EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
Dated as of July 7, 2001
among
Daleco Resources Corporation,
DROC Acquisition, Inc.
and
16/6, Inc
Xxxxxx Xxxxx
THIS FIRST AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the
"Agreement") is made as of the 7th day of July, 2001 by and among Daleco
Resources Corporation, a Delaware corporation ("DRC"), DROC Acquisition, Inc., a
Pennsylvania corporation and a wholly-owned subsidiary of DRC ("Merger Sub"),
16/6,Inc. a Pennsylvania corporation ("16/6"), and Xxxxxx Xxxxx (" Principal
Shareholder").
RECITALS
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WHEREAS, 16/6 owns the rights to United States Patent Pending, Serial No:
09/659641, "System and Method for Providing Content" ("Patent"), "I Top" 1.0
information technology evaluation and benchmarking software and other valuable
assets and technology ("Assets");
WHEREAS, Xxxxxx Xxxxx, either individually or jointly with his spouse owns
100 shares of common stock of 16/6, representing 100% of the issued and
outstanding common stock of 16/6;
WHEREAS, the Boards of Directors of DRC and 16/6 deem it advisable and in
the best interests of the shareholders of their respective corporations that
16/6 be acquired by DRC through the merger of 16/6 with and into Merger Sub (the
"Merger") pursuant to the Pennsylvania Business Corporation Law ("BCL") and in
accordance with the provisions of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants, representations, warranties and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
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SECTION 1.1. THE MERGER. At the Effective Time (as defined herein) and
subject to and upon the terms and conditions of this Agreement, 16/6 shall be
merged with and into Merger Sub in accordance with the provisions of the BCL.
Following the Merger, Merger Sub shall continue as the surviving corporation
under the name of 16/6 (the "Surviving Corporation"), and the separate corporate
existence of 16/6 shall cease. Merger Sub and 16/6 are sometimes collectively
referred to herein as the "Constituent Corporations".
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SECTION 1.2. EFFECT OF THE MERGER. The separate corporate existence of
Merger Sub, with all of its purposes, rights, privileges, powers, certificates
and franchises, shall continue unimpaired by the Merger. At the Effective Time,
the separate corporate existence of 16/6 shall cease, and the Surviving
Corporation shall succeed to all the Assets of the Constituent Corporations and
to all debts, chooses in action and other interests due or belonging to the
Constituent Corporations and shall be subject to, and responsible for (subject
to the terms herein), all the debts, liabilities and duties of the Constituent
Corporations with the effects provided by the applicable provisions of the BCL.
SECTION 1.3. CLOSING AND EFFECTIVE TIME. On the terms and subject to the
conditions of this Agreement, and provided that this Agreement has not been
terminated pursuant to Article X, on or before July 30, 2001 (or such other date
as may be agreed by each of the parties hereto), the parties hereto shall cause
the Merger to be consummated by filing articles of merger with the Department of
State of the Commonwealth of Pennsylvania (the "Articles of Merger"), in the
form agreed by the parties hereto. For purposes of this Agreement, "Effective
Time" shall mean the date and time of the filing and acceptance of the Articles
of Merger with the Department of State of Commonwealth of Pennsylvania, or such
later time as may be agreed by each of the parties hereto and specified in the
Articles of Merger. Immediately prior to the filing of the Articles of Merger, a
closing (the "Closing") will be held at 10 a.m. at the offices of Xxxxxx, Van
Denbergh & Xxxxxxx, P.C., Xxxxx 000, Xxx Xxxx Xxxxxx Xxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000 (or such other place as the parties may agree). The date on
which the Closing occurs is referred to as the "Closing Date."
SECTION 1.4. ARTICLES OF INCORPORATION AND BY-LAWS. The Articles of
Incorporation and By-laws of Merger Sub in effect immediately prior to the
Effective Time shall be the Articles of Incorporation and By-laws of the
Surviving Corporation following the Merger until amended in accordance with
applicable law.
SECTION 1.5. OFFICERS AND DIRECTORS. The officers of 16/6 immediately
prior to the Effective Time shall be become the officers of the Surviving
Corporation following the Merger and shall hold office from the Effective Time
until their successors are duly elected or appointed and qualified. The
directors of Merger Sub as of the Effective Time shall continue as directors of
the Surviving Corporation and shall serve until their successors are elected and
qualified.
SECTION 1.6. MERGER CONSIDERATION.
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(a) Subject to the provisions and conditions set forth below, the
consideration for the Merger (the "Merger Consideration") shall be:
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(i) One Million (1,000,000) shares of DRC common stock, par value
$.01 ("Common Stock") ("Consideration Stock"); provided, however, that if a
binding agreement for the license, lease or sale of the Assets is entered into
within ninety (90) days of the Effective Date for consideration the present
value of which is in excess of Eight Million Dollars ($8,000,000), then the
amount of the Consideration Stock shall be One Million Five Hundred Thousand
shares of Common Stock; plus
(ii) After DRC's receipt of the first One Million Dollars
($1,000,000) assuming One Million shares of Common Stock are issued under
Section 1.6 (a)(i) above, or One Million Five Hundred Thousand Dollars
($1,500,000) assuming One Million Five Hundred Thousand shares of Common Stock
are issued under Section 1.6 (a) (i) above ("Initial Payment"), two thirds of
all proceeds realized by DRC from any third party for any of the Assets sold,
leased or licensed pursuant to an agreement of sale, lease or license if the
date of such agreement of sale, lease or licenses is prior to the second
anniversary of the Effective Date ("Asset Proceeds"). The Asset Proceeds shall
be payable to the Shareholders when, if and as received and for as long same are
received by DRC.
SECTION 1.7. CONVERSION OF SHARES.
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(a) At the Effective Time, by virtue of the Merger and without any action
on the part of Merger Sub, 16/6 or the holders of any of the following
securities, each of the following will occur:
(i) Each share of common stock, par value $.01 per share, of 16/6
issued and outstanding immediately prior to the Effective Time (the "Shares")
shall no longer be outstanding, and the holders thereof (the "16/6
Shareholders") shall cease to have any rights with respect to such Shares,
except the right to receive the Net Merger Consideration Per Share. The "Net
Merger Consideration Per Share" shall mean the Merger Consideration divided by
the number of Shares issued and outstanding immediately prior to the Effective
Time.
(ii) Each share of common stock of Merger Sub shall be converted into
and become one share of the Surviving Corporation's common stock. From and after
the Effective Time, each certificate that, prior to the Effective Time,
represented shares of Merger Sub's common stock, shall evidence ownership of
shares of the Surviving Corporation's common stock, and shall be fully paid and
nonassessable.
(b) At Closing, each 16/6 Shareholder shall surrender the certificate or
certificates theretofore representing such 16/6 Shareholder's Shares
("Certificates"), to the Exchange Agent, and upon such surrender, the
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surrendering 16/6 Shareholder shall be entitled to receive payment for the
Shares represented by such Certificates in accordance with Section 1.6 hereof.
At the Effective Time, the stock transfer books of 16/6 shall be closed and
there shall be no further registration of transfers of Shares thereafter on the
records of 16/6. If payment for the Shares is to be made to a Person other than
the Person in whose name the surrendered Certificate is registered, it shall be
a condition of such exchange that the surrendered Certificate be properly
endorsed or otherwise in proper form for transfer and that the Person requesting
such issuance shall either (i) pay to the Exchange Agents any transfer or other
taxes required by reason of the payment to a Person other than the registered
holder of the surrendered Certificate, or (ii) establish to the satisfaction of
the Exchange Agents that such tax has been paid or is not payable. The Merger
Consideration issued or paid upon conversion of the Shares in accordance with
the terms hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to such Shares.
SECTION 1.8. WITHHOLDING. The Exchange Agent shall deduct and withhold,
for the benefit of DRC and the Surviving Corporation, from the Net Merger
Consideration otherwise payable pursuant to this Agreement to any 16/6
Shareholder, such amounts as are required to be deducted and withheld with
respect to the making of such payment under the Internal Revenue Code (the
"Code"), or any provision of state, local or foreign tax law. To the extent that
amounts are so withheld by the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the 16/6
Shareholders in respect of which such deduction and withholding was made.
SECTION 1.9. LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the 16/6
Shareholder claiming such Certificate to be lost, stolen or destroyed and any
other documents required pursuant to Section 1.8, the Exchange Agent shall,
after the Effective Time, pay such 16/6 Shareholder for the Shares represented
by the lost, stolen or destroyed Certificate pursuant to the terms hereof.
SECTION 1.10. NO LIABILITY. Neither DRC, the Surviving Corporation nor any
of their respective officers, directors, shareholders, employees, agents or
representatives shall be liable to any 16/6 Shareholder for any Merger
Consideration delivered to a public official pursuant to any abandoned property,
escheat or similar law.
