AGREEMENT AND PLAN OF REORGANIZATION
among
XXXX X. XXXXXXX
XXXXXX X. XXXXXXX
XXXXXXX X. XXXXXXX
XXXX X. XXXXXXX
and
WESTSTAR ENVIRONMENTAL, INC.,
a Florida Corporation
Effective as of June 1, 2000
Cover Page
ARTICLE 1 - DEFINITIONS...................................................... 1
ARTICLE 2 - REORGANIZATION................................................... 3
2.1 QUALIFYING B REORGANIZATION......................................... 3
2.2 IMPLEMENTATION OF REORGANIZATION.................................... 3
2.3 ADDITIONAL ACTIONS AT CLOSING....................................... 4
2.4 NONCOMPETE PAYMENTS................................................. 4
2.5 POST-CLOSING ADJUSTMENT AND ESCROW OF CERTAIN WESTSTAR SHARES....... 4
ARTICLE 3 - CLOSING.......................................................... 4
3.1 CLOSING............................................................. 4
3.2 DELIVERIES BY SELLERS AT CLOSING.................................... 4
3.3 DELIVERIES BY WESTSTAR AT CLOSING................................... 5
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF SELLERS........................ 6
4.1 ORGANIZATION AND POWER OF THE COMPANY............................... 6
4.2 AUTHORITY RELATIVE TO AGREEMENT..................................... 6
4.3 AUTHORIZED CAPITALIZATION........................................... 6
4.4 OWNERSHIP AND TRANSFER OF COMMON SHARES............................. 6
4.5 ENFORCEABILITY OF AGREEMENT......................................... 6
4.6 EFFECT OF AGREEMENT................................................. 7
4.7 INFORMATION FURNISHED BY SELLERS TO WESTSTAR........................ 7
4.8 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES.................... 7
4.9 LITIGATION.......................................................... 7
4.10 RESTRICTIVE DOCUMENTS............................................... 8
4.11 COMPLIANCE WITH LAWS................................................ 8
4.12 SUBSIDIARIES........................................................ 8
4.13 PROPRIETARY RIGHTS.................................................. 8
4.14 TAX MATTERS......................................................... 9
4.15 UNION CONTRACTS AND LABOR RELATIONS................................. 9
4.16 EMPLOYEES/EMPLOYEE BENEFIT PLANS.................................... 9
4.17 CONDUCT OF BUSINESS................................................. 10
4.18 SOLVENCY............................................................ 10
4.19 LEASES.............................................................. 10
4.20 REAL AND PERSONAL PROPERTY.......................................... 10
4.21 MATERIAL CONTRACTS.................................................. 11
4.22 GOVERNMENT PERMITS.................................................. 11
4.23 TITLE TO PROPERTIES................................................. 12
4.24 INSURANCE........................................................... 12
4.25 ACCOUNTS RECEIVABLE................................................. 12
4.26 TRANSACTIONS WITH AFFILIATES........................................ 12
4.27 BANK ACCOUNTS, POWERS OF ATTORNEY AND COMPENSATION OF EMPLOYEES..... 12
4.28 INVENTORY........................................................... 12
4.29 SUPPLIERS AND CUSTOMERS............................................. 12
4.30 BOOKS AND RECORDS................................................... 13
4.31 DISCLOSURE.......................................................... 13
4.32 BROKER'S OR FINDER'S FEES........................................... 13
4.33 ABSENCE OF CERTAIN EVENTS........................................... 13
4.34 CUSTOMERS........................................................... 13
4.35 SUBSTANTIAL SUPPLIERS............................................... 14
4.36 PRODUCT WARRANTY.................................................... 14
4.37 DISPOSAL OR RELEASE OF HAZARDOUS SUBSTANCES......................... 14
4.38 INVESTMENT REPRESENTATION........................................... 14
4.39 ACCOUNTS PAYABLE.................................................... 15
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ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF WESTSTAR....................... 16
5.1 ORGANIZATION AND POWER OF WESTSTAR.................................. 16
5.2 AUTHORITY RELATIVE TO AGREEMENT..................................... 16
5.3 ENFORCEABILITY OF AGREEMENT......................................... 16
5.4 EFFECT OF AGREEMENT................................................. 16
5.5 RESTRICTIVE DOCUMENTS............................................... 16
5.6 FULL DISCLOSURE..................................................... 16
5.7 INVESTMENT REPRESENTATION........................................... 16
5.8 AUTHORIZED CAPITALIZATION........................................... 17
5.9 INFORMATION FURNISHED BY WESTSTAR TO SELLERS........................ 17
5.10 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES.................... 17
5.11 TAX MATTERS......................................................... 17
5.12 BROKER'S OR FINDER'S FEES........................................... 18
ARTICLE 6 - COVENANTS OF SELLERS............................................. 18
6.1 CONDUCT OF BUSINESS................................................. 18
6.2 EXCLUSIVE DEALING................................................... 19
6.3 REVIEW OF THE COMPANY OR ITS SUBSIDIARIES........................... 19
6.4 REGULATORY APPROVALS................................................ 19
6.5 CHANGES IN CAPITAL STOCK............................................ 19
6.6 FURTHER ASSURANCES.................................................. 19
6.7 KEY EMPLOYEES....................................................... 19
6.8 BEST EFFORTS........................................................ 19
6.9 NONSOLICITATION OF EMPLOYEES........................................ 20
ARTICLE 7 - COVENANTS OF WESTSTAR............................................ 20
7.1 REGULATORY APPROVALS................................................ 20
7.2 FURTHER ASSURANCES.................................................. 20
7.3 CONFIDENTIALITY..................................................... 20
ARTICLE 8 - CONDITIONS TO WESTSTAR'S OBLIGATIONS............................. 20
8.1 NO MATERIAL ADVERSE CHANGE.......................................... 20
8.2 TRUTH OF REPRESENTATIONS AND WARRANTIES............................. 21
8.3 PERFORMANCE OF AGREEMENTS........................................... 21
8.4 NO PROCEEDINGS...................................................... 21
8.5 GOVERNMENTAL APPROVALS.............................................. 21
8.6 PROCEEDINGS......................................................... 21
8.7 OPINION OF COUNSEL.................................................. 21
ARTICLE 9 - CONDITIONS TO OBLIGATIONS OF SELLERS............................. 21
9.1 TRUTH OF REPRESENTATIONS AND WARRANTIES............................. 22
9.2 PERFORMANCE OF AGREEMENTS........................................... 22
9.4 NO PROCEEDINGS...................................................... 22
9.5 GOVERNMENTAL APPROVALS.............................................. 22
9.6 PROCEEDINGS......................................................... 22
ARTICLE 10 - SURVIVAL OF REPRESENTATIONS; INDEMNITY.......................... 22
10.1 SURVIVAL OF REPRESENTATIONS......................................... 22
10.2 INDEMNIFICATION BY SELLERS.......................................... 22
10.3 INDEMNIFICATION BY WESTSTAR......................................... 23
10.4 REDUCTION OF PAYMENTS............................................... 23
10.5 DEFENSE............................................................. 23
10.6 TIME FOR NOTICE..................................................... 23
10.7 TIME FOR PAYMENT.................................................... 24
10.8 WESTSTAR'S IPO...................................................... 24
10.9 INITIAL OPERATION OF THE COMPANY POST-CLOSING....................... 24
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ARTICLE 11 - MISCELLANEOUS................................................... 24
11.1 TERMINATION OF AGREEMENT............................................ 24
11.2 EXECUTION IN COUNTERPARTS........................................... 25
11.3 NOTICES............................................................. 25
11.4 WAIVERS............................................................. 25
11.5 SPECIFIC PERFORMANCE................................................ 26
11.6 ENTIRE AGREEMENT.................................................... 26
11.7 APPLICABLE LAW...................................................... 26
11.8 BINDING EFFECT...................................................... 26
11.9 ASSIGNABILITY....................................................... 26
11.10 EXPENSES............................................................ 26
11.11 PUBLICITY........................................................... 26
11.12 AMENDMENTS.......................................................... 27
11.13 NO THIRD PARTY BENEFICIARIES........................................ 27
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SCHEDULES
Schedule 4.9 Litigation
Schedule 4.13 Proprietary Rights
Schedule 4.14 Tax Matters
Schedule 4.15 Union Contracts and Labor Relations
Schedule 4.16 Employees and Employee Benefit Plans
Schedule 4.19 Leases
Schedule 4.20 Real and Personal Property
Schedule 4.21 Material Contracts
Schedule 4.22 Permits, Licenses, Etc.
Schedule 4.24 Insurance
Schedule 4.25 Accounts Receivable
Schedule 4.26 Transactions with Affiliates
Schedule 4.27 Bank Accounts, Etc.
Schedule 4.34 Material Customers
Schedule 4.35 Material Suppliers
Schedule 4.36 Product Warranty
Schedule 4.39 Accounts Payable
EXHIBITS
Exhibit 1-A Form of Promissory Note
Exhibit 1-B Form of Employment Agreement
Exhibit 1-C Form of Noncompetition Agreement
Exhibit 1-D Form of Lease Agreement
Exhibit 4.8 Financial Statements
Exhibit 8.7 Form of Opinion of Wealing Shareholders' Counsel
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is effective as of June 1, 2000,
among XXXX X. XXXXXXX, XXXXXX X. XXXXXXX, XXXXXXX X. XXXXXXX AND XXXX X. XXXXXXX
(collectively, "Wealing Shareholders"), and WESTSTAR ENVIRONMENTAL, INC., a
Florida corporation ("Weststar").
PRELIMINARY STATEMENT. Wealing Shareholders own collectively 100 shares of
common stock, no par value (the "Wealing Shares"), of WEALING BROTHERS, INC., an
Indiana corporation (the "Company"), representing one hundred percent (100%) of
the issued and outstanding shares of common stock in the Company. The Company
specializes in bio-waste transport and spreading. Wealing Shareholders desire to
sell and Weststar desires to purchase the Wealing Shares, upon the terms and
subject to the conditions hereinafter set forth. Wealing Shareholders desire to
transfer and exchange the Wealing Shares for common stock in Weststar, and
Weststar desires to exchange certain of its common stock for the Wealing Shares,
pursuant to Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended, and upon the terms and subject to the conditions hereinafter set forth.
ACCORDINGLY, the parties hereby agree as follows:
ARTICLE 1 - DEFINITIONS
All terms used herein without definition that are defined in the Uniform
Commercial Code as enacted and in effect from time to time in the State of
Florida shall have the same meanings herein as they have in the Uniform
Commercial Code, unless otherwise provided herein. In addition, the following
terms shall have the meanings assigned to them below:
ACCOUNTS PAYABLE. "Accounts Payable" shall have the meaning assigned to it
in Section 4.39 hereof.
