject to
any law or regulation which materially and adversely affects the
business, operations, properties, assets or condition of ATC.
3.09 INTELLECTUAL PROPERTY. Except as set forth in the ATC Schedules,
ATC owns the entire right, title and interest in and to its proprietary software
listed in the ATC Schedules and to all of the trade secrets, technology,
know-how, trade names, trademarks, service marks and other proprietary
information owned by or used in connection with the business of ATC, including
all copyrights, patents, patent applications, registrations and applications
with respect thereto (collectively the "Intellectual Property"). Except as set
forth in the ATC Schedules, such Intellectual Property is not subject to the
payment of royalties or any other obligation to any other person or entity.
Neither the shareholders nor any employee or former employee of ATC owns,
directly or indirectly, any right, title or interest in or to the Intellectual
Property. None of the Intellectual Property is subject to any material order,
decree, judgment, stipulation, settlement, encumbrance or attachment. There are
no pending or threatened proceedings, litigation or other adverse claims of
which ATC is aware affecting or with respect to the Intellectual Property. The
Intellectual Property does not infringe on the copyright, patent, trade secret,
know-how or other proprietary right of any other person or entity and comprises
all such rights necessary to permit the operation of the business of ATC, as now
being conducted and as proposed to be conducted.
3.10 LITIGATION AND PROCEEDINGS. There are no actions, suits or
proceedings pending or, to the knowledge of ATC, threatened by or against ATC or
affecting ATC or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. ATC is not in material default with respect to any
judgment, order, writ, injunction, decree or award applicable to it of any
court, arbitrator or judicial agency.
3.11 MATERIAL CONTRACT DEFAULTS. ATC is not in default in any material
respect under the terms of any outstanding contract, agreement, lease or other
commitment which is material to the business, operations, properties, assets or
condition of ATC, and there is no event of default or other event which, with
notice or lapse of time or both, would constitute a default in any material
respect under any such contract, agreement, lease or other commitment in respect
of which ATC has not taken adequate steps to prevent such a default from
occurring.
3.12 NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which ATC is a
party or to which any of its properties or operations is subject, which would
have a material adverse effect on ATC.
18
3.13 GOVERNMENTAL AUTHORIZATIONS. To the best knowledge of ATC, ATC has
all licenses, franchises, permits and other governmental authorizations that are
legally required to enable it to conduct its business in all material respects
as conducted on the date hereof or as presently contemplated. Except for
compliance with federal and state securities and corporation laws, as
hereinafter provided, no authorization, approval, consent or order of, or
registration, declaration or filing with, any court or other governmental body
is required in connection with the execution and delivery by ATC of this
Agreement and the consummation of the transactions contemplated hereby.
3.14 COMPLIANCE WITH LAWS AND REGULATIONS. Except as set forth in the
ATC Schedules, ATC has complied with all applicable statutes and regulations of
any federal, state or other governmental entity or agency thereof, except to the
extent that noncompliance would not materially and adversely affect the
business, operations, properties, assets or condition of ATC or except to the
extent that noncompliance would not result in the incurrence of any material
liability for ATC. Included in the ATC Schedules is a copy of each letter of
inquiry, review or investigation or other writing from or to any governmental
authority subsequent to September 22, 1997 evidencing a violation or possible or
alleged violation of any of the foregoing.
3.15 LABOR AGREEMENTS AND ACTIONS. ATC is not bound by or subject to
(and none of its assets or properties is bound by or subject to) any written or
oral, express or implied, contract, commitment or arrangement with any labor
union, and no labor union has requested or sought to represent any of the
employees, representatives or agents of ATC. There is no strike or other labor
dispute involving ATC pending or threatened, which could have a material adverse
effect on the assets, properties, financial condition, operating results or
business of ATC (as such business is presently conducted and as it is proposed
to be conducted), and ATC is not aware of any labor organization activity
involving its employees. ATC is not aware that any officer or key employee, or
that any group of key employees, intends to terminate their employment with ATC,
and ATC does not have a present intention to terminate the employment of any of
the foregoing.
3.16 PENSION REFORM ACT OF 1974. ATC does not have any unfunded pension
liability to the Pension Benefit Guaranty Corporation or to any other person or
entity in connection with any retirement or pension plan or similar arrangement.
3.17 HAZARDOUS SUBSTANCES.
(a) The following words and phrases shall have the meanings
indicated:
(i) "Current Actual Knowledge" shall mean that no information
that would give ATC current actual knowledge of the inaccuracy of
any statements has come to the attention of ATC and/or its
directors and officers; however, no special or independent
investigation has been undertaken to determine the accuracy of
such statements.
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(ii) "Environment" shall mean soil, surface waters, ground
waters, land, stream sediments, surface or subsurface strata,
ambient air and any environmental medium.
(iii) "Environmental Law" shall mean any environmental
related law, regulation, rule, ordinance or bylaw at the federal,
state or local level existing as of the date hereof.
