Exhibit 2.1
ACQUISITION AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 14, 2006
BETWEEN
XXXXX LABORATORIES, INC.
AND
PINOAK, INC.
TABLE OF CONTENTS
ARTICLE 1. The Merger
Section 1.1. The Merger
Section 1.2. The Acquisition
Section 1.3. Effective Time
Section 1.4. Closing of the Merger
Section 1.5. Effects of the Merger
Section 1.6. Board of Directors and Officers of ETLB
Section 1.7. Taking of Necessary Action; Further Action
ARTICLE 2. Representations and Warranties of Xxxxx Laboratories, Inc.
Section 2.1. Organization and Qualification
Section 2.2. Capitalization of ETLB
Section 2.3. Authority Relative to this Agreement; Recommendation
Section 2.4. SEC Reports; Financial Statements
Section 2.5. Information Supplied
Section 2.6. Consents and Approvals; No Violations
Section 2.7. No Default
Section 2.8. No Undisclosed Liabilities; Absence of Changes
Section 2.9. Litigation
Section 2.10. Compliance with Applicable Law
Section 2.11. Employee Benefit Plans; Labor Matters
Section 2.12. Environmental Laws and Regulations
Section 2.13. Tax Matters
Section 2.14. Title To Property
Section 2.15. Intellectual Property
Section 2.16. Insurance
Section 2.17. Vote Required
Section 2.18. Tax Treatment
Section 2.19. Affiliates
Section 2.20. Certain Business Practices
Section 2.21. Insider Interests
Section 2.22. Opinion of Financial Adviser
Section 2.23. Brokers
Section 2.24. Disclosure
Section 2.25. No Existing Discussion
ARTICLE 3. Representations and Warranties of PINOAK.
Section 3.1. Organization and Qualification
Section 3.2. Capitalization of PINOAK
Section 3.3. Authority Relative to this Agreement; Recommendation
Section 3.4. SEC Reports; Financial Statements
Section 3.5. Information Supplied
Section 3.6. Consents and Approvals; No Violations
Section 3.7. No Default
Section 3.8 No Undisclosed Liabilities; Absence of Changes
Section 3.9. Litigation
Section 3.10. Compliance with Applicable Law
Section 3.11. Employee Benefit Plans; Labor Matters
Section 3.12. Environmental Laws and Regulations
Section 3.13. Tax Matters
Section 3.14. Title to Property
Section 3.15. Intellectual Property
Section 3.16. Insurance
Section 3.17. Vote Required
Section 3.18. Tax Treatment
Section 3.19. Affiliates
Section 3.20. Certain Business Practices
Section 3.21. Insider Interests
Section 3.22. Opinion of Financial Adviser
Section 3.23. Brokers
Section 3.24. Disclosure
Section 3.25. No Existing Discussions
ARTICLE 4. Covenants
Section 4.1. Conduct of Business of ETLB
Section 4.2. Conduct of Business of PINOAK
Section 4.3. Preparation of 8-K
Section 4.4. Other Potential Acquirers
Section 4.5. NASD OTC:BB Listing
Section 4.6. Access to Information
Section 4.7. Additional events; Reasonable Efforts
Section 4.8. Indemnification
Section 4.9. Notification of Certain Matters
ARTICLE 5. Conditions to Consummation of the Merger
Section 5.1. Conditions to each Party's Obligation
Section 5.2. Conditions to the Obligations of ETLB
Section 5.3. Conditions to the Obligations of PINOAK
ARTICLE 6. Termination; Amendment; Waiver
Section 6.1. Termination
Section 6.2. Effect of Termination
Section 6.3. Fees and Expenses
Section 6.4. Amendment
Section 6.5. Extension; Waiver
ARTICLE 7. Miscellaneous
Section 7.1. Nonsurvival of Representations and Warranties
Section 7.2. Entire Agreement; Assignment
Section 7.3. Validity
Section 7.4. Notices
Section 7.5. Governing Law
Section 7.6. Descriptive Headings
Section 7.7. Parties in Interest
Section 7.8. Certain Definitions
Section 7.9. Personal Liability
Section 7.10. Specific Performance
Section 7.11. Counterparts
ACQUISITION AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of
April 14, 2006, is between Xxxxx Laboratories, Inc., a Nevada corporation
("ETLB"), and PINOAK, INC., a Nevada corporation ("PINOAK").
Whereas, the Boards of Directors of ETLB and PINOAK each have, in light of
and subject to the terms and conditions set forth herein, (i) determined that
the Merger (as defined below) is fair to their respective stockholders and in
the best interests of such stockholders and (ii) approved the Acquisition
Agreement and Plan of Merger in accordance with this Agreement;
Whereas, for Federal income tax purposes, it is intended that the Merger
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
Whereas, ETLB and PINOAK desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
to prescribe various conditions to the Merger.
Now, therefore, in consideration of the promises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, ETLB and PINOAK hereby agree as follows:
ARTICLE I
The Merger
Section 1.1. The Merger. At the Effective Time (as defined below) and
upon the terms and subject to the conditions of this Agreement and in
accordance with the General Corporation Law of the State of Nevada (the
"NGCL"), PINOAK shall be merged with and into ETLB (as defined below) (the
"Merger"). Following the Merger, ETLB shall continue as the surviving
corporation (the "Successor Corporation"), shall continue to be governed by
the laws of the jurisdiction of its incorporation or organization and the
separate corporate existence of PINOAK shall cease to exist. The Successor
Corporation shall continue to adapt the original Articles and By-laws of Xxxxx
Laboratories, Inc. The Merger is intended to qualify as a tax-free
reorganization under Section 368 of the Code as relates to the non-cash
exchange of stock referenced herein.
Section 1.2. The Acquisition. ETLB shall purchase for cash all of the
issued and outstanding shares of PINOAK. PINOAK has 2,000,000 common shares
issued and outstanding to one shareholder. This shareholder has agreed to
sell and ETLB has agreed to purchase all 2,000,000 shares for cash at par
value $0.001 for a total of $4,000. Once ETLB purchases all of the common
shares of PINOAK, ETLB will have complete ownership of PINOAK. Further,
the 2,000,000 common shares of PINOAK will be cancelled upon the closing of
the merger.
Section 1.3. Effective Time. Subject to the terms and conditions set
forth in this Agreement, a Certificate of Merger (the "Merger Certificate")
shall be duly executed and acknowledged by each of PINOAK and ETLB, and
thereafter the Merger Certificate reflecting the Merger shall be delivered to
the Secretary of State of the State of Nevada for filing pursuant to the NGCL
on the Closing Date (as defined in Section 1.3). The Merger shall become
effective at such time as a properly executed and certified copy of the
Merger Certificate is duly filed by the Secretary of State of the State
of Nevada in accordance with the NGCL or such later time as the parties
may agree upon and set forth in the Merger Certificate (the time at which
the Merger becomes effective shall be referred to herein a the "Effective
Time").
Section 1.4. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Article 5
(the "Closing Date"), at the law offices of Xxxxxx X. Xxxx, 0000 X. Xxxxxx
Xxx, Xxxxx 000, Xxx Xxxxx, XX 00000, unless another time, date or place is
agreed to in writing by the parties hereto.
Section 1.5. Effects of the Merger. The Merger shall have the effects
set forth in the NGCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the properties, rights,
privileges, powers of PINOAK shall vest in the Successor Corporation,
and all debts, liabilities and duties of PINOAK shall become the debts,
liabilities and duties of the Successor Corporation.
Section 1.6. Board of Directors and Officers of ETLB. At or prior to the
Effective Time, each of PINOAK and ETLB agrees to take such action as is
necessary (i) to cause the number of directors comprising the full Board of
Directors of ETLB to remain the same.
Section 1.7. Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, PINOAK or ETLB reasonably determines that any deeds,
assignments, or instruments or confirmations of transfer are necessary or
desirable to carry out the purposes of this Agreement and to vest ETLB with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of PINOAK, the officers and directors of ETLB and PINOAK
are fully authorized in the name of their respective corporations or otherwise
to take, and will take, all such lawful and necessary or desirable action.
ARTICLE 2
Representations and Warranties of ETLB
Except as set forth on the Disclosure Schedule delivered by ETLB to PINOAK
(the "ETLB Disclosure Schedule"), ETLB hereby represents and warrants to PINOAK
as follows:
Section 2.1. Organization and Qualification.
(a) ETLB is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization, has
approximately 100 or more round lot (100 or more shares) stockholders and has
all requisite power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such
power and authority would not have a Material Adverse Effect (as defined
below) on ETLB. When used in connection with ETLB, the term "Material
Adverse Effect" means any change or effect (i) that is or is reasonably likely
to be materially adverse to the business, results of operations, condition
(financial or otherwise) or prospects of ETLB, other than any change or
effect arising out of general economic conditions unrelated to any business
in which ETLB is engaged, or (ii) that may impair the ability of ETLB to
perform its obligations hereunder or to consummate the transactions
contemplated hereby.
(b) ETLB has heretofore delivered to PINOAK accurate and complete copies of
the Articles of Incorporation and Bylaws (or similar governing documents), as
currently in effect, of ETLB. Except as set forth on Schedule 2.1 of the ETLB
Disclosure Schedule, ETLB is duly qualified or licensed and in good standing
to do business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing would not
have a Material Adverse Effect on ETLB.
Section 2.2. Capitalization of ETLB.
(a) The authorized capital stock of ETLB consists of: (i) Seventy Million
(80,000,000) Authorized Shares of Common Stock, $0.001 par value, 10,873,750
Common shares are issued and outstanding as of December 31, 2005, and held by
approximately 100 or more round lot (100 or more shares) stockholders; (ii)
Twenty Million (20,000,000) Authorized Shares of Preferred Stock, $0.001
par value, no Preferred Shares have been issued. Pursuant to the Merger
Agreement ETLB will not issue any shares to PINOAK, and purchase the 2,000,000
issued and outstanding of PINOAK for cash at par value of $0.001 per share.
