REORGANIZATION AND STOCK PURCHASE
AGREEMENT
REORGANIZATION AND STOCK PURCHASE AGREEMENT ("Agreement"), dated
May 28, 1999, by and among Lakota Energy, Inc., a Colorado
corporation (hereinafter referred to as "Lakota"),
0-Xxxxxxxx.xxx, Inc., a Texas corporation (hereinafter referred
to as "Infinity"), and Xxxxx Xxxxxx, the sole individual
stockholder of Infinity (hereinafter referred to as "Xxxxxx").
Each of Lakota, Infinity, and Xxxxxx shall be referred to herein
as a "Party" and collectively as the "Parties".
W I T N E S S E T H
WHEREAS, Xxxxxx owns 100% of the issued and outstanding common
stock of Infinity (the "Infinity Shares") as set forth in
Exhibit "A" attached hereto;
WHEREAS, Xxxxxx desires to sell and Lakota desires to purchase
the Infinity Shares in accordance with the terms, conditions,
covenants and promises set forth herein;
NOW THEREFORE, in consideration of the premises and respective
mutual agreements, covenants, representations and warranties
herein contained, it is agreed between the Parties hereto as
follows:
ARTICLE 1
DEFINITIONS
Capitalized terms in this Agreement shall have the meanings
indicated below:
1.1 "Initial Closing Date" shall mean the date when all
the Parties hereto have executed this Agreement.
1.2 "Closing" shall be the process of exchanging
documents, certificates and materials by and between the
Parties, and concluding all transactions contemplated hereunder
within thirty (30) days of the Initial Closing Date.
1.3 "Final Closing" shall be that date when all
anticipated and contemplated exchanges of documents,
certificates and materials between the Parties has been
accomplished in accordance with the terms of this Agreement,
which shall occur no later than thirty (30) days following the
Initial Closing Date.
1.4 "Subsidiary" shall be as described and defined in
Section 3.1.4 hereof.
1.5 "Initial Distribution" shall be as described and
defined in Section 2.1 hereof.
1.6 "Second Distribution" shall be as described and
defined in Section 2.3.1 hereof.
1.7 "Third Distribution" shall be as described and
defined in Section 2.3.2 hereof.
1.8 "Fourth Distribution" shall be as described and
defined in Section 2.3.3 hereof.
1.9 "Bonus Distribution" shall be as described and
defined in Section 2.3.4 hereof.
1.10 "Option" shall be as described and defined in
Section 4.5 hereof.
ARTICLE 2
SALE AND PURCHASE OF THE SHARES
2.1 Sale of the Infinity Shares. Effective as of the Final
Closing Date, and subject to the terms and conditions herein
set forth, and on the basis of the representations, covenants,
warranties and agreements herein contained, Xxxxxx shall sell
to Lakota and Lakota shall purchase from Xxxxxx, all of the
Infinity Shares. As consideration for the receipt of the
Infinity Shares, Lakota shall cause to be issued to Xxxxxx, or
his assigns, concurrent with the delivery of the Infinity
Shares and effective as of the Final Closing Date, an aggregate
of Three Million (3,000,000) shares of Lakota common stock
bearing an appropriate 144 restrictive legend (hereinafter
"Initial Distribution").
2.2 Instruments of Conveyance and Transfer. Effective as of
the Final Closing Date, and subject to the provisions of
Article 4 hereinbelow, Xxxxxx shall deliver to Lakota a
certificate or certificates representing all of the Infinity
Shares held in the name of Xxxxxx, and Lakota shall deliver to
Xxxxxx a certificate or certificates representing an aggregate
of Three Million 3,000,000 shares of Lakota common stock.
2.3 Additional Consideration Based Upon Performance. As
additional consideration for the purchase of the Infinity
Shares, Lakota shall issue to Xxxxxx, or his assigns,
additional shares of Lakota common stock, within thirty (30)
days of when the gross sales (i.e. the total of all sales
generated) of Infinity are confirmed by both the Lakota and
Infinity Boards to have reached or surpassed the following
milestones or goals:
2.3.1 At such time as Infinity achieves gross sales of one
million dollars (US$1,000,000) following the Final Closing Date
(accumulated gross sales shall be calculated from all sales
generated by Infinity effective as of the Final Closing Date),
then Xxxxxx shall be issued an aggregate of one million five
hundred thousand (1,500,000) additional shares of Lakota common
stock bearing an appropriate 144 restrictive legend
(hereinafter "Second Distribution").
2.3.2 In addition to the additional consideration set forth
in Section 2.3.1 hereof, at such time as Infinity achieves
gross sales of two million six hundred fifty thousand dollars
(US$2,650,000) following the Final Closing Date, then Xxxxxx
shall be issued an aggregate of one million five hundred
thousand (1,500,000) additional shares of Lakota common stock
bearing an appropriate 144 restrictive legend (hereinafter
"Third Distribution").