SECTION 1.11. RESPONSIBILITY OF EXCHANGE AGENT. The Exchange Agent, shall
have sole responsibility for effecting the surrender and cancellation of
Certificates representing all of the Shares, distributing the Merger
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Consideration to the 16/6 Shareholders, and taking all other actions necessary
or appropriate to consummate the exchange of the Shares in accordance with this
Article I and as required by law. None of DRC, the Surviving Corporation or any
of their respective officers, directors, shareholders, employees, agents or
representatives shall be liable to any 16/6 Shareholder or any third party for
any action or inaction of the Exchange Agent in performing or failing to perform
their duties hereunder, and Exchange Agent shall indemnify DRC and the Surviving
Corporation for such liability pursuant to Section 8.1 hereof. Except as
expressly provided in this Article I, Exchange Agent shall have no authority by
virtue of this Agreement or otherwise to contract or otherwise act on behalf of
DRC and/or the Surviving Corporation, and Exchange Agent shall not represent
themselves to any third party, including without limitation any Shareholder, as
having such authority.
SECTION 1.12. BALANCE OF EXCHANGE ACCOUNT. Any funds remaining in the
Exchange Account on the date that is ninety one (91) days after the payment of
funds into the Exchange Agent Account, or such earlier date as payment has been
made for all of the Shares in accordance with this Article I (or as otherwise
required by law), shall be delivered by the Exchange Agent to DRC, together with
appropriate records indicating the total amount of funds disbursed and
Certificates received. Upon and after such delivery, DRC, or such Person as may
be designated by DRC, shall act as the successor ("Successor Exchange Agent")
exchange agent for DRC and the Surviving Corporation; provided, however, that
nothing in this Section 1.12 shall be deemed to relieve the Exchange Agent from
any liability incurred by such Exchange Agent during the period for which they
were responsible for distributing the Merger Consideration, including, without
limitation, their indemnification obligations pursuant to Section 8.1 hereof.
DRC shall indemnify and hold harmless the Principal Shareholder, individually
and jointly, for any liability to any Shareholder arising from the actions of
the Successor Exchange Agent in accordance with the provisions of Section 8.1(b)
below.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF 16/6 AND
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THE PRINCIPAL SHAREHOLDER
-------------------------
16/6 and the Principal Shareholder, represents and warrants to DRC and
Merger Sub as follows:
SECTION 2.1. CAPITAL STOCK. The authorized capital stock of 16/6 consists
of 1000 shares of common stock, par value $.01 per share, of which 100 shares
are issued and outstanding as of the date of this Agreement to the Persons and
in the proportions set forth on Schedule 2.1. There are no shares of 16/6
capital stock held in treasury. All such outstanding shares of 16/6 (a) have
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been duly authorized and validly issued and are fully paid and non-assessable,
and (b) have been issued in compliance with all applicable federal and state
securities laws. There are no outstanding warrants, options, rights, calls,
commitments, conversion rights, rights of exchange, plans or other agreements of
any character providing for the purchase, issuance or sale of any shares of the
capital stock of any of 16/6 or any restrictions or limitations thereon.
SECTION 2.2. OWNERSHIP OF STOCK The Principal Shareholder, with his
respective spouse, owns all of his Shares free and clear of all liens,
encumbrances, restrictions and claims of every kind (collectively, "Liens"). .
SECTION 2.3. ORGANIZATION; GOOD STANDING; OWNERSHIP. 16/6 is a corporation
duly incorporated, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Certified copies of the Companies' respective
Articles of Incorporation and By-laws, and all amendments thereto to date, have
been delivered to DRC, and the same are complete and correct. 16/6 has the full
and unrestricted power and authority to own the Assets now owned by it and to
conduct the business presently being conducted by it. 16/6 is not qualified to
do business as a foreign corporation in any state other than its state of
incorporation.
SECTION 2.4. AUTHORITY. 16/6 has the full corporate power and authority,
and the Principal Shareholder has the requisite capacity, legal right and power,
to make, execute, deliver and perform this Agreement, including all Exhibits and
Schedules hereto, and all of the other instruments and documents required or
contemplated hereby and thereby ("16/6's Transaction Documents"). Such
execution, delivery and performance have been duly authorized by all necessary
action by the Board of Directors of 16/6, and 16/6 shall deliver to DRC at
Closing certified resolutions of the Board of Directors, as required by the BCL,
of 16/6 authorizing the transactions contemplated hereby. On or before the
Closing Date, the Merger shall have been duly authorized and approved by the
16/6 Shareholders of 16/6, and 16/6 shall provide DRC with the certified results
of the meeting of the 16/6 Shareholders of 16/6 called to vote on the Merger in
accordance with the BCL.
SECTION 2.5. BINDING EFFECT. To the extent this Agreement is binding upon
DRC and Merger Sub, this Agreement, and each of 16/6's Transaction Documents to
be signed by 16/6 and/or the Principal Shareholder, constitute or will
constitute the valid and binding obligations of 16/6 and the Principal
Shareholder, as the case may be, enforceable against each of them in accordance
with their respective terms.
SECTION 2.6. ABSENCE OF CONFLICTING AGREEMENTS. Neither the execution or
delivery of this Agreement or any of 16/6's Transaction Documents to be signed
by 16/6 and the Principal Shareholder, nor the performance by 16/6 and the
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Principal Shareholder of the transactions contemplated hereby and thereby,
conflicts with, or constitutes a breach of or a default under (i) any of the
Companies' Articles of Incorporation or By-laws, (ii) any law, rule, judgment,
order, writ, injunction, or decree of any court, currently in effect and
applicable to the Companies or the Principal Shareholder; (iii) any rule or
regulation of any administrative agency or other governmental authority
currently in effect and applicable to the Companies or the Principal
Shareholder; or (iv) any agreement, indenture, contract or instrument to which
the Companies or the Shareholder are now a party or by which any of them is
bound.
SECTION 2.7. GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. Except as
set forth on Schedule 2.7 hereto, the execution, delivery and performance of
this Agreement by 16/6 and the Principal Shareholder, and the consummation of
the transactions contemplated hereby, do not and will not require any consent,
approval or action by or in respect of, or any declaration, filing or
registration with, any government, court, regulatory or administrative agency or
commission, or other governmental authority, agency or instrumentality, whether
federal, state or local, or any other Person.
SECTION 2.8. CONTRACTS.
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(a) Schedule 2.8(a) sets forth a true, complete and correct list of all
written agreements, contracts and commitments to which 16/6 is a party or by
which it or any of Assets are bound in excess of $5,000 in face amount (the
"Contracts"). All the information set forth on Schedule 2.8 with respect to the
Contracts are true, complete and accurate. The Contracts and commitments
referred to in this Section 2.8 were entered into and require performance in the
ordinary course of 16/6's respective businesses. To the extent valid and binding
on the other parties to the Contract, each of the Contracts is valid and
enforceable in accordance with its terms and is in full force and effect. There
is no default by 16/6 and 16/6 is not in receipt of a notice of default, set-off
or claim of default under any provision thereof. To the best of 16/6's knowledge
after inquiry, there is no default by any other party to the Contracts, and
there has not occurred any event which with the passage of time or the giving of
notice (or both) would constitute such a default or breach. Except as set forth
on Schedule 2.8(a), all amounts due and payable under the Contracts are current.
Through the Closing Date all Contracts will be paid in the ordinary course.
Except as listed on Schedule 2.7 or 2.8, each of said Contracts shall remain in
full force and effect without the need for third party consent and shall not be
otherwise effected as a result of the consummation of the transactions
contemplated by this Agreement.
(b) Except as listed on Schedule 2.8, 16/6 is not a party to or liable in
connection with, and has not granted, any currently in force, written or oral:
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(i) contract, agreement or commitment for the employment or retention
of, or collective bargaining, severance or termination agreement with, any
director, officer, employee, consultant or agent or group of employees;
(ii) agreement or arrangement for the sale of any of the Assets, (by
sale of assets, sale of stock, merger or otherwise);
(iii) joint venture contract or similar arrangement or agreement
which is likely to involve a sharing of profits or future payments; or
(iv) licensing, distributor, dealer, franchise, sales or
manufacturer's representative, agency or other similar contract, arrangement or
commitment.
SECTION 2.9. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on
Schedule 2.9, 16/6 does not have any liabilities or obligations, and there is no
basis for any assertion against 16/6 of any liability or obligation, except
those liabilities or obligations which are: (a) disclosed in this Agreement or
in the Schedules hereto, or (b) incurred in the ordinary course of business,
consistent with past practice and, which are, in the aggregate, not material to
16/6. For the purposes of this Agreement the phrase "liabilities or obligations"
shall include any direct or indirect indebtedness, guaranty, endorsements,
claim, loss, damage, deficiency or obligation, known or unknown, absolute or
contingent, accrued or unaccrued, due or to be due, liquidated or unliquidated.