These 2,000,000 shares of PINOAK will be cancelled by closing the merger. All
of the outstanding ETLB Shares have been duly authorized and validly issued,
and are fully paid, nonassessable and free of preemptive rights. Except as
set forth herein, as of the date hereof, there are no outstanding (i) shares
of capital stock or other voting securities of ETLB, (ii) securities of
ETLB convertible into or exchangeable for shares of capital stock or voting
securities of ETLB, (iii) options or other rights to acquire from ETLB, except
as set forth in 2.2(a) of the Disclosure Schedule, and, no obligations of
ETLB to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
ETLB, and (iv) equity equivalents, interests in the ownership or earnings
of ETLB or other similar rights (collectively, "ETLB Securities"). As
of the date hereof, except as set forth on Schedule 2.2(a) of the ETLB
Disclosure Schedule there are no outstanding obligations of ETLB or its
subsidiaries to repurchase, redeem or otherwise acquire any ETLB
Securities or stockholder agreements, voting trusts or other agreements or
understandings to which ETLB is a party or by which it is bound relating to
the voting or registration of any shares of capital stock of ETLB. For
purposes of this Agreement, "Lien" means, with respect to any asset
(including, without limitation, any security) any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset.
(b) The ETLB Shares constitute the only class of equity securities of
ETLB registered or required to be registered under the Exchange Act.
(c) ETLB does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including membership
interests) of any entity, other than as specifically disclosed in the
disclosure documents.
Section 2.3. Authority Relative to this Agreement; Recommendation. ETLB
has all necessary corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of ETLB (the "ETLB Board") and no other corporate
proceedings on the part of ETLB are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by ETLB and constitutes a valid,
legal and binding agreement of ETLB, enforceable against ETLB in accordance
with its terms.
Section 2.4. SEC Reports; Financial Statements. SEC Reports; Financial
Statements.
(a) ETLB has not filed any reports with the U. S. Securities and
Exchange Commission.
Section 2.5. Information Supplied. None of the information supplied or
to be supplied by ETLB for inclusion or incorporation by reference in
connection with the Merger will at the date presented to the stockholder of
PINOAK and at the times of the meeting or meetings of stockholders of ETLB to be
held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 2.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1916, as amended (the "HSR Act"), the rules of the National Association
of Securities Dealers, Inc. ("NASD"), the filing and recordation of the
Merger Certificate as required by the NGCL, and as set forth on Schedule 2.6
of the ETLB Disclosure Schedule no filing with or notice to, and no permit,
authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency or authority (a
"Governmental Entity") is necessary for the execution and delivery by ETLB of
this Agreement or the consummation by ETLB of the transactions contemplated
hereby, except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice would not
have a Material Adverse Effect on ETLB.
Except as set forth in Section 2.6 of the ETLB Disclosure Schedule,
neither the execution, delivery and performance of this Agreement by ETLB nor
the consummation by ETLB of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
Articles of Incorporation or Bylaws (or similar governing documents) of ETLB,
(ii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or Lien) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which ETLB is a party or by which any of its properties or assets may be
bound, or (iii) violate any order, writ, injunction, decree, law, statute,
rule or regulation applicable to ETLB or any of its properties or assets,
except in the case of (ii) or (iii) for violations, breaches or defaults
which would not have a Material Adverse Effect on ETLB.
Section 2.7. No Default. Except as set forth in Section 2.7 of the ETLB
Disclosure Schedule, ETLB is not in breach, default or violation (and no
event has occurred which with notice or the lapse of time or both would
constitute a breach default or violation) of any term, condition or provision
of (i) its Articles of Incorporation or Bylaws (or similar governing
documents), (ii) any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which ETLB is now a
party or by which any of its respective properties or assets may be bound or
(iii) any order, writ injunction, decree, law, statute, rule or regulation
applicable to ETLB or any of its respective properties or assets, except in
the case of (ii) or (iii) for violations, breaches or defaults that would not
have a Material Adverse Effect on ETLB. Except as set forth in Section 2.7 of
the ETLB Disclosure Schedule, each note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which ETLB
is now a party or by which its respective properties or assets may be bound
that is material to ETLB and that has not expired is in full force and effect
and is not subject to any material default thereunder of which ETLB is aware
by any party obligated to ETLB thereunder.
Section 2.8. No Undisclosed Liabilities; Absence of Changes. Except as
and to the extent disclosed in the December 31, 2005 audited financial
statements, none of ETLB or its subsidiaries had any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise,
that would be required by generally accepted accounting principles to be
reflected on a consolidated balance sheet of ETLB and its consolidated
subsidiaries (including the notes thereto) or which would have a Material
Adverse Effect on ETLB. Except as disclosed by ETLB, none of ETLB or its
subsidiaries has incurred any liabilities of any nature, whether or not
accrued, contingent or otherwise, which could reasonably be expected to have,
and there have been no events, changes or effects with respect to ETLB or its
subsidiaries having or which could reasonably be expected to have, a Material
Adverse Effect on ETLB. Except as and to the extent disclosed by ETLB there
has not been (i) any material change by ETLB in its accounting methods,
principles or practices (other than as required after the date hereof by
concurrent changes in generally accepted accounting principles), (ii) any
revaluation by ETLB of any of its assets having a Material Adverse Effect on
ETLB, including, without limitation, any write-down of the value of any
assets other than in the ordinary course of business or (iii) any other
action or event that would have required the consent of any other party
hereto pursuant to Section 4.2 of this Agreement had such action or event
occurred after the date of this Agreement.
Section 2.9. Litigation. Except as set forth in Schedule 2.9 of the ETLB
Disclosure Schedule there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of ETLB, threatened against ETLB
or any of its subsidiaries or any of their respective properties or assets
before any Governmental Entity which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on ETLB or could
reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement. Except as disclosed by ETLB,
none of ETLB or its subsidiaries is subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen in the
future, could reasonably be expected to have a Material Adverse Effect on
ETLB or could reasonably be expected to prevent or delay the consummation of
the transactions contemplated hereby.
Section 2.10. Compliance with Applicable Law. Except as disclosed by
ETLB, ETLB and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for
the lawful conduct of their respective businesses (the "ETLB Permits"),
except for failures to hold such permits, licenses, variances, exemptions,
orders and approvals which would not have a Material Adverse Effect on ETLB.
Except as disclosed by ETLB, ETLB and its subsidiaries are in compliance with
the terms of the ETLB Permits, except where the failure so to comply would
not have a Material Adverse Effect on ETLB. Except as disclosed by ETLB, the
businesses of ETLB and its subsidiaries are not being conducted in violation
of any law, ordinance or regulation of any Governmental Entity except that no
representation or warranty is made in this Section 2.10 with respect to
Environmental Laws and except for violations or possible violations which do
not, and, insofar as reasonably can be foreseen, in the future will not, have
a Material Adverse Effect on ETLB. Except as disclosed by ETLB no
investigation or review by any Governmental Entity with respect to ETLB or
its subsidiaries is pending or, to the knowledge of ETLB, threatened, nor, to
the knowledge of ETLB, has any Governmental Entity indicated an intention to
conduct the same, other than, in each case, those which ETLB reasonably
believes will not have a Material Adverse Effect on ETLB.
Section 2.11. Employee Benefit Plans; Labor Matters.
(a) Except as set forth in Section 2.11(a) of the ETLB Disclosure
Schedule with respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), maintained or contributed to at
any time by ETLB or any entity required to be aggregated with ETLB pursuant
to Section 414 of the Code (each, a "ETLB Employee Plan"), no event has
occurred and to the knowledge of ETLB, no condition or set of circumstances
exists in connection with which ETLB could reasonably be expected to be
subject to any liability which would have a Material Adverse Effect on ETLB.
(b) (i) No ETLB Employee Plan is or has been subject to Title IV of
ERISA or Section 412 of the Code; and (ii) each ETLB Employee Plan intended
to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
Internal Revenue Service determination letter, and nothing has occurred which
could reasonably be expected to adversely affect such determination.
(c) Section 2.11(c) of the ETLB Disclosure Schedule sets forth a true
and complete list, as of the date of this Agreement, of each person who holds
any ETLB Stock Options, together with the number of ETLB Shares which are
subject to such option, the date of grant of such option, the extent to which
such option is vested (or will become vested as a result of the Merger), the
option price of such option (to the extent determined as of the date hereof),
whether such option is a nonqualified stock option or is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Section 2.11(c) of the ETLB
Disclosure Schedule also sets forth the total number of such incentive stock
options and such nonqualified options. ETLB has furnished PINOAK with complete
copies of the plans pursuant to which the ETLB Stock Options were issued.
Other than the automatic vesting of ETLB Stock Options that may occur without
any action on the part of ETLB or its officers or directors, ETLB has not
taken any action that would result in any ETLB Stock Options that are
unvested becoming vested in connection with or as a result of the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(d) There shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any ETLB Employee
Plan or any agreement or arrangement disclosed under this Section 2.11 solely
by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(e) There are no controversies pending or, to the knowledge of ETLB,
threatened, between ETLB and any of their employees, which controversies have
or could reasonably be expected to have a Material Adverse Effect on ETLB.
Neither ETLB nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by ETLB or any of its subsidiaries (and neither ETLB nor any of its
subsidiaries has any outstanding material liability with respect to any
terminated collective bargaining agreement or labor union contract), nor does
ETLB know of any activities or proceedings of any labor union to organize any
of its or employees. ETLB has no knowledge of any strike, slowdown, work
stoppage, lockout or threat thereof, by or with respect to any of its
employees.
