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EXHIBIT 10.5
STOCK ACQUISITION AGREEMENT
BY AND BETWEEN
1ST NET TECHNOLOGIES, INC.
AND
MC32, INC.
Dated as of August 15, 1998
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TABLE OF CONTENTS
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I. DEFINITIONS..........................................................................1
II. THE STOCK ACQUISITION................................................................2
2.1 Stock Acquisition.............................................................2
2.2 The Closing...................................................................2
2.3 Effective Time; Effect of Stock Acquisition...................................3
2.4 Articles of Incorporation.....................................................3
2.5 By-Laws.......................................................................3
2.6 Directors and Officers........................................................3
2.7 Conversion of Shares..........................................................3
III. REPRESENTATIONS AND WARRANTIES OF 1ST NET............................................4
3.1 Organization and Authorization................................................4
3.2 Non-Contravention.............................................................4
3.3. Capital Stock.................................................................4
3.4 Financial Statements..........................................................5
3.5 No Adverse Changes............................................................5
3.6 Approvals.....................................................................6
3.7 Taxes.........................................................................6
3.8 Contracts; Absence of Default.................................................7
3.9 Title to Assets...............................................................8
3.10 Litigation....................................................................8
3.11 Permits.......................................................................8
3.12 Corporate Records.............................................................8
3.13 Absence of Undisclosed Liabilities............................................9
3.14 Corporate Compliance..........................................................9
3.15 Regulatory Compliance.........................................................9
3.16 Conflict of Interest..........................................................9
3.17 Labor Matters.................................................................9
3.18 Benefit Plans................................................................10
3.19 Accuracy of Information Furnished............................................10
3.20 Brokers......................................................................10
3.21 Reorganization Representations of 1st Net....................................10
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IV. SPECIAL MATTERS.....................................................................11
4.1 No-Shop......................................................................11
4.2 Payment of Certain Expenses..................................................11
V. REPRESENTATIONS AND WARRANTIES OF MC32..............................................11
5.1 Organization and Authorization...............................................11
5.2 Non-Contravention............................................................12
5.3 Capital Stock................................................................12
5.4 Unaudited Financial Statements and Stock Purchase Agreement..................12
5.5 No Adverse Changes...........................................................13
5.6 Litigation...................................................................13
5.7 Corporate Records............................................................13
5.8 Corporate Compliance.........................................................13
5.9 Accuracy of Information Furnished............................................13
5.10 Brokers......................................................................13
5.11 Reorganization Representations of MC32.......................................13
VI. COVENANTS...........................................................................14
6.1 Negative Covenants of 1ST NET and MC32.......................................14
6.2 Additional Affirmative Covenants of MC32.....................................14
6.3 Additional Affirmative Covenants of 1ST NET..................................15
6.4 Access and Confidentiality...................................................15
6.5 Public Announcements.........................................................15
6.6 Expenses.....................................................................15
6.7 Survival of Representations and Warranties and Covenants; Indemnification....16
6.8 Reorganization Covenant......................................................17
6.9 Financial Covenants of 1ST NET...............................................17
VII. CONDITIONS..........................................................................17
7.1 Conditions Precedent to the Obligations of All Parties.......................17
7.2 Additional Conditions Precedent to the Obligations of 1ST NET................18
7.3 Additional Conditions Precedent to the Obligations of MC32...................18
VIII. TERMINATION.........................................................................19
8.1 Termination by Mutual Consent................................................19
8.2 Termination by MC32..........................................................19
8.3 Effect of Termination........................................................19
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IX. GENERAL PROVISIONS..................................................................19
9.1 Notices......................................................................19
9.2 Amendment and Waiver.........................................................20
9.3 Counterparts.................................................................20
9.4 Assignability................................................................21
9.5 Entire Agreement.............................................................21
9.6 Applicable Law...............................................................21
9.7 Headings.....................................................................21
9.8 Attorneys' Fees..............................................................21
9.9. Further Assurances...........................................................21
EXHIBITS:
A - Articles of Incorporation of 1ST NET TECHNOLOGIES, INC.
B - Issuance of 1ST NET Common Stock to MC32 Shareholders
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THIS AGREEMENT ("Agreement") is made and entered into as of this 15th
day of August, 1998 by and between 1ST NET TECHNOLOGIES, INC., a Colorado
corporation ("1ST NET"), and MC32, INC.., a Colorado corporation ("MC32").
RECITALS
A. STOCK ACQUISITION. In order that 1ST NET may acquire all of the
capital stock of MC32, and MC32 desires that MC32 sale all its capital stock to
1ST NET pursuant to the terms and conditions set forth in this Agreement and in
accordance with the laws of the State of Colorado (the "Stock Acquisition"); and
B. TRANSFER OF TECHNOLOGY. 1ST NET will transfer to MC32 all of its
proprietary rights to the Mariah IP Telephoney technology and Wisper wireless
voice and data transmission technology.