ACCOUNTS RECEIVABLE. "Accounts Receivable" shall have the meaning assigned
to it in Section 4.25 hereof.
AFFILIATE. "Affiliate" shall mean any Person that owns or controls, is
owned or controlled by or is under common ownership or control with the Person
in question.
CLOSING. "Closing" shall have the meaning assigned to it in Section 3.1
hereof.
CLOSING DATE. "Closing Date" shall have the meaning assigned to it in
Section 3.1 hereof.
CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.
COMPANY. "Company" shall have the meaning assigned to it in the Preliminary
Statement.
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EMPLOYMENT AGREEMENTS. "Employment Agreements" shall mean the respective
Employment Agreements between Weststar and Xxxx X. Xxxxxxx and Xxxxxx X.
Xxxxxxx, substantially in the form of EXHIBIT 1-B hereto.
ENVIRONMENTAL LAW. "Environmental Law" shall mean any governmental statute,
law, ordinance, code, rule, regulation, order or decree or any decision,
conclusion or determination made by a government official relating to or
imposing liability or standards of conduct as may now or at any time hereafter
be in effect regarding any air emission, water discharge or the use, storage,
handling, generation or disposal of any hazardous materials, including without
limitation the following, as the same may be amended or replaced from time to
time, and all regulations promulgated thereunder or in connection therewith: the
Superfund Amendments and Reauthorization Act of 1986 ("XXXX"); the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"); the
Clean Air Act ("CAA"); the Clean Water Act ("CWA"); the Toxic Substances Control
Act ("TSCA"); the Solid Waste Disposal Act ("SWDA"), as amended by the Resource
Conservation and Recovery Act ("RCRA"); and the Occupational Safety and Health
Act of 1970 ("OSHA").
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
GAAP. "GAAP" shall mean generally accepted accounting principles,
consistently applied.
IPO DATE. "IPO Date" shall have the meaning assigned to it Section 10.8
hereof.
IRS. "IRS" shall mean the Internal Revenue Service.
LEASE AGREEMENT. "Lease Agreement" shall mean the Lease Agreement between
Xxxx X. Xxxxxxx and Weststar for the real property commonly known as 0000 Xxxxx
000 Xxxx, Xxxxxx, Xxxxxxx 00000, which shall be substantially in the form of
EXHIBIT 1-D attached hereto.
NONCOMPETITION AGREEMENTS. "Noncompetition Agreements" shall mean the
respective Noncompetition Agreements between Weststar and each Wealing
Shareholder, substantially in the form of EXHIBIT 1-C hereto.
NOTES. "Notes" shall mean four term notes, one to each Wealing Shareholder
from Weststar in the original principal amount of $90,000.00 each ($360,000 in
the aggregate), payable at eight and one-half percent (8.5 %) interest per
annum, given in payment for each Wealing Shareholder's obligations under their
respective Noncompetition Agreement, which shall be substantially in the form of
EXHIBIT 1-A attached hereto).
PERSON. "Person" shall mean an individual, partnership, joint venture,
corporation, trust, business entity, unincorporated organization or government
or department or agency thereof.
PURCHASE PRICE. "Purchase Price" shall have the meaning assigned to it in
Section 2.2 hereof.
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REORGANIZATION. "Reorganization" shall mean the exchange of the Weststar
Shares for the Wealing Shares pursuant to Section 368(a)(1)(B) of the Code.
SECURITIES ACT. "Securities Act" shall have the meaning assigned to it in
Section 4.38 hereof.
SUBSIDIARY. "Subsidiary" shall mean, with respect to any corporation,
another corporation, more than 50% of whose voting securities are owned,
directly or indirectly, by the corporation in question.
WEALING SHAREHOLDERS LIABILITIES. "Wealing Shareholders Liabilities" shall
have the meaning assigned to it in Section 10.2 hereof.
WEALING SHARES. "Wealing Shares" shall have the meaning assigned to it in
the Preliminary Statement.
WESTSTAR'S IPO. "Weststar's IPO" shall have the meaning assigned to it
Section 10.8 hereof.
WESTSTAR SECURITIES. "Weststar Securities" shall have the meaning assigned
to it in Section 4.38 hereof.
WESTSTAR SHARES. "Weststar Shares" shall mean 82,500 shares of Weststar's
common stock, $.001 par value (valued at $6.00 per share), provided by Weststar
to Wealing Shareholders (20,625 shares to each Wealing Shareholder) in exchange
for the Wealing Shares. [The amount of Weststar Shares shall be reduced or
increased if there is a decrease or increase in the net worth of the Company on
the Closing Date, as compared to the financial statements attached hereto as
EXHIBIT 4.8 (i.e., the number of Weststar Shares shall be decreased or increased
one share for every six dollars of decrease or increase in the Company's net
worth).]
ARTICLE 2 - REORGANIZATION
2.1 QUALIFYING "B" REORGANIZATION. The Reorganization shall be deemed
effective as of the Closing Date. Pursuant to the requirements of Section
368(a)(1)(B) of the Code and the regulations promulgated thereunder, On the
Execution Date, Weststar will issue and deliver the Weststar Shares in exchange
for the Wealing Shares (subject to the post-closing adjustment detailed in
Section 2.5 hereinbelow). Immediately after the exchange, Weststar shall have
control (as defined in section 368(c) of the Code) of the Company.
2.2 IMPLEMENTATION OF REORGANIZATION. Wealing Shareholders shall cause the
Company to (i) take all corporate actions and obtain all approvals and consents
necessary to complete the Reorganization, (ii) secure the consent of any party
(where such consent is necessary) to the consummation of such Reorganization,
(iii) file all necessary documents, returns, notices and/or applications with
all governmental bodies necessary to complete the
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Reorganization, and (iv) on the Execution Date, deliver and transfer the
certificates representing the Wealing Shares, together with stock power duly
endorsed in blank.
2.3 ADDITIONAL ACTIONS AT CLOSING. In addition to the exchange of the
Wealing Shares for the Weststar Shares, on the Execution Date, Weststar, Wealing
Shareholders and the Company (caused by Weststar post closing), as appropriate,
shall enter into the Employment Agreements, the Noncompetition Agreements and
the Lease Agreement.
2.4 NONCOMPETE PAYMENTS. In full consideration for Wealing Shareholders
entering into the Noncompetition Agreements, Weststar shall deliver to Wealing
Shareholders on the Execution Date the Notes (the payments under the Notes shall
be referred to herein collectively as the "Noncompete Payments").
2.5 POST-CLOSING ADJUSTMENT AND ESCROW OF CERTAIN WESTSTAR SHARES. Weststar
and Wealing Shareholders have agreed that the 82,500 shares of Weststar's common
stock given in exchange for the Wealing Shares has been based upon the Company's
net worth as shown on the December 31, 1999 audited financials (i.e.,
$394,038.00). On the Execution Date, Weststar shall issue 60,000 shares of
Weststar's common stock (15,000 to each Wealing Shareholder), and shall hold
22,500 shares in escrow pending the post-closing determination of the Company's
net worth as of the Closing Date.
Within sixty (60) days following the Closing Date, Weststar and Wealing
Shareholders shall use their respective reasonable best efforts to determine the
net worth of the Company as of the Closing Date. Within ten (10) days following
such determination, Weststar shall cause the remaining amount of Weststar Shares
to be issued to Wealing Shareholders equally. The number of Weststar Shares
shall be decreased or increased one share for every six dollars of decrease or
increase in the Company's net worth on the Closing Date in comparison to that
shown on the December 31, 1999 audited financials.
ARTICLE 3 - CLOSING
3.1 CLOSING. Subject to the satisfaction or waiver of all of the conditions
set forth in Sections 8 and 9 hereof, the Reorganization and the consummation of
the other transactions contemplated by this Agreement (the "Closing") shall be
effective as of June 1, 2000 (the "Closing Date").
3.2 DELIVERIES BY WEALING SHAREHOLDERS AT CLOSING. On the Execution Date,
Wealing Shareholders shall deliver to Weststar the following:
(a) The stock certificates representing the Wealing Shares, duly endorsed
in blank or accompanied by stock powers duly executed in blank, with all
necessary transfer tax and other revenue stamps paid and, if appropriate,
affixed and cancelled;
(b) (i) Copies of the Company's articles of incorporation, including all
amendments thereto, certified by the Secretary of State of the State of Indiana,
and (ii) a
4
certificate from the Secretary of State of the State of Indiana to the effect
that the Company is in good standing;
(c) The Company's minute book, containing all resolutions and minutes
adopted or approved by the Company's board of directors and or shareholder
though the Execution Date, along with the Company's stock transfer records and
unissued stock certificates;
(d) A Closing Certificate as to the matters specified in Sections 8.1, 8.2,
8.3, 8.4 and 8.5 hereof;
(e) Resignation letters, whereby Wealing Shareholders resign from all
positions they may hold as officers or directors of the Company;
(f) The respective Employment Agreements, duly executed by Xxxx X. Xxxxxxx
and Xxxxxx X. Xxxxxxx, respectively;
(g) The respective Noncompetition Agreements, duly executed by each Wealing
Shareholder;
(h) The Lease Agreement, duly executed by Xxxx X. Xxxxxxx;
(i) .An opinion of counsel to Wealing Shareholders, as provided in Section
8.7 hereof and
(j) All other documents that are required herein to be delivered by Wealing
Shareholders.
3.3 DELIVERIES BY WESTSTAR AT CLOSING. On the Execution Date, Weststar
shall deliver to Wealing Shareholders the following:
(a) The Notes, executed on behalf of Weststar;
(b) Stock certificates representing a portion of the Weststar Shares
(subject to the provisions of Section 2.5 hereof) having the appropriate
restrictive legends;
(c) (i) Copies of Weststar's articles of incorporation, including all
amendments thereto, certified by the Secretary of State of the State of Florida,
and (ii) a certificate from the Secretary of State of the State of Florida to
the effect that Weststar is in good standing;
(d) A Closing Certificate as to the matters specified in Sections 9.1, 9.2,
9.3 and 9.4 hereof;
(e) A Secretary's Certificate of Weststar, certifying resolutions adopted
by the Board of Directors of Weststar, authorizing the transactions contemplated
hereby;
5
(f) The Employment Agreements, executed on behalf of Weststar;
(g) The Noncompetition Agreements, executed on behalf of Weststar;
(h) The Lease Agreement, executed on behalf of Weststar; and
(i) All other documents that are required herein to be delivered by
Weststar.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF WEALING SHAREHOLDERS
Wealing Shareholders hereby represent and warrant to Weststar that:
4.1 ORGANIZATION AND POWER OF THE COMPANY. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Indiana and is duly qualified to do business as a foreign corporation
in each jurisdiction where the conduct of business or the ownership or lease of
property requires or makes it desirable for the Company to be so qualified.