Section 2.12. Environmental Laws and Regulations.
(a) Except as publicly disclosed by ETLB in the ETLB SEC Reports, (i)
ETLB is in material compliance with all applicable federal, state, local and
foreign laws and regulations relating to pollution or protection of human
health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"), except for non-compliance that would
not have a Material Adverse Effect on ETLB, which compliance includes, but is
not limited to, the possession by ETLB of all material permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof; (ii) ETLB has not received
written notice of, or, to the knowledge of ETLB, is the subject of, any
action, cause of action, claim, investigation, demand or notice by any person
or entity alleging liability under or non-compliance with any Environmental
Law (an ``Environmental Claim") that could reasonably be expected to have a
Material Adverse Effect on ETLB; and (iii) to the knowledge of ETLB, there
are no circumstances that are reasonably likely to prevent or interfere with
such material compliance in the future.
(b) Except as publicly disclosed by ETLB, there are no Environmental
Claims which could reasonably be expected to have a Material Adverse Effect
on ETLB that are pending or, to the knowledge of ETLB, threatened against
ETLB or, to the knowledge of ETLB, against any person or entity whose
liability for any Environmental Claim ETLB has or may have retained or
assumed either contractually or by operation of law.
Section 2.13. Tax Matters.
(a) Except as set forth in Section 2.13 of the ETLB Disclosure Schedule:
(i) ETLB has filed or has had filed on its behalf in a timely manner (within
any applicable extension periods) with the appropriate Governmental Entity
all income and other material Tax Returns (as defined herein) with respect to
Taxes (as defined herein) of ETLB and all Tax Returns were in all material
respects true, complete and correct; (ii) all material Taxes with respect to
ETLB have been paid in full or have been provided for in accordance with GAAP
on ETLB's most recent balance sheet which is part of the ETLB SEC Documents.
(iii) there are no outstanding agreements or waivers extending the statutory
period of limitations applicable to any federal, state, local or foreign
income or other material Tax Returns required to be filed by or with respect
to ETLB; (iv) to the knowledge of ETLB none of the Tax Returns of or with
respect to ETLB is currently being audited or examined by any Governmental
Entity; and (v) no deficiency for any income or other material Taxes has been
assessed with respect to ETLB which has not been abated or paid in full.
(b) For purposes of this Agreement, (i) "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, sales, use, ad valorem, goods and services, capital,
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property or
other taxes, customs duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority and (ii) "Tax Return"
shall mean any report, return, documents declaration or other information or
filing required to be supplied to any taxing authority or jurisdiction with
respect to Taxes.
Section 2.14. Title to Property. ETLB has good and defensible title to
all of its properties and assets, free and clear of all liens, charges and
encumbrances except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby
or which, individually or in the aggregate, would not have a Material Adverse
Effect on ETLB; and, to ETLB's knowledge, all leases pursuant to which ETLB
leases from others real or personal property are in good standing, valid and
effective in accordance with their respective terms, and there is not, to the
knowledge of ETLB, under any of such leases, any existing material default or
event of default (or event which with notice of lapse of time, or both, would
constitute a default and in respect of which ETLB has not taken adequate
steps to prevent such a default from occurring) except where the lack of such
good standing, validity and effectiveness, or the existence of such default
or event, would not have a Material Adverse Effect on ETLB.
Section 2.15. Intellectual Property.
(a) ETLB owns, or possesses adequate licenses or other valid rights to
use, all existing United States and foreign patents, trademarks, trade names,
service marks, copyrights, trade secrets and applications therefore that are
material to its business as currently conducted (the "ETLB Intellectual
Property Rights").
(b) The validity of the ETLB Intellectual Property Rights and the title
thereto of ETLB is not being questioned in any litigation to which ETLB is a
party.
(c) Except as set forth in Section 2.15(c) of the ETLB Disclosure
Schedule, the conduct of the business of ETLB as now conducted does not, to
ETLB's knowledge, infringe any valid patents, trademarks, trade names,
service marks or copyrights of others. The consummation of the transactions
completed hereby will not result in the loss or impairment of any ETLB
Intellectual Property Rights.
(d) ETLB has taken steps it believes appropriate to protect and maintain
its trade secrets as such, except in cases where ETLB has elected to rely on
patent or copyright protection in lieu of trade secret protection.
Section 2.16. Insurance. ETLB currently maintains general liability and
other business insurance.
Section 2.17. Vote Required. Approval of this Acquisition Agreement
and Plan of Merger by the Stockholders of ETLB is not required pursuant to
current Nevada law.
Section 2.18. Tax Treatment. Neither ETLB nor, to the knowledge of ETLB,
any of its affiliates has taken or agreed to take action that would prevent
the Merger from constituting a reorganization qualifying under the provisions
of Section 368(a) of the Code.
Section 2.19. Affiliates. Except for the directors and executive
officers of ETLB, each of whom is listed in Section 2.19 of the ETLB
Disclosure Schedule, there are no persons who, to the knowledge of ETLB, may
be deemed to be affiliates of ETLB under Rule 1-02(b) of Regulation S-X of
the SEC (the "ETLB Affiliates").
Section 2.20. Certain Business Practices. None of ETLB or any directors,
officers, agents or employees of ETLB has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties
or campaigns or violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended (the "FCPA"), or (iii) made any other unlawful payment.
Section 2.21. Insider Interests. Except as set forth in Section 2.21 of
the ETLB Disclosure Schedule, neither any officer or director of ETLB has any
interest in any material property, real or personal, including without
limitation, any computer software or ETLB Intellectual Property Rights, used
in or pertaining to the business of ETLB, expect for the ordinary rights of a
stockholder or employee stock option holder.
Section 2.22. Opinion of Financial Adviser. No advisers, as of the date
hereof, have delivered to the ETLB Board a written opinion to the effect
that, as of such date, the exchange ratio contemplated by the Merger is fair
to the holders of ETLB Shares.
Section 2.23. Brokers. No broker, finder or investment banker (other
than the ETLB Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to PINOAK) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of ETLB.
Section 2.24. Disclosure. No representation or warranty of ETLB in this
Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to PINOAK pursuant hereto or in connection herewith
contains, as of the date of such representation, warranty or instrument, or
will contain any untrue statement of a material fact or, at the date thereof,
omits or will omit to state a material fact necessary to make any statement
herein or therein, in light of the circumstances under which such statement
is or will be made, not misleading.
Section 2.25. No Existing Discussions. As of the date hereof, ETLB is
not engaged, directly or indirectly, in any discussions or negotiations with
any other party with respect to any Third Party Acquisition (as defined in
Section 4.4).
ARTICLE 3
Representations and Warranties of PINOAK
Except as set forth on the Disclosure Schedule delivered by PINOAK to ETLB
(the "PINOAK Disclosure Schedule"),PINOAK hereby represents and warrants to ETLB
as follows:
Section 3.1. Organization and Qualification.
(a) Each of PINOAK and its subsidiaries is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
or organization and has all requisite power and authority to own, lease and
operate its properties and to carry on its businesses as now being conducted,
except where the failure to be so organized, existing and in good standing or
to have such power and authority would not have a Material Adverse Effect (as
defined below) on PINOAK. When used in connection with PINOAK, the term
"Material Adverse Effect" means any change or effect (i) that is or is
reasonably likely to be materially adverse to the business, results of
operations, condition (financial or otherwise) or prospects of PINOAK
and its subsidiaries, taken as a whole, other than any change or effect
arising out of general economic conditions unrelated to any businesses
in which PINOAK and its subsidiaries are engaged, or (ii) that may
impair the ability of PINOAK to consummate the transactions contemplated hereby.
(b) PINOAK has heretofore delivered to ETLB accurate and complete copies of
the Articles of Incorporation and Bylaws (or similar governing documents), as
currently in effect, of PINOAK. Each of PINOAK and its subsidiaries is duly
qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect on PINOAK.
Section 3.2. Capitalization of PINOAK.
(a) As of December 31, 2005, the authorized capital stock of PINOAK
consists of Twenty Million (20,000,000) PINOAK common Shares, $0.001 par value,
of which 2,000,000 common Shares are issued and outstanding. All of the
outstanding PINOAK Shares have been duly authorized and validly issued, and are
fully paid, nonassessable and free of preemptive rights. PINOAK has five
million (5,000,000) Authorized Shares of Preferred Stock, $0.001 par value, no
Preferred Shares have been issued.
(b) Except as set forth in Section 3.2(b) of the PINOAK Disclosure
Schedule, Xxxx Xxxxx is the record and beneficial owner of all of the
issued and outstanding shares of capital stock of its subsidiaries.
(c) Except as set forth in Section 3.2(c) of the PINOAK Disclosure
Schedule, between December 31, 1998 (inception) and the date hereof, no shares
of PINOAK's capital stock have been issued and no PINOAK Stock options have
been granted.Except as set forth in Section 3.2(a) above, as of the date hereof,
there are no outstanding (i) shares of capital stock or other voting securities
of PINOAK, (ii) securities of PINOAK or its subsidiaries convertible into or
exchangeable for shares of capital stock or voting securities of PINOAK,
(iii) options or other rights to acquire from PINOAK or its subsidiaries,
or obligations of PINOAK or its subsidiaries to issue, any capital stock,
voting securities or securities convertible into or exchangeable for
capital stock or voting securities of PINOAK, or (iv) equity equivalents,
interests in the ownership or earnings of PINOAK or its subsidiaries or
other similar rights (collectively, "PINOAK Securities"). As of the
date hereof, there are no outstanding obligations of PINOAK or any of
its subsidiaries to repurchase, redeem or otherwise acquire any PINOAK
Securities. There are no stockholder agreements, voting trusts or other
agreements or understandings to which PINOAK is a party or by which it
is bound relating to the voting or registration of any shares of
capital stock of PINOAK.