C. TAX IMPLICATIONS. The parties intend that the Stock Acquisition
will constitute a reorganization under the provisions of Section 368(a)(1)(B) of
the Internal Revenue Code of 1986, as amended.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and the
representations, warranties and agreements herein contained, the parties hereby
agree as follows:
I. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings set forth:
"Closing" and "Closing Date" shall have the meanings set forth in
Section 2.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Constituent Corporations" shall mean both MC32 and 1ST NET.
"Conversion Ratio" shall have the meaning set forth in Section 2.7.
"Effective Time" shall have the meaning set forth in Section 2.3.
"MC32 Common Stock" shall mean the common stock, $.001 par value, of
MC32.
"1ST NET" shall have the meaning set forth in the preface of this
Agreement.
"1ST NET Common Stock" shall mean the Common Stock, $.001 par value, of
1ST NET.
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"1ST NET Financial Statements" shall mean Financial Statements of 1ST
NET referred to in Section 3.4, including the notes thereto.
"Knowledge" of a party shall mean any item of which any executive
officer of MC32 or 1ST NET has actual knowledge or of which such
executive officer would have discovered following reasonable inquiry.
"Stock Acquisition" shall have the meaning set forth in the preambles
hereto and more fully described in Section 2.1.
"Ordinary course of business" or similar reference shall mean consistent
with past custom and practice, including with respect to quantity and
frequency.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Tax" shall mean a net income, gross income, gross receipts, sales, use,
ad valorem, franchise, profits, license, withholding, payroll,
employment, excise, severance, stamp, transfer, occupation, real
property, premium, property or windfall profit tax, custom duty, or
other tax, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest and any penalty, additional
tax or additional amount imposed by any jurisdiction or other taxing
authority (federal, state, local or foreign).
II. THE TRANSACTION.
2.1 STOCK ACQUISITION. Pursuant to the provisions of this Agreement
and in accordance with Colorado Business Act at the Effective Time 1ST NET shall
acquire all of the outstanding stock of all classes of MC32.
2.2 THE CLOSING.
(a) Subject to the conditions set forth in Article VII,
unless this Agreement shall have been terminated as provided in Article VIII,
the consummation of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of The Xxxxxxx Group, LLP, 00000 Xxxx
Xxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx, commencing at 9:00 a.m., on December 31,
1998 or such other place or such other date as the parties may mutually
determine (the "Closing Date").
(b) At the Closing, (i) 1ST NET shall deliver to MC32 the
various certificates, instruments and documents referred to in Section 7.3, and
shall deliver to MC32 share certificates as set forth in Exhibit B hereto of 1ST
NET representing 450,000 shares of 1ST NET Common Stock, which shall be validly
issued and fully paid and nonassessable, free and clear of any lien or other
encumbrance.
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2.3 EFFECTIVE TIME; EFFECT OF STOCK ACQUISITION. The Stock
Acquisition shall become effective as of the time (the "Effective Time") 1ST NET
files the Notice of Transaction with the Secretary of State of the State of
Colorado. As of the Effective Time, the separate existence of MC32 shall
continue
2.4 ARTICLES OF INCORPORATION. The Articles of Incorporation of MC32
in effect immediately prior to the Effective Time shall continue to be the
Articles of Incorporation of MC32 until amended in accordance with the
provisions thereof.
2.5 BY-LAWS. The By-Laws of MC32 as in effect immediately prior to
the Effective Time shall be the By-Laws of MC32 until further amended in
accordance with the provisions thereof.
2.6 DIRECTORS AND OFFICERS.
(a) The Board of Directors of MC32 from and after the
Effective Time shall consist of the persons who are members of the Board of
Directors of 1ST NET as of the Effective Time. Such directors shall serve until
their resignation, removal or failure to be reelected and until their respective
successors are duly elected or appointed and qualified in accordance with the
Articles of Incorporation and By-Laws of MC32.
(b) The persons who are officers OF MC32 as of the Effective
Time shall continue in the same capacity as officers of MC32 until the Board of
Directors of the MC32 shall otherwise determine. Other persons may be elected or
appointed to other offices from time to time in accordance with the By-Laws of
MC32 .
2.7 PURCHASE OF SHARES.
As of the Effective Time, each share of MC32 shall be purchased
by 1ST NET.
III. REPRESENTATIONS AND WARRANTIES OF 1ST NET.
1ST NET hereby represents and warrants to MC32 as follows:
3.1 ORGANIZATION AND AUTHORIZATION.
1ST NET is a corporation duly organized, validly existing and in
good standing under the laws of Colorado, has the corporate power and all
necessary corporate authorizations to own all of its properties and assets and
to carry on its business as it is now being conducted. 1ST NET is duly qualified
to do business and is in good standing in each jurisdiction in which the nature
of its
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business or character of its properties requires such qualification and where
the failure to be so qualified would materially and adversely affect 1ST NET,
its business, properties or rights. 1ST NET has delivered to MC32 complete and
correct copies of 1ST NET's Articles of Incorporation and By-Laws, as amended
and in effect on the date of this Agreement. 1ST NET has all requisite corporate
power to execute, deliver and perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement by 1ST NET, and the
consummation by 1ST NET of the transactions contemplated hereby have been duly
authorized by the Board of Directors and shareholders of 1ST NET. This Agreement
has been duly executed and delivered by 1ST NET and constitutes a valid and
binding agreement of 1ST NET.