4.2 AUTHORITY RELATIVE TO AGREEMENT. The execution, delivery and
performance of this Agreement by Wealing Shareholders, and the consummation by
Wealing Shareholders of the transactions contemplated hereby and thereby, do not
require the authorization of any third party.
4.3 AUTHORIZED CAPITALIZATION. The authorized capital stock of the Company
consists of 1,000 shares of common stock, no par value per share, of which 100
shares are issued and outstanding to Wealing Shareholders, 25 to each Wealing
Shareholder. There are no outstanding options, warrants, rights, calls,
commitments, conversion rights, rights of exchange, plans or other agreements of
any character providing for the purchase, issuance or sale of any shares of the
capital stock of the Company, other than as contemplated by this Agreement.
4.4 OWNERSHIP AND TRANSFER OF WEALING SHARES. All of the Wealing Shares
have been duly authorized and validly issued and are fully paid and
nonassessable. Wealing Shareholders are the lawful owners of the Wealing Shares,
free and clear of all liens, encumbrances, restrictions and claims of every
kind. Wealing Shareholders have full legal right, power and authority to enter
into this Agreement and to sell, assign, transfer and convey the Wealing Shares
to Weststar pursuant to this Agreement. The delivery to Weststar of the Wealing
Shares pursuant to the provisions of this Agreement will transfer to Weststar
full, valid title thereto, free and clear of all liens, encumbrances,
restrictions and claims of every kind. None of the Wealing Shares is subject to
any federal or state restriction on resale or transfer. The certificates
representing the Wealing Shares do not bear a legend of any kind thereon.
4.5 ENFORCEABILITY OF AGREEMENT. Wealing Shareholders have duly executed
and delivered this Agreement. This Agreement constitutes a valid and binding
obligation of Wealing Shareholders, enforceable in accordance with its terms.
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4.6 EFFECT OF AGREEMENT. The execution, delivery and performance of this
Agreement by Wealing Shareholders and the consummation by Wealing Shareholders
of the transactions contemplated hereby do not and will not (i) to the best of
Wealing Shareholders' knowledge following reasonable diligent inquiry, violate
any provision of law applicable to the Company or the corporate articles of
incorporation or bylaws of the Company; (ii) require the consent, waiver,
approval, license or authorization of, or filing with, any Person; or (iii) with
or without the giving of notice or the passage of time or both, conflict with or
result in a breach or termination of, constitute a default under, or result in
the creation of any lien, charge or encumbrance upon any of the assets of the
Company, pursuant to any provision of any mortgage, deed of trust, indenture or
other agreement or instrument, or any order, judgment, decree or any other
restriction of any kind or character, to which the Company is a party or by
which its assets may be bound, including, without limitation, any loan documents
between the Company and any financial institution.
4.7 INFORMATION FURNISHED BY WEALING SHAREHOLDERS TO WESTSTAR. There is no
fact that the Wealing Shareholders have not disclosed herein that materially and
adversely affects the properties, business, prospects, profits or condition
(financial or otherwise) of the Company, except that Wealing Shareholders make
no representation or warranty as to the effect of general economic conditions,
the condition of the financial markets, future legislation or future regulatory
action. There has been no materially adverse change in the assets or
liabilities, the business or condition, financial or otherwise, the results of
operations or the prospects of the Company since May 31, 2000.
4.8 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES. Wealing Shareholders
have heretofore furnished to Weststar true and complete copies of (i) the
audited financial statements of the Company as of December 31, 1999, (ii) the
unaudited balance sheet of the Company at May 31, 2000, and (iii) the related
unaudited statement of income and retained earnings and statement of cash flows
for the Company as of May 31, together with the notes thereto (collectively, the
"Financial Statements," copies of which are attached hereto as EXHIBIT 4.8). The
Financial Statements were prepared in accordance with GAAP and present fairly
the financial position, results of operations and cash flow of the Company as of
the date and for the period indicated. Except as disclosed in the Financial
Statements, the Company has no material liabilities or obligations of any kind,
whether accrued, absolute, contingent or otherwise, whether or not such
liabilities or obligations would have been required to be disclosed on a balance
sheet prepared in conformity with GAAP. Without limiting the generality of the
foregoing, the Company has no liability (and there is no basis for any present
or future charge, complaint, action, suit, proceeding, hearing, investigation,
claim or demand against it giving rise to any liability) arising out of any
injury to persons or property as a result of the ownership, possession or use of
any product manufactured, sold, leased or delivered by the Company or any of its
dealers or representatives.
4.9 LITIGATION. Except as disclosed in SCHEDULE 4.9 hereto, (i) there
are no claims, actions, proceedings or investigations pending or threatened
against or relating to the Company, before any court or governmental or
regulatory authority or body, and (ii) neither the Company nor any of its
property is subject to any order, judgment, injunction or decree that materially
adversely affects the financial condition, assets, business or prospects of the
Company.
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4.10 RESTRICTIVE DOCUMENTS. The Company is not subject to, or a party to,
any charter, bylaw, mortgage, lien, lease, license, permit, agreement, contract,
instrument, law, rule, ordinance, regulation, order, judgment or decree, or
other restriction of any kind or character, that materially adversely affects
the business practices, operations or condition of the Company or any of its
assets or property, or that would prevent consummation of the transactions
contemplated by this Agreement, compliance by Wealing Shareholders with the
terms, conditions and provisions hereof or thereof or the continued operation of
the Company's business after the date hereof on substantially the same basis as
heretofore operated.
4.11 COMPLIANCE WITH LAWS. To the best of Wealing Shareholders' knowledge
following reasonable diligent inquiry, the Company is and at all times has been
in compliance in all material respects with all applicable statutes, laws,
regulations, rules, orders, judgments and decrees, including, without
limitation, all applicable federal, state and local laws, administrative
rulings, regulations and regulating approvals relating to (a) protection of the
environment, (b) wages, hours, hiring, non-discrimination, promotion,
retirement, benefits, pensions and working conditions, (c) air, water, toxic
substances, pesticides, noise, odor or solid gaseous or liquid waste generation,
and handling, storage, disposal or transportation thereof, (d) health and
safety, (e) zoning and building codes, (f) production, storage, processing,
advertising, sale, transportation, destruction, disposal, use and warranty of
products, and (g) trade and antitrust regulations. The Company has received no
notice from any governmental or regulatory agency or authority that it is not in
such compliance.
4.12 SUBSIDIARIES. The Company has no Subsidiaries.
4.13 PROPRIETARY RIGHTS. SCHEDULE 4.13 sets forth a correct and complete
list of all licenses (or other rights to use), copyrights, trademarks, service
marks, trade names, patents, assumed or fictitious names, logos, trade secrets,
know-how and other proprietary rights and applications therefor and
registrations thereof that are material to the conduct of the business of the
Company (collectively, "Proprietary Rights"). The Company has a right to use
such proprietary rights in connection with its business as presently being
conducted, and no claim has been made against the Company that such use violates
the rights of any third party. To the best of Wealing Shareholders' knowledge,
all Proprietary Rights of the Company are free from any claim of others,
security interest, lien, encumbrance or restriction, there is no default with
respect thereto on the part of the Company, and such Proprietary Rights have not
been and are not now being challenged in any way or involved in any pending or
threatened infringement, unfair competition or other proceeding. To the best of
Wealing Shareholders' knowledge, the Company is not infringing the rights of any
other Person with respect to any Proprietary Right and has not received any
claim of any such infringement or violation. To the best of Wealing
Shareholders' knowledge, none of the rights of the Company to any Proprietary
Right will be impaired in any way by the transactions contemplated by this
Agreement.
8
4.14 TAX MATTERS. Except as may be disclosed on SCHEDULE 4.14 hereto:
(a) The Company (i) has duly and timely filed with the appropriate
governmental authorities all tax returns and reports required to be filed and
(ii) has duly paid all taxes, interest, penalties, assessments and deficiencies
and other governmental charges upon it and its properties, assets, income,
business, sales and payrolls, including all amounts assessed as additional
taxes, penalties and interest.
(b) The Company has not been audited by the IRS during the past five (5)
years. The Company has not executed or filed with the IRS or any other taxing
authority any agreement extending the period for assessment or collection of any
income or other taxes.
(c) The Company is not a party to any pending action or proceeding nor, to
the best of Wealing Shareholders' knowledge, is any action or proceeding
threatened by any governmental authority for assessment or collection of taxes,
and no claim for assessment or collection of taxes has been asserted against the
Company.
(d) The Company has withheld proper and accurate amounts from its employees
in full and complete compliance with all withholding and similar provisions of
the Code and any and all other applicable United States, foreign, state or local
laws, statutes, codes, ordinances, rules and regulations. The Company has timely
filed the proper federal, foreign, state and local returns, reports and
estimates with respect to employee income tax withholding, social security taxes
and unemployment taxes (or comparable or similar taxes or charges) for all years
and periods (or portions thereof) for which such returns and reports were due,
and any and all amounts that were due and payable have been paid in full. All
payments (including interest and penalties thereon) due or to become due from
the Company with respect to its employee income tax withholding, social security
taxes and unemployment taxes (or comparable or similar taxes or charges) for any
year or period (or portions thereof) ended on or prior to or including the
Closing Date, have been paid in full or are adequately reserved for (excluding
deferred tax accounts).
4.15 UNION CONTRACTS AND LABOR RELATIONS. Except as set forth in SCHEDULE
4.15, the Company is not a party to any collective bargaining or union agreement
and there is no (i) labor strike, dispute, grievance, controversy or other labor
trouble pending or, to the best knowledge of Wealing Shareholders, threatened
that may materially affect the Company, (ii) application for certification of a
collective bargaining agent pending or, to the knowledge of Wealing
Shareholders, threatened or (iii) complaint pending or, to the knowledge of
Wealing Shareholders, threatened or on file with any federal, state or local
governmental agencies alleging employment discrimination.