SECTION 2.10. MATERIAL CHANGES. Since December 8, 2000, there has not
been, any material adverse change in the condition (financial or otherwise), of
16/6 or its operations. Since its inception, 16/6 has conducted its business
only in the normal course, and 16/6 has not (i) sold, assigned, transferred or
encumbered any of the Assets outside the normal course of its businesses, (ii)
amended, terminated or had terminated any material Contract, or (iii) increased
the compensation or benefit packages payable to its respective employees; nor
have the Principal Shareholder sold or encumbered the Shares owned or held by
them.
ECTION 2.11. INTELLECTUAL PROPERTY. Schedule 2.11 attached hereto sets
forth a list of all 16/6's (i) patents, patent applications, registrations and
applications for registrations, (ii) trademarks, service marks, trade dress,
logos, trade names, service names and corporate names and registrations and
applications for registration thereof, (iii) copyrights and registrations and
applications for registration thereof, (iv) computer software, data and
documentation, (v) trade secrets and confidential business information, whether
patentable or nonpatentable and whether or not reduced to practice,
copyrightable works, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
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information, and (vi) other proprietary rights relating to any of the foregoing
(including without limitation associated goodwill and remedies against
infringements thereof and rights of protection of interest therein under the
laws of all jurisdictions) (together, "Proprietary Rights"). Schedule 2.11 also
lists all licenses, sublicenses and other agreements as to which 16/6 is a party
and pursuant to which any Person is authorized to use such Proprietary Right,
including the identity of all parties thereto, a description of the nature and
subject matter thereof, the applicable royalty and the term thereof. Since its
inception, 16/6 has not been sued, charged in writing with, or been a defendant
in any claim, suit, action or proceeding relating to its business that has not
been finally terminated prior to the date hereof and that involves a claim of
infringement of any Proprietary Rights. No Proprietary Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting the
use thereof by 16/6 or restricting the licensing thereof by 16/6 to any Person.
16/6 has not entered into any agreement to indemnify any other Person against
any charge of infringement of any Proprietary Rights.
SECTION 2.12. TITLE TO AND CONDITION OF REAL PROPERTY.
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Except as set forth on Schedule 2.12, 16/6 owns no real property.
SECTION 2.13. TITLE TO AND CONDITION OF PERSONAL PROPERTY.
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(a) Set forth on Schedule 2.13 attached hereto is a true, complete and
accurate depreciation schedule of all of the material items of tangible property
owned by 16/6.
(b) Except for the security interests and other Liens listed and described
on Schedule 2.13 and Permitted Encumbrances, 16/6 has good and marketable title
to all personal property owned by it, subject to no Liens or restraints on
transfer whatsoever. All personal property of 16/6 is in good operating
condition and repair (ordinary wear and tear and routinely scheduled maintenance
excepted) and is suitable and adequate for the uses for which it is intended or
is being used. No other Person has any right to the use or possession of any of
such property except as set forth on Schedule 2.13.
(c). Schedule 2.13 sets forth a complete and correct copy of each of the
leases relating to the assets or the businesses of 16/6 or to which 16/6 is a
party (together with all modifications or amendments thereto), the annual rental
and unexpired lease term thereby, and all the information set forth on Schedule
2.13 is complete, correct and accurate. Except as otherwise set forth on
Schedule 2.13, each of said leases shall remain in full force and effect
notwithstanding the consummation of the transactions contemplated by this
Agreement.
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SECTION 2.14. ACCOUNTS RECEIVABLE; INVENTORY.
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Set forth on Schedule 2.14 is a complete list, with aging of all accounts
receivable, accounts payable and inventory of 16/6.
SECTION 2.15. SUBSIDIARIES AND INVESTMENTS. Except as set forth in Section
2.1 hereof or on Schedule 2.15, none of the Companies owns, directly or
indirectly, any capital stock or other equity or ownership, or proprietary
interest in any corporation, partnership, association, trust, joint venture or
other entity.
SECTION 2.16. LEGAL PROCEEDINGS; COMPLIANCE WITH LAWS; APPROVALS.
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(a) Except as set forth on Schedule 2.16, there are no disputes, claims,
actions, suits or proceedings, arbitration or investigations, either
administrative or judicial, pending or, to the knowledge of 16/6 and the
Principal Shareholder, threatened in writing, against or affecting 16/6 or its
business, the Assets or capital stock of 16/6, the legality or validity of this
Agreement, or 16/6's or the Principal Shareholder's ability to consummate the
transactions contemplated herein, at law or in equity or otherwise, before or by
any court or governmental agency or body, domestic or foreign, or before an
arbitrator of any kind.
(b) The operation of 16/6 has been conducted in accordance with all
applicable laws, regulations, orders and other requirements of all courts and
other governmental and regulatory authorities having jurisdiction over 16/6 and
the Assets, including, without limitation, all such laws, regulations, orders
and requirements promulgated by or relating to consumer protection, equal
opportunity, health, third-party reimbursement, environmental protection, fire,
zoning and building and occupational safety matters, except for violations that
individually or in the aggregate would not and, insofar as may reasonably be
foreseen, in the future will not, have a material adverse effect on the Assets
or the business or the operation of 16/6.
SECTION 2.17. EMPLOYEES. 16/6 has no employees.
SECTION 2.18. INSURANCE AND SURETY AGREEMENTS. Schedule 2.18 attached
hereto sets forth a list of: (a) all policies of insurance held or owned by 16/6
or otherwise in force and providing coverage for its business or the Assets; (b)
indemnity agreements and other agreements of suretyship made for or held by 16/6
or otherwise in force and relating to 16/6's business or the Assets; and (c) any
claims made thereunder16/6 has not been advised in writing by its insurance
carrier of any intention on the part of such carrier to terminate coverage and
there are no disputes between 16/6 and any insurance carrier regarding coverage,
claims, settlements or premiums..
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SECTION 2.18. ENVIRONMENTAL COMPLIANCE.
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Except as set forth on Schedule 2.18, at no time during 16/6's operations,
and to 16/6's and the Principal Shareholder' knowledge, at no time has 16/6 or
its respective agents or representatives, ever been served with a notice from
any governmental body claiming any violation of any federal, state or local law,
regulation or ordinance concerning the generation, handling, storage, or
disposal of any toxic waste, or the environmental state, condition, or quality
of the premises occupied by 16/6.
SECTION 2.19. TAX MATTERS. 16/6 has filed when due in accordance with all
applicable laws (or properly and timely filed an extension therefor) all tax
returns required under applicable statutes, rules or regulations to be filed by
it with respect to all taxes, federal, state and local. Except as set forth on
Schedule 2.19 as of the time of filing, such returns were accurate and complete.
All taxes due, and all additional assessments received, have been paid or
provided for on 16/6's books and records in accordance with generally accepted
accounting procedures (whether or not shown on any such return). 16/6 is not
delinquent in the payment of any tax and has not requested any extension of time
within which to file or send any tax return, which return has not since been
filed or sent. 16/6 has not waived the statute of limitations in respect of any
taxes or agreed to any extension of time with respect to any tax assessment or
deficiency. There are no liens for taxes (other than for current taxes not yet
due and payable) upon any 16/6 or the Assets. Attached hereto as Exhibit 2.19,
are 16/6's tax returns for the calendar year 2000.
SECTION 2.20. ACCURACY OF INFORMATION. Neither this Agreement nor the
Schedules hereto or any certificate to be delivered at the Closing by 16/6 or
the Principal Shareholder to DRC and Merger Sub in connection with this
Agreement or any of the transactions contemplated hereby contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements made, in light of the circumstances under which they are made,
not misleading, or contains a statement which is misleading. The statements
contained in the Schedules hereto or any certificate to be delivered at the
Closing by 16/6 and the Principal Shareholder to DRC and Merger Sub in
connection with this Agreement or any of the transactions contemplated hereby
shall be deemed to constitute representations and warranties under this
Agreement to the same extent as if set forth in this Agreement in full.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DRC AND MERGER SUB
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DRC and Merger Sub, jointly and severally, represent and warrant to 16/6
and the Principal Shareholder as follows:
SECTION 3.1. ORGANIZATION; STANDING; OWNERSHIP. Except as set forth on
Schedule 3.l, DRC and Merger Sub are both corporations duly organized, validly
existing and in good standing under the laws of the states of their
incorporation. Copies of DRC's and Merger Sub's Articles of Incorporation and
By-Laws, and all amendments thereto to date, have been delivered to the
Principal Shareholder, and the same are complete and correct. Each of DRC and
Merger Sub have the corporate power and authority to own the property and assets
now owned by such entity and to conduct the business presently being conducted
by such entity.