2.3.3 In addition to the additional consideration set forth
in Sections 2.3.1 and 2.3.2 hereof, at such time as Infinity
achieves gross sales of four million six hundred fifty thousand
dollars (US$4,650,000) following the Final Closing Date, then
Xxxxxx shall be issued an aggregate of one million five hundred
thousand (1,500,000) additional shares of Lakota common stock
bearing an appropriate 144 restrictive legend (hereinafter
"Fourth Distribution").
2.3.4 In addition to the consideration set forth in Sections
2.3.1, 2.3.2, and 2.3.3 hereof, in the event that Infinity
reaches gross sales of at least $1,000,000 (accumulated gross
sales calculated from the Final Closing Date) during the eight
(8) months immediately following the Final Closing Date, and
reaches gross sales of at least $2,650,000 during the fourteen
(14) months immediately following the Final Closing Date, and
reaches gross sales of at least $4,650,000 during the eighteen
(18) months
immediately following the Final Closing Date, then
Xxxxxx shall be issued an aggregate of one million five hundred
thousand (1,500,000) additional shares of Lakota common stock
bearing an appropriate 144 restrictive legend (hereinafter
"Bonus Distribution").
2.3.5 The stock distributions described in Sections 2.3.1,
2.3.2, 2.3.3, and 2.3.4 are each independent of each other, and
can be accumulated and shall be payable to Xxxxxx at any time
during his employment with Infinity, with the exception of the
Bonus Distribution described under Section 2.3.4, which can
only be accumulated if the second, third and fourth
distributions are achieved within the time frames indicated in
Section 2.3.4. All distributions of stock shall be made by
Lakota to Xxxxxx within thirty (30) days following the date
when the gross sales have been confirmed or certified by both
the Infinity and Lakota Board of Directors to have reached or
exceeded the goals specified in the Sections above, and both
Boards shall use their best efforts to confirm and certify the
achievement of such goals within thirty (30) days following the
end of the month in which the gross sales were reported to have
achieved or exceeded the goals or milestones specified herein.
The obligations of Lakota to make the distributions to Xxxxxx
described under this Section 2.3 shall be conditioned upon
Jalali's continued employment with Infinity as its principal
manager, and shall be forfeited by Xxxxxx only in the event of
his voluntary termination of his employment with Infinity, or
in the event of his discharge by Infinity for cause; however,
should Jalali's employment with Infinity be terminated by
Infinity without cause, or without voluntary consent by Xxxxxx,
then ALL distributions described under this Section 2.3
(inclusive of all stock distributions described in Sections
2.3.1, 2.3.2, 2.3.3, and 2.3.4) shall become immediately vested
in Xxxxxx effective as of his date of termination, and shall be
distributed to Xxxxxx by Lakota within no more than thirty (30)
days following his involuntary termination, without cause.
2.4 Position and Title with Infinity. Effective as of the Final
Closing Date, Xxxxxx shall continue to serve as the President,
Chief Executive Officer, and as a Director of Infinity under
terms and minimum employment conditions which are mutually
agreeable to the Parties. Lakota and Infinity agree to enter
into any additional agreements or formal employment contracts
with Xxxxxx, if deemed appropriate, on or before the Final
Closing Date in order to ensure the ongoing employment of
Xxxxxx as President and Chief Executive Officer of Infinity,
effective as of the Final Closing Date.
2.5 Position and Title with Lakota. Effective as of the Final
Closing Date, Xxxxxx will be appointed as a Director of Lakota,
to serve as a full voting member of the Lakota Board of
Directors at the discretion of the Lakota stockholders, until
his successor shall be duly elected and qualified.
2.6 Lakota's Appointments to the Infinity Board. Effective as
of the Final Closing Date, Lakota will appoint two (2) members
to the Infinity Board of Directors, to serve at the discretion
of the stockholder(s), until their successors are duly elected
and qualified.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Infinity. To induce
Lakota to enter into
this Agreement and to consummate the transactions contemplated
hereby, Infinity represents and warrants, that as of the
Initial Closing Date and continuing through the Final Closing
Date, the following are true and correct:
3.1.1 Corporate Authority. Infinity has the full right, power
and authority to enter into this Agreement and to carry out and
consummate the transactions contemplated herein. This Agreement
constitutes the legal, valid and binding obligation of Infinity.
3.1.2 Corporate Existence and Authority of Infinity. Infinity
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas. It has all
requisite corporate power, franchises, licenses, permits and
authority to own its properties and assets and to carry on its
business as it has been and is being conducted. It is in good
standing in the State of Texas, or any other jurisdiction
wherein the character of the business transacted by it makes
such qualification necessary.