(d) Except as set forth in Section 3.2(d) of the PINOAK Disclosure
Schedule, there are no securities of PINOAK convertible into or exchangeable
for, no options or other rights to acquire from PINOAK, and no other contract,
understanding, arrangement or obligation (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of any capital
stock or other ownership interests in, or any other securities of, any
subsidiary of PINOAK.
(e) The PINOAK Shares constitute the only class of equity securities
of PINOAK or its subsidiaries.
(f) Except as set forth in Section 3.2(f) of the PINOAK Disclosure
Schedule, PINOAK does not own directly or indirectly any outstanding voting
securities or interests (including membership interests) of any entity.
Section 3.3. Authority Relative to this Agreement; Recommendation.
(a) PINOAK has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of PINOAK (the "PINOAK Board"), and no other corporate
proceedings on the part of PINOAK are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby, except, as referred to in
Section 3.17, the approval and adoption of this Agreement by the holders of
at least a majority of the then outstanding PINOAK Shares. This Agreement has
been duly and validly executed and delivered by PINOAK and constitutes a valid,
legal and binding agreement of PINOAK, enforceable against PINOAK in accordance
with its terms.
(b) The PINOAK Board has resolved to recommend that the sole stockholder of
PINOAK approved and adopted this Agreement.
Section 3.4. SEC Reports; Financial Statements.
(a) PINOAK has filed all required forms, reports and documents with the
Securities and Exchange Commission (the "SEC") since December 31, 2005, each
of which has complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and the Exchange Act (and the rules and regulations promulgated
thereunder, respectively), each as in effect on the dates such forms, reports
and documents were filed. PINOAK has heretofore delivered or promptly will
deliver prior to the Effective Date to PINOAK, in the form filed with the SEC
(including any amendments thereto but excluding any exhibits), (i) its
initial Registration Statement on Form SB-2 filed January 3, 2002, (ii) all
other reports or registration statements filed by PINOAK with the SEC since its
inception on December 31, 1998 (all of the foregoing, collectively, the "PINOAK
SEC Reports"). None of such PINOAK SEC Reports, including, without limitation,
any financial statements or schedules included or incorporated by reference
therein, contained, when filed, any untrue statement of a material fact or
omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited financial statements of PINOAK included in the PINOAK SEC Reports fairly
present, in conformity with generally accepted accounting principles applied
on a consistent basis (except as may be indicated in the notes thereto), the
financial position of PINOAK as of the dates thereof and its results of
operations and changes in financial position for the periods then ended. All
material agreements, contracts and other documents required to be filed as
exhibits to any of the PINOAK SEC Reports have been so filed.
(b) PINOAK has heretofore made available or promptly will make available to
ETLB a complete and correct copy of any amendments or modifications which are
required to be filed with the SEC but have not yet been filed with the SEC,
to agreements, documents or other instruments which previously had been filed
by PINOAK with the SEC pursuant to the Exchange Act.
Section 3.5. Information Supplied. None of the information supplied or
to be supplied by PINOAK for inclusion or incorporation by reference to the 8-K
will, at the time the 8-K is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
Section 3.6. Consents and Approvals; No Violations. Except as set forth
in Section 3.6 of the PINOAK Disclosure Schedule, and for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, the rules of the NASD, and the
filing and recordation of the Merger Certificate as required by the NGCL, no
filing with or notice to, and no permit, authorization, consent or approval
of, any Governmental Entity is necessary for the execution and delivery by
PINOAK of this Agreement or the consummation by PINOAK of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on PINOAK.
Neither the execution, delivery and performance of this Agreement by PINOAK
nor the consummation by PINOAK of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
Articles of Incorporation or Bylaws (or similar governing documents) of PINOAK
or any of PINOAK's subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration or Lien) under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which PINOAK or any of PINOAK's subsidiaries
is a party or by which any of them or any of their respective properties or
assets may be bound or (iii) violate any order, writ, injunction, decree, law,
statute, rule or regulation applicable to PINOAK or any of PINOAK's subsidiaries
or any of their respective properties or assets, except in the case of (ii) or
(iii) for violations, breaches or defaults which would not have a Material
Adverse Effect on PINOAK.
Section 3.7. No Default. PINOAK is not in breach, default or violation (and
no event has occurred which with notice or the lapse of time or both would
constitute a breach, default or violation) of any term, condition or
provision of (i) its Articles of Incorporation or Bylaws (or similar governing
documents), (ii) any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which PINOAK or any of
its subsidiaries is now a party or by which any of them or any of their
respective properties or assets may be bound or (iii) any order, writ,
injunction, decree, law, statute, rule or regulation applicable to PINOAK, its
subsidiaries or any of their respective properties or assets, except in the
case of (ii) or (iii) for violations, breaches or
defaults that would not have a Material Adverse Effect on PINOAK. Each note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which PINOAK or any of its subsidiaries is now a
party or by which any of them or any of their respective properties or assets
may be bound that is material to PINOAK and its subsidiaries taken as a whole
and that has not expired is in full force and effect and is not subject to
any material default thereunder of which PINOAK is aware by any party obligated
to PINOAK or any subsidiary thereunder.
Section 3.8. No Undisclosed Liabilities; Absence of Changes. Except as
set forth in Section 2.8 of the PINOAK Disclosure Schedule and except as and to
the extent publicly disclosed by PINOAK in the PINOAK SEC Reports, as of
December 31, 2005, PINOAK does not have any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, that would be
required by generally accepted accounting principles to be reflected on a
balance sheet of PINOAK (including the notes thereto) or which would have a
Material Adverse Effect on PINOAK. Except as publicly disclosed by PINOAK,
since December 31, 2005, PINOAK has not incurred any liabilities of any
nature, whether or not accrued, contingent or otherwise, which could
reasonably be expected to have, and there have been no events, changes or
effects with respect to PINOAK having or which reasonably could be
expected to have, a Material Adverse Effect on PINOAK. Except as and to
the extent publicly disclosed by PINOAK in the PINOAK SEC Reports and
except as set forth in Section 2.8 of the PINOAK Disclosure Schedule,
since December 31, 2005, there has not been (i) any material change
by PINOAK in its accounting methods, principles or practices (other
than as required after the date hereof by concurrent changes in
generally accepted accounting principles), (ii) any revaluation by
PINOAK of any of its assets having a Material Adverse Effect on PINOAK,
including, without limitation, any write-down of the value of any assets
other than in the ordinary course of business or (iii) any other action
or event that would have required the consent of any other party hereto
pursuant to Section 4.1 of this Agreement had such action or event
occurred after the date of this Agreement.
Section 3.9. Litigation. Except as publicly disclosed by PINOAK in
the PINOAK SEC Reports, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of PINOAK, threatened against
PINOAK or any of its subsidiaries or any of their respective properties
or assets before any Governmental Entity which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect
on PINOAK or could reasonably be expected to prevent or delay the
consummation of the transactions contemplated by this Agreement.
Except as publicly disclosed by PINOAK in the PINOAK SEC Reports,
PINOAK is not subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen in the
future, could reasonably be expected to have a Material Adverse Effect on
PINOAK or could reasonably be expected to prevent or delay the consummation
of the transactions contemplated hereby.
Section 3.10. Compliance with Applicable Law. Except as publicly
disclosed by PINOAK in the PINOAK SEC Reports, PINOAK holds all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities necessary for the lawful conduct of their respective businesses
(the "PINOAK Permits"), except for failures to hold such permits, licenses,
variances, exemptions, orders and approvals which would not have a Material
Adverse Effect on PINOAK. Except as publicly disclosed by PINOAK in the
PINOAK SEC Reports, PINOAK is in compliance with the terms of the PINOAK
Permits, except where the failure so to comply would not have a Material
Adverse Effect on PINOAK. Except as publicly disclosed by PINOAK in
the PINOAK SEC Reports, the business of PINOAK is not being conducted
in violation of any law, ordinance or regulation of any Governmental
Entity except that no representation or warranty is made in this
Section 2.10 with respect to Environmental Laws (as defined in Section
2.12 below) and except for violations or possible violations which do not,
and, insofar as reasonably can be foreseen, in the future will not,
have a Material Adverse Effect on PINOAK. Except as publicly disclosed
by PINOAK in the PINOAK SEC Reports, no investigation or review by any
Governmental Entity with respect to PINOAK is pending or, to the
knowledge of PINOAK, threatened, nor, to the knowledge of PINOAK, has
any Governmental Entity indicated an intention to conduct the same,
there than, in each case, those which PINOAK reasonably believes will
not have a Material Adverse Effect on PINOAK.
Section 3.11. Employee Benefit Plans; Labor Matters.
(a) With respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of ERISA), maintained or
contributed to at any time by PINOAK, any of its subsidiaries or any entity
required to be aggregated with PINOAK or any of its subsidiaries pursuant to
Section 414 of the Code (each, a "PINOAK Employee Plan"), no event has occurred
and, to the knowledge of PINOAK, no condition or set of circumstances exists in
connection with which PINOAK or any of its subsidiaries could reasonably be
expected to be subject to any liability which would have a Material Adverse
Effect on PINOAK.
(b) (i) No PINOAK Employee Plan is or has been subject to Title IV of ERISA
or Section 412 of the Code; and (ii) each PINOAK Employee Plan intended to
qualify under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code is the subject of a favorable Internal
Revenue Service determination letter, and nothing has occurred which could
reasonably be expected to adversely affect such determination.