3.2 NON-CONTRAVENTION. The execution and delivery of this Agreement
do not and the consummation of the transactions contemplated hereby will not (a)
violate the Articles of Incorporation or By-Laws of 1ST NET (b) violate any
material provision of or result in the breach or the acceleration of or entitle
any party to accelerate (whether after the giving of notice or the lapse of time
or both) any obligation under any material mortgage, lease, agreement, license
or instrument, or any order, arbitration award, judgment, or decree, to which
1ST NET is a party or by which it is bound, (c) result in the creation or
imposition of any lien, charge, pledge, security interest or other encumbrance
on any material property of 1ST NET or (d) to the knowledge of 1ST NET violate
or conflict with any law, ordinance or rule to which 1ST NET is subject.
3.3. CAPITAL STOCK.
(a) The authorized and outstanding capital stock of 1ST NET
consists of _______________shares of Common Stock, $.001 par value. As of the
date of this Agreement there is __________________ shares of Common Stock issued
and outstanding which are validly issued, fully paid and nonassessable. There
are sufficient authorized but unissued shares of 1ST NET Common Stock to permit
the issuance of all shares required to be issued in accordance with the terms
and conditions of this Agreement to MC32 upon consummation of the Stock
Acquisition.
(b) There are no voting trusts, voting agreements,
irrevocable proxies or other agreements to which 1ST NET is a party, or of which
1ST NET has knowledge, in effect relating to the voting or transfer of any
shares of 1ST NET Common Stock.
(c) The Shares of 1ST NET Common Stock to be delivered
pursuant to the Stock Acquisition will, upon issuance, be validly issued, fully
paid and nonassessable.
3.4 FINANCIAL STATEMENTS. 1ST NET has previously furnished MC32 with
its audited Balance Sheets as of December 31, 1997 (collectively the "1ST NET
Financial Statements"). The 1ST NET Financial Statements (a) were prepared in
accordance with the books and records of 1ST NET; and (b) have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods covered thereby. The 1ST NET Financial
Statements present fairly the financial position of 1ST NET as of the dates
thereof and the results of operations and changes in financial position of 1ST
NET for the periods then ended. The
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balance sheet of 1ST NET as of December 31, 1997 is sometimes referred to herein
as the "Latest 1ST NET Balance Sheet."
3.5 NO ADVERSE CHANGES. Except as contemplated herein, since the
date of the latest 1ST NET Balance Sheet, 1ST NET has conducted its business
only in the ordinary course, there has not been any material adverse change in
the financial condition, assets, liabilities, properties, business or operations
of 1ST NET and 1ST NET has not:
(a) issued or sold any stock, notes, bonds or other
securities, or any option to purchase the same, or entered into any agreement
with respect thereto;
(b) declared, set aside or made any dividend or other
distribution on capital stock or redeemed, purchased or acquired any shares
thereof or entered into any agreement in effect to the foregoing;
(c) amended its Articles of Incorporation or By-Laws;
(d) incurred any material obligation or liability (absolute
or contingent);
(e) made any payment or arrangement, agreement or commitment
to pay any bonus, incentive compensation or retirement, termination or severance
benefits;
(f) borrowed or loaned any money;
(g) changed its method of accounting; or
(h) agreed, whether in writing or otherwise, to take any
action described in this Section 3.5.
3.6 APPROVALS. Except for the approval by the 1ST NET shareholders
and the filing of the Notice of Transaction with the Colorado Secretary of
State, no consent, approval, order or authorization of, or registration,
declaration or filing with any governmental authority is required in connection
with the execution and delivery of this Agreement by 1ST NET or the consummation
by 1ST NET of the transactions contemplated hereby.
3.7 TITLE TO ASSETS. 1ST NET owns and has good and marketable title
to all of its assets and properties (real, personal and mixed, tangible or
intangible), reflected in the 1ST NET Financial Statements free and clear of any
mortgage, lien, pledge, charge, claim, conditional sales or other agreement,
lease, right or encumbrance, except to the extent stated or reserved against in
the 1ST NET Financial Statements.
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3.8 LITIGATION. There are no actions, suits or proceedings or
investigations pending or, to the knowledge of 1ST NET threatened against or
affecting the business or financial condition of 1ST NET at law or in equity in
any court or before any foreign, federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality. 1ST NET is not
in default in respect of any judgment, order, writ, injunction or decree of any
court or any foreign, federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality.