4.16 EMPLOYEES/EMPLOYEE BENEFIT PLANS. SCHEDULE 4.16 sets forth a correct
and complete list of all current employees of the Company, and all employee
benefit plans (collectively, the "Plans") maintained by the Company, in which it
participates or may be required to participate or in respect of which it may
have any liability. Except for the Plans, the Company does not have in effect,
participate in, or have any liability for any plan, fund or program as defined
in Section III(2) of the Employee Retirement Income Act of 1974, as amended
("ERISA"), and does not have an obligation to establish any such plan, fund or
program. Wealing Shareholders have furnished
9
Weststar with true and complete copies of all of the Plans and the latest
financial statements therefor, which fairly represent the financial condition of
the Plans at such dates. There have been no materially adverse changes to any of
the Plans since the date of the latest financial statements. There is not
outstanding any request for information concerning the Plans by participants,
beneficiaries or government agencies. Neither the Company nor the Plans have
been involved in any transaction that would constitute a "prohibited
transaction" within the meaning of Sections 503 and 4975 of the Code or ERISA
Section 406. None of the Plans has any "accumulated funding deficiency" as
described in Code Section 412, and all required contributions to the Plans for
the period through the Closing Date have been made. All Plans are in compliance
with the applicable provisions of ERISA, the regulations issued thereunder and
all other applicable statutes and regulations. The Plans have been maintained
and administered in accordance with their separate terms. Each Plan has been
issued a determination letter by the IRS that it is qualified under Code Section
401(a) and its trust fund is exempt from taxation under Code Section 501(a). All
information submitted with the request for such determination letters was true
and accurate in all material respects, all material information required to have
been submitted to the IRS was submitted, and no event has occurred with respect
to any Plan that would cause the loss of such qualification. Each trust fund
established for any medical or disability plan has been issued a determination
letter by the IRS that it is exempt from taxation under Code Section 501(c)(9),
and no event has occurred with respect to any such Plan that would cause the
loss of such qualification. None of the Plans has experienced a "reportable
event" as described in ERISA Section 4043(b) or is experiencing any condition
that may constitute grounds under ERISA Section 4042 for the termination of such
Plan or the appointment of a trustee to administer such Plan. The Company has
not (i) contributed or been required to contribute to any "multi-employer
pension plan," as that term is defined in ERISA Section III(37)(A), or (ii)
incurred any withdrawal liability under subtitle E of Title IV of ERISA or has
withdrawn from any multi-employer pension plan in any manner that could result
in any liability to the Company.
4.17 CONDUCT OF BUSINESS. Between May 31, 2000, and the Execution Date, the
business of the Company has been and will be conducted only in the ordinary
course and there has occurred no materially adverse change or, to the knowledge
of Wealing Shareholders, any event that involved any significant possibility of
a materially adverse change, in the condition (financial or otherwise), assets,
liabilities, business, operations or affairs of the Company.
4.18 SOLVENCY. The sale and transfer of the Wealing Shares pursuant to this
Agreement will not render either Wealing Shareholder insolvent (within the
meaning of the Uniform Fraudulent Conveyance Act or 11 X.X.X.xx. 101(31)).
4.19 LEASES. SCHEDULE 4.19 sets forth a correct and complete list of all
leases under which the Company leases, as lessor or lessee, any real or personal
property along with the names of the parties to such leases, the commencement
and expiration dates of such leases and a summary description of the rental
under such leases and any options pertaining thereto. All such leases are in
full and force and effect and no party thereto is in material default or breach
thereunder.
4.20 REAL AND PERSONAL PROPERTY. SCHEDULE 4.20 sets forth a correct and
complete list and summary description of all real and material personal
property, tangible or intangible (other than inventory), owned by the Company
or, whether or not owned, used in its business. Except as
10
disclosed on SCHEDULE 4.20, the Company owns the property set forth in SCHEDULE
4.20 free and clear of all liens, charges, mortgages, security interests,
pledges and encumbrances of any nature whatsoever. Substantially all such
tangible personal property is in satisfactory condition and is suitable for the
purpose for which it is being used, subject in each case to consumption in the
ordinary course, to ordinary wear and tear and to ordinary repair, maintenance
and periodic replacement.
4.21 MATERIAL CONTRACTS. SCHEDULE 4.21 sets forth a correct and complete
list as of the date hereof of all written or material oral agreements, contracts
and commitments of the following types to which the Company or by which the
Company is bound or otherwise affected as of the date hereof, including, without
limitation: (i) mortgages, indentures, security agreements, loan and credit
agreements and other agreements and instruments relating to the borrowing of
money or evidence of credit, (ii) contracts or options to purchase or sell real
property, (iii) contracts for the purchase or sale of materials, supplies or
equipment or for providing services, that individually involve payments to be
made of more than $1,000, (iv) contracts between the Company and Wealing
Shareholders, (v) agreements and instruments representing loans or commitments
to loan to officers, directors, employees or agents of the Company, (vi)
contracts of any kind to which the United States Government or any of its
agencies or any state or local municipality is a party or under which the
Company is a contractor or subcontractor under any federal, state or local law,
regulation or executive order, (vii) partnership or joint venture agreements of
any kind, (viii) management, employment, consulting, service and independent
contractor agreements, (ix) development, production, financing and similar
agreements, (x) license agreements, (xi) confidentiality and nondisclosure
agreements, (xii) agreements relating to a merger or to the acquisition or
disposition of stock or assets, (xiii) distribution agreements, and (xiv) other
agreements, contracts and commitments (other than those previously set forth in
Schedules hereto). Wealing Shareholders have delivered or made available to
Weststar complete and correct copies of all such written agreements, contracts
and commitments, together with all amendments thereto and waivers and consents
with respect thereto. Except as disclosed in SCHEDULE 4.21 hereto, all of such
agreements, contracts and commitments referred to are in full force and effect
and all parties to such agreements, contracts and commitments have performed in
all material respects all of the obligations required to be performed by them to
date and are not in default thereunder in any material respect. No agreement,
contract or commitment to which the Company is a party, or by which it or any of
its properties is bound, specifically limits its freedom to compete in any line
of business or with any person or entity.
4.22 GOVERNMENT PERMITS. Except as set forth in SCHEDULE 4.22 hereto, to
the best of Wealing Shareholders' knowledge following reasonable diligent
inquiry,, the Company has and is in substantial compliance with all material
permits, licenses, orders and approvals of all federal, state, local or foreign
governmental or regulatory bodies required for it to carry out its business as
presently conducted, all of which are listed in SCHEDULE 4.22. All such permits,
licenses, orders and approvals are in full force and effect, and no suspension
or cancellation, nor any proposed adverse modification of any of them is pending
or, to the knowledge of Wealing Shareholders, threatened. No consent of any
governmental or regulatory body issuing such permits, licenses, orders and
approvals is necessary for the consummation of the transactions contemplated by
this Agreement.
11
4.23 TITLE TO PROPERTIES. The Company has good and marketable title to all
of the properties and assets reflected in the May 31, 2000 balance sheet as
owned by it (other than assets disposed of in the ordinary course of business,
since May 31, 2000, or as disclosed in the notes to the financial statements),
free and clear of all restrictions, conditions, liens, mortgages, encumbrances
and similar claims (Liens") other than (a) Liens reflected in such financial
statements and notes, (b) Liens for taxes and betterment assessments contested
in good faith in appropriate proceedings or that are not yet due and payable,
(c) Liens reflected in SCHEDULE 4.23, and (d) and such other Liens, if any, as
do not materially detract from the value of or interfere with the present or
future use of the properties or assets affected thereby.
4.24 INSURANCE. Set forth in SCHEDULE 4.24 hereto is a complete list of
insurance policies that the Company maintains with respect to its businesses,
properties or employees. Such policies are in full force and effect free from
any right of termination on the part of the insurance carriers. Since May 31,
2000, there has not been any material adverse change in the Company's
relationship with its insurers or in the premiums payable pursuant to such
policies.
4.25 ACCOUNTS RECEIVABLE. Set forth in SCHEDULE 4.25 hereto is a complete
list of the Company's accounts receivables, unbilled invoices and other debts
due to the Company (the "Accounts Receivable") as of May 31, 2000. The amount of
all Accounts Receivable recorded in the records and books of account of the
Company, at the Closing Date (less the amount of any provision or reserve
therefor made in the respective records and books of account of the Company),
are and at the Closing will be good and collectible in full in the ordinary
course of business, and in any event not later than 60 days after the Closing
Date. None of such Accounts Receivable is or will at the Closing Date be subject
to any counterclaim or set-off except to the extent of any such provision or
reserve.
4.26 TRANSACTIONS WITH AFFILIATES. Except as set forth in SCHEDULE 4.26
hereto, the Company is not a party to any transaction with Wealing Shareholders
or any officer, director, employee or Affiliate thereof.
4.27 BANK ACCOUNTS, POWERS OF ATTORNEY AND COMPENSATION OF EMPLOYEES. Set
forth in SCHEDULE 4.27 is an accurate and complete list showing (a) the name and
address of each bank in which the Company has an account or safe deposit box,
the number of any such account or any such box and the names of all persons
authorized to draw thereon or to have access thereto, (b) the names of all
persons, if any, holding powers of attorney from the Company and a summary
statement of the terms thereof and (c) the names of all persons whose
compensation from the Company for the recent calendar year ended exceeded an
annualized rate of $20,000, together with a statement of the full amount paid or
payable to each such person for services rendered during such calendar year.
4.28 INVENTORY. The Company has no inventory.
4.29 SUPPLIERS AND CUSTOMERS. The Company's current relationships with its
suppliers and customers is good, and there is no indication of any intention to
terminate or modify in a manner adverse to the Company any of such
relationships. To the best of Wealing Shareholders' knowledge, no material
adverse change in relations with the Company's suppliers or customers will
12
occur as a result of the announcement or consummation of the transactions
contemplated by this Agreement.
4.30 BOOKS AND RECORDS. The minute books of the Company, as previously made
available to Weststar, contain accurate records of all meetings of and corporate
actions or written consents of the stockholders and the Board of Directors of
the Company. The Company has no records, systems, controls, data or information
recorded, stored, maintained, operated or otherwise wholly or partly dependent
upon or held by any means (including any electronic, mechanical or photographic
process, whether computerized or not) that (including all means of access
thereto and therefrom) are not under the exclusive ownership and direct control
of the Company.
4.31 DISCLOSURE. Wealing Shareholders have caused to be made available for
inspection and copying by Weststar and its advisers, true, complete and correct
copies of all documents referred to in this Article 4 or in any Schedule
furnished to Weststar by Wealing Shareholders. No representation or warranty
contained in this Agreement, and no statement, certificate, schedule, list or
other information furnished or to be furnished by or on behalf of Wealing
Shareholders to Weststar in connection with this Agreement, contains or will
contain any untrue statement of a material fact, or omits to state or will omit
to state a material fact necessary in order to make the statements herein or
therein not misleading.
4.32 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting on
behalf of Wealing Shareholders or the Company, is, or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto, or from
any Affiliate of the parties hereto, in connection with any of the transactions
contemplated herein.
