SECURITIES EXCHANGE AGREEMENT
This SECURITIES EXCHANGE AGREEMENT ("Agreement") dated as of April 17,
2003, is by and between DR. OWL ONLINE, INC., a Texas corporation ("Dr. Owl"),
GPEH Corp., a Delaware corporation ("GPEH"), and the individuals whose names
appear on the signature page hereof, each being a shareholder of GPEH (the
"Shareholders").
W I T N E S S E T H:
WHEREAS, as of April 17, 2003, there are 15,000,000 outstanding shares of
the common stock, par value $0.001 of GPEH (the "GPEH Stock"), of which a
majority of the shares of GPEH Stock are beneficially owned and/or controlled by
the Shareholders.
WHEREAS, Dr. Owl proposes to acquire all of the outstanding shares of GPEH
in exchange for the issuance of an aggregate of 15,000,000 shares of Dr. Owl
common stock (on a post-split basis) ("Dr. Owl Stock"), representing
approximately 74% of the post-closing, issued and outstanding Dr. Owl common
stock.
WHEREAS, the Board of Directors of Dr. Owl and GPEH have determined that it
is desirable to effect a plan of reorganization.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants, agreements, representations and warranties contained herein, the
parties hereto agree as follows:
ARTICLE 1
ISSUANCE AND EXCHANGE OF SHARES
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1.1 Issuance and Exchange. At the Closing (defined below) to be held in
accordance with the provisions of Article 2 below and subject to the terms and
agreements set forth herein, Dr. Owl shall issue to each of the Shareholders,
and all other shareholders of GPEH not a party to this Agreement, the number of
authorized and newly issued shares of Dr. Owl Stock determined as provided in
Section 1.2 below for each share of GPEH Stock owned by them. In consideration
for the shares of Dr. Owl Stock to be exchanged, the Shareholders and all other
shareholders of GPEH, each shall deliver to Dr. Owl certificates evidencing
their shares of GPEH, together with duly executed stock powers to effectuate the
transfer.
1.2 Exchange Ratio.
(a) At the Closing, Dr. Owl shall exchange one (1) share of Dr. Owl Stock
for each share of GPEH Stock as full consideration for the GPEH Stock.
(b) No fractional shares of Dr. Owl Stock will be issued to any
Shareholder. Accordingly, Shareholders who would otherwise be entitled
to receive fractional shares of Dr. Owl Stock will, upon surrender of
their certificate representing the fractional shares of GPEH Stock,
receive a full share if the fractional share exceeds fifty percent
(50%) and if the fractional share is less than fifty percent (50%) the
fractional share shall be cancelled.
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ARTICLE 2
CLOSING
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2.1 Closing. The consummation of the exchange by Dr. Owl, GPEH and the
Shareholders (the "Closing") shall occur at the offices of Xxxxxx & Xxxxxxxxx,
P.C., Xxxxx Xxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, on even date, or at such
other place and/or on such other time and date as the parties may agree upon.
All costs and expenses associated with consummation of the transactions
contemplated by this Agreement incurred by Dr. Owl shall be the sole
responsibility of Xxxxxxx Xxxxx, while all expenses incurred by the Shareholders
and GPEH shall be the sole responsibility of GPEH.
2.2 Deliveries by Dr. Owl. Dr. Owl shall deliver, or cause to be delivered
to the Shareholders:
(a) As soon after the Closing and no later than three (3) business days
thereafter, certificates for the shares of Dr. Owl Stock being
exchanged for their respective accounts, in form and substance
reasonably satisfactory to the Shareholders and their counsel;
(b) At the Closing, the certificates, resolutions and resignations
specified in Article 7 below; and
(c) At the Closing, all of the books and records of Dr. Owl.
2.2 Shareholders' Deliveries.
The Shareholders shall deliver to Dr. Owl:
(a) At the Closing, a certificate or certificates evidencing the ownership
of each Shareholder and his affiliates, of all GPEH Stock currently
owned and/or controlled by them, respectively, duly endorsed for
transfer to Dr. Owl; and
(b) The certificates and resolutions specified in Article 6 below.
ARTICLE 3
REPRESENTATIONS OF SHAREHOLDERS
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Each Shareholder hereby represents and warrants as to himself and his
affiliates to Dr. Owl as follows (it being acknowledged that Dr. Owl is entering
into this Agreement in material reliance upon each of the following
representations and warranties, and that the truth and accuracy of each, as
evidenced by their signature set forth on the signature page, constitutes a
condition precedent to the obligations of Dr. Owl hereunder):
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3.1 Ownership of Stock. Each Shareholder and his affiliates are the lawful
owner of their GPEH Stock to be transferred to Dr. Owl free and clear of all
preemptive or similar rights, liens, encumbrances, restrictions and claims of
every kind and the delivery to Dr. Owl of the GPEH Stock pursuant to the
provisions of this Agreement will transfer to Dr. Owl valid title thereto, free
and clear of all liens, encumbrances, restrictions and claims of every kind. To
the knowledge of the Shareholder, the GPEH Stock to be exchanged herein has been
duly authorized and validly issued and is fully paid and nonassessable.