3.9 PERMITS. 1ST NET has all permits, licenses, orders and approvals
of all foreign, federal, state, or local governmental or regulatory bodies
required for it to conduct its business as presently conducted, the absence of
which would have a material adverse effect on the business or financial
condition of 1ST NET all such permits, licenses, orders and approvals are in
full force and effect and no suspension or cancellation of any of them is
threatened; and such permits, licenses, orders or approvals will not be
adversely affected by the consummation of the transactions contemplated by this
Agreement.
3.10 CORPORATE RECORDS. The minute books of 1ST NET contain complete
and accurate records of all material corporate actions taken at all meetings,
all actions by written consent without a meeting, and all other material
corporate actions taken by the Board of Directors and shareholders of 1ST NET.
3.11 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
reflected or reserved against in the 1ST NET Financial Statements, 1ST NET had
as of the dates of such financial statements, no liabilities or obligations,
whether accrued, contingent or otherwise required by GAAP to be reflected in the
1ST NET Financial Statements or otherwise material to 1ST NET. As of the date of
this Agreement, 1ST NET does not have any liabilities or obligations, whether
accrued, contingent or otherwise, except as provided for in the preceding
sentence and for such liabilities or obligations as have arisen in the ordinary
course of business since the date of the Latest Balance Sheet, none of which
newly arisen liabilities or obligations has a material adverse effect upon the
business or financial condition of 1ST NET.
3.12 CORPORATE COMPLIANCE. 1ST NET is not in violation of, or in
default under, any term or provision of its Articles of Incorporation or
By-Laws.
3.13 REGULATORY COMPLIANCE. To its knowledge, 1ST NET is in
compliance in all material respects with all federal, state, local and foreign
laws and regulations applicable to it, including, without limitation,
environmental laws. 1ST NET has not generated, used, handled, treated or stored
hazardous waste or hazardous substance (as hereinafter defined) and/or oil at,
on or in any site currently or formerly owned, leased or used by 1ST NET or
shipped the same for treatment, storage or disposal at any other site or
facilities other than those generated, used, handled, treated or stored in the
ordinary course of business which was in compliance in all material respects
with the laws and regulations relating to hazardous waste and hazardous
substances. For the purpose of this Section 3.15, "hazardous waste" and
"hazardous substance" shall have the meanings set forth
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in the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq.,
and the Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. Sections 9601 et seq., and any federal regulations adopted pursuant to
or in furtherance of such acts as such statutes or regulations may be amended,
or as defined in any state or local statutes or regulations governing such waste
and substances.
3.14 CONFLICT OF INTEREST.
(a) No director or officer of 1ST NET or, to the knowledge
of 1ST NET any employee of 1ST NET, has any interest in any material property,
real or personal or tangible or intangible necessary for, used in or pertaining
to the business of 1ST NET; and
(b) No director or officer of 1ST NET, or to the knowledge
of 1ST NET, employee of 1ST NET, (i) competes with 1ST NET in any line of
business, or (ii) is a party to any 1ST NET contract, nor does any director or
officer of 1ST NET, or, to the knowledge of 1ST NET, any employee of 1ST NET
have an ownership interest, direct or indirect, in any entity which competes
with 1ST NET in any line of business or is a party to any 1ST NET contract.
3.15 LABOR MATTERS. There are no disputes pending or, to the
knowledge of 1ST NET, threatened, between 1ST NET and any of its former
employees other than Mr. Xxxxxxx Xxxx. To the knowledge of 1ST NET, 1ST NET is
in compliance with all applicable labor laws the failure to comply with which
would have a material adverse effect on the business or financial condition of
1ST NET. 1ST NET is not a party to any collective bargaining agreements.
3.16 BENEFIT PLANS.
(a) 1ST NET is not presently a party to any compensation,
bonus, pension, profit sharing, retirement, savings, stock option, stock
purchase, severance, bonus, medical, dental, health benefit, disability, income,
vacation, holiday, leave of absence, expense reimbursement, automobile or other
transportation allowance, or similar plans, procedures, programs or agreements
(the "1ST NET" Employee Benefit Plans").
(b) 1ST NET does not maintain or contribute to any "employee
welfare benefit plan" as defined in Section 3(1) of the Employee Retirement
Income Security Act of 1974 ("ERISA") (a "Welfare Benefit Plan"), pursuant to
collective bargaining agreement or otherwise, providing benefits to retirees or
former employees.
(c) 1ST NET has administered all former 1ST NET Employee
Benefit Plans, if any, in compliance in all material respects with applicable
law, including but not limited to ERISA, and with respect to each such plan all
applicable reporting and disclosure obligations have been satisfied in all
material respects.
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(d) There is no pending or, to the knowledge of 1ST NET,
threatened litigation against 1ST NET, with respect to any 1ST NET Employee
Benefit Plan and no such plan has been the subject of an audit, investigation or
other proceeding by any governmental agency.