3.1.3 Capitalization of Infinity. The authorized equity
securities of Infinity consist of two thousand (2,000) shares
of common stock, of which all two thousand (2,000) shares are
issued and outstanding to Xxxxx Xxxxxx at the time of execution
of this Agreement and as of the Initial Closing Date. No other
shares of capital stock of Infinity are issued and outstanding.
All of the issued and outstanding shares have been duly and
validly issued in accordance and compliance with all applicable
laws, rules and regulations and are fully paid and
nonassessable. There are no options, other than as specified
herein under Section 4.5 below, warrants, rights, calls,
commitments, plans, contracts or other agreements of any
character granted or issued by Infinity, which provide for the
purchase, issuance or transfer of any shares of the capital
stock of Infinity other than those which are disclosed herein
and/or are contemplated under this Agreement; nor are there any
outstanding securities granted or issued by Infinity that are
convertible into any shares of the equity securities of
Infinity, and none is authorized. Infinity is not obligated or
committed to purchase, redeem or otherwise acquire any of its
equity. All presently exercisable voting rights in Infinity are
vested exclusively in its outstanding shares of common stock,
each share of which is entitled to one vote on every matter to
come before it's shareholders, and other than as may be
contemplated by this Agreement, there are no voting trusts or
other voting arrangements with respect to any of Infinity's
equity securities, however, the Parties agree that such Voting
Trusts or Voting Agreements are not prohibited by the Infinity
Bylaws or by applicable law, and that such an agreement may be
entered into by the Infinity shareholders, should they so elect.
3.1.4 Subsidiaries. "Subsidiary" or "Subsidiaries" means all
corporations, trusts, partnerships, associations, joint
ventures or other Persons, as defined below, of which a
corporation or any other Subsidiary of such corporation owns
not less than twenty percent (20%) of the voting securities or
other equity, or of which such corporation or any other
Subsidiary of such corporation possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies, whether through ownership of voting
shares, management contracts or otherwise. "Person" means any
individual, corporation, trust, association, partnership,
proprietorship, joint venture or other entity. There are no
Subsidiaries of Infinity.
3.1.5 Execution of Agreement. The execution and delivery of
this Agreement does not, and the consummation of the
transactions contemplated hereby will not: (a) violate,
conflict with, modify or cause any default under or
acceleration of (or give any party any
right to declare any default or acceleration upon notice or
passage of time or both), in whole or in part, any charter, article
of incorporation, bylaw, mortgage, lien, deed of trust, indenture,
lease, agreement, instrument, order, injunction, decree,
judgment, law or any other restriction of any kind to which
either Infinity or Xxxxxx are a party or by which either of
them or any of their properties are bound; (b) result in the
creation of any security interest, lien, encumbrance, adverse
claim, proscription or restriction on any property or asset
(whether real, personal, mixed, tangible or intangible), right,
contract, agreement or business of Infinity; (c) violate any
law, rule or regulation of any federal or state regulatory
agency; or (d) permit any federal or state regulatory agency to
impose any restrictions or limitations of any nature on Infinity.
3.1.6 Taxes. All known taxes, assessments, fees, penalties,
interest and other governmental charges with respect to
Infinity which have become due and payable as of the Initial
Closing Date, have been paid in full or adequately reserved
against by Infinity, (including without limitation, income,
property, sales, use, franchise, capital stock, excise, added
value, employees' income withholding, social security and
unemployment taxes), and all interest and penalties thereon
with respect to the periods then ended and for all periods
thereto. There are no other agreements of any character
granted or issued by Infinity which provide for the purchase,
issuance or transfer of any shares of the capital stock of
Infinity nor are there any outstanding securities granted or
issued by Infinity that are convertible into any shares of the
equity securities of Infinity, and none is authorized. Infinity
is not obligated or committed to purchase, redeem or otherwise
acquire any of its equity. All presently exercisable voting
rights in Infinity are vested exclusively in its outstanding
shares of common stock, each share of which is entitled to one
vote on every matter to come before it's shareholders, and
other than as may be contemplated by this Agreement, there are
no voting trusts or other voting arrangements with respect to
any of Infinity's equity securities.
Further, there are no agreements, waivers or other arrangements
providing for an extension of time with respect to the
assessment of any tax or deficiency against Infinity, nor are
there any known actions, suits, proceedings, investigations or
claims now pending against Infinity, nor are there any known
actions, suits, proceedings, investigations or claims now
pending against Infinity in respect of any tax or assessment,
or any matters under discussion with any federal, state, local
or foreign authority relating to any taxes or assessments, or
any claims for additional taxes or assessments asserted by any
such authority, and there is no known basis for the assertion
of any additional taxes or assessments against Infinity.