(iv) "Hazardous Material" shall mean any pollutant, toxic
substance, hazardous waste, hazardous material, hazardous
substance or oil as currently defined in the Resource Conservation
and Recovery Act, as amended; the Comprehensive Environmental
Response, Compensation and Liability Act, as amended; the Federal
Clean Water Act, as amended; or any other federal, state or local
environmental law, regulation, ordinance, rule or bylaw, existing
as of the date hereof.
(v) "Permit" shall mean environmental permit, license,
approval, consent or authorization issued by a federal, state or
local governmental entity.
(vi) "Release" shall mean any releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping into the environment.
(vii) "Threat of Release" shall mean a substantial likelihood
of a Release which requires action to prevent or mitigate damage
to the environment which may result from such Release.
(b) To its Current Actual Knowledge, ATC does not have any
material liability under any Environmental Law applicable to its
operations.
(c) ATC has not violated any Environmental Law applicable to its
operations, the violation or noncompliance with which would have a
material adverse effect upon ATC.
(d) ATC has not:
(i) Entered into or been subject to any consent decree,
compliance order or administrative order with respect to its
properties or any facilities or operations thereon;
(ii) Received written notice under the citizen suit provision
of any violation of any Environmental Law in connection with its
properties or any facilities or operations thereon;
20
(iii) Received any written request for information, notice,
demand letter, administrative inquiry or claim with respect to a
violation of any Environmental Law relating to its properties or
any facilities or operations thereon; or
(iv) Been subject to or threatened in writing with any
governmental or citizen enforcement action with respect to a
violation of any Environmental Law relating to its properties or
any facilities or operations thereon.
3.18 ATC SCHEDULES. ATC has delivered to NDSCo and the Shareholders the
following schedules, which are collectively referred to as the "ATC Schedules".
The ATC Schedules shall be updated through the date of Closing and shall be
certified by the chief executive officer of ATC as complete, true and accurate:
(a) A schedule including copies of the Articles of Incorporation
and Bylaws of ATC in effect as of the date of this Agreement as
referred to in Section 3.01;
(b) A schedule containing copies of resolutions adopted by the
Board of Directors of ATC approving this Agreement and the transactions
herein contemplated as referred to in Section 3.02;
(c) A schedule containing the financial statements identified in
section 3.05;
(d) A schedule containing the Registration Statement of ATC on
Form S-1 filed October 12, 1999, the quarterly reports on Form 10-Q for
the quarters ended September 30, 1999 and December 31, 1999 and the
current report on Form 8-K dated February 17, 2000.
(e) A schedule setting forth a description of all existing
warrants, calls, commitments or other rights of any character relating
to authorized and unissued ATC Common Stock or other securities of ATC,
required to be provided pursuant to section 3.07 hereof;
(f) A schedule setting forth a description of any material adverse
change in the business, operations, property, inventory, assets or
conditions of ATC since the most recent balance sheet included in the
ATC Schedules, required to be provided pursuant to section 3.08 hereof;
(g) A schedule setting forth the litigation and proceedings as
referred to in section 3.10;
21
(h) A schedule setting forth any other information, together with
any required copies of documents, required to be disclosed in the ATC
Schedules by sections 3.01 through 3.17.
ARTICLE IV
PLAN OF REORGANIZATION
4.01 TERMS OF THE REORGANIZATION. ATC shall issue to the Shareholders
1,100,000 shares of ATC Common Stock in exchange for all 3,928,571 shares of
NDSCo Stock issued, outstanding and held by the Shareholders.
4.02 THE SHARE EXCHANGE. Following the share exchange, NDSCo shall
continue to exist as a wholly owned subsidiary of ATC.
4.03 TAX OBLIGATIONS. Although ATC and NDSCo intend for the
reorganization to qualify as a tax free reorganization under section
368(a)(1)(B) of the Code, the Shareholders shall be solely responsible for any
tax due from the Shareholders with respect to the receipt by the Shareholders of
the consideration set forth in section 4.01 of this Agreement.
4.04 CLOSING EVENTS. At the Closing:
(a) The Shareholders shall deliver to ATC the certificates
representing the NDSCo Stock;
(b) ATC shall issue to the Shareholders 1,100,000 shares of ATC
Common Stock. The shares of ATC Common Stock to be issued shall not be
registered under the Securities Act or applicable state securities
laws, and the certificates representing such shares shall contain the
legend set forth in section 5.07;
(c) The parties shall execute multiple copies of the Articles of
Share Exchange in the form attached hereto as Exhibit A and
incorporated herein by this reference and all other documents necessary
to effectuate the share exchange herein contemplated, all in such form
as shall be acceptable to the parties hereto and their respective legal
counsel and shall file such Articles of Share Exchange with the Utah
Division of Corporations and Commercial Code and the Arizona
Corporations Commission;
(d) Each of the respective parties hereto shall execute,
acknowledge and deliver (or shall cause to be executed, acknowledged
and delivered) any and all certificates, opinions, financial
statements, schedules, agreements, resolutions, rulings or other
instruments required by this Agreement to be so delivered at or prior
to the Closing, together with such other items as may be reasonably
requested by the parties hereto and
22
their respective legal counsel in order to effectuate or evidence the
transactions contemplated hereby; and
(e) In addition to the foregoing, each of the parties shall
execute and deliver such additional documents as may reasonably be
required in order to effectuate the transactions herein contemplated in
accordance with the requirements of the Code and shall treat such
transactions for all tax purposes consistently with the other parties'
treatment thereof and with such characteristics as a reorganization
under Code section 368(a)(1)(B).