SECTION 3.2. AUTHORITY. DRC and Merger Sub each have the full corporate
power and authority to execute, deliver and perform this Agreement including all
Schedules hereto, and the other instruments and documents required or
contemplated hereby and thereby ("DRC's Transaction Documents"). Such execution,
delivery and performance have been duly authorized by all necessary corporate
action on the part of DRC and Merger Sub.
SECTION 3.3. BINDING EFFECT. To the extent this Agreement is binding on
16/6 and the Principal Shareholder, this Agreement, and each of DRC's
Transaction Documents to be signed by DRC and/or Merger Sub, constitute or will
constitute the valid and binding obligations of DRC and Merger Sub, as
applicable, enforceable against DRC or Merger Sub, in accordance with their
respective terms.
SECTION 3.4. ABSENCE OF CONFLICTING AGREEMENTS. Neither the execution or
delivery of this Agreement or any of DRC's Transaction Documents by DRC and
Merger Sub, nor the performance by DRC and Merger Sub of the transactions
contemplated hereby and thereby, conflicts with, or constitutes a breach of or a
default under (i) DRC's or Merger Sub's Articles of Incorporation or By-Laws;
(ii) any applicable law, rule, judgment, order, writ, injunction, or decree of
any court, currently in effect; (iii) any applicable rule or regulation of any
administrative agency or other governmental authority currently in effect; or
(iv) any agreement, indenture, contract or instrument to which DRC or Merger Sub
is now a party or by which it or any of its properties are bound.
SECTION 3.5. LEGAL PROCEEDINGS. No suit, action, investigation or legal or
administrative proceeding has been brought against DRC or Merger Sub, or to the
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best of DRC's and Merger Sub's knowledge, threatened against DRC or Merger Sub
which would affect the validity or legality of this Agreement or DRC's and/or
Merger Sub's ability to consummate the transactions contemplated hereby.
ARTICLE IV
CERTAIN COVENANTS
SECTION 4.1. ACCESS. Prior to the Effective Time, DRC has been given
access, to the books and records of 16/6. DRC may continue to make, or cause to
be made, such investigation of 16/6's financial and legal condition, as DRC
deems necessary or advisable to familiarize itself with 16/6 and/or matters
relating to its history or operation. Without limiting the generality of the
foregoing, DRC may, at any time after the date of this Agreement and prior to
the Effective Time other studies as DRC may elect. 16/6 shall permit DRC and
their authorized representatives (including legal counsel and accountants) to
have full access to 16/6's books and records upon not less than twenty-four (24)
hours advance notice, provided such access will not unreasonably disrupt 16/6's
business. 16/6 will furnish, or cause to be furnished, to DRC such financial and
operating data and other information and copies of documents with respect to
16/6's services, operations, and/or Assets, as DRC shall from time to time
request to enable DRC and its representatives to investigate the affairs of 16/6
and the accuracy of the representations and warranties made in this Agreement.
16/6 shall permit
SECTION 4.2. CONFIDENTIALITY. DRC agrees that certain of the information
and records with respect to which it will be provided access hereunder is not
available from public records and is confidential and proprietary to 16/6. DRC
agrees not to disclose any such confidential or proprietary information except
its third party agents and representatives, who agree to be bound by the
confidentiality provisions of this Section 4.3, in connection with its due
diligence investigation of the Companies and the Facilities or except as
required by law or in connection with a legal proceeding.
ARTICLE V
OBLIGATIONS OF THE PARTIES UNTIL THE EFFECTIVE TIME
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SECTION 5.1. CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME. Between the
date of this Agreement and the Effective Time, 16/6 and the Principal
Shareholder shall maintain the separate corporate existence of 16/6 and conduct
16/6's business in the ordinary course consistent with past practices.
Specifically, but without limitation, between the date hereof and the Effective
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Time, 16/6 and the Principal Shareholder shall use their best efforts to:
(a) maintain the Assets in substantially the state of repair, order and
condition as on the date hereof;
(b)maintain in full force and effect the insurance policies and binders
currently in;
(c) preserve intact the present business organization of 16/6; to the best
of 16/6's and the Principal Shareholder' ability, keep available the services of
16/6's present employees and agents, and any other employees and agents employed
in connection with its operations; not enter into any contract or agreement (or
enter into negotiations in connection therewith) with any third party without
the prior written consent of DRC which consent shall not be unreasonably
withheld; and, to the best of 16/6's and the Principal Shareholder's ability,
maintain 16/6's relations and goodwill anyone having business relating to 16/6;
(c)maintain all of the books and records of 16/6 in accordance with its
past practices;
(d) not make any change in any of 16/6's authorized, issued or outstanding
capital stock and not grant any options, or other rights of any kind to acquire,
whether directly or indirectly, any of 16/6's capital stock or any security
convertible into or exchangeable for the 16/6's capital stock;
(e) not declare, set aside, or pay any dividend or make any other
distributions with respect 16/6's capital stock or directly or indirectly
redeem, retire or repurchase or otherwise acquire any of 16/6's capital stock
(f) not issue, substitute stock certificates to replace certificates which
have been lost, misplaced, destroyed, stolen or are otherwise irretrievable,
unless approved by DRC;
(g) comply with all provisions of the Contracts listed in Schedule 2.8 and
with any other agreements that 16/6 has entered into in the ordinary course of
business since the date of this Agreement and with the provisions of all laws,
rules and regulations applicable to 16/6's' business;
(h) cause to be paid when due or obtain extensions, with the approval of
DRC, for the payment of all taxes, assessments and changes or levies imposed
upon 16/6 which 16/6 is required to withhold and pay over;
(i) promptly advise DRC in writing of the commencement, or the receipt of
a written threat to commence, against 16/6 or the Principal Shareholder of any
dispute, claim, action, suit or proceeding, arbitration or investigation that
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would materially adversely affect the operations, properties, assets or
prospects of 16/6;
(j) not sell, lease, license, option or grant a security interest in,
license, incur or create any Liens on or otherwise dispose of and of the;
(k) not incur any debt or obligation, except current liabilities incurred
in the ordinary course of business; and,
(l) not agree or commit to do any act prohibited by the foregoing.
SECTION 5.2. REQUEST FOR INFORMATION. DRC, 16/6 and the Principal
Shareholder shall each notify the others within five (5) days in the event that
such party receives a nonroutine request for information with respect to the
transaction contemplated hereby from any governmental agency or any third party.
SECTION 5.3. EXCLUSIVE NEGOTIATIONS. From and after the execution of this
Agreement through the Effective Time, neither 16/6 nor the Principal Shareholder
shall (i) sell, transfer, pledge, encumber or otherwise dispose of any of the
capital stock of 16/6, (ii) negotiate with any other Person (other than
representatives of DRC) regarding the possible disposition of the capital stock
or the business or all or substantially all of the Assets or any division or
line of business of 16/6, or (iii) initiate or solicit any of the foregoing.
16/6 and the Principal Shareholder shall not provide any information relating to
the Merger 16/6 and the Principal Shareholder agree that the Merger hereunder is
a unique opportunity and that DRC shall have the right, in addition to any other
rights it may have, to specific enforcement against 16/6 and the Principal
Shareholder of their obligations set forth in this Section 5.3.
SECTION 5.4. SHAREHOLDER APPROVAL. As soon as practicable after the date
hereof, 16/6, and Merger Sub shall submit the Merger to their respective 16/6
Shareholders for approval. The Board of Directors of 16/6 and Merger Sub will
recommend to their respective shareholders approval of this Agreement and the
Merger and shall take all such actions consistent with the fiduciary obligations
of such Board to obtain such approvals as promptly as practicable, including
without limitation the solicitation of proxies. The Principal Shareholder shall
vote his Shares to approve the Merger. At or prior to the Closing Date, the
Principal Shareholder shall obtain, and provide copies to DRC of, the
irrevocable proxies of their respective spouses.
SECTION 5.5. DISSENTER'S RIGHTS. The Principal Shareholder shall cause
16/6 to take all actions required to be taken by it by reason of the
transactions contemplated herein pursuant to Chapter 15, Subchapter D of the
BCL. 16/6 and the Principal Shareholder shall promptly notify DRC upon receipt
of any notice of intent to dissent from any Shareholder.
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SECTION 5.6. UPDATE OF DISCLOSURE.