4.33 ABSENCE OF CERTAIN EVENTS. Since May 31, 2000, the business of the
Company has been conducted only in the ordinary course and there has not been
(a) any materially adverse change or, to the knowledge of Wealing Shareholders,
any event that involved any significant possibility of a materially adverse
change, in the Company's assets or the condition (financial or otherwise),
liabilities, business, operations or affairs of the Company; (b) any damage,
destruction or casualty loss, whether covered by insurance or not, materially
and adversely affecting either the business, operations or financial condition
of the Company; (c) any material increase in the rate or terms of compensation
payable or to become payable by the Company to its directors, officers or key
employees, except increases occurring in the ordinary course of business in
accordance with its customary practices; (d) any material increase in the rate
or terms of any bonus, insurance, pension or other employee benefit plan,
payment or arrangement made to, for or with any such directors, officers or key
employees except salary increases occurring in the ordinary course of business
in accordance with its customary practices; (e) any entry into any material
agreement, commitment or transaction (including without limitation any
borrowing, capital expenditure or capital financing) by the Company, except
agreements, commitments or transactions entered into in the ordinary course of
business or as contemplated by or referred to in this Agreement or the Schedules
hereto; or (f) any material change by the Company in its accounting method,
principles or practices.
4.34 CUSTOMERS. Listed in SCHEDULE 4.34 are the material customers of the
Company for the twelve-month period ended May 31, 2000, and the type of service
provided to each such customer during such period.
13
4.35 SUBSTANTIAL SUPPLIERS. Listed in SCHEDULE 4.35 are the material
suppliers to the Company for the twelve-month period ended May 31, 2000.
4.36 PRODUCT WARRANTY. The Company has no express warranties or indemnities
to which the Company may become liable.
4.37 DISPOSAL OR RELEASE OF HAZARDOUS SUBSTANCES. No part of any of the
premises owned, leased or used by the Company (including without limitation any
leased property) has been used by the Company or any other person or entity for
the disposal, burial or placement (other than in tanks or other containers
authorized by law) of hazardous substances (as defined in or pursuant to CERCLA)
or any petroleum products, pollutants or contaminants. The Company has not
caused or permitted the release of any hazardous substances (as defined in or
pursuant to CERCLA), petroleum products, pollutants or contaminants onto the
premises or into the subsurfaces thereof, including, without limitation, surface
waters and groundwaters. The Company is not in violation of any applicable laws,
statutes, rules, regulations or ordinances in connection with the
transportation, disposal, storage, treatment, processing, release and other
handling of hazardous substances (as defined in or pursuant to CERCLA) or any
petroleum products, pollutants or contaminants or the emission or release of any
hazardous substance (as defined in or pursuant to CERCLA), effluent,
contaminant, pollutant or other material, and no other person has used all or
part of the premises owned, leased or used by the Company in violation of any of
those requirements of law.
4.38 INVESTMENT REPRESENTATION. The Notes and the Weststar Shares
(collectively, the "Weststar Securities") are being acquired for the account of
Wealing Shareholders and not with a view to, nor for sale in connection with,
any distribution thereof, and without any present intention of selling the same.
The Weststar Securities will not be sold or otherwise disposed of in the absence
of a registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), covering the Notes or the Weststar Shares, respectively, or
an exemption from the registration requirements of the Securities Act.
Wealing Shareholders hereby acknowledge that (i) the Weststar Securities
may not be sold or otherwise transferred unless they are registered under the
Securities Act or an exemption from such registration is available; (ii) any
sales of the Weststar Securities made in reliance upon Rule 144 promulgated
under the Securities Act can be made only in accordance with the terms and
conditions of Rule 144 and, further, that if Rule 144 is not applicable, any
resale of such securities under circumstances in which Wealing Shareholders or
the person through whom the sale is made may be deemed to be an underwriter, as
that term is defined in the Securities Act, may require compliance with some
other exemption under the Securities Act or the rules and regulations of the
Securities and Exchange Commission or other governmental authority substituted
therefor; and (iii) Weststar is under no obligation to register any of the
Weststar Securities under the Securities Act or to comply with the terms and
conditions of any exemption thereunder.
The instruments evidencing the Weststar Securities may bear a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer thereof):
14
THE SECURITIES REPRESENTED HEREBY WERE NOT REGISTERED UNDER, AND ARE
SUBJECT TO, THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND
MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED, AND THE COMPANY IS NOT REQUIRED
TO GIVE EFFECT TO ANY ATTEMPTED SALE, TRANSFER OR ASSIGNMENT, EXCEPT (I)
PURSUANT TO A CURRENT REGISTRATION UNDER THE 1933 ACT; (II) IN A
TRANSACTION PERMITTED BY RULE 144 UNDER THE 1933 ACT AND AS TO WHICH THE
COMPANY HAS RECEIVED REASONABLY SATISFACTORY EVIDENCE OF COMPLIANCE WITH
THE PROVISIONS OF RULE 144; OR (III) UPON RECEIPT OF A LEGAL OPINION
RENDERED BY COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT
THAT THE TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT.
If a legal opinion complying with clause (iii) of the legend set forth
above indicates that the legend and stop-transfer order may be removed, Weststar
will substitute unlegended instruments for and remove the stop-transfer order
from the instruments described in the opinion.
In connection with any Weststar IPO (as defined in Section 10.8 hereof) or
any other offering involving an underwriting of shares being issued by Weststar,
Weststar shall not be required to include any of the Weststar Shares in such
underwritings unless other similarly situated shareholders of Weststar are being
permitted to include some or all of their shares in the underwritings, in which
case Wealing Shareholders shall be permitted to include some or all of the
Weststar Shares on an equivalent basis; HOWEVER, should Weststar agree to
include a portion of the Weststar Shares in such underwriting, following Wealing
Shareholders' request to do so, Wealing Shareholders must accept the terms of
the underwriting (to the extent applicable to the Weststar Shares) as agreed
upon between Weststar and the underwriters selected by Weststar (all costs of
registering the Weststar Shares shall be borne by Weststar). Furthermore, in
connection with any registration of the Weststar Shares, Wealing Shareholders
agree, if requested by Weststar or the underwriters managing any underwritten
offering of the Weststar Shares, not to sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any of the
Weststar Shares (other than that included in the registration) without the prior
written consent of Weststar or such underwriters, as the case may be, for such
period of time after the effective date of such registration as Weststar or the
underwriters may specify, which, in any event, shall be a minimum of twelve (12)
months following any Weststar IPO; but in any event shall be no longer than the
time period required by the underwriter for similarly situated shareholders of
Weststar. Wealing Shareholders shall receive treatment no less favorably than
any other shareholder of Weststar at the time of any offering involving an
underwriting of shares being issued by Weststar. Weststar shall provide Wealing
Shareholders a minimum of fifteen (15) days notice prior to any underwriting.
4.39 ACCOUNTS PAYABLE. Set forth in SCHEDULE 4.39 hereto is a complete list
of the Company's accounts payables ("Accounts Payable") as of May 31, 2000. All
such Accounts Payable were incurred by the Company in the ordinary course of its
business, and each represents the fair market value for services or materials
rendered to or received by the Company.
15
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF WESTSTAR
Weststar hereby represents and warrants to Wealing Shareholders that:
5.1 ORGANIZATION AND POWER OF WESTSTAR. Weststar is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida and has all requisite corporate power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
5.2 AUTHORITY RELATIVE TO AGREEMENT. The execution, delivery and
performance of this Agreement by Weststar, and the consummation by Weststar of
the transactions contemplated hereby and thereby, have been duly authorized by
all necessary corporate action on the part of Weststar.
5.3 ENFORCEABILITY OF AGREEMENT. Weststar has duly executed and delivered
this Agreement. This Agreement constitutes a valid and binding obligation of
Weststar, enforceable in accordance with its terms.
5.4 EFFECT OF AGREEMENT. The execution, delivery and performance of this
Agreement by Weststar, and the consummation by Weststar of the transactions
contemplated hereby and thereby, do not and will not (i) violate any provision
of law applicable to Weststar or the corporate articles of incorporation or
bylaws of Weststar; (ii) require the consent, waiver, approval, license or
authorization of, or filing with, any Person; provided that Weststar makes no
representation to the extent any of the foregoing is required as the result of
the nature of the business or assets of the Company; or (iii) with or without
the giving of notice or the passage of time or both, conflict with or result in
a breach or termination of, constitute a default under or result in the creation
of any lien, charge or encumbrance upon any of the assets of Weststar pursuant
to, any provision of any mortgage, deed of trust, indenture or other agreement
or instrument, or any order, judgment, decree or other restriction of any kind
or character, to which Weststar is a party or by which Weststar or any of its
assets may be bound.
5.5 RESTRICTIVE DOCUMENTS. Weststar is not subject to, or a party to, any
charter, bylaw, mortgage, lien, lease, license, permit, agreement, contract,
instrument, law, rule, ordinance, regulation, order, judgment or decree, or any
other restriction of any kind or character that would prevent consummation of
the transactions contemplated by this Agreement.
5.6 FULL DISCLOSURE. No representation or warranty contained in this
Agreement, and no statement, certificate, schedule, list or other information
furnished or to be furnished by or on behalf of Weststar to Wealing Shareholders
in connection with this Agreement, contains or will contain any untrue statement
of a material fact, or omits to state or will omit to state a material fact
necessary in order to make the statements herein or therein not misleading.
5.7 INVESTMENT REPRESENTATION. The Wealing Shares are being acquired for
the account of Weststar and not with a view to, nor for sale in connection with,
any distribution thereof,
16
and without any present intention of selling the same. The Wealing Shares will
not be sold or otherwise disposed of (except to an Affiliate of Weststar) in the
absence of a registration statement under the Securities Act covering the
Wealing Shares, or any exemption from the registration requirements of the
Securities Act.
5.8 AUTHORIZED CAPITALIZATION. The authorized capital stock of Weststar
consists of 10,000,000 shares of common stock, $.001 par value per share.
5.9 INFORMATION FURNISHED BY WESTSTAR TO WEALING SHAREHOLDERS. There is no
fact that Weststar has not disclosed herein that materially and adversely
affects the properties, business, prospects, profits or condition (financial or
otherwise) of Weststar, except that Weststar makes no representation or warranty
as to the effect of general economic conditions, the condition of the financial
markets, future legislation or future regulatory action. There has been no
materially adverse change in the assets or liabilities, the business or
condition, financial or otherwise, the results of operations or the prospects of
Weststar since December 31, 1999.