4.05 EFFECTIVE DATE. The Effective Date of the share exchange shall be
the date on which the Articles of Share Exchange are filed with the Utah
Division of Corporations and Commercial Code.
4.06 EFFECT OF SHARE EXCHANGE. On the Effective Date of the share
exchange, NDSCo shall become a wholly owned subsidiary of ATC in accordance with
the provisions of this Agreement, the Articles of Share Exchange and the Plan of
Share Exchange, and in accordance with the provisions of and with the effect
provided in the corporation laws of the states of Utah and Arizona. NDSCo shall
continue to possess all the rights, privileges, franchises and trust and
fiduciary duties, powers and obligations of a private as well as a public
nature, and be subject to all the restrictions, obligations and duties that it
had prior to the share exchange; all property, real, personal and mixed, and all
debts due to NDSCo on whatever account and all other things belonging to NDSCo
and all property, rights, privileges, powers and franchises, and all and every
other interest shall continue to be the property of NDSCo; the title to any real
estate, whether vested by deed or otherwise, in NDSCo shall not revert or be in
any way impaired by reason of the share exchange. All rights of creditors and
all liens on any property of NDSCo shall be preserved unimpaired.
4.07 TERMINATION.
(a) This Agreement and the share exchange contemplated hereby may
be terminated at any time prior to the Effective Date by the mutual
consent of ATC and NDSCo through action of their respective Boards of
Directors. In the event of termination pursuant to this paragraph (a)
of section 4.07, no obligation, right, remedy or liability shall arise
hereunder, and the parties shall bear their own costs incurred in
connection with the preparation and execution of this Agreement, the
preparation and review of financial statements required to be delivered
pursuant hereto, and the negotiation of the transactions contemplated
hereby.
(b) This Agreement and the share exchange may be terminated at any
time prior to the Effective Date by action of the Board of Directors of
ATC if NDSCo or the Shareholders shall fail to comply in any material
respect with any of their respective covenants or agreements contained
in this Agreement or if any of the representations or
23
warranties of NDSCo or the Shareholders contained herein shall be
inaccurate in any material respect. In the event of termination
pursuant to this paragraph (b) of section 4.07, no obligation, right,
remedy or liability shall arise hereunder.
(c) This Agreement and the share exchange may be terminated at any
time prior to the Effective Date by action of the Board of Directors of
NDSCo if ATC shall fail to comply in any material respect with any of
their covenants or agreements contained in this Agreement or if any of
the representations or warranties of ATC contained herein shall be
inaccurate in any material respect. In the event of termination
pursuant to this paragraph (c) of section 4.07, no obligation, right,
remedy or liability shall arise hereunder.
4.08 CLOSING AND POST-CLOSING COVENANTS OF ATC. Concurrent with or
subsequent to Closing of the transactions contemplated by this Agreement, ATC
covenants to do as follows:
(a) If ATC shall determine at any time to register any of the ATC
Common Stock ATC will (i) promptly give to the Shareholders written
notice thereof, and (ii) cause to be included in such registration and
in any underwriting involved therein all the Exchanged ATC Stock. In
any event, ATC shall register all of the Exchanged ATC Stock within one
(1) year of Closing.
(b) ATC shall take all actions necessary or reasonably requested
by the Shareholders to enable the Shareholders to sell the Exhanged ATC
Stock without registration under the Securities Act within the
limitation of the exemption provided by Rule 144 under the Securities
Act, as such rule may be amended from time to time, and any similar
rules or regulations hereafter adopted by the SEC, including, without
limiting the generality of the foregoing, filing on a timely basis all
reports required to be filed by the Exchange Act (or, if ATC is not
required to file such reports, making publicly available, at the
request of the Shareholders, other information necessary to enable the
Shareholders to sell the Exchanged ATC Stock pursuant to such rule).
Upon the request of the Shareholders, ATC will deliver to the
Shareholders a written statement as to whether it has complied with
such requirements.
(c) ATC shall not undertake (or fail to undertake) any action that
would result in the share exchange failing to qualify as a
reorganization within the meaning of section 368(a)(1)(B) of the Code.
(d) NDSCo shall enter into employment contracts with Xxxx Xxxxxx
("Xxxxxx") and Xxxxxxx Xxxxxxx ("Xxxxxxx"). Such employment contracts
shall provide that NDSCo will pay Xxxxxx and Xxxxxxx compensation that
is no less than the compensation they are presently earning with NDSCo.