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(a) Prior to the Effective Time, 16/6, the Principal Shareholder and DRC
shall promptly notify the other in writing of: (i) the discovery by any of them
of any event, condition, fact or circumstance that occurred or existed on or
prior to the date of this Agreement and that caused or constitutes a material
inaccuracy in any representation or warranty made by any of them in this
Agreement; (ii) any event, condition, fact or circumstance that occurs, arises
or exists after the date of this Agreement and that would cause or constitute a
material inaccuracy in any representation or warranty made by any of them in
this Agreement if (A) such representation or warranty had been made as of the
time of the occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement; (iii) any event,
condition, fact or circumstance hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in the Schedules; (iv) any material breach of any covenant or
obligation of any of them ; and (v) any event, condition, fact or circumstance
that would make the timely satisfaction of any of the conditions set forth in
Articles VI and VII impossible or unlikely or that has had or could reasonably
be expected to have a material adverse effect on the Companies' assets or the
business or the operation of the Facilities. No notification given to any party
pursuant to this Section 5.7(a) shall limit or otherwise affect (i) any
representations, warranties, covenants or obligations of the other parties
contained in this Agreement or (ii) any of such party's rights with respect to
any inaccuracy or breach of such representations, warranties, covenants or
obligations of the other parties contained in this Agreement.
(b) If any event, condition, fact or circumstance that is required to be
disclosed pursuant to Section 5.7(a) requires any change in the Schedules, or if
any such event, condition, fact or circumstance would require such a change
assuming the Schedule was dated as of the date of the occurrence, existence or
discovery of such event, condition, fact or circumstance, then the party
obtaining such information shall notify the other shall promptly deliver an
update to the Schedules specifying such change. No such update shall be deemed
to supplement or amend the Schedules for the purpose of (i) determining the
accuracy of any of the representations and warranties made by a party hereto in
this Agreement, or (ii) determining whether any of the conditions set forth in
Article VI has been satisfied, nor shall such update affect any of a party's
rights with respect to any inaccuracy or breach of such representations,
warranties, covenants or obligations of a party hereto contained in this
Agreement.
SECTION 5.7. EXCLUSIVITY. DRC shall not provide any information relating
to the Merger or disclose to any third party that 16/6 has considered entering
into a Merger or the sale of one or more of the Companies.
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ARTICLE VI
CONDITIONS PRECEDENT TO DRC AND MERGER SUB'S OBLIGATIONS
Unless waived by DRC, DRC's and Merger Sub's obligations to consummate the
Merger are subject to the fulfillment, prior to or at the Effective Time or as
otherwise specified, of each of the conditions set forth below. 16/6 and the
Principal Shareholder covenant that, to the extent within their control, they
will use their good faith best efforts, subject to the terms of this Agreement,
to satisfy, or cause to be satisfied, the conditions precedent to the
obligations of DRC and Merger Sub set forth in this Article VI. Upon failure of
any of the following conditions, DRC may terminate this Agreement.
SECTION 6.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of 16/6 and the Principal Shareholder contained in this Agreement or
on any Schedule, list, certificate or other document delivered pursuant to the
provisions hereof shall be true and correct at and as of the date hereof and as
of the Effective Time as though such representations and warranties were made at
and as of such time except to the extent affected by the transactions herein
contemplated.
SECTION 6.2. PERFORMANCE OF COVENANTS. 16/6and the Principal Shareholder
shall have performed or complied with each of their agreements and covenants
required by this Agreement to be performed or complied with by them prior to or
at the Effective Time.
SECTION 6.3. DELIVERY OF CLOSING CERTIFICATES. 16/6 and the Principal
Shareholder shall have executed and delivered to DRC certificates dated as of
the Effective Time upon which DRC may rely, certifying that the statements made
in Sections 6.1 and 6.2 are true, correct and complete as of the Effective Time.
SECTION 6.4. GOOD STANDING AND OTHER CERTIFICATES. 16/6 shall have
delivered to DRC (a) copies of 16/6's charters, including all amendments
thereto, certified by the Department of State of Pennsylvania or other
appropriate official of their respective jurisdiction of incorporation, dated as
of a date not more than twenty (20) days prior to the Effective Time, (b) a
certificate from the appropriate official of 16/6's jurisdiction of
incorporation to the effect that such Company is in good standing or subsisting
in such jurisdiction and listing all charter documents of such Company on file,
dated as of a date not more than twenty (20) days prior to the Effective Time,
(c) a certificate from the appropriate official in each jurisdiction in which
16/6 is qualified to do business to the effect that 16/6 is in good standing in
such jurisdiction, dated as of a date not more than twenty (20) days prior to
the Effective Time, (d) a no taxes due certificate as to the tax status of each
of 16/6 from the appropriate official in each state in which such 16/6 is
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qualified to do business, dated as of a date not more than twenty (20) days
prior to the Effective Time, and (e) a copy of the By-Laws of 16/6, certified by
the Secretary of 16/6 as being true and correct and in effect on the Effective
Time.
SECTION 6.5. DISSENTER'S RIGHTS. There shall have been no dissenter's
rights.
SECTION 6.6. DUE DILIGENCE. DRC shall have completed its due diligence
investigation of the Companies, the Facilities and the Real Properties to its
sole satisfaction, including that all material contracts of 16/6 will not be
adversely affected by the Merger.
SECTION 6.7. LEGAL MATTERS. No suit, action, investigation, or legal or
administrative proceeding shall have been brought or threatened by any Person
that questions the validity or legality of this Agreement or seeks to restrain
or prohibit, or obtain damages by reason of, consummation of the transactions
contemplated hereby, and neither DRC or Merger Sub nor the Principal Shareholder
or 16/6 shall have received any nonroutine requests for information with request
to the transactions covered hereby from any governmental agency or any
Noncompliance Claim which have not been resolved as of or prior to Effective
Time.
SECTION 6.8. NO MATERIAL ADVERSE CHANGE. Except as may be contemplated in
this Agreement, there shall not have been any material adverse change in the
assets or liabilities, condition (financial or otherwise), results of operations
or prospects of 16/6 or the Assets
SECTION 6.9. LEGAL OPINION. DRC shall have received an opinion dated the
Effective Time from counsel to 16/6 and the Principal Shareholder, in form and
substance reasonably satisfactory to DRC and its counsel.
SECTION 6.10. OTHER DOCUMENTS. 16/6 and the Principal Shareholder shall
have delivered to DRC such other documents or instruments reasonably required to
be delivered or reasonably requested to be delivered by 16/6 and the Principal
Shareholder at or prior to the Effective Time by this Agreement.
SECTION 6.11. APPROVALS. The Boards of Directors of DRC, Merger Sub, and
the 16/6 Shareholders shall have approved the transaction contemplated hereby.
ARTICLE VII
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CONDITIONS PRECEDENT TO
16/6 AND PRINCIPAL SHAREHOLDER' OBLIGATIONS
-------------------------------------------
Unless waived by 16/6 and the Principal Shareholder, 16/6's and the
Principal Shareholder' obligations to consummate the Merger is subject to the
fulfillment, prior to or at the Effective Time, of each of the conditions set
forth below. DRC covenants that, to the extent within its control, it will use
its good faith best efforts, subject to the terms of this Agreement, to satisfy,
or cause to be satisfied, the conditions precedent to the obligations of 16/6
and the Principal Shareholder set forth in this Article VII. Upon failure of any
of the following conditions, 16/6 and/or the Principal Shareholder may terminate
this Agreement.
SECTION 7.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of DRC and Merger Sub contained in this Agreement shall be true and
correct at and as of the date hereof and as of the Effective Time as though such
representations and warranties were made at and as of such time except to the
extent affected by the transactions herein contemplated.
SECTION 7.2. PERFORMANCE OF COVENANTS. DRC and Merger Sub shall have
performed or complied with each of its agreements and covenants required by this
Agreement to be performed or complied with by such parties prior to or at the
Effective Time, including, without limitation, payment of the Merger
Consideration.
SECTION 7.3. DELIVERY OF CLOSING CERTIFICATE. DRC shall have executed and
delivered to 16/6 and the Principal Shareholder a certificate of an executive
officer of each of DRC and Merger Sub dated as of the Effective Time upon which
the Principal Shareholder and 16/6 may rely, certifying that the statements made
in Sections 7.1 and 7.2 are true, correct and complete as of the Effective Time.
SECTION 7.4. GOOD STANDING AND OTHER CERTIFICATES. DRC and Merger Sub
shall have delivered to 16/6 (a) copies of each of DRC's and Merger Sub's
charters, including all amendments thereto, certified by an officer of the
corporation, (b) a certificate from the appropriate official of Merger Sub's
jurisdiction of incorporation to the effect that such company is in good
standing or subsisting in such jurisdiction and listing all charter documents of
each such company on file, dated as of a date not more than twenty (20) days
prior to the Effective Time, (c) a copy of the By-Laws of each of DRC and Merger
Sub, certified by the Secretary of each of DRC and Merger Sub as being true and
correct and in effect on the Effective Time.
SECTION 7.5. LEGAL MATTERS. No suit, action, investigation, or legal or
administrative proceeding shall have been brought or threatened by any Person
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that questions the validity or legality of this Agreement or seeks to restrain
or prohibit, or obtain damages by reason of, consummation of the transactions
contemplated hereby, and neither DRC or Merger Sub nor the Principal Shareholder
or the Companies shall have received any nonroutine requests for information
with request to the transactions covered hereby from any governmental agency or
any Noncompliance Claim which have not been resolved as of or prior to Effective
Time.