(c) Section 3.11(c) of the PINOAK Disclosure Schedule sets forth a true and
complete list, as of the date of this Agreement, of each person who holds any
PINOAK Stock Options, together with the number of PINOAK Shares which are
subject to such option, the date of grant of such option, the extent to which
such option is vested (or will become vested as a result of the Merger), the
option price of such option (to the extent determined as of the date hereof),
whether such option is a nonqualified stock option or is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Section 3.11(c) of the PINOAK
Disclosure Schedule also sets forth the total number of such incentive stock
options and such nonqualified options. PINOAK has furnished ETLB with complete
copies of the plans pursuant to which the PINOAK Stock Options were issued.
Other than the automatic vesting of PINOAK Stock Options that may occur without
any action on the part of PINOAK or its officers or directors, PINOAK has not
taken any action that would result in any PINOAK Stock Options that are unvested
becoming vested in connection with or as a result of the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(d) Except as disclosed in Section 3.11(e) of the PINOAK Disclosure
Schedule there shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any PINOAK Employee
Plan or any agreement or arrangement disclosed under this Section 3.11 solely
by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(e) There are no controversies pending or, to the knowledge of PINOAK
threatened, between PINOAK or any of its subsidiaries and any of their
respective employees, which controversies have or could reasonably be
expected to have a Material Adverse Effect on PINOAK. Neither PINOAK nor
any of its subsidiaries is a party to any collective bargaining agreement
or other labor union contract applicable to persons employed by PINOAK or
any of its subsidiaries (and neither PINOAK nor any of its subsidiaries has
any outstanding material liability with respect to any terminated collective
bargaining agreement or labor union contract), nor does PINOAK know of any
activities or proceedings of any labor union to organize any ofits or any of its
subsidiaries' employees. PINOAK has no knowledge of any strike, slowdown, work
stoppage, lockout or threat thereof by or with respect to any of its or any
of its subsidiaries' employees.
Section 3.12. Environmental Laws and Regulations.
(a)Except as disclosed by PINOAK,(i)each of PINOAK and its subsidiaries is
in material compliance with all Environmental Laws, except for non-compliance
that would not have a Material Adverse Effect on PINOAK, which compliance
includes, but is not limited to, the possession by PINOAK and its subsidiaries
of all material permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof;(ii) none of PINOAK or its subsidiaries has received written notice of,
or, to the knowledge of PINOAK, is the subject of, any Environmental Claim that
could reasonably be expected to have a Material Adverse Effect on PINOAK; and
(iii) to the knowledge of PINOAK, there are no circumstances that are reasonably
likely to prevent or interfere with such material compliance in the future.
(b) Except as disclosed by PINOAK, there are no Environmental Claims which
could reasonably be expected to have a Material Adverse Effect on PINOAK that
are pending or, to the knowledge of PINOAK, threatened against PINOAK or any of
its subsidiaries or, to the knowledge of PINOAK, against any person or entity
whose liability for any Environmental Claim PINOAK or its subsidiaries has or
may have retained or assumed either contractually or by operation of law.
Section 3.13. Tax Matters. Except as set forth in Section 3.13 of the
PINOAK Disclosure Schedule: (i) PINOAK and each of its subsidiaries has filed or
has had filed on its behalf in a timely manner (within any applicable
extension periods) with the appropriate Governmental Entity all income and
other material Tax Returns with respect to Taxes of PINOAK and each of its
subsidiaries and all Tax Returns were in all material respects true, complete
and correct; (ii) all material Taxes with respect to PINOAK and each of its
subsidiaries have been paid in full or have been provided for in accordance
with GAAP on PINOAK's most recent balance sheet which is part of the PINOAK SEC
Documents; (iii) there are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal, state, local or
foreign income or other material Tax Returns required to be filed by or with
respect to PINOAK or its subsidiaries; (iv) to the knowledge of PINOAK none of
the Tax Returns of or with respect to PINOAK or any of its subsidiaries is
currently being audited or examined by any Governmental Entity; and (v) no
deficiency for any income or other material Taxes has been assessed with respect
to PINOAK or any of its subsidiaries which has not been abated or paid in full.
Section 3.14. Title to Property. PINOAK and each of its subsidiaries have
good and defensible title to all of their properties and assets, free and
clear of all liens, charges and encumbrances except liens for taxes not yet
due and payable and such liens or other imperfections of title, if any, as do
not materially detract from the value of or interfere with the present use of
the property affected thereby or which, individually or in the aggregate,
would not have a Material Adverse Effect on PINOAK; and, to PINOAK's knowledge,
all leases pursuant to which PINOAK or any of its subsidiaries lease from
others real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, to the knowledge of
PINOAK, under any of such leases, any existing material default or event of
default (or event which with notice or lapse of time, or both, would
constitute a material default and in respect of which PINOAK or such subsidiary
has not taken adequate steps to prevent such a default from occurring) except
where the lack of such good standing, validity and effectiveness, or the
existence of such default or event of default would not have a Material
Adverse Effect on PINOAK.
Section 3.15. Intellectual Property.
(a) Each of PINOAK and its subsidiaries owns, or possesses adequate
licenses or other valid rights to use, all existing United States and foreign
patents, trademarks, trade names, services marks, copyrights, trade secrets,
and applications therefore that are material to its business as currently
conducted (the "PINOAK Intellectual Property Rights").
(b) Except as set forth in Section 3.15(b) of the PINOAK Disclosure
Schedule the validity of the PINOAK Intellectual Property Rights and the title
thereto of PINOAK or any subsidiary, as the case may be, is not being questioned
in any litigation to which PINOAK or any subsidiary is a party.
(c) The conduct of the business of PINOAK as now conducted does not, to
PINOAK's knowledge, infringe any valid patents, trademarks, trade names, service
marks or copyrights of others. The consummation of the transactions
contemplated hereby will not result in the loss or impairment of any PINOAK
Intellectual Property Rights.
(d) PINOAK has taken steps it believes appropriate to protect and maintain
its trade secrets as such, except in cases where PINOAK has elected to rely on
patent or copyright protection in lieu of trade secret protection.
Section 3.16. Insurance. PINOAK currently does not maintain general
liability and other business insurance.
Section 3.17. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding PINOAK Shares is the only vote of the
holders of any class or series of PINOAK's capital stock necessary to approve
and adopt this Agreement and the Merger.
Section 3.18. Tax Treatment. Neither PINOAK nor,to the knowledge of PINOAK,
any of its affiliates has taken or agreed to take any action that would
prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
Section 3.19. Affiliates. Except for the directors and executive
officers of PINOAK, each of whom is listed in Section 3.19 of the PINOAK
Disclosure Schedule, there are no persons who, to the knowledge of PINOAK,
may be deemed to be affiliates of PINOAK under Rule 1-02(b) of Regulation
S-X of the SEC (the "PINOAK Affiliates").
Section 3.20. Certain Business Practices. None of PINOAK, any of its
subsidiaries or any directors, officers, agents or employees of PINOAK or any of
its subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or
violated any provision of the FCPA, or (iii) made any other unlawful payment.
Section 3.21. Insider Interests. Except as set forth in Section 3.21 of
the PINOAK Disclosure Schedule, no officer or director of PINOAK has any
interest in any material property, real or personal, including without
limitation, any computer software or PINOAK Intellectual Property Rights, used
in or pertaining to the business of PINOAK or any subsidiary, except for the
ordinary rights of a stockholder or employee stock option holder.
Section 3.22. Opinion of Financial Adviser. No advisers, as of the date
hereof, have delivered to the PINOAK Board a written opinion to the effect that,
as of such date, the exchange ratio contemplated by the Merger is fair to the
holders of PINOAK Shares.
Section 3.23. Brokers. No broker, finder or investment banker (other
than the PINOAK Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to ETLB) is entitled to any brokerage, finders or
other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of PINOAK.
Section 3.24. Disclosure. No representation or warranty of PINOAK in this
Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to ETLB pursuant hereto or in connection
herewith contains, as of the date of such representation, warranty or
instrument, or will contain any untrue statement of a material fact or, at
the date thereof, omits or will omit to state a material fact necessary to
make any statement herein or therein, in light of the circumstances under
which such statement is or will be made, not misleading.
Section 3.25. No Existing Discussions. As of the date hereof, PINOAK is not
engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to any Third Party Acquisition (as defined in
Section 5.4).
ARTICLE 4
Covenants
Section 4.1. Conduct of Business of ETLB. Except as contemplated by this
Agreement or as described in Section 4.1 of the ETLB Disclosure Schedule,
during the period from the date hereof to the Effective Time, ETLB will
conduct its operations in the ordinary course of business consistent with
past practice and, to the extent consistent therewith, with no less diligence
and effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organization, keep available the service
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end
that goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement or as described in Section 4.1 of the
ETLB Disclosure Schedule, prior to the Effective Time, ETLB will not, without
the prior written consent of PINOAK:
(a) amend its Articles of Incorporation or Bylaws (or other similar
governing instrument);
(b) amend the terms of any stock of any class or any other securities
(except bank loans) or equity equivalents.
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of ETLB (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person.