In addition, ATC shall xxxxx Xxxxxx and Xxxxxxx options to purchase
75,000 shares each pursuant to the ATC
24
Employee Stock Option Plan, which shall become exercisable 25,000
shares per year for three (3) years at a price of $5.00 per share.
(e) ATC shall execute any and all documents, instruments and
agreements necessary to effectuate the purposes of this Agreement.
4.09 CLOSING AND POST-CLOSING COVENANTS OF NDSCO AND THE SHAREHOLDERS.
Concurrent with or subsequent to Closing of the transactions contemplated by
this Agreement, NDSCo and the Shareholders covenant to do the following:
(a) The Shareholders will limit their sales of the Exchanged ATC
Stock to an amount equal to five percent (5%) of the Exchanged ATC
Stock per month.
(b) NDSCo shall prepay rent for a period of six (6) months for the
Co- Location space for the NDSCo servers. At the election of ATC, the
lease for such space can be renewed or relocated to new Co-Location
space.
(c) NDSCo has entered into a lease with Spring Run Corporation for
1,509 rentable square feet in Xxxxxxxx 000, Xxxxx 0-X, at the Spring
Run Corporate Center at a rent of $15.00 per square foot per year. The
lease has a term of one year commencing as of March 1, 2000. NDSCo will
prepay six (6) months of the lease. NDSCo shall have the option to
terminate the lease at the end of such six (6) month period in the
event ATC elects to discontinue the operation of NDSCo in the state of
Utah. NDSCo will have an option to renew the lease for an additional
one (1) year term at the same rent.
(d) NDSCo will prepay the Cort Furniture lease for six months. The
lease will be terminated at the end of such six (6) month period. NDSCo
will have the option to enter into a new lease for the furniture or
buyout the furniture under the existing lease.
(e) For no additional charge, ITI shall complete the new NDSCo
software, including the manufacturer module, which will allow multiple
manufacturers and dealerships to access the system with private
CarGroups, according to the specifications set forth in Schedule 4.09.
ITI shall complete the software within twelve (12) weeks after Closing.
In the event ITI does not complete the new NDSCo software within twelve
(12) weeks after Closing (the "first penalty date"), ten thousand
(10,000) shares of the Exchanged ATC Stock being held in escrow
pursuant to paragraph (k) of this section 4.09 shall be forfeited to
ATC. If ITI does not complete the new NDSCo software within thirty (30)
days after the first penalty date (the "second penalty date"), an
additional twenty thousand (20,000) shares of the Exchanged ATC Stock
being held in escrow pursuant to paragraph (k) of this section 4.09
shall be forfeited to ATC. If the new NDSCo software is not completed
within thirty (30) days after the second penalty date, the remaining
seventy thousand (70,000) shares of Exchanged ATC Stock being held in
escrow pursuant to paragraph (k) of this section 4.09 shall be
forfeited to ATC.
25
Notwithstanding any forfeiture of the Exchanged ATC Stock, ITI shall
have the responsibility of completing and delivering the new NDSCo
software to ATC.
(f) At the option of ATC, NDSCo will assign to ATC all rights in
and to the NDSCo software, including previous versions and C++
programs.
(g) As of closing, except as provided in paragraphs (b), (c) and
(d) of this section 4.09, all liabilities of NDSCo will have been
converted into Shareholders' equity.
(h) NDSCo shall provide to ATC at closing copies of commitments
from two vehicle manufacturers.
(i) At the request of ATC, Xxxxxxx Xxxxxx shall provide consulting
services to ATC and/or NDS during the six (6) month period following
closing at a rate of $85.00 per hour.
(j) JKT shall be responsible for any undisclosed liabilities of
NDSCo in excess of $15,000 for a period of one (1) year following
Closing, with the amount of such responsibility not to exceed the value
of the Exchanged ATC Stock received by JKT.
(k) Upon Closing, 100,000 shares of Exchanged ATC Stock to be
issued to the McCoys shall be deposited in escrow with Xxx X. Xxxxxxxxx
as escrow agent. In the event ITI fails to complete development of the
software within the time limited specified in paragraph (e) of this
Section 4.09, a portion or all of the shares the Exchanged ATC Stock
being held in escrow shall be forfeited to ATC as provided in paragraph
(e). If ITI completes development of the software prior to the
forfeiture of all of the shares of the Exchanged ATC Stock being held
in escrow, the escrow agent shall return the remaining shares to the
McCoys.
ARTICLE V
THE ACQUISITION OF THE EXCHANGED ATC STOCK
5.01 SALE OF SECURITIES. The consummation of this Agreement and the
issuance of the Exchanged ATC Stock as contemplated herein constitutes the offer
and sale of securities as those terms are defined in the Securities Act and
applicable state statutes. Such transactions shall be consummated in reliance on
certain exemptions from the registration requirements of the Securities Act and
applicable state statutes which depend, upon other items, on the circumstances
under which such securities are acquired.