3.1.7 Disputes and Litigation. There is no suit, action,
litigation, proceeding, investigation, claim, complaint, or
accusation pending, threatened against or affecting Infinity or
any of its properties, assets or business or to which Infinity
is a party, in any court or before any arbitrator of any kind
or before or by any governmental agency (including, without
limitation, any federal, state, local, foreign or other
governmental department, commission, board, bureau, agency or
instrumentality), and there is no basis for such suit, action,
litigation, proceeding, investigation, claim, complaint, or
accusation; (b) there is no pending or threatened change in any
environmental, zoning or building laws, regulations or
ordinances which affect or could affect Infinity or any of its
properties, assets or businesses; and (c) there is no
outstanding order, writ, injunction,
decree, judgment or award by any court, arbitrator or governmental
body against or affecting Infinity or any of its properties, assets or
business. There is no litigation, proceeding, investigation,
claim, complaint or accusation, formal or informal, or
arbitration pending, or any of the aforesaid threatened, or any
contingent liability which would give rise to any right of
indemnification or similar right on the part of any director or
officer of Infinity or any such person's heirs, executors or
administrators as against Infinity.
3.1.8 Compliance with laws. Infinity has at all times been,
and presently is to the best of its knowledge and belief, in
full compliance with, and has not received notice of any
claimed violation of, any applicable federal, state, local,
foreign and other laws, rules and regulations. Infinity has
filed all returns, reports and other documents and furnished
all information required or requested by any federal, state,
local or foreign governmental agency and all such returns,
reports, documents and information are true and complete in all
respects. All permits, licenses, orders, franchises and
approvals of all federal, state, local or foreign governmental
or regulatory bodies required of Infinity for the conduct of
its business through the Initial Closing Date have been
obtained, or have been disclosed to Lakota, and no violations
are or have been recorded in respect of any such permits,
licenses, orders, franchises and approvals, and there is no
litigation, proceeding, investigation, arbitration, claim,
complaint or accusation, formal or informal, pending or
threatened, which may revoke, limit, or question the validity,
sufficiency or continuance of any such permit, license, order,
franchise or approval. Such permits, licenses, orders,
franchises and approvals are valid and sufficient for all
activities presently carried on by Infinity.
3.1.9 Guaranties. Infinity has not guaranteed any dividend,
obligation or indebtedness of any person; nor has any Person
guaranteed any dividend, obligation or indebtedness of Infinity.
3.1.10 Books and Records. Infinity keeps its books, records
and accounts (including, without limitation, those kept for
financial reporting purposes and for tax purposes) in
accordance with good business practice and in sufficient detail
to reflect the transactions and dispositions of its assets,
liabilities and equities. The minute books of Infinity contain
records of its shareholders' and directors' meetings and of
action taken by such shareholders and directors. The meeting of
directors and shareholders referred to in such minute books
were duly called and held, and the resolutions appearing in
such minute books were duly adopted. The signatures appearing
on all documents contained in such minute books are the true
signatures of the persons purporting to have signed the same. A
true and accurate list of Infinity assets and liabilities as of
the Initial Closing Date is attached hereto as Exhibit "B".
Further, attached hereto as Exhibit "C" is the current contract
between Infinity and TUT Systems, Inc. which Infinity hereby
represents, is a valid and binding obligation on all parties
thereto. Infinity represents and warrants that there are no
other material contracts or agreements in existence as of the
Initial Closing Date.
3.1.11 Xxxxxx acknowledges that all shares of Lakota common
stock issued in accordance with this Agreement will be
"restricted securities" (as such term is defined in Rule 144
promulgated under the Securities Act of 1933, ("Rule 144") as
amended), that the Shares will include the restrictive legend
set forth in Section 3.2 hereof, and, except as
otherwise set forth in this Agreement, that the shares cannot be
sold for a period of one (1) year from the date of issuance
(which the Parties agree shall be the Final Closing Date) unless
registered with the United States Securities and Exchange
Commission ("SEC") and qualified by appropriate state
securities regulators, or unless Xxxxxx obtains written consent
from Lakota and otherwise complies with an exemption from such
registration and qualification (including, without limitation,
compliance with Rule 144).