(iii) make any loans, advances or capital contributions to, or investments
in, any other person; (iv) pledge or otherwise encumber shares of capital
stock of ETLB; or (v) mortgage or pledge any of its material assets, or
create or suffer to exist any material Lien thereupon (other than tax Liens
for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent ETLB from (i) entering into employment
agreements or severance agreements with employees in the ordinary course of
business and consistent with past practice or (ii) increasing annual
compensation and/or providing for or amending bonus arrangements for
employees or fiscal 2000 in the ordinary course of year-end compensation
reviews consistent with past practice and paying bonuses to employees for
fiscal 2000 in amounts previously disclosed to PINOAK (to the extent that such
compensation increases and new or amended bonus arrangements do not result in
a material increase in benefits or compensation expense to ETLB);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions (other than in the ordinary
course of business);
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets including, without
limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to ETLB; (iii) authorize any new
capital expenditure or expenditures which, individually is in excess of
$1,000 or, in the aggregate, are in excess of $5,000; provided, however that
none of the foregoing shall limit any capital expenditure required pursuant
to existing contracts;
(k) make any tax election or settle or compromise any income tax
liability material to ETLB;
(l) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
ETLB;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or in the
ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1(a) through 4.1(m) or any action which would make
any of the representations or warranties of contained in this Agreement
untrue or incorrect.
Section 4.2. Conduct of Business of PINOAK. Except as contemplated by this
Agreement or as described in Section 4.2 of the PINOAK Disclosure Schedule
during the period from the date hereof to the Effective Time, PINOAK will
conduct its operations in the ordinary course of business consistent with
past practice and, to the extent consistent therewith, with no less diligence
and effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organization, keep available the service
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end
that goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement or as described in Section 4.2 of the
PINOAK Disclosure Schedule, prior to the Effective Time, PINOAK will not,
without the prior written consent of:
(a) amend its Articles of Incorporation or Bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any other securities (except bank loans) or equity
equivalents (including, without limitation, any stock options or stock
appreciation rights;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution, merger
consolidation, restructuring, recapitalization or other reorganization of PINOAK
(other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business. (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person;
(iii) make any loans, advances or capital contributions to or investments in,
any other person; (iv) pledge or otherwise encumber shares of capital stock
of PINOAK or its subsidiaries; or (v) mortgage or pledge any of its material
assets, or create or suffer to exist any material Lien thereupon (other than
tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent PINOAK or its subsidiaries from (i) entering
into employment agreements or severance agreements with employees in the
ordinary course of business and consistent with past practice or (ii)
increasing annual compensation and/or providing for or amending bonus
arrangements for employees for fiscal 2003 in the ordinary course of yearend
compensation reviews consistent with past practice and paying bonuses to
employees for fiscal 2003 in amounts previously disclosed to (to the extent
that such compensation increases and new or amended bonus arrangements do not
result in a material increase in benefits or compensation expense to PINOAK);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions other than in the ordinary
course of business;
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory of writing-off notes
or accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership, or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to PINOAK; (iii) authorize any new capital
expenditure or expenditures which, individually, is in excess of $1,000 or,
in the aggregate, are in excess of $5,000: provided, however that none of the
foregoing shall limit any capital expenditure required pursuant to existing
contracts;
(k) make any tax election or settle or compromise any income tax
liability material to PINOAK and its subsidiaries taken as a whole;
(l) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
PINOAK;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or except in
the ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.2(a) through 4.2(m) or any action which would make
any of the representations or warranties of the PINOAK contained in this
Agreement untrue or incorrect.
Section 4.3. Preparation of 8-K. PINOAK and ETLB shall promptly prepare
and file with the SEC an 8-K disclosing this merger with audited financials
of ETLB along with pro forma combined statements.
Section 4.4. Other Potential Acquirers.
(a) PINOAK, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore
with respect to any Third Party Acquisition.
Section 4.6. Access to Information.
(a) Between the date hereof and the Effective Time, ETLB will give PINOAK
and its authorized representatives, and PINOAK will give ETLB and its authorized
representatives, reasonable access to all employees, plants, offices,
warehouses and other facilities and to all books and records of itself and
its subsidiaries, will permit the other party to make such inspections as
such party may reasonably require and will cause its officers and those of
its subsidiaries to furnish the other party with such financial and operating
data and other information with respect to the business and properties of
itself and its subsidiaries as the other party may from time to time
reasonably request.
(b) Between the date hereof and the Effective Time, ETLB shall furnish
to PINOAK, and PINOAK will furnish to ETLB, within 25 business days after the
end of each quarter, quarterly statements prepared by such party in conformity
with its past practices) as of the last day of the period then ended.
(c) Each of the parties hereto will hold and will cause its consultants
and advisers to hold in confidence all documents and information furnished to
it in connection with the transactions contemplated by this Agreement.
Section 4.7. Additional Agreements, Reasonable Efforts. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
(i) cooperating in the preparation and filing of the 8-K, any filings that
may be required under the HSR Act, and any amendments to any thereof; (ii)
obtaining consents of all third parties and Governmental Entities necessary,
proper or advisable for the consummation of the transactions contemplated by
this Agreement; (iii) contesting any legal proceeding relating to the Merger
and (iv) the execution of any additional instruments necessary to consummate
the transactions contemplated hereby. Subject to the terms and conditions of
this Agreement, PINOAK and ETLB agree to use all reasonable efforts to cause the
Effective Time to occur as soon as practicable after the stockholder votes
with respect to the Merger. In case at any time after the Effective Time any
further action is necessary to carry out the purposes of this Agreement, the
proper officers and directors of each party hereto shall take all such
necessary action.
Section 4.8. Indemnification.
(a) To the extent, if any, not provided by an existing right under one
of the parties' directors and officers liability insurance policies, from and
after the Effective Time, ETLB shall, to the fullest extent permitted by
applicable law, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director, officer or employee of the parties hereto or any
subsidiary thereof (each an "Indemnified Party" and, collectively, the
"Indemnified Parties") against all losses, expenses (including reasonable
attorneys' fees and expenses), claims, damages or liabilities or, subject to
the proviso of the next succeeding sentence, amounts paid in settlement
arising out of actions or omissions occurring at or prior to the Effective
Time and whether asserted or claimed prior to, at or after the Effective
Time) that are in whole or in part (i) based on, or arising out of the fact
that such person is or was a director, officer or employee of such party or a
subsidiary of such party or (ii) based on, arising out of or pertaining to
the transactions contemplated by this Agreement. In the event of any such
loss expense, claim, damage or liability (whether or not arising before the
Effective Time), (i) ETLB shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to ETLB, promptly after statements therefore are
received and otherwise advance to such Indemnified Party upon request
reimbursement of documented expenses reasonably incurred, in either case to
the extent not prohibited by the NGCL or its Articles of Incorporation or
bylaws, (ii) ETLB will cooperate in the defense of any such matter and (iii)
any determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under the NGCL and
ETLB's Articles of Incorporation and bylaws shall be made by independent
counsel mutually acceptable to ETLB and the Indemnified Party; provided,
however, that ETLB shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld). The
Indemnified Parties as a group may retain only one law firm with respect to
each related matter except to the extent there is, in the opinion of counsel
to an Indemnified Party, under applicable standards of professional conduct,
conflict on any significant issue between positions of any two or more
Indemnified Parties.
(b) In the event ETLB or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity or such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to
any person, then and in either such case, proper provision shall be made so
that the successors and assigns of ETLB shall assume the obligations set
forth in this Section 4.9.
(c) To the fullest extent permitted by law, from and after the Effective
Time, all rights to indemnification now existing in favor of the employees,
agents, directors or officers of ETLB and PINOAK and their subsidiaries with
respect to their activities as such prior to the Effective Time, as provided
in ETLB's and PINOAK's Articles of Incorporation or bylaws, in effect on the
date thereof or otherwise in effect on the date hereof, shall survive the
Merger and shall continue in full force and effect for a period of not less
than two years from the Effective Time.
(d) The provisions of this Section 4.9 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 4.9. Notification of Certain Matters. The parties hereto shall
give prompt notice to the other parties, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at or prior to the Effective
Time, (ii) any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, (iii) any notice of, or other communication relating to, a default
or event which, with notice or lapse of time or both, would become a default,
received by such party or any of its subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, under any contract or
agreement material to the financial condition, properties, businesses or
results of operations of such party and its subsidiaries taken as a whole to
which such party or any of its subsidiaries is a party or is subject, (iv)
any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement, or (v) any material adverse
change in their respective financial condition, properties, businesses,
results of operations or prospects taken as a whole, other than changes
resulting from general economic conditions; provided, however, that the
delivery of any notice pursuant to this Section 4.10 shall not cure such
breach or non-compliance or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
ARTICLE 5
Conditions to Consummation of the Merger
Section 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) this Agreement shall have been approved and adopted by the requisite
vote of the stockholders of PINOAK;
(b) this Agreement shall have been approved and adopted by the Board of
Directors of ETLB and PINOAK;
(c) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority which prohibits,
restrains, enjoins or restricts the consummation of the Merger;
(d) any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired, and any other governmental or regulatory notices
or approvals required with respect to the transactions contemplated hereby
shall have been either filed or received; and
Section 5.2. Conditions to the Obligations of ETLB. The obligation of
ETLB to effect the Merger is subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) the representations of PINOAK contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except to
the extent that the breach thereof would not have a Material Adverse Effect
on PINOAK) at and as of the Effective Time with the same effect as if made at
and as of the Effective Time (except to the extent such representations
specifically related to an earlier date, in which case such representations
shall be true and correct as of such earlier date), and at the Closing PINOAK
shall have delivered to ETLB a certificate to that effect;
(b) each of the covenants and obligations of PINOAK to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time
and at the Closing PINOAK shall have delivered to ETLB a certificate to that
effect;
(d) PINOAK shall have obtained the consent or approval of each person whose
consent or approval shall be required in order to permit the Merger as
relates to any obligation, right or interest of PINOAK under any loan or credit
agreement, note, mortgage, indenture, lease or other agreement or instrument,
except those for which failure to obtain such consents and approvals would
not, in the reasonable opinion of ETLB, individually or in the aggregate,
have a Material Adverse Effect on PINOAK;
(e) there shall have been no events, changes or effects with respect to
PINOAK or its subsidiaries having or which could reasonably be expected to have
a Material Adverse Effect on PINOAK; and
Section 5.3. Conditions to the Obligations of PINOAK. The respective
obligations of PINOAK to effect the Merger are subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) the representations of ETLB contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except to
the extent that the breach thereof would not have a Material Adverse Effect
on ETLB) at and as of the Effective Time with the same effect as if made at
and as of the Effective Time (except to the extent such representations
specifically related to an earlier date, in which case such representations
shall be true and correct as of such earlier date), and at the Closing ETLB
shall have delivered to PINOAK a certificate to that effect;
(b) each of the covenants and obligations of ETLB to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time
and at the Closing ETLB shall have delivered to PINOAK a certificate to that
effect;
(c) there shall have been no events, changes or effects with respect to
ETLB having or which could reasonably be expected to have a Material Adverse
Effect on ETLB.