3.17 ACCURACY OF INFORMATION FURNISHED. The certificates, statements
and other information furnished to MC32 in writing by or on behalf of 1ST NET do
not to the knowledge of 1ST NET contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
3.18 BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried on without the intervention
of any person acting on behalf of 1ST NET who has or may have a valid claim
against MC32 or the Surviving Corporation for any broker's or finder's fee or
similar compensation.
IV. SPECIAL MATTERS.
4.1 NO-SHOP. 1ST NET agrees, severally, for the benefit of MC32 that
1ST NET will not, directly or indirectly, prior to the termination of this
Agreement as provided in Article VIII, (i) sell, transfer, pledge, encumber or
otherwise dispose of any shares and capital stock of 1ST NET, or discuss or
negotiate with any other corporation, person (other than its professional
advisors) or firm (other than representatives of MC32) or entertain or consider
any inquiry or proposals, regarding the possible disposition of such shares or
the business or all or substantially all of the assets of 1ST NET, or a Stock
Acquisition or combination of 1ST NET, or an acquisition of 1ST NET by another
party; (ii) provide any information relating to the possible sale of 1ST NET or
its business, or all or substantially all of the assets of 1ST NET, to any
potential third-party purchaser or to disclose to any potential third-party
purchaser that 1ST NET, or all or any sign 1st Netcant portion of the assets of
1ST NET, is or may be for sale; or (iii) intentionally take any action which is
inconsistent with the obligations of 1ST NET hereunder.
4.2 PAYMENT OF CERTAIN EXPENSES. If the closing does not occur, each
party shall pay its or his own expenses for legal, accounting and other
professional fees incurred in connection with this Agreement.
V. REPRESENTATIONS AND WARRANTIES OF MC32 .
MC32 hereby represents and warrants to 1ST NET as follows:
5.1 ORGANIZATION AND AUTHORIZATION. MC32 is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado, has the corporate power and all necessary authorizations to own all of
its properties and assets and to carry on its business as it is now being
conducted. MC32 is duly qualified to do business and is in good standing in each
jurisdiction in which the nature of its business or character of its properties
requires such
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qualification and where the failure to be so qualified would materially and
adversely affect MC32 its businesses, properties or rights. MC32 has delivered
to 1ST NET complete and correct copies of its Articles of Incorporation and
By-Laws, as amended and in effect on the date of this Agreement. MC32 has all
requisite corporate power to execute, deliver and perform its obligations under
this Agreement. The execution, delivery and performance of this Agreement by
MC32 , and the consummation by MC32 of the transactions contemplated hereby have
been duly authorized by the Board of Directors of MC32 . This Agreement has been
duly executed and delivered by MC32 and upon the approval of the MC32
shareholders will constitute a valid and binding agreement of MC32 .
5.2 NON-CONTRAVENTION. The execution and delivery of this Agreement
do not and the consummation of the transactions contemplated hereby will not (a)
violate the Articles of Incorporation or By-Laws of MC32 (b) violate any
provision of or result in the breach or the acceleration of or entitle any party
to accelerate (whether after the giving of notice or the lapse of time or both)
any obligation under any mortgage, lease, agreement, license or instrument, or
any order, arbitration award, judgment, or decree, to which MC32 is a party or
by which either of them is bound, (c) result in the creation or imposition of
any lien, charge, pledge, security interest or other encumbrance on any property
of MC32 or (d) violate or conflict with any law, ordinance or rule to which MC32
or the property of MC32 is subject.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of MC32 consists of
50,000,000 shares of Common Stock, $.001 par value. As of the date of this
Agreement there are no shares of Common Stock issued and outstanding that are
validly issued, fully paid and nonassessable.
(b) There are no outstanding subscriptions, options,
conversion rights, warrants or other agreements or commitments of any nature
whatsoever obligating MC32 to issue, deliver or sell, or cause to be issued,
delivered or sold, any additional shares of the capital stock of MC32 or
obligating MC32 to grant, extend or enter into any such agreement or commitment,
except for that certain Option Agreement between MC32 and Entreprenuer
Investments, LLC, for services performed in the organizing of MC32 and for
on-going advisor services. The terms of the Option Agreement are 1,500,000
shares of MC32 Common Stock at $0.10 per share exercisable no later than August
15, 2001. No preemptive or similar rights exist or will arise as a result of the
transaction contemplated by this Agreement. There are no voting trusts, voting
agreements, irrevocable proxies or other agreements to which MC32 is a party, or
of which MC32 has knowledge, in effect relating to voting or transfer of any
shares of MC32 Common Stock.
5.4 NO ADVERSE CHANGES. MC32 has conducted its business only in the
ordinary course, and there has not been any material adverse changes in the
business, financial condition, assets, liabilities, properties or operations of
MC32.