SECTION 7.6. LEGAL OPINION. 16/6 shall have received an opinion dated the
Effective Time from counsel to DRC and the Merger Sub, in form and substance
reasonably satisfactory to 16/6.
SECTION 7.7. OTHER DOCUMENTS. DRC AND THE MERGER SUB shall have delivered
to 16/6 and the Principal Shareholder all such other documents or instruments
reasonably required to be delivered by DRC and/or the Merger Sub at or prior to
the Effective Time by this Agreement.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. GENERAL INDEMNIFICATION OBLIGATIONS OF THE PRINCIPAL
SHAREHOLDER AND DRC.
(a) The Principal Shareholder shall indemnify DRC and the Surviving
Corporation, together with their respective officers, directors, shareholders,
employees, agents and representatives (collectively, the "DRC Indemnified
Parties") and hold them harmless against and with respect to any and all damage,
loss, liability, deficiency, cost and expense (including without limitation
reasonable attorneys' fees and court costs) (referred to herein as a "Loss"),
resulting from (i) any misrepresentation, breach of warranty, or failure to
fulfill any agreement or covenant on the part of 16/6 or the Principal
Shareholder under this Agreement, including without limitation any failure by
the Principal Shareholder to perform their duties as Exchange Agents pursuant to
Article I hereof; (ii) any liability to any Dissenting shareholders, Dissenting
Shares or shareholders, (iii) any taxes, interest, penalties and additions to
tax that are required to be paid to the United States Government or any state or
local taxing authority by the Companies or otherwise resulting from the
operation of the Facilities for any period prior to the Effective Time which are
not accrued on 16/6's balance sheet, (iv) any accounts receivable existing as of
the Effective Time which are not fully collectible within 90 days of the date of
such receivable, or, if such accounts receivable are included on Schedule 2.14,
within such later time as set forth in Schedule 2.14, in each case in excess of
the reserve on the balance sheet for uncollectible accounts receivable, (v) any
settlements, collections, civil monetary penalties or other obligations due and
owing to any other third-party payer relating to periods prior to the Effective
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Time with respect to 16/6 which are not accrued on 16/6's Balance Sheet; (vi)
any claim relating to any liability of 16/6, the Principal Shareholder arising
from events or transactions occurring on or before the Effective Time; (vii) any
liability arising out of 16/6's non-compliance with any state statute; and
(viii) any and all actions, suits, proceedings, demands, assessments, judgments,
costs and legal and other reasonable expenses incident to any of the foregoing.
(b) DRC, up to the Merger Consideration, but not otherwise shall indemnify
the Principal Shareholder, together with 16/6's respective officers, directors,
shareholders, employees, agents and representatives immediately preceding the
consummation of the Merger (collectively the "16/6 Indemnified Parties") and
hold them harmless against and with respect to any and all Losses resulting
from: (i) any misrepresentation, breach of warranty, or failure to fulfill any
agreement or covenant on the part of DRC or the Surviving Corporation under this
Agreement; (ii) performance of its duties as Successor Exchange Agent; (iii) any
taxes, interest, penalties and additions to tax that are required to be paid to
the United States Government or any state or local taxing authority by the
Companies or otherwise resulting from the operation of 16/6 that were accrued on
the balance sheet as owing but not required to be paid as of the Effective Time,
(iv ) subject to Section 8.1(a), any liability or claim relating to the
Surviving Corporation arising from events or transactions occurring after the
Effective Time; and (vi) any and all actions, suits, proceedings, demands,
assessments, judgments, costs and legal and other reasonable expenses incident
to any of the foregoing.
SECTION 8.2. METHOD OF ASSERTING CLAIMS, ETC.
(a) In the event that any claim or demand for which the Principal
Shareholder would be liable to a DRC Indemnified Party or DRC would be liable to
a 16/6 Indemnified Party (hereinafter the DRC Indemnified Party and the 16/6
Indemnified Party are sometimes collectively referred to as "Indemnified Party")
hereunder is asserted against or sought to be collected from an Indemnified
Party by a third party, the Indemnified Party shall promptly notify the
indemnifying party under Section 8.1(a) or Section 8.1(b) above (hereinafter
collectively referred to as the "Indemnifying Party") of such claim or demand
and the amount or the estimated amount thereof to the extent then feasible
(which estimate shall not be conclusive of the final amount of such claim and
demand (the "Claim Notice")). The Indemnifying Party shall have thirty (30) days
from the personal delivery or mailing of the Claim Notice (the "Notice Period")
to notify the Indemnified Party, whether or not they desire, at its sole cost
and expense, to defend the Indemnified against such claim or demand.
(b) In the event that the Indemnifying Party notifies the Indemnified
Party within the Notice Period that it desires to defend the Indemnified Party
against such claim or demand then, except as hereinafter provided, the
Indemnifying Party shall have the right to defend the Indemnified Party by
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appropriate proceedings, which proceedings shall be promptly settled or
prosecuted by it to a final conclusion in such a manner as to avoid any risk of
the Indemnified Party becoming subject to liability for any other matter;
provided, however, the Indemnifying Party shall not, without the prior written
consent of the Indemnified Party, consent to the entry of any judgment against
the Indemnified Party or enter into any settlement or compromise which does not
include, as an unconditional term thereof, the giving by the claimant or
plaintiff to the Indemnified Party of a release, in form and substance
satisfactory to the Indemnified Party, from all liability in respect of such
claim or litigation. If any Indemnified Party desires to participate in, but not
control, any such defense or settlement, it may do so at its sole cost and
expense. If, in the reasonable opinion of the Indemnified Party, any such claim
or demand or the litigation or resolution of any such claim or demand involves
an issue or matter which could have a materially adverse effect on the business,
operations, assets, properties or prospects of the Indemnified Party, including
without limitation the administration of the tax returns and responsibilities
under the tax laws of any Indemnified Party, then the Indemnified Party shall
have the right to control the defense or settlement of any such claim or demand
and its reasonable costs and expenses shall be included as part of the
indemnification obligation of the Indemnifying Party hereunder; provided,
however, that the Indemnified Party shall not settle any such claim or demand
without the prior written consent of the Indemnifying Party, which consent shall
not be reasonably withheld. If the Indemnified Party should elect to exercise
such right, the Indemnifying Party shall have the right to participate in, but
not control, the defense or settlement of such claim or demand at its sole cost
and expense.
(c) If the Indemnifying Party elects not to defend the Indemnified Party
against such claim or demand, whether by not giving the Indemnified Party timely
notice as provided above or otherwise, then the amount of any such claim or
demand, or if the same be defended by the Indemnifying Party or by the
Indemnified Party (but the Indemnified Party shall not have any obligation to
defend any such claim or demand), then that portion thereof as to which such
defense is unsuccessful, in each case shall be conclusively deemed to be a
liability of the Indemnifying Party hereunder.
(d) In the event an Indemnified Party should have a claim against the
Indemnifying Party hereunder that does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall promptly send a Claim Notice with respect to such claim
to the Indemnifying Party. If the Indemnifying Party does not notify the
Indemnified Party within thirty (30) days after its receives the Claim Notice
that it disputes such claim, the amount of such claim shall be conclusively
deemed a liability of the Indemnifying Party hereunder.
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SECTION 8.3. PAYMENT. Upon the determination of liability under Section
8.2 hereof, the Indemnifying Party shall pay the Indemnified Party, within ten
days after such determination, the amount of any claim for indemnification made
hereunder less the sum of any amounts reasonably recoverable by the Indemnified
Party under insurance policies with respect to such claim (except to the extent
of any subrogation rights of the Indemnifying Party); provided, however, that
the Principal Shareholder' obligations pursuant to Sections 8.1 and 8.2 hereof
shall be satisfied after reduction for insurance proceeds, if any, shall be paid
by, the Principal Shareholder directly. Upon the payment in full of any claim,
either by set-off or otherwise, the Indemnifying Party shall be subrogated to
the rights of the Indemnified Party against any Person with respect to the
subject matter of such claim
SECTION 8.4. LIMITATIONS ON INDEMNIFICATION. Except with respect to claims
based on fraud, intentional misconduct or willful misrepresentation by 16/6 or
the Principal Shareholder (which claims shall be unlimited), the total maximum
aggregate indemnification liability of the Principal Shareholder for all claims
pursuant to Section 8.1 hereof shall not exceed the Merger Consideration.