ARTICLE 6
Termination; Amendment; Waiver
Section 6.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval and adoption of this Agreement by ETLB's or PINOAK's
stockholders:
(a) by mutual written consent of ETLB and PINOAK;
(b) by PINOAK or ETLB if (i) any court of competent jurisdiction in the
United States or other United States Governmental Entity shall have issued a
final order, decree or ruling or taken any other final action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling
or other action is or shall have become nonappealable or (ii) the Merger has
not been consummated by April 30, 2005; provided, however, that no party may
terminate this Agreement pursuant to this clause (ii) if such party's failure
to fulfill any of its obligations under this Agreement shall have been the
reason that the Effective Time shall not have occurred on or before said
date;
(c) by ETLB if (i) there shall have been a breach of any representation
or warranty on the part of PINOAK set forth in this Agreement, or if any
representation or warranty of PINOAK shall have become untrue, in either case
such that the conditions set forth in Section 5.2(a) would be incapable of
being satisfied by April 30, 2005 (or as otherwise extended), (ii) there shall
have been a breach by PINOAK of any of their respective covenants or agreements
hereunder having a Material Adverse Effect on PINOAK or materially adversely
affecting (or materially delaying) the consummation of the Merger, and PINOAK,
as the case may be, has not cured such breach within 20 business days after
notice by ETLB thereof, provided that ETLB has not breached any of its
obligations hereunder, (iii) ETLB shall have convened a meeting of its
stockholders to vote upon the Merger and shall have failed to obtain the
requisite vote of its stockholders; or (iv) ETLB shall have convened a
meeting of its Board of Directors to vote upon the Merger and shall have
failed to obtain the requisite vote;
(d) by PINOAK if (i) there shall have been a breach of any representation
or warranty on the part of ETLB set forth in this Agreement, or if any
representation or warranty of ETLB shall have become untrue, in either case
such that the conditions set forth in Section 5.3(a) would be incapable of
being satisfied by April 30, 2005 (or as otherwise extended), (ii) there shall
have been a breach by ETLB of its covenants or agreements hereunder having a
Material Adverse Effect on ETLB or materially adversely affecting (or
materially delaying) the consummation of the Merger, and ETLB, as he case
may be, has not cured such breach within twenty business days after notice by
PINOAK thereof, provided that PINOAK has not breached any of its obligations
hereunder, (iii) the ETLB Board shall have recommended to ETLB's stockholders
a Superior Proposal, (iv) the ETLB Board shall have withdrawn, modified or
changed its approval or recommendation of this Agreement or the Merger, or
hold a stockholders' meeting to vote upon the Merger, or shall have adopted
any resolution to effect any of the foregoing, (v) PINOAK shall have convened a
meeting of its stockholders to vote upon the Merger and shall have failed to
obtain the requisite vote of its stockholders.
Section 6.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part
of any party hereto or its affiliates, directors, officers or stockholders,
other than the provisions of this Section 6.2 and Sections 4.7(c) and 6.3
hereof. Nothing contained in this Section 6.2 shall relieve any party from
liability for any breach of this Agreement.
Section 6.3. Fees and Expenses. Except as specifically provided in this
Section 6.3, each party shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
Section 6.4. Amendment. This Agreement may be amended by action taken by
ETLB and PINOAK at any time before or after approval of the Merger by the
stockholders of ETLB and PINOAK (if required by applicable law) but, after any
such approval, no amendment shall be made which requires the approval of such
stockholders under applicable law without such approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of the
parties hereto.
Section 6.5. Extension; Waiver. At any time prior to the Effective Time,
each party hereto may (i) extend the time for the performance of any of the
obligations or other acts of any other party, (ii) waive any inaccuracies in
the representations and warranties of any other party contained herein or in
any document, certificate or writing delivered pursuant hereto or (iii) waive
compliance by any other party with any of the agreements or conditions
contained herein. Any agreement on the part of any party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such
rights.
ARTICLE 7
Miscellaneous
Section 7.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 7.1 shall not
limit any covenant or agreement of the parties hereto which by its terms
requires performance after the Effective Time.
Section 7.2. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all other prior agreements and
understandings both written and oral, between the parties with respect to the
subject matter hereof and (b) shall not be assigned by operation of law or
otherwise.
Section 7.3. Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby,
and to such end, the provisions of this Agreement are agreed to be severable.
Section 7.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested), to each other party as follows:
If to PINOAK:
PINOAK, INC.
Attn: Xxxx Xxxxx
00000 X. Xxxxx Xx.
Xxxx, XX 00000
if to ETLB:
Xxxxx Laboratories, Inc.
Attn: X. X. Xxxxx
000 X. Xxxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without regard
to the principles of conflicts of law thereof.
Section 7.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
Section 7.7. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Sections 4.9 and 4.11, nothing
in this Agreement, express or implied, is intended to or shall confer upon
any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 7.8. Certain Definitions. For the purposes of this Agreement,
the term:
(a) "affiliate" means (except as otherwise provided in Sections 2.19 and
3.19 a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
the first mentioned person;
(b) "business day" means any day other than a day on which Nasdaq is
closed;
(c) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(d) "knowledge" or "known" means, with respect to any matter in
question, if an executive officer of ETLB or PINOAK or its subsidiaries, as the
case may be, has actual knowledge of such matter;
(e) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity; and
(f) "subsidiary" or "subsidiaries" of ETLB, PINOAK or any other person,
means any corporation, partnership, limited liability company, association,
trust, unincorporated association or other legal entity of which ETLB, PINOAK or
any such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, 50% or
more of the capital stock, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of
such corporation or other legal entity.
Section 7.9. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part
of any direct or indirect stockholder of ETLB, PINOAK or any officer, director,
employee, agent, representative or investor of any party hereto.
Section 7.10. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder; provided, however, that,
if a party hereto is entitled to receive any payment or reimbursement of
expenses pursuant to Sections 6.3(a), (b) or (c), it shall not be entitled to
specific performance to compel the consummation of the Merger.
Section 7.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
In Witness Whereof, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
XXXXX LABORATORIES, INC.
By: /s/ X. X. Xxxxx
----------------------
Name: X. X. Xxxxx
Title: President/Director
PINOAK, INC.
By: /s/ Xxxx Xxxxx
---------------------------
Name: Xxxx Xxxxx
Title: President/Director
ETLB DISCLOSURE SCHEDULE
Schedule 2.1 Organization See Articles/Bylaws
Schedule 2.2(a) Options, Stock Preference Rights Not Applicable
Schedule 2.6 Consents & Approvals None Provided
Schedule 2.7 No Default Not Applicable
Schedule 2.8 No Undisclosed Liability None Exist
Schedule 2.9 Litigation Not Applicable
Schedule 2.10 Compliance with Applicable Law None
Schedule 2.11 Employee Benefit Plans None
Schedule 2.12 Environmental Laws and Regs Not Applicable
Schedule 2.13 Tax Matters None Exist
Schedule 2.14 Title to Property None Exist
Schedule 2.15 Intellectual Property None Exist
Schedule 2.16 Insurance None Exist
Schedule 2.17 Vote Required None Required
Schedule 2.18 Tax Treatment Not Applicable
Schedule 2.19 Affiliates X. X. Xxxxx
Schedule 2.20 Certain Business Practices None Exist
Schedule 2.21 Insider Interest Not Applicable
Schedule 2.22 Opinion of Financial Adviser Waived - None Exist
Schedule 2.23 Broker None Exist
Schedule 4.1 Conduct of Business None Provided
PINOAK DISCLOSURE SCHEDULE
Schedule 3.2(b) Subsidiary Stock None Exist
Schedule 3.2(c) Capital Stock Rights None Exist other than as
in Articles
Schedule 3.2(d) Securities conversions None Exist
Schedule 3.2 (f) Subsidiaries None Exist
Schedule 3.6 Consents & Approvals Provided
Schedule 3.7 No Default Not Applicable
Schedule 3.8 No Undisclosed Liability None Exist
Schedule 3.9 Litigation None Exist
Schedule 3.10 Compliance with Applicable Law Not Applicable - full
disclosed in 10-KSB
Schedule 3.11 Employee Benefit Plans Section 3.11( c)No Options
Exist
Section 3.11(e) No Agreements Exist
Schedule 3.12 Environmental Laws and Regs Not Applicable
Schedule 3.13 Tax Matters None Exist
Schedule 3.14 Title to Property None Exist
Schedule 3.15(b) Intellectual Property None Exist
Schedule 3.16 Insurance None Exist
Schedule 3.17 Vote Required See Shareholder Meeting
Certificate
Schedule 3.18 Tax Treatment Not Applicable
Schedule 3.19 Affiliates Xxxx Xxxxx
Schedule 3.20 Certain Business Practices None Exist
Schedule 3.21 Insider Interest None Exist
Schedule 3.22 Opinion of Financial Adviser Waived - None Exist
Schedule 3.23 Broker None Exist
Schedule 4.2 Conduct of Business See Amended Articles
Exhibit A
ARTICLES OF MERGER
OF
XXXXX LABORATORIES, INC.
a Nevada corporation
and
PINOAK, Inc.
a Nevada corporation
XXXX XXXXXX Entity #
Secretary of State
[state seal] 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0 Document Number:
Xxxxxx Xxxx, Xxxxxx 00000-0000
(000) 000 0000
Website: xxxxxxxxxxxxxxxx.xxx Date Filed:
In the office of
----------------------------------------------- /s/ Xxxx Xxxxxx
- Articles of Merger - Xxxx Xxxxxx
- (Pursuant to NRS 92A.200) - Secretary of State
- Page 1 -
-----------------------------------------------
ABOVE SPACE IS FOR OFFICE USE ONLY
(Pursuant to Nevada Revised Statutes Chapter 92A)
(excluding 92A.200(4b))
1) Name and jurisdiction of organization of each constituent entity (NRS 92A.