3.2 Representations and Warranties of Lakota. To induce
Infinity and Xxxxxx to enter into this Agreement and to
consummate the transactions contemplated hereby, Lakota
represents and warrants to both Infinity and to Xxxxxx
individually, that as of the Initial Closing Date and
continuing through the Final Closing Date, the following are
true and correct:
3.2.1 Corporate Existence and Authority of Lakota. Lakota is
a corporation duly organized, validly existing and in good
standing under the laws of the State of Colorado. It has all
requisite corporate power, franchises, licenses, permits and
authority to own its properties and assets and to carry on its
business as it has been and is being conducted. It is in good
standing in each state, nation or other jurisdiction in each
state, nation or other jurisdiction wherein the character of
the business transacted by it makes such qualification
necessary. Lakota has the full right, power and authority to
enter into this Agreement and to carry out and consummate the
transactions contemplated herein. This Agreement constitutes
the legal, valid and binding obligation of Lakota.
3.2.2 Capitalization of Lakota. The authorized equity
securities of Lakota consists of 50,000,000 shares of common
stock, of which 33,588,906 shares are issued and outstanding as
of the close of business on May 27, 1999, and 5,000,000 shares
of Preferred Stock, of which no shares are issued and
outstanding as of the close of business on May 27, 1999. No
other shares of capital stock of Lakota are issued and
outstanding, nor will any additional shares be issued by
Lakota, except as contemplated herein, between the Initial
Closing Date and the Final Closing Date. All of the issued and
outstanding shares have been duly and validly issued in
accordance and compliance with all applicable laws, rules and
regulations and are fully paid and nonassessable. All presently
exercisable voting rights in Lakota are vested exclusively in
its outstanding shares of common stock, each share of which is
entitled to one vote on every matter to come before it's
shareholders, and other than as may be contemplated by this
Agreement, there are no voting trusts or other voting
arrangements with respect to any of Lakota's equity securities.
3.2.3 Subsidiaries. There are no Subsidiaries of Lakota, as
the same have been defined under Section 2.1.4 above, with the
sole exception of West Belt Energy, Inc., a Texas corporation.
3.2.4 Execution of Agreement. The execution and delivery of
this Agreement does not, and the consummation of the
transactions contemplated hereby will not: (a) violate,
conflict with, modify or cause any default under or
acceleration of (or give any party any right to declare any
default or acceleration upon notice or passage of time or
both), in whole or in part, any charter, article of
incorporation, bylaw, mortgage, lien, deed of trust, indenture,
lease, agreement, instrument, order, injunction, decree,
judgment, law or any other restriction of any kind to which
Lakota is a party or by which it or any of its properties are
bound; (b) result in the creation of any security interest,
lien,
encumbrance, adverse claim, proscription or restriction
on any property or asset (whether real, personal, mixed,
tangible or intangible), right, contract, agreement or business
of Lakota; (c) violate any law, rule or regulation of any
federal or state regulatory agency; or (d) permit any federal
or state regulatory agency to impose any restrictions or
limitations of any nature on Lakota or any of its actions.
ARTICLE 4
CLOSING AND DELIVERY OF DOCUMENTS
4.1 Initial Closing Date. The Initial Closing Date shall be
the date that all Parties have signed this Agreement, which in
no event, shall extend beyond June 1, 1999. Subsequent to the
signing, and within no more than thirty (30) days of the
Initial Closing Date (which in no event shall be beyond June
30, 1999), the following actions shall occur as a single
integrated transaction, intended to consummate and conclude the
obligations and conditions associated with the Closing:
4.2 Delivery of Initial Funds by Lakota to Infinity. Within
thirty (30) days following the Initial Closing Date, Lakota
shall cause to be delivered or wire transferred to an account
in the name of Infinity, located in Houston, Texas, an initial
capital investment of one hundred and fifty thousand dollars
(US$150,000) to be retained and used by Infinity for the
funding of its ongoing business activities and the expansion of
its business. Additional funds shall be contributed by Lakota
to Infinity, as necessary, following receipt of a projected
1999 Budget from Infinity's management to the Boards of both
Infinity and Lakota, following the Final Closing Date. All
additional operating and expense budget funding shall be
subject to the prior approval of both the Infinity and Lakota
Boards of Directors, and shall be submitted by the Infinity
management in accordance with good business practice and in
sufficient detail to reflect the transactions and expenditures
contemplated by the proposed budget. All such funds shall be
available for disbursement by the management of Infinity, for
the purposes of paying Infinity's ongoing business costs,
debts, expenses and fees incurred after the Final Closing Date.
4.3 Primary Stock Delivery by Lakota: Within no more than
thirty (30) days following the Initial Closing Date, Lakota
shall deliver to Xxxxxx an aggregate of three million
(3,000,000) shares of Lakota common stock, and all instruments
of conveyance and transfer required by Section 2.2 subject to
no liens, security interests, pledges, encumbrances, charges,
restrictions, demands or claims in any other party whatsoever,
except as set forth in the legend on the certificate(s), which
legend shall provide as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE, AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF FOR A
PERIOD OF TWO YEARS FROM THE ISSUANCE THEREOF
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE
STATE LAWS OR (ii) UPON THE EXPRESS WRITTEN
AGREEMENT OF THE COMPANY AND COMPLIANCE, TO
THE EXTENT APPLICABLE, WITH RULE 144 UNDER THE
ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING
TO THE DISPOSITION OF SECURITIES).