5.10 FINANCIAL STATEMENTS AND UNDISCLOSED LIABILITIES. Weststar has
heretofore furnished to Wealing Shareholders true and complete copies of the
INITIAL DRAFT of the audited financial statements of Weststar as of December 31,
1999 (the "Weststar Financial Statements"). The Weststar Financial Statements
were prepared in accordance with GAAP and present fairly the financial position,
results of operations and cash flow of Weststar as of the date and for the
period indicated. Except as disclosed in the Weststar Financial Statements,
Weststar has no material liabilities or obligations of any kind, whether
accrued, absolute, contingent or otherwise, whether or not such liabilities or
obligations would have been required to be disclosed on a balance sheet prepared
in conformity with GAAP. Without limiting the generality of the foregoing, to
the best of Weststar's knowledge, Weststar has no liability (and there is no
basis for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim or demand against it giving rise to any liability)
arising out of any injury to persons or property as a result of the ownership,
possession or use of any product manufactured, sold, leased or delivered by
Weststar or any of its dealers or representatives.
5.11 TAX MATTERS.
(a) Weststar (i) has duly and timely filed with the appropriate
governmental authorities all tax returns and reports required to be filed and
(ii) has duly paid, or arranged for payment, all taxes, interest, penalties,
assessments and deficiencies and other governmental charges upon it shown to be
due thereon and its properties, assets, income, business, sales and payrolls,
including all amounts assessed as additional taxes, penalties and interest.
(b) Weststar has not been audited by the IRS during the past five (5)
years. Weststar has not executed or filed with the IRS or any other taxing
authority any agreement extending the period for assessment or collection of any
income or other taxes.
(c) Weststar is not a party to any pending action or proceeding nor, to the
best of Weststar's knowledge, is any action or proceeding threatened by any
governmental authority for
17
assessment or collection of taxes, and no claim for assessment or collection of
taxes has been asserted against Weststar.
(d) Weststar has withheld proper and accurate amounts from its employees in
full and complete compliance with all withholding and similar provisions of the
Code and any and all other applicable United States, foreign, state or local
laws, statutes, codes, ordinances, rules and regulations. Weststar has timely
filed the proper federal, foreign, state and local returns, reports and
estimates with respect to employee income tax withholding, social security taxes
and unemployment taxes (or comparable or similar taxes or charges) for all years
and periods (or portions thereof) for which such returns and reports were due,
and any and all amounts that were due and payable have been paid in full. All
payments (including interest and penalties thereon) due or to become due from
Weststar with respect to its employee income tax withholding, social security
taxes and unemployment taxes (or comparable or similar taxes or charges) for any
year or period (or portions thereof) ended on or prior to or including the
Closing Date, have been paid in full or are adequately reserved for (excluding
deferred tax accounts).
5.12 BROKER'S OR FINDER'S FEES. Except for a commission to be paid by
Weststar to Environmental & Financial Consulting, Inc., a Florida corporation,
no agent, broker, person or firm acting on behalf of Weststar, is, or will be,
entitled to any commission or broker's or finder's fees from any of the parties
hereto, or from any Affiliate of the parties hereto, in connection with any of
the transactions contemplated herein.
ARTICLE 6 - COVENANTS OF WEALING SHAREHOLDERS
Wealing Shareholders hereby covenants and agrees with Weststar as follows:
6.1 CONDUCT OF BUSINESS. During the period from the Closing Date to the
Execution Date, Wealing Shareholders shall cause the Company to conduct
operations in the ordinary and usual course of business and shall use best
efforts to preserve intact business organizations, keep available the services
of officers and employees and maintain satisfactory relationships with
licensors, suppliers, distributors, clients and others having business
relationships with the it. Without limiting the generality of the foregoing,
Wealing Shareholders shall cause the Company to (a) maintain its Articles of
Incorporation and Bylaws in their respective forms on the date of this
Agreement, (b) maintain the compensation payable or to become payable by the
Company to any officer, employee or agent being paid $20,000 per year or more at
their levels on the date of this Agreement, (c) refrain from making any bonus,
pension, retirement or insurance payment or arrangement with any such person
except those that already have been accrued, (d) refrain from entering into any
contract or commitment except contracts in the ordinary course of business, (e)
refrain from making any change affecting any bank, safe deposit or power of
attorney arrangements, and (f) refrain from declaring or paying any dividend or
distribution of cash, stock or other property. During the period from the date
of this Agreement to the Execution Date, Wealing Shareholders shall cause the
Company to make its employees available to confer on a regular and frequent
basis with one or more designated representatives of Weststar to report material
operational matters and to report the general status of ongoing operations.
Wealing Shareholders shall notify Weststar of any unexpected emergency or other
change in the normal course of business or in the operation of
18
the properties of the Company and of any governmental complaints, investigations
or hearings (or communication indicating that the same may be contemplated),
adjudicatory proceedings or submissions involving any material property of the
Company, and shall keep Weststar fully informed of such events and permit its
representatives prompt access to all materials prepared in connection therewith.
6.2 EXCLUSIVE DEALING. During the period from the date of this Agreement
through August 31, 2000, Wealing Shareholders shall not take any action,
directly or indirectly, to encourage, initiate or engage in discussions or
negotiations with, or provide any information to, any Person other than
Weststar, concerning any purchase of the Wealing Shares or any merger, sale of
assets (except in the ordinary and usual course of business of the Company) or
similar transaction involving the Company.
6.3 REVIEW OF THE COMPANY. Wealing Shareholders shall permit Weststar and
its employees, agents, attorneys, accountants and other representatives to have,
after the date of execution hereof, full access to the premises and to all of
the books, records, facilities and properties of the Company and shall, and
shall cause the officers and employees of the Company to, furnish Weststar with
such financial and operating data and other information with respect to the
Company and its business operations, financial condition and prospects as
Weststar from time to time shall reasonably request. Such review shall not,
however, affect or limit the representations and warranties made by Wealing
Shareholders hereunder.
6.4 REGULATORY APPROVALS. Wealing Shareholders shall, and shall use all
reasonable efforts to cause their Affiliates to, apply for all applicable
federal and state regulatory approvals required of them to effectuate the
provisions of this Agreement.
6.5 CHANGES IN CAPITAL STOCK. Prior to the Closing, Wealing Shareholders
shall not take any action that would permit the Company to make or commit to
make any change in its issued and outstanding capital stock, issue any options,
warrants or convertible securities or make any commitments for the issuance of
shares, options, warrants or convertible securities.
6.6 FURTHER ASSURANCES. Wealing Shareholders shall deliver or cause to be
delivered such additional instruments and take such additional actions on the
Execution Date and at such other times and places before or after Closing as
Weststar reasonably may request for the purpose of carrying out the provisions
of this Agreement.
6.7 KEY EMPLOYEES. Through the Execution Date, Wealing Shareholders shall
assist Weststar in meeting with key employees of the Company, as requested by
Weststar. Wealing Shareholders shall exercise all reasonable efforts to
encourage each of these employees to continue in the employ of Weststar after
the Execution Date. Wealing Shareholders promptly shall advise Weststar of any
resignation by one of these employees that is effective on or before the Closing
Date or that is effective after the Closing Date if notice is given prior to the
Closing Date.
6.8 BEST EFFORTS. Wealing Shareholders shall use all reasonable efforts to
fulfill all of the conditions set forth in this Agreement over which it has
control or influence (including obtaining
19
any authorizations, consents, approvals or waivers hereunder) and to consummate
the transactions contemplated herein.
6.9 NONSOLICITATION OF EMPLOYEES. For the period commencing on the date of
execution of this Agreement and continuing for a period of two years after the
Closing Date, the Wealing Shareholders shall refrain and shall cause their
Affiliates to refrain from directly or indirectly soliciting for employment any
individual who formerly was employed by the Company or who is in the employ of
Weststar or one of its Affiliates, without Weststar's prior written consent.
ARTICLE 7 - COVENANTS OF WESTSTAR
7.1 REGULATORY APPROVALS. Weststar shall, and shall use all reasonable
efforts to cause its Affiliates to, apply for all applicable federal and state
regulatory approvals required of Weststar to effectuate the provisions of this
Agreement. Weststar shall, and shall use all reasonable efforts to cause its
Affiliates to, reasonably provide information to and otherwise reasonably
cooperate with Wealing Shareholders and their Affiliates in order to allow them
to comply with the requirements of Section 6.4 hereof.
7.2 FURTHER ASSURANCES. Weststar shall deliver or cause to be delivered
such additional documents, and take such additional actions on the Execution
Date and at such other times and places, before or after Closing, as Wealing
Shareholders reasonably may request for the purpose of carrying out the
provisions of this Agreement.
7.3 CONFIDENTIALITY. Except as may be required by law, Weststar shall
maintain in strict confidence, and shall not disclose, any information regarding
the Company delivered to Weststar pursuant to this Agreement, unless and until
the Execution Date; provided that, this restriction shall not apply to (i)
information in the public domain; (ii) information in the possession of Weststar
without restriction as to use or disclosure and not acquired from Wealing
Shareholders; and (iii) information obtained from third parties lawfully in
possession of it and were under no obligation of secrecy with respect thereto.
ARTICLE 8 - CONDITIONS TO WESTSTAR'S OBLIGATIONS
The obligations of Weststar contained herein are subject to the
satisfaction or waiver of the following conditions precedent on or prior to the
Execution Date:
8.1 NO MATERIAL ADVERSE CHANGE. From May 31, 2000, through the Execution
Date, (i) there shall have been no material adverse change in the assets or
liabilities, the business or condition, financial or otherwise, the results of
operations or the prospects of the Company, (ii) there shall have been no
increase in the compensation, bonuses or benefits payable to employees generally
or to any members of management of the Company, (iii) there shall have been no
payment on or distribution in respect of the capital stock of the Company, (iv)
there shall have been no amendment to the Articles of Incorporation or Bylaws of
the Company and (v) there shall have been no, and no agreement in respect of, a
merger or sale of a material portion of the assets of the
20
Company. Wealing Shareholders shall have delivered to Weststar a Certificate,
dated the Execution Date, to such effect.
8.2 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Wealing Shareholders contained in this Agreement or in any
Schedule delivered pursuant hereto shall be true and correct on and as of the
Execution Date with the same effect as though such representations and
warranties had been made on and as of such date, and Wealing Shareholders shall
have delivered to Weststar on the Execution Date a certificate, dated the
Execution Date, to such effect.
8.3 PERFORMANCE OF AGREEMENTS. Each and all of the acts of Wealing
Shareholders to be performed on or before the Execution Date pursuant to the
terms hereof shall have been duly performed, and Wealing Shareholders shall have
delivered to Weststar evidence reasonably satisfactory to Weststar, including a
certificate, dated the Execution Date, to such effect.