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5.5 LITIGATION. There are no material actions, suits or proceedings
or investigations pending or, to the knowledge of MC32 , threatened against or
affecting the business, operations or financial condition of MC32 at law or in
equity in any court or before any foreign, federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality.
MC32 is not in default in respect of any judgment, order, writ, injunction or
decree of any court or any foreign, federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality.
5.6 CORPORATE RECORDS. The minute books of MC32 made available to
1ST NET or its legal counsel to review contained complete and accurate records
of all material corporate actions taken at all meetings, all actions by written
consent without a meeting, and all other material corporate actions taken by the
Board of Directors and shareholders of MC32 .
5.7 CORPORATE COMPLIANCE. MC32 is not in violation of, or in default
under, any term or provision of its Articles of Incorporation or By-Laws.
5.8 ACCURACY OF INFORMATION FURNISHED. The certificates, statements,
and other information furnished to 1ST NET in writing by or on behalf of MC32 in
connection with the transactions contemplated hereby, do not to the knowledge of
MC32 contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading; provided, however, that no
representation is made as to the accuracy of any financial projections contained
in such information.
5.9 BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried on without the intervention
of any person acting on behalf of MC32 who has or may have a valid claim against
1ST NET or the Surviving Corporation for any broker's or finder's fee or similar
compensation.
5.10 REORGANIZATION REPRESENTATIONS OF MC32 . There is no
intercorporate indebtedness existing between 1ST NET and MC32 . MC32 is not an
investment company as defined in Section 368(a) (2) (F) (iii) and (iv) of the
Code. MC32 is not under the jurisdiction of a court in a Title 11 or similar
case. The fair market value of the assets of MC32 exceeds and will exceed as of
the Effective Time the sum of its liabilities plus the amount of liabilities, if
any, to which the assets are subject.
VI. COVENANTS.
6.1 NEGATIVE COVENANTS OF 1ST NET AND MC32 . From the date of this
Agreement until the Effective Time, except with the prior written consent of the
other parties or as expressly permitted by this Agreement, 1ST NET and MC32 each
hereby covenant and agree that it will not:
(a) declare or pay any dividends or effect any stock split
or other reclassification;
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(b) merge or consolidate with any corporation;
(c) make any acquisition of stock or assets of any person or
entity;
(d) authorize the creation or issuance of or issue, sell or
dispose of, or create any obligation to issue, sell or dispose of, any shares of
its capital stock except pursuant to conversion rights, options or other
commitments or agreements existing on the date of this Agreement.
(e) incur any indebtedness for borrowed money other than in
the ordinary course of business or in connection with transactions disclosed
hereunder or contemplated herein;
(f) enter into or amend any employment contract with any of
its officers, increase the salary of any officer other than in the ordinary
course of business, adopt or amend in any material respect (except as required
by law) any employee benefit plan, severance plan or collective bargaining
agreement or make awards or distributions under any employee benefit plan not
consistent with past practice or custom;
(g) amend its Articles of Incorporation or By-Laws;
(h) dispose of any material assets or otherwise conduct its
business in a manner that is not consistent with past practices; or
6.2 ADDITIONAL AFFIRMATIVE COVENANTS OF MC32 . In addition to the
covenants set forth in Section 6.1, MC32 hereby covenants and agrees that from
the date of this Agreement until the Effective Time (or until the items referred
to have either been accomplished or, in good faith, abandoned), except with the
prior written consent of 1ST NET:
(a) shall use all reasonable efforts to comply with all
applicable federal or state filing requirements imposed on MC32 with respect to
the Stock Acquisition, and cooperate with and promptly furnish information to
1ST NET in connection with any such filing requirements imposed upon 1ST NET in
connection with the Stock Acquisition; and
(b) shall (i) promptly advise 1ST NET orally and in writing
of any inquiry or proposal for the acquisition of its stock, assets or business;
(ii) use all reasonable efforts to obtain any consent, authorization or approval
of, or exemption by, any governmental authority or agency or other third party
required to be obtained or made by in connection with the Stock Acquisition or
the taking of any action in connection with the consummation thereof; and (iii)
use all reasonable efforts to cause the conditions precedent to the Stock
Acquisition to be fulfilled.
6.3 ADDITIONAL AFFIRMATIVE COVENANTS OF 1ST NET. In addition to the
covenants set forth in Section 6.1, 1ST NET hereby covenants and agrees that
from the date of this Agreement until the Effective Time (or until the items
referred to have either been accomplished or, in good faith, abandoned), except
with the prior written consent of MC32 , it shall use all reasonable efforts to
comply with all filing requirements which federal or state law may impose on 1ST
NET with
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respect to the Stock Acquisition, and cooperate with and promptly furnish
information to MC32 in connection with any such filing requirements imposed upon
MC32 in connection with the Stock Acquisition.