200). If there are more than four merging entities, check box [ ] and
attach an 8 1/2" X 11" blank sheet containing the required information
for each additional entity.
Pinoak, Inc.
----------------------
Name of merging entity
Nevada Corporation
------------ ------------
Jurisdiction Entity type*
-------------------
Name of merging entity
------------ ------------
Jurisdiction Entity type*
-------------------
Name of merging entity
------------ ------------
Jurisdiction Entity type*
-------------------
Name of merging entity
------------ ------------
Jurisdiction Entity type*
and,
Xxxxx Laboratories, Inc.
------------------------
Name of surviving entity
Nevada Corporation
------------ ------------
Jurisdiction Entity type*
* Corporation, non-profit corporation, limited partnership, limited-liability
company or business trust.
Filing Fee: $350.00
This form must be accompanied by appropriate fees.
XXXX XXXXXX
Secretary of State
[state seal] 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0
Xxxxxx Xxxx, Xxxxxx 00000-0000
(000) 000 0000
Website: xxxxxxxxxxxxxxxx.xxx
-----------------------------------------------
- Articles of Merger -
- (Pursuant to NRS 92A.200) -
- Page 2 -
-----------------------------------------------
ABOVE SPACE IS FOR OFFICE USE ONLY
2) Forwarding address where copies of process may be sent by the Secretary of
State of Nevada (if a foreign entity is the survivor in the merger - NRS
92A.1 90):
Attn: Xxxxx Laboratories, Inc.
------------------------
c/o: 000 X. Xxxxxxx, Xxxxx 000
-------------------------
Xxx Xxxxx, Xxxxxx 00000
------------------------
3) (Choose one)
[X] The undersigned declares that a plan of merger has been adopted by
each constituent entity (NRS 92A.200).
[ ] The undersigned declares that a plan of merger has been adopted
by the parent domestic entity (NRS 92A.180)
4) Owner's approval (NRS 92A.200)(options a, b, or c must be used, as
applicable, for each entity)(if there are more than four merging entities,
check box [ ] and attach an 8 1/2" X 11" blank sheet containing the
required information for each additional entity):
(a) Owner's approval was not required from
---------------------------------------------------------
Name of merging entity, if applicable
---------------------------------------------------------
Name of merging entity, if applicable
---------------------------------------------------------
Name of merging entity, if applicable
---------------------------------------------------------
Name of merging entity, if applicable
and, or;
---------------------------------------------------------
Name of surviving entity, if applicable
This form must be accompanied by appropriate fees.
XXXX XXXXXX
Secretary of State
[state seal] 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0
Xxxxxx Xxxx, Xxxxxx 00000-0000
(000) 000 0000
Website: xxxxxxxxxxxxxxxx.xxx
-----------------------------------------------
- Articles of Merger -
- (Pursuant to NRS 92A.200) -
- Page 3 -
-----------------------------------------------
ABOVE SPACE IS FOR OFFICE USE ONLY
(b) The plan was approved by the required consent of the owners of*:
Pinoak, Inc.
-------------------------------------
Name of merging entity, if applicable
-------------------------------------
Name of merging entity, if applicable
-------------------------------------
Name of merging entity, if applicable
-------------------------------------
Name of merging entity, if applicable
and, or;
Xxxxx Laboratories, Inc.
---------------------------------------
Name of surviving entity, if applicable
* Unless otherwise provided in the certificate of trust or governing
instrument of a business trust, a merger must be approved by all the trustees
and beneficial owners of each business trust that is a constituent entity in
the merger.
This form must be accompanied by appropriate fees.
XXXX XXXXXX
Secretary of State
[state seal] 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0
Xxxxxx Xxxx, Xxxxxx 00000-0000
(000) 000 0000
Website: xxxxxxxxxxxxxxxx.xxx
-----------------------------------------------
- Articles of Merger -
- (Pursuant to NRS 92A.200) -
- Page 4 -
-----------------------------------------------
ABOVE SPACE IS FOR OFFICE USE ONLY
(c) Approval of plan of merger for Nevada non-profit corporation (NRS
92A.160):
The plan of merger has been approved by the directors of the
corporation and by each public officer or other person whose approval
of the plan of merger is required by the articles of incorporation of
the domestic corporation.
-------------------------------------
Name of merging entity, if applicable
-------------------------------------
Name of merging entity, if applicable
-------------------------------------
Name of merging entity, if applicable
-------------------------------------
Name of merging entity, if applicable
and, or;
---------------------------------------
Name of surviving entity, if applicable
This form must be accompanied by appropriate fees.
XXXX XXXXXX
Secretary of State
[state seal] 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0
Xxxxxx Xxxx, Xxxxxx 00000-0000
(000) 000 0000
Website: xxxxxxxxxxxxxxxx.xxx
-----------------------------------------------
- Articles of Merger -
- (Pursuant to NRS 92A.200) -
- Page 5 -
-----------------------------------------------
ABOVE SPACE IS FOR OFFICE USE ONLY
5) Amendments, if any, to the articles or certificate of the surviving
entity. Provide article numbers, if available. (NRS 92A.200)*:
----------------------------------------------------
6) Location of Plan of Merger (check a or b):
[ ] (a) The entire plan of merger is attached;
or,
[X] (b) The entire plan of merger is on file at the registered office of
the surviving corporation, limited-liability company or business
trust, or at the records office address if a limited partnership, or
other place of business of the surviving entity (NRS 92A.200).
7) Effective date (optional)**:
----------------------
* Amended and restated articles may be attached as an exhibit or integrated
into the articles of merger. Please entitle them "Restated" or "Amended and
Restated," accordingly. The form to accompany restated articles prescribed
by the secretary of state must accompany the amended and/or restated
articles. Pursuant to NRS 92A.180 (merger of subsidiary into parent Nevada
parent owning 90% or more of subsidiary), the articles of merger may not
contain amendments to the constituent documents of the surviving entity
except that the name of the surviving entity may be changed.
** A merger takes effect upon filing the articles of merger or upon a later
date as specified in the articles, which must not be more than 90 days after
the articles are filed (NRS 92A.240).
This form must be accompanied by appropriate fees.
XXXX XXXXXX
Secretary of State
[state seal] 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0
Xxxxxx Xxxx, Xxxxxx 00000-0000
(000) 000 0000
Website: xxxxxxxxxxxxxxxx.xxx
-----------------------------------------------
- Articles of Merger -
- (Pursuant to NRS 92A.200) -
- Page 6 -
-----------------------------------------------
ABOVE SPACE IS FOR OFFICE USE ONLY
8) Signatures ? Must be signed by: An officer of each Nevada corporation; All
general partners of each Nevada limited partnership; All general partners
of each Nevada limited partnership; A manager of each Nevada limited-
liability company with managers or all the members if there are no
managers; A trustee of each Nevada business trust (NRS 92A.230)*
(If there are more than four merging entities, check box [ ] and attach an
8 1/2" X 11" blank sheet containing the required information for each
additional entity.):
Pinoak, Inc.
------------------------
Name of merging entity
/s/ Xxxx Xxxxx Director 4/14/2006
------------------------ -------- ----------
Signature Title Date
------------------------
Name of merging entity
------------------------ -------- ----------
Signature Title Date
------------------------
Name of merging entity
------------------------ -------- ----------
Signature Title Date
------------------------
Name of merging entity
------------------------ -------- ----------
Signature Title Date
Xxxxx Laboratories, Inc.
------------------------
Name of surviving entity
/s/ X. X. Xxxxx President 4/14/2006
------------------------ --------- ----------
Signature Title Date
* The articles of merger must be signed by each foreign constituent entity in
the manner provided by the law governing it (NRS 92A.230). Additional
signature blocks may be added to this page or as an attachment, as needed.
IMPORTANT: Failure to include any of the above information and submit the
proper fees may cause this filing to be rejected.
This form must be accompanied by appropriate fees.
Exhibit B
RESOLUTION IN LIEU OF STOCKHOLDERS MEETING
THE UNDERSIGNED, being the sole Stockholder of Pinoak, Inc., a Nevada
Corporation, in lieu of a Stockholders meeting, hereby consent to the following
resolutions:
RESOLVED, that the Corporation enter into an Acquisition Agreement
and Plan of Merger with XXXXX LABORATORIES, INC. (A copy of which is attached)
hwith XXXXX LABORATORIES, INC. remaining as the surviving corporation, and be it
FURTHER RESOLVED, that the Corporation officers are hereby authorized
to execute any and all documents necessary to accomplish the merger.
DATED: April 14, 2006
/s/ Xxxx Xxxxx
-----------------------
Xxxx Xxxxx