5.02 REPRESENTATIONS BY SHAREHOLDERS. In order to provide documentation
for reliance upon such exemptions, the approval by NDSCo and the Shareholders of
this Agreement and the transactions contemplated hereby shall constitute the
parties' acceptance of, and concurrence in, the following representations and
warranties:
26
(a) NDSCo and the Shareholders acknowledge that neither the SEC
nor the securities commission of any state or other federal agency has
made any determination as to the merits of acquiring the Exchanged ATC
Stock and that the acquisition and ownership of the Exchanged ATC Stock
involves certain risks.
(b) NDSCo and the Shareholders have received and read this
Agreement and the Registration Statement of ATC on Form S-1 filed
October 12, 1999, the quarterly reports on Form 10-Q for the quarters
ended September 30, 1999 and December 31, 1999 and the current report
on Form 8-K dated February 17, 2000, and understand the risks related
to the consummation of the transactions herein contemplated. NDSCo and
the Shareholders have been given an opportunity to meet with and ask
questions of management of ATC concerning the business, operations and
assets of ATC and the transactions contemplated by this Agreement.
(c) The Shareholders have such knowledge and experience in
business and financial matters that they are capable of evaluating ATC
and its business operations.
(d) The Shareholders are acquiring the Exchanged ATC Stock for
their own account and not with a view for resale to others.
5.03 INVESTMENT INTENT. The Shareholders have not offered or sold any
securities of ATC or interest in this Agreement and have no present intention of
dividing the Exchanged ATC Stock to be received or the rights under this
Agreement with others or of reselling or otherwise disposing of any portion of
such stock or rights, either currently or after the passage of a fixed or
determinable period of time or on the occurrence or nonoccurrence of any
predetermined event or circumstance.
5.04 NO PUBLIC SOLICITATION. NDSCo and the Shareholders were at no time
solicited by any leaflet, public promotional meeting, circular, newspaper or
magazine article, radio or television advertisement, or any other form of
general advertising or solicitation in connection with the offer, sale or
purchase of the Exchanged ATC Stock through this Agreement.
5.05 ABILITY TO BEAR RISK OF INVESTMENT. The Shareholders have adequate
means of providing for their current needs and possible contingencies and have
no need now, and anticipate no need in the foreseeable future, to sell the
Exchanged ATC Stock. The Shareholders are able to bear the economic risks of
this investment, and consequently, without limiting the generality of the
foregoing, are able to hold the Exchanged ATC Stock to be received for an
indefinite period of time and have a sufficient net worth to sustain a loss of
the entire investment, in the event such loss should occur.
5.06 NO REGISTRATION. The Shareholders understand that the Exchanged
ATC Stock has not been registered, but is being acquired by reason of a specific
exemption under the Securities Act as well as under certain state statutes for
transactions by an issuer not involving any public
27
offering and that any disposition of the subject Exchanged ATC Stock may, under
certain circumstances, be inconsistent with this exemption and may make the
Shareholders "underwriters" within the meaning of the Securities Act. It is
understood that the definition of "underwriter" focuses upon the concept of
"distribution" and that any subsequent disposition of the subject Exchanged ATC
Stock can only be effected in transactions which are not considered synonymous
with "public offering" or any other offer or sale involving general solicitation
or general advertising. Under present law, in determining whether a distribution
occurs when securities are sold into the public market, under certain
circumstances one must consider the availability of public information regarding
the issuer, a holding period for the securities sufficient to assure that the
persons desiring to sell the securities without registration first bear the
economic risk of their investment, and a limitation on the number of securities
which the shareholder is permitted to sell and on the manner of sale, thereby
reducing the potential impact of the sale on the trading markets. These criteria
are set forth specifically in Rule 144 promulgated under the Securities Act, and
after one year after the date the Exchanged ATC Stock is fully paid for, as
calculated in accordance with Rule 144(d), sales of securities in reliance upon
Rule 144 can only be made in limited amounts in accordance with the terms and
conditions of that Rule. After two years from the date the securities are fully
paid for, as calculated in accordance with Rule 144(d), they can generally be
sold without meeting those conditions, provided the holder is not (and has not
been for the preceding three months) an affiliate of the issuer.
5.07 RESTRICTIONS ON TRANSFER. The Shareholders acknowledge that the
shares of Exchanged ATC Stock must be held and may not be sold, transferred or
otherwise disposed of for value unless they are subsequently registered under
the Securities Act or an exemption from such registration is available. ATC's
registrar and transfer agent will maintain a stop transfer order against the
registration of transfer of the Exchanged ATC Stock, and the certificates
representing the Exchanged ATC Stock will bear a legend in substantially the
following form so restricting the sale of such securities:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND
ARE "RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144 PROMULGATED
UNDER THE SECURITIES ACT. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLYING WITH
RULE 144 IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OR OTHER
COMPLIANCE UNDER THE SECURITIES ACT.