SECTION 8.5. OTHER RIGHTS AND REMEDIES NOT AFFECTED. The indemnification
rights of the parties under this Article VIII are independent of and in addition
to such rights and remedies as the parties may have at law or in equity or
otherwise for any misrepresentation, breach of warranty or failure to fulfill
any agreement or covenant hereunder on the part of any party hereto, including
with limitation to the right to seek specific performance, rescission or
restitution, none of which rights or remedies shall be affected or diminished
hereby.
SECTION 8.6. RECORDS. On the Effective Time, the Principal Shareholder
shall deliver, or cause to be delivered, to DRC all resident lists and records
and all other records and files not then in DRC's possession relating to the
operations of the Facilities.
SECTION 8.7. TAX MATTERS. After the Effective Time, the Principal
Shareholder shall cooperate with DRC, the Surviving Corporation and their
representatives as may be reasonably requested by them or otherwise necessary or
appropriate for the preparation and filing of all tax returns with respect to
16/6 for taxable periods on or prior to the Effective Time. To the extent that
any tax liability with respect to a period covered by 16/6's balance sheet is
not accrued on 16/6's balance sheet, it shall be the obligation of the Principal
Shareholder, and shall be paid by the Principal Shareholder according to Section
8.3 hereof. The Principal Shareholder shall also cooperate fully in preparing
for any audits of, or disputes with taxing authorities regarding, taxes of the
Companies for periods on or prior to the Effective Time.
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ARTICLE IX
DRC STOCK
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SECTION 9.1. DRC STOCK. The common stock constituting a portion of the
Merger Consideration shall be fully paid, nonassable common stock of DRC, par
value, $.01 and shall bear the following legend. The DRC Stock shall have
registration rights consistent with the Registration Rights Agreement attached
hereto as Exhibit 9.1. The DRC Stock shall contain the following restrictive
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED ("'33 ACT"), OR ANY OTHER SECURITIES AUTHORITY. THE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE `33 ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUE THAT THE SOLE OR TRANSFER IS
EXEMPT FROM REGISTRATION UNDER THE ACT.
ARTICLE X
TERMINATION
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SECTION 10.1. TERMINATION. This Agreement may be terminated at any time
before the Effective Time as follows:
(a) Pursuant to Articles VI, VII and IX hereof;
(b) By mutual consent of the Principal Shareholder and DRC;
(c) By DRC (i) if any of the representations and warranties contained in
Article II hereof were incorrect when made or at any time thereafter, (ii) if
16/6 and/or the Principal Shareholder are in material breach of any of their
respective obligations under this Agreement and such breach has not been cured
within ten (10) days after written notice to the breaching party, or (iii) if
there has occurred any material adverse change in the assets or liabilities,
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condition (financial or otherwise), results of operations or prospects of the
Companies, the Facilities or the Real Properties since the Balance Sheet Date;
or
(d) By 16/6 or the Principal Shareholder (i) if any of the representations
and warranties contained in Article III hereof were incorrect when made or at
any time thereafter, or (ii) if DRC or Merger Sub are in material breach of any
of their respective obligations under this Agreement and such breach has not
been cured within ten (10) days after written notice to the breaching party.
SECTION 10.2. EFFECT OF TERMINATION.
---------------------
(a) If this Agreement is terminated by 1/6 or the Principal Shareholder
pursuant to Section 10.1(d) hereof, 16/6 and/or the Principal Shareholder shall
be entitled to retain the Consideration Stock as liquidated damages, and neither
DRC, Merger Sub nor any of their respective officers, directors, shareholders,
employees, agents or representatives shall have any further liability arising
out of this Agreement or the termination thereof.
(b) If this Agreement is terminated by DRC or Merger Sub pursuant to
Section 10.1(c) hereof, DRC and Merger Sub shall be entitled to retain and/or
receive from 16/6 and the Principal Shareholder the Initial Payment as
liquidated damages, and neither 16/6, the Principal Shareholder nor any of their
respective officers, directors, shareholders, employees, agents or
representatives shall have any further liability arising out of this Agreement
or the termination thereof.
ARTICLE XI
COVENANT NOT TO COMPETE
-----------------------
SECTION 11.1. COVENANT NOT TO COMPETE.
-----------------------
(a) The Principal Shareholder acknowledge that an important part of the
consideration which DRC will receive in connection with the transactions
contemplated hereby is the goodwill of 16/6's Assets and business. As such, the
Principal Shareholder agree that for a period of three (3) years from and after
the Effective Time, each of the Principal Shareholder, and any corporation,
partnership or other business entity or Person controlling, controlled by or
under common control with any of the Principal Shareholder ("Restricted Party")
shall not, directly or indirectly, operate, manage, own, control, finance or
provide financing for, be a consultant for or enter into a management service
contract with, (i) any entity in competition with 16/6 or developing a product
in competition with or superceding in any way either the Patent or the Assets,
-26-
or (ii) any entity existing or to be formed that competes in any way with 16/6
or with any other facility of DRC.
(b)The period of time during which the Restricted Parties are prohibited
from engaging in, causing or permitting certain activities pursuant to the terms
of this Section 11.1 shall be extended by the length of time during which such
Restricted Party is in breach of any of the terms of Section 11.1(a)).
(c)The invalidity of any one or more of the words, phrases, sentences or
clauses contained in this Section 11.1 shall not affect the enforceability of
the remaining portions of Section 11.1(a) If one or more of the words, phrases,
sentences or clauses contained in this Section 11.1 shall be invalid, this
Section 11.1 shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences or clause or clauses had not been inserted, and
if such invalidity should be caused by the length of any period of time , such
period of time shall, without need of further action by any party hereto, be
deemed to be reduced to a period that will cure such invalidity.
(d) The Principal Shareholder further acknowledge that their failure to
comply with any of the provisions of this Section 11.1 will result in
irreparable injury and continuing damage to DRC for which there will be no
adequate remedy at law and that, in the event of a failure of a Principal
Shareholder so to comply, DRC shall be entitled to preliminary and permanent
injunction relief as may be proper and necessary to ensure compliance with all
of the provisions of this Section 11.1 without having to prove actual damages or
to post a bond. DRC shall also be entitled to an equitable accounting of all
earnings, profits and other benefits arising from any such violation, which
rights shall be cumulative and in addition to any other rights or remedies to
which DRC may be entitled in law or equity.
ARTICLE XII
MISCELLANEOUS PROVISIONS
------------------------
SECTION 12.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by each party in this Agreement or in any
Schedule, certificate, document or list delivered by any such party pursuant
hereto shall survive for a period of two (2) years after the Effective Time.
Notwithstanding any investigation conducted before or after the Closing or the
decision of any party to consummate the Closing, DRC, on the one hand, and
Principal Shareholder, on the other, shall be entitled to rely and is hereby
declared to have reasonably relied upon the representations and warranties of
the other.
-27-
SECTION 12.2. PUBLIC ANNOUNCEMENTS. Any general public announcements or
similar media publicity with respect to this Agreement or the transactions
contemplated herein shall be at such time and in such manner as DRC and the
Principal Shareholder shall mutually agree; provided that nothing herein shall
prevent any party, upon notice to the other, making such public announcements as
such party's counsel may consider necessary in order to satisfy the party's
legal and contractual obligations in such regard.
SECTION 12.3. COSTS AND EXPENSES. Except as expressly otherwise provided
in this Agreement, each party shall bear its own costs and expenses incurred in
connection with this Agreement.
SECTION 12.4. PERFORMANCE. In the event of a breach by any party of its
obligations hereunder, the other party shall have the right, in addition to any
other remedies which may be available, to obtain specific performance of the
terms of this Agreement.
SECTION 12.5. BENEFIT AND ASSIGNMENT. This Agreement binds and inures to
the benefit of each party hereto and its or his respective heirs, executors,
successors and proper assigns. No party hereto may assign its or his interest
under this Agreement to any other Person or entity without the prior written
consent of the other party.
SECTION 12.6. EFFECT AND CONSTRUCTION OF THIS AGREEMENT. This Agreement
and the Exhibits and Schedules hereto embody the entire agreement and
understanding of the parties and supersede any and all prior agreements,
arrangements and understandings relating to matters provided for herein. The
captions used herein are for convenience only and shall not control or affect
the meaning or construction of the provisions of this Agreement. This Agreement
supersedes and replaces the Original Agreement in its entirety.
SECTION 12.7. COOPERATION/FURTHER ASSISTANCE. Subject to the terms and
conditions herein provided, each of the parties hereto shall use its or his best
efforts to take, or cause to be taken, all things necessary, proper and
advisable under the provisions of this Agreement and under applicable law
consummate and make effective the transactions contemplated by this Agreement.
SECTION 12.8. ACCOUNTS RECEIVABLE. After the Effective Time, DRC and/or
the Surviving Corporation will use reasonable efforts to attempt to collect
accounts receivable of the Companies existing as of the Effective Time.