8.4 NO PROCEEDINGS. No action or proceeding shall have been instituted or,
to the best knowledge, information and belief of Wealing Shareholders,
threatened before or by any governmental body or agency, or by any third party,
to restrain or prohibit any of the transactions contemplated hereby, and there
shall not be in effect any injunction or order enjoining or restraining the
consummation of the transactions contemplated hereby, and Wealing Shareholders
shall have delivered to Weststar a certificate, dated the Execution Date, to the
best of Wealing Shareholder's knowledge, to such effect.
8.5 GOVERNMENTAL APPROVALS. All governmental and other consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been received.
8.6 PROCEEDINGS. All proceedings to be taken in connection with the
transactions contemplated by this Agreement, and all documents incident hereto
and thereto, shall be reasonably satisfactory in form and substance to Weststar
and its counsel, and Weststar shall have received copies of all such documents
and other evidence as it or its counsel reasonably may request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
8.7 OPINION OF COUNSEL. Wealing Shareholders shall have furnished Weststar
with a favorable opinion, dated the Execution Date, of its counsel, Xxxxxxx,
Xxxxxxxx & Xxxxx, of Lafayette, Indiana, in form and substance reasonably
satisfactory to Weststar and its counsel substantially in the form of EXHIBIT
8.7 hereto.
ARTICLE 9 - CONDITIONS TO OBLIGATIONS OF WEALING SHAREHOLDERS
The obligations of Wealing Shareholders contained herein are subject to the
satisfaction or waiver of the following conditions precedent on or prior to the
Execution Date:
21
9.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Weststar contained in this Agreement shall be true and correct on
and as of the Execution Date with the same effect as though such representations
and warranties had been made on and as of such date, and Weststar shall have
delivered to Wealing Shareholders on the Execution Date a certificate, dated the
Execution Date, to such effect.
9.2 PERFORMANCE OF AGREEMENTS. Each and all of the agreements to be
performed by Weststar on or before the Execution Date pursuant to the terms
hereof shall have been duly performed, and Weststar shall have delivered to
Wealing Shareholders evidence reasonably satisfactory to Wealing Shareholders,
including a certificate, dated the Execution Date, to such effect.
9.3 NO PROCEEDINGS. No action or proceeding shall have been instituted or,
to the best knowledge, information and belief of Weststar, threatened before or
by a governmental body or agency or by any third party to restrain or prohibit
any of the transactions contemplated hereby, and there shall not be in effect
any injunction or order enjoining or restraining the consummation of the
transactions contemplated hereby. Weststar shall have delivered to Wealing
Shareholders a certificate, dated the Execution Date, to the best of Weststar's
knowledge, to such effect.
9.4 GOVERNMENTAL APPROVALS. All governmental and other consents and
approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been obtained.
9.5 PROCEEDINGS. All proceedings to be taken in connection with the
transactions contemplated by this Agreement, and all documents incident hereto
and thereto, shall be reasonably satisfactory in form and substance to Wealing
Shareholders and their counsel, and Wealing Shareholders shall have received
copies of all such documents and other evidence as it or its counsel reasonably
may request in order to establish the consummation of such transactions and the
taking of all proceedings in connection therewith.
ARTICLE 10 - SURVIVAL OF REPRESENTATIONS; INDEMNITY
10.1 SURVIVAL OF REPRESENTATIONS. The respective representations and
warranties of the parties contained in this Agreement or in any Schedule
delivered pursuant hereto shall survive the consummation of the transactions
contemplated hereby and continue for a period of three (3) years thereafter;
provided, however, that all representations and warranties of Wealing
Shareholders relating to ownership of the Wealing Shares shall continue
indefinitely.
10.2 INDEMNIFICATION BY WEALING SHAREHOLDERS. Wealing Shareholders, jointly
and severally, shall indemnify Weststar, its Affiliates and their respective
officers, directors and agents, and the Company post-closing (collectively, the
"Weststar Indemnified Parties") against and hold them harmless from all damages,
losses, expenses, claims, demands, suits, causes of action, proceedings,
judgments and liabilities, including reasonable counsel fees and court costs,
assessed, incurred or sustained by or against the Weststar Indemnified Parties
or the Company with respect to or arising out of (i) the failure of any
representation or warranty made by Wealing Shareholders in
22
this Agreement or in any Schedule delivered pursuant hereto to be true and
correct in all material respects as of the Execution Date, (ii) the failure of
Wealing Shareholders to fulfill any of its covenants or agreements hereunder,
(iii) any action or inaction of the Company prior to the Execution Date, and
(iv) any liability in excess of that disclosed in the December 31, 1999 audited
financial statements of the Company with respect to the proceedings disclosed on
SCHEDULE 4.9 ("Litigation") hereto (collectively, "Wealing Shareholder
Liabilities").
In addition to, and not in limitation of, Weststar's rights pursuant to
this Agreement or by law, Weststar shall have the right (i) to offset any
amounts owed to Wealing Shareholders under the Notes for any Wealing Shareholder
Liabilities incurred by Weststar or the Company prior to the satisfaction of the
Notes, and (ii) from the Closing Date until twelve (12) months following
Weststar's IPO (as defined in Section 10.8 hereinbelow), to cause Weststar's
transfer agent to stop transfer of any of the Weststar Shares from Wealing
Shareholders to any third party, and Weststar shall have the right to redeem
(without requirement of any payment) such number of Weststar Shares from Wealing
Shareholders (at a value of $6.00 per share) in an amount of Wealing Shareholder
Liabilities incurred by Weststar or the Company. Nothing in this paragraph shall
be interpreted to be a reduction in time of any statute of limitations afforded
Weststar for indemnification by Wealing Shareholders for Wealing Shareholder
Liabilities.
10.3 INDEMNIFICATION BY WESTSTAR. Weststar shall indemnify Wealing
Shareholders and Wealing Shareholders' agents (collectively, the "Wealing
Shareholder Indemnified Parties") against and hold them harmless from all
damages, losses, expenses, claims, demands, suits, causes of action,
proceedings, judgments and liabilities, including reasonable counsel fees and
court costs, assessed, incurred or sustained by or against the Wealing
Shareholder Indemnified Parties with respect to or arising out of (i) the
failure of any representation or warranty made by Weststar in this Agreement to
be true and correct in all material respects as of the Execution Date, (ii) the
failure of Weststar to fulfill any of its covenants or agreements contained
herein or in the Note, and (iii) any action or inaction of the Company after the
Execution Date.
10.4 REDUCTION OF PAYMENTS. If a payment by either party gives rise to a
loss, damage or expense that is subject to indemnification by the other party
hereto, the amount for which the damaged party may receive indemnification shall
be reduced by any insurance proceeds or other payments received by the damaged
party in respect thereof.
10.5 DEFENSE. Each party hereto shall give the indemnifying party prompt
written notice of any claim, assertion, event or proceeding by or in respect of
a third party of which it has knowledge concerning any liability or damage as to
which it may request indemnification hereunder. The party providing
indemnification shall have the right at all times to control the defense or
settlement of any such claim or proceeding through counsel of its own choosing,
and to settle any and all such claims made.
10.6 TIME FOR NOTICE. Any party claiming indemnification hereunder with
respect to the falsity of any representations or warranties herein must give
notice to the other party of its claim for indemnification within the time
period, if any, specified in Section 10.1 hereof for the survival of the
applicable representation or warranty.
23
10.7 TIME FOR PAYMENT. All indemnification payments required to be made
pursuant to this Article 10 shall be made promptly after demand for payment has
been made by the indemnified party upon the indemnifying party.
10.8 WESTSTAR'S IPO. Weststar anticipates that it will go public and
provide its initial public offering ("Weststar's IPO") within twelve (12) months
of the Closing Date (the "IPO Date"). Should Weststar's IPO not be offered at or
prior to the IPO Date, Wealing Shareholders shall have the option for a period
of thirty (30) days commencing on the IPO Date to rescind the sale and transfer
of the Wealing Shares to Weststar. Such notice of rescission shall be provided
by Wealing Shareholders to Weststar in writing. Following Weststar's receipt of
Wealing Shareholders' notice of rescission, both parties shall use their
good-faith efforts to place each party in substantially the position it was in
immediately prior to the Closing, including, without limitation, taking the
following actions: (i) Wealing Shareholders shall return to Weststar the Notes
and the Weststar Shares, (ii) Wealing Shareholders shall reimburse Weststar for
any contributions to capital made to the Company following the Closing Date,
(iii) Wealing Shareholders shall reimburse Weststar for any loans made by
Weststar to the Company following the Closing Date, and (iv) reimburse Weststar
for any equipment purchased by or leased to the Company following the Closing
Date, or, in the alternative, transfer and assign such equipment to Weststar.
10.9 INITIAL OPERATION OF THE COMPANY POST-CLOSING. From the Closing Date
until the earlier of the Weststar's IPO or 30 days following the IPO Date,
Weststar agrees to use its best-faith efforts to operate the Company consistent
with past Company practices, to not make any material changes in the Company's
operations, or to make any material personnel changes without the prior written
consent of Xxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx. During such period, Weststar
further agrees to keep all accounts payable current, retain all earnings in the
Company, except as used in the ordinary course of business for working capital
purposes, and to keep all Company funds in the existing Company bank accounts
listed on SCHEDULE 4.27 hereof. The failure of Weststar to comply with any of
the terms of this Section may, at the option of Wealing Shareholders, acting in
unanimity, be deemed a breach of this Agreement entitling Wealing Shareholders
to rescind the transaction contemplated herein, and such rescission shall take
place in accordance with Section 10.8 hereof.
ARTICLE 11 - MISCELLANEOUS
11.1 TERMINATION OF AGREEMENT. The parties hereto shall use all reasonable
efforts to consummate the transactions contemplated hereby as soon as
practicable. If any condition to the performance of a party's obligations herein
is not fulfilled or waived on or prior to August 31, 2000, either party may
terminate this Agreement, and this Agreement (other than the confidentiality
provisions hereof) shall be null and void and have no further effect, provided
that no party in breach of its obligations hereunder shall have the right to
terminate this Agreement. All rights or remedies of a party that accrue as a
result of the breach of any provision of the Agreement shall survive any
termination of this Agreement.
24
11.2 EXECUTION IN COUNTERPARTS. For the convenience of the parties, this
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same document.