5.08 STOP ORDER. ATC may refuse to register transfer of the Exchanged
ATC Stock in the absence of compliance with Rule 144 unless the Shareholders
furnish ATC with an opinion of counsel reasonably acceptable to ATC stating that
the transfer is proper.
5.09 ADDITIONAL DOCUMENTATION. In order to more fully document reliance
on the exemptions as provided herein, the Shareholders agree to execute and
deliver to ATC such further letters of representation, acknowledgment,
suitability or the like as ATC and its counsel
28
may reasonably request in connection with reliance on exemptions from
registration under such securities laws.
5.10 NO LEGAL OPINION. NDSCo, the Shareholders and ATC acknowledge that
the basis for relying on exemptions from registration or qualification are
factual, depending on the conduct of the various part ies, and that no legal
opinion or other assurance will be required or given to the effect that the
transactions contemplated hereby are in fact exempt from registration or
qualification.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF ATC
The obligations of ATC under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
6.01 ACCURACY OF REPRESENTATIONS. The representations and warranties
made by NDSCo and the Shareholders in this Agreement shall be true as of the
Closing, and NDSCo and the Shareholders shall have performed or complied with
all material covenants and conditions required by this Agreement to be performed
or complied with by NDSCo and the Shareholders prior to or at the Closing. ATC
shall be furnished with certificates, signed by the Chief Executive Officer of
NDSCo and by the Shareholders and dated the Closing Date, to the foregoing
effect.
6.02 OFFICER'S CERTIFICATE. ATC shall have been furnished with a
certificate dated the Closing Date and signed by the Chief Executive Officer of
NDSCo to the effect that:
(a) This Agreement has been duly approved by the Board of
Directors and Shareholders of NDSCo and has been duly executed and
delivered in the name and on behalf of NDSCo by its duly authorized
officers pursuant to, and in compliance with, authority granted by the
Board of Directors of NDSCo;
(b) The representations and warranties of NDSCo set forth in this
Agreement are true and correct as of the date of the certificate;
(c) There has been no material adverse change since the date of
the balance sheets included in the NDSCo Schedules in the financial
condition, business or operations of NDSCo nor has any event occurred
which, with the lapse of time or giving of notice, may cause or create
any material adverse change in the financial condition, business or
operations of NDSCo up to and including the date of the certificate,
except as authorized in this Agreement;
(d) All material conditions required by this Agreement to have
been met, satisfied or performed by NDSCo have been met;
29
(e) The consummation of the transactions contemplated by this
Agreement does not violate any material law, regulation, order, writ,
injunction or decree of any court or governmental body or result in the
creation or imposition of any material mortgage, lien, charge or
encumbrance of any nature upon any of the properties of NDSCo pursuant
to any mortgage, resolution, agreement or instrument to which NDSCo is
a party;
(f) All material authorizations, consents, approvals,
registrations and/or filings with any governmental body, agency or
court required in connection with the execution and delivery of the
documents contemplated by this Agreement by NDSCo have been obtained
and are in full force and effect or, if not required to have been
obtained, will be in full force and effect by such time as may be
required; and
(g) There is no action, suit, proceeding, inquiry or investigation
at law or in equity by any public board pending or threatened in
writing against NDSCo, wherein an unfavorable decision, ruling or
finding would have a material adverse effect on the financial condition
of NDSCo, the operations or business of NDSCo, the acquisition and
reorganization contemplated herein, or any material agreement or
instrument by which NDSCo is bound or would in any way contest the
existence of NDSCo.
6.03 GOOD STANDING. ATC shall have received a certificate of good
standing from the Utah Division of Corporations and Commercial Code, with
respect to NDSCo, dated as of a date within ten days prior to the Closing Date,
certifying that NDSCo is in good standing as a corporation in the State of Utah.
6.04 UCC CERTIFICATE. ATC shall have received a Uniform Commercial Code
certificate from the Utah Division of Corporations and Commercial Code, dated as
of a date within ten days of the Closing Date to the effect that there are no
encumbrances of record on the assets of NDSCo, other than those disclosed in the
NDSCo Schedules.
6.05 OTHER ITEMS. ATC shall have received such further documents,
certificates or instruments relating to the transactions contemplated by this
Agreement as ATC may reasonably request.
ARTICLE VII
CONDITIONS PRECEDENT TO NDSCO AND THE SHAREHOLDERS
The obligations of NDSCo and the Shareholders under this Agreement are
subject to the satisfaction, at or before the Closing Date, of the following
conditions:
7.01 ACCURACY OF REPRESENTATIONS. The representations and warranties
made by ATC in this Agreement shall be true as of the Closing, and ATC shall
have performed or complied with all material covenants and conditions required
by this Agreement to be performed or
30
complied with by ATC prior to or at the Closing. NDSCo shall be furnished with
certificates, signed by the Chief Executive Officer and principal financial or
accounting officer of ATC and dated the Closing Date, to the foregoing effect.