SECTION 12.9. NOTICES. All notices required or permitted hereunder shall
be in writing and shall be deemed to be properly given when personally delivered
to the party entitled to receive the notice or when sent by telecopy,
transmission confirmed, or by certified or by registered mail, postage prepaid,
properly addressed to the party entitled to receive such notice at the address
stated below:
-28-
IF TO 16/6 OR THE PRINCIPAL SHAREHOLDER:
Xxxxxx Xxxxx
0000 Xxxx Xxxxx
Xxxx Xxxxxxx, Xx 00000
WITH A COPY TO:
IF TO DRC, MERGER SUB OR THE SURVIVING CORPORATION:
Daleco Resources Corporation
000 Xxxxx Xxxxxx Xxxxxx
Xxxx Xxxxxxx, Xx 00000
Attn: Xxxx X. Xxxxxxxxx
WITH A COPY TO:
C. Xxxxxx Xxxxxxx
Xxxxxx, Van Denbergh & Xxxxxxx, P.C.
Xxxxx 000, Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxxx, Xx 00000
SECTION 12.10. WAIVER, DISCHARGE, ETC. This Agreement shall not be
released, discharged, abandoned, changed or modified in any manner, except by an
instrument in writing executed by or on behalf of each of the parties hereto.
The failure of any party to enforce at any time of the provisions of this
Agreement shall in no way be construed to be a waiver of any such provision, nor
in any way to affect the validity off this Agreement or any part hereof or the
right of any party thereafter to enforce each and every such provision. No
waiver of breach of this Agreement shall be held to be a waiver of any other or
subsequent breach.
SECTION 12.11. RIGHTS OF PERSONS NOT PARTIES. Nothing contained in this
Agreement shall be deemed to create rights in Persons not parties hereto, other
than the heirs, successors and proper assigns of the parties hereto.
SECTION 12.12. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
disregarding any rules relating to the choice or conflict of laws.
-29-
SECTION 12.13. SERVICE OF PROCESS AND SUBMISSION TO JURISDICTION. Each of
the parties hereto hereby irrevocably submits in any suit, action or proceeding
arising out of or relating to this Agreement or any of the transactions
contemplated by this Agreement to the jurisdiction of the Courts of the
Commonwealth of Pennsylvania and waives any and all objections to jurisdiction
that such Person may have under applicable law.
SECTION 12.14. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be deemed to be
an original and all of which counterparts taken together shall constitute one
and the same instrument.
SECTION 12.15. SCHEDULES. The parties hereto acknowledge that the
Schedules hereto were not present at the time of the execution of this
Agreement. This Agreement shall not be effective and binding on the parties
hereto until the Schedules are prepared delivered and attached hereto within a
reasonable time, but in any event not later from ten (10) business days from the
date hereof.
[CONTINUED NEXT PAGE]
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IN WITNESS WHEREOF, each of the parties hereto has executed this First
Amended and Restated Agreement and Plan of Merger as of the day and year first
written above.
DALECO RESOURCES CORPORATION
/s/
----------------------------------------
By: XXXX X. XXXXXXXXX
Its: PRESIDENT
DROC ACQUISITION, INC.
/s/
----------------------------------------
By: XXXX X. XXXXXXXXX
Its: PRESIDENT
16/6, INC.
/s/
----------------------------------------
By: XXXXXX XXXXX
Its: PRESIDENT
PRINCIPAL SHAREHOLDER
/s/
----------------------------------------
XXXXXX XXXXX
-31-
Agreement and Plan of Merger
Dated July 7, 2001
Among
Daleco Resources Corporation, DRC Acquisition, Inc.
And
16/6, Inc., Xxxxxx Xxxxx
SCHEDULE 2.1
16/6, INC. STOCKHOLDERS LIST
HOLDER SHARES HELD PERCENTAGE
Xxxxxx X. Xxxxx 100 100%
-32-
Agreement and Plan of Merger
Dated July 7, 2001
Among
Daleco Resources Corporation, DRC Acquisition, Inc.
And
16/6, Inc., Xxxxxx Xxxxx
SCHEDULE 2.7
REQUIRED GOVERNMENTAL AUTHORIZATIONS
None
-33-
Agreement and Plan of Merger
Dated July 7, 2001
Among
Daleco Resources Corporation, DRC Acquisition, Inc.
And
16/6, Inc., Xxxxxx Xxxxx
SCHEDULE 2.8
CONTRACTS IN EXCESS OF $5,000
None
-34-
Agreement and Plan of Merger
Dated July 7, 2001
Among
Daleco Resources Corporation, DRC Acquisition, Inc.
And
16/6, Inc., Xxxxxx Xxxxx
SCHEDULE 2.9
16/6, INC. LIABILITIES
None as of the Agreement date - See Financial Statements Dated 7/31/01,
Appendix "A"
-35-
Agreement and Plan of Merger
Dated July 7, 2001
Among
Daleco Resources Corporation, DRC Acquisition, Inc.
And
16/6, Inc., Xxxxxx Xxxxx
SCHEDULE 2.11
16/6, INC. INTELLECTUAL PROPERTY
a.) I-Squared Patent Pending, " System and Method for Providing Content"
Number 09/659641
b.) ITOP 1.0 Business Segment Analysis Software program and Business Plan
Dated May 2001
c.) 16/6, Inc. Corporate Logo
d.) 16/6 Inc. Computer Files
Copies of the above are included as part of Appendix "A"
-36-
Agreement and Plan of Merger
Dated July 7, 2001
Among
Daleco Resources Corporation, DRC Acquisition, Inc.
And
16/6, Inc., Xxxxxx Xxxxx
SCHEDULE 2.12
16/6, INC. REAL PROPERTY
None as of the Agreement date
-37-
Agreement and Plan of Merger
Dated July 7, 2001
Among
Daleco Resources Corporation, DRC Acquisition, Inc.
And
16/6, Inc., Xxxxxx Xxxxx
SCHEDULE 2.13
16/6, INC. TANGIBLE PROPERTY
None as of the Agreement date
-38-
Agreement and Plan of Merger
Dated July 7, 2001
Among
Daleco Resources Corporation, DRC Acquisition, Inc.
And
16/6, Inc., Xxxxxx Xxxxx
SCHEDULE 2.14
16/6, INC. ACCOUNTS RECEIVABLE AND INVENTORY
a.) Accounts Receivables - Sunset Mortgage, $5,000, 60 days old as of
Agreement Date, See Financial Statements included in Appendix "A"
b.) Inventory - None as of the Agreement date, See Financial Statements
included in Appendix "A"
-39-
Agreement and Plan of Merger
Dated July 7, 2001
Among
Daleco Resources Corporation, DRC Acquisition, Inc.
And
16/6, Inc., Xxxxxx Xxxxx
SCHEDULE 2.16
16/6, INC. LEGAL PROCEEDINGS
None as of the Agreement date
-40-
Agreement and Plan of Merger
Dated July 7, 2001
Among
Daleco Resources Corporation, DRC Acquisition, Inc.
And
16/6, Inc., Xxxxxx Xxxxx
SCHEDULE 2.18
16/6, INC. INSURANCE POLICIES
None as of the Agreement date
-41-
Agreement and Plan of Merger
Dated July 7, 2001
Among
Daleco Resources Corporation, DRC Acquisition, Inc.
And
16/6, Inc., Xxxxxx Xxxxx
SCHEDULE 2.18.1
16/6, INC. ENVIRONMENTAL COMPLIANCE REQUIREMENTS
None as of the Agreement date
-42-
Agreement and Plan of Merger
Dated July 7, 2001
Among
Daleco Resources Corporation, DRC Acquisition, Inc.
And
16/6, Inc., Xxxxxx Xxxxx
SCHEDULE 2.19
16/6, INC. TAXES
No Federal and or State Tax filings required as of the Agreement date
-43-
Agreement and Plan of Merger
Dated July 7, 2001
Among
Daleco Resources Corporation, DRC Acquisition, Inc.
And
16/6, Inc., Xxxxxx Xxxxx
SCHEDULE 3.1
DALECO RESOURCES CORPORATION
DRC ACQUISITION ,INC.
CORPORATION ORGANIZATION & STANDING
a.) Daleco Resources Corporation ("DRC") is duly organized as a Delaware
Corporation. At present DRC is disputing the amount of incremental
corporate franchise tax levied by the State of Delaware, which affect
its corporate standing with the State. Once the dispute is resolved,
DRC will be in full good standing with the State.
-44-
b.) DRC Acquisition Corporation is duly organized as a Pennsylvania
Corporation. The Company is in Good Standing with the State.
Agreement and Plan of Merger
Dated July 7, 2001
Among
Daleco Resources Corporation, DRC Acquisition, Inc.
And
16/6, Inc., Xxxxxx Xxxxx
APPENDIX "A"
-45-
-46-