11.3 NOTICES. All notices that are required or may be given pursuant to the
terms of this Agreement shall be in writing and shall be sufficient in all
respects if given in writing and delivered either personally or sent by first
class mail, certified, return receipt requested, postage prepaid, or by
overnight courier service, addressed as follows:
If to Xxxxxxx Xxxx X. Xxxxxxx
Shareholders: Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
c/o 0000 Xxxxx 000 Xxxx
Xxxxxx, Xxxxxxx 00000
with copy to: Xxxxxxx, Xxxxxxxx & Xxxxx
X.X. Xxx 000
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to Weststar: Weststar Environmental, Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Chief Executive Officer
with copy to: Xxxxxxxx & Thames, P.A.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
or to such other address as the party to receive any such communication or
notice may have designated by notice to the other party. Any notices delivered
personally shall become effective at the time of receipt by the person to whom
they are given. Notices sent by certified mail, return receipt requested, or by
overnight courier service shall become effective on the earlier of (i) the date
on which they are accepted or rejected by the person to whom they are addressed,
or (ii) three (3) business days after being deposited in the mails or delivered
to the courier service.
11.4 WAIVERS. Either party hereto may, by written notice to the other
parties hereto, (a) extend the time for the performance of any of the
obligations or other actions of the other under this Agreement; (b) waive any
inaccuracies in the representations or warranties of the other party contained
in this Agreement or in any document delivered pursuant to this Agreement; (c)
waive compliance with any of the conditions to its obligations contained in this
Agreement; or (d) waive or modify performance of any of the obligations of the
other party under this Agreement. Except as provided in the preceding sentence,
no action taken pursuant to this Agreement, including without limitation any
investigation by or on behalf of either party, shall be deemed to constitute a
waiver by
25
either party taking such action of compliance with any representation,
warranty, covenant or agreement contained in this Agreement. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach.
11.5 SPECIFIC PERFORMANCE. Each party hereto acknowledges and agrees that
the remedy at law for any breach of this Agreement would be inadequate, and
agrees and consents that temporary and permanent injunctive and other relief may
be granted without proof of actual damage or inadequacy of legal remedy in any
proceeding that may be brought to enforce any of the provisions of this
Agreement.
11.6 ENTIRE AGREEMENT. This Agreement, together with the Exhibits and
Schedules hereto, constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof and supersedes all prior representations,
agreements and understandings, oral and written, by or among the parties hereto
with respect to the subject matter hereof.
11.7 APPLICABLE LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Florida applicable to contracts made and performed in Florida.
11.8 BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
11.9 ASSIGNABILITY. Neither this Agreement nor any of the parties' rights
or obligations hereunder shall be assignable by any party hereto without the
prior written consent of the other parties hereto, except that Weststar may
transfer all or part of its rights and obligations under this Agreement to one
or more of its Affiliates, provided that Weststar shall remain liable for its
obligations hereunder.
11.10 EXPENSES. The parties hereto shall pay all of their own expenses
relating to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel, accountants and
financial advisers. In the event of litigation or other adversary proceeding
with respect to this Agreement or the transactions contemplated hereby, the
nonprevailing party shall reimburse the prevailing party for all reasonable
attorneys' fees and court costs incurred in connection therewith.
11.11 PUBLICITY. Except as may be required by law, no party hereto shall
issue any press release or make any other public statement, and each party shall
keep confidential all matters, relating to or connected with or arising out of
this Agreement or the matters contained herein, unless it obtains the prior
approval of the other party hereto, which approval shall not be unreasonably
withheld; PROVIDED THAT, this restriction does not apply to (i) information in
the public domain, (ii) information in the possession of Wealing Shareholders or
Weststar, as the case may be, prior to receipt from the other parts; and (iii)
information obtained from a third party lawfully in possession of it and under
no obligation of secrecy as to it.
26
11.12 AMENDMENTS. This Agreement may not be changed orally, but only by an
agreement in writing signed by the parties hereto. Any provision of this
Agreement can be waived, amended, supplemented or modified by agreement of the
parties hereto.
11.13 NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to, and
shall not, create any rights in any Person other than Weststar and Wealing
Shareholders.
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to have been
duly executed and delivered on the date first above written.
/s/ XXXX X. XXXXXXX
------------------------------------
XXXX X. XXXXXXX
/s/ XXXXXX X. XXXXXXX
------------------------------------
XXXXXX X. XXXXXXX
/s/ XXXXXXX X. XXXXXXX
------------------------------------
XXXXXXX X. XXXXXXX
/s/ XXXX X. XXXXXXX
------------------------------------
XXXX X. XXXXXXX
"Wealing Shareholders"
WESTSTAR ENVIRONMENTAL, INC.
By: /s/ XXXXXXX X. XXXXX
--------------------------------
Xxxxxxx X. Xxxxx,
Chief Executive Officer
"Weststar"
STATE OF INDIANA
COUNTY OF TIPPECANOE
The foregoing instrument was acknowledged before me this 14th day of June,
2000, by Xxxx X. Xxxxxxx, who (check one) __x__ is personally known to me or ___
has produced _________________ as identification and who did take an
oath.
/s/ XXXXX XXX XXXXXX
-------------------------------------------
Print Name: Xxxxx Xxx Xxxxxx
Notary Public, State and County Aforesaid
My commission expires:
[Notarial Seal]
00
XXXXX XX XXXXXXX
XXXXXX XX XXXXXXXXXX
The foregoing instrument was acknowledged before me this 14th day of June,
2000, by Xxxxxx X. Xxxxxxx, who (check one) __x__ is personally known to me or
____ has produced _________________ as identification and who did take
an oath.
/s/ XXXXX XXX XXXXXX
-------------------------------------------
Print Name: Xxxxx Xxx Xxxxxx
Notary Public, State and County Aforesaid
My commission expires:
[Notarial Seal]
STATE OF INDIANA
COUNTY OF TIPPECANOE
The foregoing instrument was acknowledged before me this 14th day of June,
2000, by Xxxxxxx X. Xxxxxxx, who (check one) __x__ is personally known to me or
____ has produced _________________ as identification and who did take
an oath.
/s/ XXXXX XXX XXXXXX
-------------------------------------------
Print Name: Xxxxx Xxx Xxxxxx
Notary Public, State and County Aforesaid
My commission expires:
[Notarial Seal]
STATE OF INDIANA
COUNTY OF TIPPECANOE
The foregoing instrument was acknowledged before me this 14th day of June,
2000, by Xxxx X. Xxxxxxx, who (check one) __x__ is personally known to me or
____ has produced _________________ as identification and who did take an oath.
/s/ XXXXX XXX XXXXXX
-------------------------------------------
Print Name: Xxxxx Xxx Xxxxxx
Notary Public, State and County Aforesaid
My commission expires:
[Notarial Seal]
29
STATE OF FLORIDA
COUNTY OF XXXXX
The foregoing instrument was acknowledged before me this 15th day of June,
2000, by Xxxxxxx X. Xxxxx, as Chief Executive Officer of Weststar Environmental,
Inc., a Florida corporation, on behalf of the corporation, who (check one) ____
is personally known to me or ____ has produced _________________ as
identification and who did/did not take an oath.
________________________________________
Print Name: ____________________________
Notary Public, State and County Aforesaid
My commission expires:
[Notarial Seal]
30
SCHEDULE 4.9
LITIGATION
1. Litigation has been threatened by a former employee of the Company, Xxxxx
Xxx. Xx. Xxx claims that he was underpaid based on Indiana's wage law. The
Company has responded to Xx. Xxx'x claims and attempted to explain the
reasoning by which they are not liable for any additional wage payments.
Xx. Xxx has not proceeded any further with litigation; however, Xx. Xxx did
file a lien on the assets of the Company. Additional information concerning
this claim can be found in the December 31, 1999 audited financial
statements of the Company.
2. Safeco Insurance filed that certain Complaint on March 29,2000 (Case No.
003CP0041, Xxxxxx County Circuit Court) against the Company. Each of the
Wealing Shareholders, jointly and severally and unconditionally, shall
indemnify Weststar in full for any liability incurred by the Company or
Weststar as a result of this litigation.
SCHEDULE 4.13
PROPRIETARY RIGHTS
NONE
SCHEDULE 4.14
TAX MATTERS
None, to the best of Wealing Shareholders' knowledge following reasonable
diligent inquiry.
SCHEDULE 4.15
UNION CONTRACTS AND LABOR RELATIONS
NONE
SCHEDULE 4.16
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
See attached Exhibit A to Schedule 4.16
SCHEDULE 4.19
LEASES
1. The Company leases its facility from Xxxx X. Xxxxxxx. The lease is an oral
month-to-month lease, with a monthly rental of $1,000. The Company is
responsible for payment of insurance and maintenance of the property. The
landlord is responsible for the payment of property taxes.
SCHEDULE 4.20
REAL AND PERSONAL PROPERTY
I. Real property.
NONE
II. Material personal property
See Exhibit A to Schedule 4.20
SCHEDULE 4.21
MATERIAL CONTRACTS
See copies of contracts with Xxxxx X. Xxxxx, Resource Conservation
Services, Xxxxx Xxxxxxxx, along with a listing of verbal quotes, attached as
composite Exhibit A to Schedule 4.21.
SCHEDULE 4.22
PERMITS, LICENSES, ETC.
NONE
SCHEDULE 4.24
INSURANCE
See Exhibit A to Schedule 4.24
SCHEDULE 4.25
ACCOUNTS RECEIVABLE
See Exhibit A to Schedule 4.25
SCHEDULE 4.26
TRANSACTIONS WITH AFFILIATES
NONE
SCHEDULE 4.27
BANK ACCOUNTS, ETC.
Type of Account Financial Institution Account Number Balance as of:
--------------- --------------------- -------------- --------------
Checking Account Bank of Xxxxxxx 7-239-7 January 31, 2000
X.X. Xxx 000 $31,792.56
Xxxxxxx, Xxxxxxx 00000
February 29, 2000
$86,771.68
March 31, 2000
$1,934.06
May 31, 2000
$_________
(inclusive of
checks outstanding)
POWERS OF ATTORNEY
NONE
CERTAIN COMPENSATED EMPLOYEES
See Schedule 4.16
SCHEDULE 4.34
MATERIAL CUSTOMERS
NONE
SCHEDULE 4.35
MATERIAL SUPPLIERS
NONE
SCHEDULE 4.36
PRODUCT WARRANTY
NONE
SCHEDULE 4.39
ACCOUNTS PAYABLE
See Exhibit A to Schedule 4.39
EXHIBIT I-A
FORM OF PROMISSORY NOTE
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EXHIBIT I-B
FORM OF EMPLOYMENT AGREEMENT
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EXHIBIT I-C
FORM OF NONCOMPETITION AGREEMENT
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EXHIBIT I-D
FORM OF LEASE AGREEMENT
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EXHIBIT 4.8
FINANCIAL STATEMENTS
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EXHIBIT 8.7
FORM OF OPINION OF WEALING SHAREHOLDERS' COUNSEL
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