4.4 Delivery by Xxxxxx of Infinity Stock: Within no more than
thirty (30) days following the Initial Closing Date, and
simultaneous with Lakota's compliance with the transactions
described under Sections 4.2 and 4.3 above, Xxxxxx shall deliver to
Lakota all of the Infinity Shares and all instruments of conveyance
and transfer required by Section 2.2. All such transfers shall be
effective as of the Final Closing Date.
4.5 Option to Repurchase Infinity Shares. Lakota and Xxxxxx
acknowledge and agree that Xxxxxx shall be granted and shall have
the exclusive option ("Option ") to acquire that number of shares of
common stock of Infinity which represents thirty percent (30%) of
all the issued and outstanding common stock of Infinity at the time
of exercise by Xxxxxx, for a total sum equal to Ten Thousand Dollars
(US$10,000). The Option will be exercisable by Xxxxxx in only two
events, namely: (1) the consummation and approval by the
Shareholders and Board of Directors of Infinity of a sale of
Infinity stock which results in a change in the majority interest or
control of Infinity, or which is a sale of substantially all of the
assets of Infinity; or (2) a registered public offering of Infinity
securities to the public effectuated through the use of a
registration statement with the SEC. As a condition precedent to
the exercise of the Option by Xxxxxx, Xxxxxx must consent and agree
in writing to the transaction which triggered the exercise of the
Option, in form and substance identical to the transaction as
approved by the Lakota and Infinity Shareholders and Board of
Directors, said consent or agreement to take whatever form may be
reasonably requested by the Lakota and Infinity Boards. This Option
shall be exclusive to Xxxxxx, and shall not be contingent upon
Jalali's ongoing employment with Infinity, nor shall this Option be
conditioned upon any of the performance goals or milestones
discussed under Section 2.3 hereinabove.
ARTICLE 5
CONDITIONS, TERMINATION, AMENDMENT AND WAIVER
5.1 Condition Precedent. This Agreement, and the transactions
contemplated hereby, shall be subject to the approval of the Board
of Directors of Lakota and Infinity, and, if necessary, the
respective shareholders thereof. All conditions described herein
which are contemplated to occur within thirty (30) days of the
Initial Closing Date, are conditions precedent to the final
consummation of this Agreement, and shall be completed or waived by
written agreement signed by all Parties, prior to the Final Closing
Date. All transactions associated with Closing shall be
accomplished within thirty (30) days of the Initial Closing Date, or
this Agreement shall be deemed to be null and void. Time is of the
essence in this Agreement.
5.2 Termination. Notwithstanding anything to the contrary contained
in this Agreement, this Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior
to the Initial Closing Date by the mutual consent of
all of the parties. Following execution of this Agreement, all
conditions and transactions described above shall be concluded within
thirty (30) days of the Initial Closing Date, as specified herein, unless
extended or waived by written agreement, executed by all Parties
hereto, prior to the expiration of the thirty (30) days following
the Initial Closing Date. Failure of the Parties to conclude all
contemplated transactions and delivery of documents, certificates
and materials described herein within the time limits specified
herein, shall render this Agreement null and void. Time is of the
essence in this Agreement.
5.3 Waiver and Amendment. Any term, provision, covenant,
representation, warranty or condition of this Agreement may be
waived, but only by a written instrument signed by the Party
entitled to the benefits thereof. The failure or delay of any Party
at any time or times to require performance of any provision hereof
or to exercise its rights with respect to any provision hereof shall
in no manner operate as a waiver of or affect such Party's right at
a later time to enforce the same. No waiver by any Party of any
condition, or of the breach of any term, provision, covenant,
representation or warranty contained in this Agreement, in any one
or more instances, shall be deemed to be or construed as a further
or continuing waiver of any such condition or breach or waiver of
any other condition or of the breach of any other term, provision,
covenant, representation or warranty. No modification or amendment
of this Agreement shall be valid and binding unless it be in writing
and signed by all Parties hereto.
ARTICLE 6
COVENANTS
6.1 To induce Lakota to enter into this Agreement and to consummate
the transactions contemplated hereby, and without limiting any
covenant, agreement, representation or warranty made by Infinity
above, Xxxxxx covenants and agrees as follows:
6.1.1 Notices and Approvals. Xxxxxx agrees: (a) to use his best efforts
to cause Infinity to give all notices to third parties which may be
necessary or reasonable in connection with this Agreement and the
consummation of the transactions contemplated hereby; (b) to use his best
efforts to cause Infinity to obtain, all federal and state governmental
regulatory agency approvals, consents, permit, authorizations, and orders
which are reasonably necessary to be obtained in connection with this
Agreement and the consummation of the transactions contemplated
hereby; and (c) to use his best efforts to cause Infinity to obtain,
all consents and authorizations of any other third parties which are
reasonably necessary to be obtained in connection with this
Agreement and the consummation of the transactions contemplated hereby.