6.4 ACCESS AND CONFIDENTIALITY.
(a) From the date of this Agreement to the Effective Time,
MC32 shall afford to 1ST NET and to the officers and authorized representatives
of 1ST NET (including, without limitation, counsel, financial advisors and
independent accountants) full access to its properties, personnel, books and
records at such reasonable times and in such manner as not to disrupt normal
business operations; and the officers of MC32 will furnish such officers and
representatives with such additional financial and operating data and other
information as to its business and properties as may be reasonably requested.
Similarly, from the date of this Agreement to the Effective Time, 1ST NET shall
afford to MC32 and to MC32 's officers and authorized representatives
(including, without limitation, counsel, financial advisors and independent
accountants) full access to its properties, personnel, books and records at such
reasonable times and in such manner as not to disrupt normal business
operations; and the officers of 1ST NET will furnish such officers and
representatives with such additional financial and operating data and other
information as to its business and properties as may be reasonably requested.
(b) MC32 and 1ST NET shall at all times prior to the
Effective Time and, in the event the transactions contemplated by this Agreement
are not consummated, at all times thereafter, keep confidential all confidential
or proprietary information furnished to it by the other party in connection with
this Agreement and the transactions contemplated hereby, and will not disclose
such confidential or proprietary information to any third party without the
prior written consent of the other party. In addition, in the event of
termination of this Agreement, all non-public documents (including copies
thereof) and other non-public written information obtained hereunder by any
party from any other party shall be returned to such party.
6.5 PUBLIC ANNOUNCEMENTS. Each of the parties hereto will obtain the
prior written approval from the other parties before issuing any press release
or otherwise making any public statements with respect to the Stock Acquisition
prior to the Effective Time.
6.6 EXPENSES. Subject to Section 4.2 hereof, each of the parties
hereto shall pay all of its own costs and expenses incurred in connection with
the Stock Acquisition, this Agreement and the transactions contemplated thereby
or hereby.
6.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS.The
parties hereto hereby acknowledge and agree that the representations and
warranties and covenants set forth in this Agreement shall survive the Closing
Date for a period of 24 months, provided that, any covenant contained herein
that is to be performed after the Closing Date shall survive for a period of 24
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months from the date or expiration of the period upon or during which such
covenant is to be performed.
6.8 REORGANIZATION COVENANT. Following the Stock Acquisition, the
parties will continue their respective historic businesses.
6.9 FINANCIAL COVENANTS OF 1ST NET. Following the Closing Date, 1ST
NET shall use its best efforts to promptly complete the required audits and
accounting with respect to 1ST NET and its then existing subsidiaries so as to
permit 1ST NET to prepare and file a true, correct and complete registration
statement under either the Securities Act of 1933, or the Securities and
Exchange Act of 1934, either act as amended.
VII. CONDITIONS.
7.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ALL PARTIES.
Notwithstanding any other provision of this Agreement, the obligations of 1ST
NET on the one hand, and of MC32 on the other hand, to effect the Stock
Acquisition shall be subject to the fulfillment, as of the Closing, of each of
the following conditions (unless waived by the written consent of the parties
hereto):
(a) all permits, approvals and consents of any governmental
body or agency or other third party necessary or appropriate for consummation of
the Stock Acquisition shall have been obtained;
(b) there shall not be in effect an order or decision of a
court of competent jurisdiction which prevents, or would materially alter the
terms of, the Stock Acquisition;
(c) there shall not be any action or proceeding commenced by
or before any court or governmental agency or authority in the United States, or
threatened by any governmental agency or authority in the United States, that
challenges the consummation of the Stock Acquisition.
7.2 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF 1ST NET.
In addition to the conditions contained in Section 7.1, the obligations of 1ST
NET to effect the Stock Acquisition shall also be subject to the fulfillment as
of the Closing Date of each of the following conditions (unless waived in
writing by 1ST NET): The representations and warranties of MC32 contained in
Article V shall be true in all material respects at and as of the date hereof
and as of the Closing Date as if made at and as of such time; and MC32 shall
have duly performed and complied in all material respects with all agreements,
covenants and conditions required by this Agreement to be performed or complied
with by it prior to or on the Closing Date.
7.3 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF MC32 . In
addition to the conditions contained in Section 7.1, the obligations of MC32 to
effect the Stock Acquisition shall also be subject to the fulfillment at the
Closing Date of each of the following conditions (unless waived in writing by
MC32):
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(a) the representations and warranties of 1ST NET contained
in Article III shall be true in all material respects at and as of the date
hereof and as of the Closing Date as if made at and as of the Closing Date; 1ST
NET shall have duly performed and complied in all material respects with all
agreements, covenants and conditions required by this Agreement to be performed
or complied with by it prior to or at the Closing Date; and
(b) 1ST NET shall have delivered to MC32 1ST NET Common
Stock certificates issued in the names of the persons and in the quantities set
forth in Exhibit B hereto, representing an aggregate of 4,000,000 shares;
VIII. TERMINATION.
8.1 TERMINATION BY MUTUAL CONSENT. At any time prior to the
Effective Time, this Agreement and the Agreement of Stock Acquisition may be
terminated by written consent of 1ST NET and MC32, notwithstanding approval of
the Stock Acquisition by the shareholders of 1ST NET or MC32.