7.02 OFFICER'S CERTIFICATE. NDSCo shall have been furnished with a
certificate dated the Closing Date and signed by the Chief Executive Officer of
ATC to the effect that:
(a) This Agreement has been duly approved by the Board of
Directors of ATC and has been duly executed and delivered in the name
and on behalf of ATC by its duly authorized officers pursuant to, and
in compliance with, authority granted by the Board of Directors of ATC;
(b) The representations and warranties of ATC set forth in this
Agreement are true and correct as of the date of the certificate;
(c) There has been no material adverse change since the date of
the balance sheets included in the ATC Schedules in the financial
condition, business or operations of ATC nor has any event occurred
which, with the lapse of time or giving of notice, may cause or create
any material adverse change in the financial condition, business or
operations of ATC up to and including the date of the certificate,
except as authorized in this Agreement;
(d) All material conditions required by this Agreement to have
been met, satisfied or performed by ATC have been met;
(e) The consummation of the transactions contemplated by this
Agreement does not violate any material law, regulation, order, writ,
injunction or decree of any court or governmental body or result in the
creation or imposition of any material mortgage, lien, charge or
encumbrance of any nature upon any of the properties of ATC pursuant to
any mortgage, resolution, agreement or instrument to which ATC is a
party;
(f) All material authorizations, consents, approvals,
registrations and/or filings with any governmental body, agency or
court required in connection with the execution and delivery of the
documents contemplated by this Agreement by ATC have been obtained and
are in full force and effect or, if not required to have been obtained,
will be in full force and effect by such time as may be required; and
(g) There is no action, suit, proceeding, inquiry or investigation
at law or in equity by any public board pending or threatened in
writing against ATC, wherein an unfavorable decision, ruling or finding
would have a material adverse effect on the financial condition of ATC,
the operations or business of ATC, the acquisition and reorganization
contemplated herein, or any material agreement or instrument by which
NDSCo is bound or would in any way contest the existence of ATC.
31
7.03 GOOD STANDING. NDSCo shall have received a certificate of good
standing from the Arizona Secretary of State respect to ATC, dated as of a date
within ten days prior to the Closing Date, certifying that ATC is in good
standing as a corporation in the State of Arizona.
7.04 EMPLOYMENT AGREEMENTS AND STOCK OPTIONS. ATC shall have entered
into employment agreements with Xxxxxx and Xxxxxxx and shall have granted Xxxxxx
and Xxxxxxx stock options as provided in paragraph (e) of section 4.08.
7.05 OTHER ITEMS. NDSCo shall have received such further documents,
certificates or instruments relating to the transactions contemplated by this
Agreement as NDSCo may reasonably request.
ARTICLE VIII
MISCELLANEOUS
8.01 BROKERS. The parties agree that there were no finders or brokers
involved in bringing the parties together or who were instrumental in the
negotiation, execution or consummation of this Agreement.
8.02 INDEMNIFICATION BY THE SHAREHOLDERS. The Shareholders agree to
indemnify and hold harmless ATC and its directors and officers, from and against
any and all losses, claims, damages, expenses, liabilities or actions and will
reimburse them for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any claims or actions, resulting in
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any breach of this Agreement,
misrepresentations or omission by NDSCo or the Shareholders, but only to the
extent that such losses, claims or damages exceed $15,000 in the aggregate. The
indemnity agreement contained in this section 8.02 shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
ATC and shall survive the consummation of the transactions contemplated by this
Agreement for a period of one year following Closing.
8.03 INDEMNIFICATION BY ATC. ATC agrees to indemnify and hold harmless
the Shareholders from and against any and all losses, claims, damages, expenses,
liabilities or actions and will reimburse them for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
claims or actions, resulting in liability, insofar as such losses, claims,
damages, expenses, liabilities or actions arise out of or are based upon any
breach of this Agreement, misrepresentations or omission by ATC, but only to the
extent that such losses, claims or damages exceed $15,000 in the aggregate. In
addition, ATC agrees to indemnify and hold harmless the Shareholders from and
against any and all losses, claims, damages, expenses, liabilities or actions
and will reimburse them for any legal or other expenses reasonably incurred by
them in connection with ATC's operation of the business of NDSCo from and after
Closing. The indemnity agreements contained in this section 8.03 shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of
32
ATC and shall survive the consummation of the transactions contemplated by this
Agreement for a period of one year following Closing.
8.04 NO REPRESENTATION REGARDING TAX TREATMENT. No representation or
warranty is being made or legal opinion given by any party to any other party
regarding the treatment of this transaction for federal or state income
taxation. Although this transaction has been structured in an effort to qualify
for treatment under section 368(a)(1)(B) of the Code, there is no assurance that
any part of this transaction in fact meets the requirements for such
qualification. Each party has relied exclusively on its own legal, accounting
and other tax advisers regarding the treatment of this transaction for federal
and state income taxes and on no representation, warranty or assurance from any
other party or such other party's legal, accounting or other adviser.