6.1.2 Information for Lakota's Statements and Applications. Xxxxxx and
Infinity and their employees, accountants and attorneys shall reasonably
cooperate with Lakota in the preparation of any statements or applications
made by Lakota to any federal or state governmental regulatory agency in
connection with this Agreement and the transactions contemplated hereby
and shall use their best efforts to furnish Lakota with all information
concerning Infinity which is necessary or reasonable for inclusion
in such statements and applications, including, without limitation,
all requisite financial statements and schedules.
6.1.3 Access to Information. Lakota, together with its appropriate
attorneys, agents and representatives, have made and shall be permitted
to make a full and complete investigation of Infinity and have been
granted and shall be granted full access to all of the books and records
of Infinity during reasonable business hours. Notwithstanding the
foregoing, such parties shall treat all such information as confidential
and shall not disclose such information without the prior written consent
of the other, and further, Lakota covenants and agrees with both Xxxxxx
and Infinity to treat any and all information obtained during the
negotiations between the Parties, through the course of Closing, and
as a process or consequence of the transactions contemplated by this
Agreement as confidential.
6.2 To induce Xxxxxx to enter into this Agreement and to
consummate the transactions contemplated hereby, and without
limiting any covenant, agreement, representation or warranty made
above, Lakota covenants and agrees as follows:
6.2.1 Access to Information. Xxxxxx, together with his appropriate
attorneys, agents and representatives, shall be permitted to make the full
and complete investigation of Lakota and have full access to all of the
books and records of the other during reasonable business hours.
Notwithstanding the foregoing, such parties shall treat all such
information as confidential and shall not disclose such information
without the prior consent of the other.
6.2.2 Key Employee. Lakota acknowledges that Xxxxxx is critical to the
success of Infinity, and as such, Lakota shall use its best efforts to
ensure that Xxxxxx is retained by Infinity as its principal manager
following the Final Closing Date under terms and conditions mutually
agreeable to the Parties.
ARTICLE 7
MISCELLANEOUS
7.1 Expenses. Except as otherwise specifically provided for herein,
whether or not the transactions contemplated hereby are consummated,
each of the Parties hereto shall bear all taxes of any nature
(including, without limitation, income, franchise, transfer and
sales taxes) and all fees and expenses relating to or arising from
its compliance with the various provisions of this Agreement and
such Party's covenants to be performed hereunder, and except as
otherwise specifically provided for herein, each of the Parties
hereto agrees to pay all of its own expenses (including, without
limitation, attorneys and accountants' fees and printing expenses)
incurred in connection with this Agreement, the transactions
contemplated hereby, the negotiations leading to the same and the
preparations made for carrying the same into effect, up to the Final
Closing Date.
7.2 Notices. Any notice, request, instruction or other document
required by the terms of this Agreement, or deemed by any of the
parties hereto to be desirable, to be given to any other party
hereto shall be in writing and shall be given by prepaid telegram or
delivered or mailed by registered or certified mail, postage
prepaid, with return receipt requested, to the following addresses:
To Lakota:
Lakota Energy, Inc.
0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: R.K. (Xxx) Xxxxxxxx, President
Facsimile (000) 000-0000
with a copy to:
The Law Offices of M. Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Facsimile (000) 000-0000
To Infinity or Xxxxxx:
0-Xxxxxxxx.xxx, Inc.
0000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxx, President and CEO
Facsimile (000) 000-0000
The persons and addresses set forth above may be changed from time
to time by a notice sent as aforesaid. If notice is given by
delivery in accordance with the provisions of this Section, said
notice shall be conclusively deemed given at the time of such actual
delivery (courier receipt). If notice is given by mail in accordance
with the provisions of this Section, such notice shall be
conclusively deemed given forty-eight (48) hours after deposit
thereof in the United States mail, Certified, Return Receipt
Requested. If notice is given by telegraph in accordance with the
provisions of this Section, such notice shall be conclusively deemed
given at the time that the telegraphic agency shall confirm delivery
thereof to the addressee.