8.2 TERMINATION BY MC32 . MC32 may terminate this Agreement and the
Agreement of Stock Acquisition at any time prior to the Effective Time by
delivery of written notice to 1ST NET if:
(a) There has been a material adverse change in 1ST NET's
business, assets, financial condition or prospects since the date of this
Agreement;
(b) 1ST NET has violated any material term or provision of
this Agreement which has not been cured by 1ST NET within ten (10) days from the
date of receipt of notice of such violation by MC32; or
(c) Any representation or warranty made by 1ST NET in this
Agreement is false or inaccurate in any material respect or there is any
material misrepresentation or omission by 1ST NET.
8.3 EFFECT OF TERMINATION. In the event of termination as provided
above, this Agreement shall forthwith become of no further force or effect, all
parties hereto shall bear their own costs associated with this Agreement and all
transactions mentioned herein and there shall be no obligation on the part of
any party's officers, directors or shareholders; provided, however, that Section
6.4(b), Section 6.5 and Section 9.8 shall survive such termination and continue
in full force and effect.
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IX. GENERAL PROVISIONS.
9.1 NOTICES. All notices, requests, demands or other communications
required or authorized or contemplated to be given by this Agreement shall be in
writing and shall be deemed to have been duly given if hand delivered, sent by
commercial overnight courier or sent by cert1st Neted or registered mail,
postage prepaid, and addressed as follows:
If to 1ST NET: 1ST NET TECHNOLOGIES, INC.
00000 Xxxx Xxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
With a copy to: R. Xxxxx Xxxxxxx, Esq.
The Xxxxxxx Group, LLP
00000 Xxxx Xxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
If to MC32: Xxxxxxx X. Xxxxxx
MC32, Inc.
0000 Xxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
With a copy to: Xxxxxxxx Xxxx
Xxxx & Associates, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
or such other address as the parties hereto may from time to time designate in
writing, prior to the giving of such notice. Any such notice, if hand delivered,
shall be effective upon the date of delivery, and if given by commercial
overnight courier or by certified or registered mail, shall be effective two
business days following the date of sending such notice. A facsimile
transmission, when received, shall be considered delivery of written notice.
9.2 AMENDMENT AND WAIVER. No amendment or waiver of any provision of
this Agreement shall in any event be effective, unless the same shall be in
writing signed by each of the parties hereto, and then such amendment, waiver or
consent shall be effective only in a specific instance and for the specific
purpose for which given.
9.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
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9.4 ASSIGNABILITY. This Agreement shall not be assigned by any party
without the prior written consent of all of the parties hereto, which consent
may be withheld by any such party in its sole and absolute discretion. In the
event of such permitted assignment, this Agreement shall bind and inure to the
benefit of the parties named herein and their respective successors and assigns.
9.5 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein contain the entire understanding among the parties with respect to the
transactions contemplated hereby and supersede all prior and contemporaneous
agreements and understandings whether oral or written, relating to the subject
matter hereof.
9.6 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado and the parties
hereby consent to the jurisdiction of the Nevada courts for all matters relating
to this Agreement.
9.7 HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of the terms and conditions contained therein or of
this Agreement.
9.8 ATTORNEYS' FEES. In the event of any dispute which results in a
suit or other legal proceeding to construe or enforce any provision of this
Agreement or because of any alleged breach, default or misrepresentation in
connection with any of the provisions of this Agreement, the parties agree that
the prevailing party or parties (in addition to all other amounts and relief to
which sued party or parties may be entitled) shall be entitled to recover
reasonable attorneys' fees and other costs and expenses incurred in any action
or proceeding.
9.9. FURTHER ASSURANCES. At the request of any of the parties hereto,
and without further consideration, the other parties agree to execute and
deliver to the other parties such documents and instruments and to do such
further acts as may be necessary or desirable to effectuate the Stock
Acquisition as contemplated by this Agreement.
(SIGNATURES ON FOLLOWING PAGE)
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement or
have caused this Agreement to be signed by their respective duly authorized
officers as of the date first above written.
1ST NET TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Writer, Jr.
-------------------------------------
Xxxxxxx X. Writer, Jr.
Chief Executive Officer
AND
By: /s/ Xxxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxxx X. Xxxxx
President
MC32, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx
Secretary
AND
By: /s/ Xxxxx X. Xxxxxx, Xx.
-------------------------------------
Xxxxx X. Xxxxxx, Xx.
President
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EXHIBIT A
ISSUANCE OF 1ST NET COMMON STOCK TO MC32 SHAREHOLDERS
Number of 1ST NET Common Shares
Name of Shareholder to be delivered at the Closing
------------------- ------------------------------
MC32 4,000,000
Total 4,000,000