8.05 GOVERNING LAW. This Agreement shall be governed by, enforce and
construed under and in accordance with the laws of the United States of America
and, with respect to matters of state law, the laws of the State of Utah.
8.06 NOTICES. Any notices or other communications required or permitted
hereunder shall be sufficiently given if personally delivered to an officer or
manager of a party, sent by facsimile or other electronic communication, or sent
by recognized overnight courier addressed as follows:
If to ATC: XxxxXxxxxXxxxxx.xxx Inc.
0000 Xxxx Xxxxxxxx, Xxxxx 0
Xxxxxxxxxx, XX 00000
If to NDSCo: XXXXx.Xxx, Inc.
0000 Xxxxx 0000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
If to the Shareholders: JK Technologies, L.L.C.
0000 Xxxxx 0000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Beckstrand Investments L.L.C.
0000 Xxxxx 0000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
33
Xxxxx X. "Will" XxXxx and Xxxxx XxXxx
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxx Xxxx Xxxx, XX 00000
If to ITI: Information Technology International, Inc.
000 Xxxx Xxxxxx-Xxxxxxxx Xxxx, Xxxxx 0X
Xxxx Xxxx Xxxx, XX 00000
A party may change its address for the purpose of receiving notices or
communications under this Agreement by giving written notice to the other
parties as provided in this section. Any notice or communication shall be deemed
to have been given as of the date so delivered or sent by facsimile or
electronic communication or one day after the date sent by overnight courier.
8.07 ATTORNEYS' FEES. In the event that any party institutes any action
or suit to enforce this Agreement or to secure relief from any default hereunder
or breach hereof, the prevailing party shall be entitled to recover reasonable
attorneys' fees and all other costs incurred in connection with such action and
in enforcing or collecting any judgment rendered therein.
8.08 SCHEDULES; KNOWLEDGE. Whenever in any section of this Agreement
reference is made to information set forth in the ATC or NDSCo Schedules, such
reference is to information specifically set forth in such schedules and clearly
referenced to identify the section of this Agreement to which such information
relates. Whenever any representation is made to the "knowledge" of any party, it
shall be deemed to be a representation that such officer or director has made a
reasonable investigation of such matters.
8.09 THIRD-PARTY BENEFICIARIES. This Agreement is solely between ATC,
NDSCo and the Shareholders; and no director, officer, stockholder, employee,
agent, independent contractor or any other person or entity shall be deemed to
be a third-party beneficiary of this Agreement.
8.10 ENTIRE AGREEMENT. This Agreement, together with the other
agreements entered into between the parties contemporaneously with this
Agreement (collectively, the "Transaction Documents"), represent the entire
agreement between the parties relating to the subject matter hereof. All
previous agreements between the parties, whether written or oral, have been
merged into the Transaction Documents. The Transaction Documents fully and
completely express the agreement of the parties relating to the subject matter
hereof. There are no other courses of dealing, understandings, agreements,
representations or warranties, written or oral, except as set forth in the
Transaction Documents.
8.11 TERMINATION; SURVIVAL. The representations, warranties and
covenants of the respective parties shall survive the Closing and, except as
otherwise provided in this Agreement, terminate three (3) years subsequent to
the Closing Date.
34
8.12 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
taken together shall be but a single instrument.
8.13 AMENDMENT OR WAIVER. Every right and remedy provided herein shall
be cumulative with every other right and remedy, whether conferred herein , at
law or in equity, and may be enforced concurrently herewith, and no waiver by
any party of the performance of any obligation by the other shall be construed
as a waiver of the same or any other default then, theretofore or thereafter
occurring or existing. This Agreement may be amended by a writing signed by all
of the parties hereto, with respect to any of the terms contained herein, and
any term or condition of this Agreement may be waived or the time for
performance thereof may be extended by a writing signed by the party or parties
for whose benefit the provision is intended.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers or managers, hereunto duly authorized, as
of the date first above written.
XxxxXxxxxXxxxxx.xxx Inc.
By /S/ XXXXX X. XXXXXXXXXX
------------------------------------------
Its: PRESIDENT
XXXXx.Xxx, Inc.
By /S/ XXXXXXX X. XXXXXX
------------------------------------------
Its: CEO
JK Technologies, L.L.C.
By /S/ XXXXXXX X. XXXXXX
------------------------------------------
Manager
35
Xxxxxxxxxx Investments L.L.C.
By /S/ XXXXXXX X. XXXXXXXXXX
------------------------------------------
Manager
/S/ WILL XXXXX
---------------------------------------------
Xxxxx X. "Will" XxXxx
/S/ XXXXX XXXXX
---------------------------------------------
Xxxxx XxXxx
Information Technology International, Inc.
By /S/ WILL XXXXX
------------------------------------------
Its: CEO
36