7.3 Entire Agreement. This Agreement, together with the schedule and
exhibits hereto, sets forth the entire agreement and understanding
of the parties hereto with respect to the transactions contemplated
hereby, and supersedes all prior agreements, arrangements and
understandings related to the subject matter hereof. No
understanding, promise, inducement, statement of intention,
representation, warranty, covenant or condition, written or oral,
express or implied, whether by statute or otherwise, has been made
by any party hereto which is not embodied in this Agreement, or
exhibits hereto or the written statements, certificates, or other
documents delivered pursuant hereto or in connection with the
transactions contemplated hereby, and no party hereto shall be bound
by or liable for any alleged understanding, promise, inducement,
statement, representation, warranty, covenant or condition not so
set forth.
7.4 Survival of Representations. All statements of fact
(including financial statements) contained in the schedules, the
exhibits, the certificates or any other instrument delivered by or
on behalf of the parties hereto, or in connection with the
transactions contemplated hereby, shall be deemed representations
and warranties by the
respective party hereunder. All representation, warranties agreements
and covenants hereunder shall survive the Initial Closing Date and the
Final Closing Date and shall remain effective regardless of any
investigation or audit at any time made by or on behalf of the parties
or of any information a party may have in respect thereto. Consummation
of the transactions contemplated hereby shall not be deemed or construed
to be a waiver of any right or remedy possessed by any party hereto,
notwithstanding that such party knew or should have known at the
time that such right or remedy existed.
7.5 Incorporated by Reference. All documents (including, without
limitation, all financial statements) delivered as part hereof or
incident hereto are incorporated as a part of this Agreement by
reference.
7.6 Remedies Cumulative. No remedy herein conferred upon any Party
is intended to be exclusive of any other remedy and each and every
such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or
in equity or by statute or otherwise.
7.7 Execution of Additional Documents. Each party hereto shall make,
execute, acknowledge and deliver such other instruments and
documents, and take all such other actions as may be reasonably
required in order to effectuate the purposes of this Agreement and
to consummate the transactions contemplated hereby within the time
frames described herein. The Parties hereto understand and agree
that time is of the essence, and that failure to perform any of the
transactions or conveyances described under the Closing procedure,
shall render this Agreement null and void.
7.8 Finders' and Related Fees. Each of the Parties hereto is
responsible for, and shall indemnify the other against, any claim by
any third party to a fee, commission, bonus or other remuneration
arising by reason of any services alleged to have been rendered to
or at the instance of said party to this Agreement with respect to
this Agreement or to any of the transactions contemplated hereby.
7.9 Governing Law. This Agreement has been negotiated and executed
in the State of Texas and shall be construed and enforced in
accordance with the laws of such state.
7.10 Forum. Each of the parties hereto agrees that any action or
suit which may be brought by any party hereto against any other
party hereto in connection with this Agreement or the transactions
contemplated hereby may be brought only in a federal or state court
in Xxxxxx County, Texas.
7.11 Attorneys' Fees. Except as otherwise provided herein, if a
dispute should arise between the parties including, but not limited
to arbitration, the prevailing party shall be reimbursed by the
nonprevailing party for all reasonable expenses incurred in
resolving such dispute, including reasonable attorneys' fees
exclusive of such amount of attorneys' fees as shall be a premium
for result or for risk of loss under a contingency fee arrangement.
7.12 Binding Effect and Assignment. This Agreement, and the ongoing
rights, obligations, privileges and options described herein shall
inure to the benefit of and be binding upon the parties hereto and
their respective heirs, executors, administrators, legal
representatives and assigns.
7.13 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the
same instrument. In making proof of this Agreement, it shall not be
necessary to produce or account for more than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
as of the date first written hereinabove ("Initial Closing Date").
LAKOTA ENERGY, INC.
a Colorado corporation ("LAKOTA") Attest:
/s/X.X. Xxxxxxxx By:/s/Xxxxxx Xxxxxx
By: R.K. (Xxx) Xxxxxxxx
Its: President
0-XXXXXXXX.XXX, INC.
a Texas corporation ("INFINITY") Attest:
By:/s/Xxxxxxx X. Xxxx
Secretary
/s/Xxxxx Xxxxxx
By: Xxxxx Xxxxxx
Its: President
Xxxxx Xxxxxx, Stockholder ("Xxxxxx")
Witnessed:
/s/Xxxxx Xxxxxx
By: Xxxxx Xxxxxx
EXHIBIT A
CERTIFICATION OF CORPORATE SECRETARY
(Insert here a certification signed by the Corporate Secretary of
0-Xxxxxxxx.xxx, Inc. that the total authorized shares are two
thousand (2,000) and that all shares have been issued to and are
standing in the name of Xxxxx Xxxxxx.)
EXHIBIT B
INFINITY ASSETS AND LIABILITIES
- TUT Systems, Inc. Value Added Reseller Agreement dated May 20, 1999.
EXHIBIT C
TUT Systems, Inc. Value Added Reseller Agreement