3.2 Authority to Execute and Perform Agreement; No Breach. Each Shareholder
and his affiliates has the full legal right and power and all authority and
approval required to enter into, execute and deliver this Agreement, and to
sell, assign, transfer and convey the GPEH Stock and to perform fully their
respective obligations hereunder. This Agreement has been duly executed and
delivered by each Shareholder and, assuming due execution and delivery by, and
enforceability against, Dr. Owl, constitutes the valid and binding obligation of
each Shareholder enforceable in accordance with its terms, subject to the
qualifications that enforcement of the rights and remedies created hereby is
subject to (i) bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting the rights and remedies of creditors, and (ii)
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law). No approval or consent of, or
filing with, any governmental or regulatory body, and no approval or consent of,
or filing with, any other person is required to be obtained by the Shareholders
or his affiliates or in connection with the execution and delivery by the
Shareholders of this Agreement and consummation and performance by them of the
transactions contemplated hereby.
The execution, delivery and performance of this Agreement by each
Shareholder and the consummation of the transactions contemplated hereby in
accordance with the terms and conditions hereof by each Shareholder will not:
(a) violate, conflict with or result in the breach of any of the terms of,
or constitute (or with notice or lapse of time or both would
constitute) a default under, any contract, lease, agreement or other
instrument or obligation to which a Shareholder is a party or by or to
which any of the properties and assets of any of the Shareholders may
be bound or subject;
(b) violate any order, judgment, injunction, award or decree of any court,
arbitrator, governmental or regulatory body, by which a Shareholder or
the securities, assets, properties or business of any of them is
bound; or
(c) violate any statute, law or regulation to which Shareholder is
subject.
3.3 Securities Matters. The Shareholders hereby represent, warrant and
covenant to Dr. Owl, as follows:
(a) The Shareholders have been advised that the Dr. Owl Stock has not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities act in reliance on
exemptions therefrom.
(b) The Dr. Owl Stock is being acquired solely for the Shareholder's own
account, for investment and are not being acquired with a view to or
for the resale, distribution, subdivision or fractionalization
thereof, the Shareholder's have no present plans to enter into any
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such contract, undertaking, agreement or arrangement and the
Shareholders further understands that the Dr. Owl Stock, may only be
resold pursuant to a registration statement under the Securities Act,
or pursuant to some other available exemption.
(c) The Shareholders acknowledge, in connection with the exchange of the
Dr. Owl Stock, that no representation has been made by representatives
of Dr. Owl regarding its business, assets or prospects other than that
set forth herein and that it is relying upon the information set forth
in the filings made by Dr. Owl pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended and such other
representations and warranties as set forth in this Agreement.
(d) The Shareholders agree that the certificate or certificates
representing the Dr. Owl Stock will be inscribed with substantially
the following legend:
"The securities represented by this certificate have not
been registered under the Securities Act of 1933. The
securities have been acquired for investment and may not be
sold, transferred or assigned in the absence of an effective
registration statement for these securities under the
Securities Act of 1933 or an opinion of Dr. Owl's counsel
that registration is not required under said Act."
ARTICLE 4
REPRESENTATIONS OF GPEH
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GPEH hereby represents and warrants to Dr. Owl as follows (it being
acknowledged that Dr. Owl is entering into this Agreement in material reliance
upon each of the following representations and warranties, and that the truth
and accuracy of each, as evidenced by the execution of this Agreement by a duly
authorized officer of GPEH, constitutes a condition precedent to the obligations
of Dr. Owl hereunder).
4.1 Existence and Good Standing. GPEH is a corporation duly organized,
validly existing and in good standing under the laws of Delaware. GPEH's
subsidiaries are entities duly organized, validly existing and in good standing
under the laws of the jurisdictions in which they are incorporated. GPEH and its
subsidiaries have the power to own or lease their respective properties and
assets and to carry on their businesses as now being conducted. GPEH and its
subsidiaries are duly qualified to do business and are in good standing in the
jurisdictions set forth on Schedule 4.1, which are the only jurisdictions in
which the character or location of the properties owned or leased by GPEH and
its subsidiaries or the nature of the business conducted by GPEH or its
subsidiaries makes such qualification necessary.
4.2 Capitalization. GPEH currently has outstanding 15,000,000 shares of
common stock and no shares of preferred stock. All such outstanding shares have
been duly authorized and validly issued and are fully paid and nonassessable.
Except as set forth as Schedule 4.2 attached hereto, there are no outstanding
options, warrants, rights, calls, commitments, conversion rights, rights of
exchange, plans or other agreements, commitments or arrangements of any
character providing for the purchase, subscription, issuance or sale of any
shares of capital stock of GPEH, other than the exchange of the GPEH Stock as
contemplated by this Agreement.
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4.3 Financial Statements and No Material Changes. Annexed hereto as
Schedule 4.3(a) are the audited balance sheets, income statements and statements
of cash flows of GPEH and its subsidiaries as of December 31, 2002 (the "GPEH
Financial Statements").
The GPEH Financial Statements were carefully prepared from the books and
records of GPEH, present fairly the financial position, assets and liabilities
of GPEH and the results of its operations, for the respective periods indicated
and reflect all necessary accruals, all in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis. The GPEH Financial
Statements contain all adjustments (consisting of only normal recurring
accruals) required to be made by GAAP, subject to normal year-end adjustments.
Except as disclosed in Schedule 4.3(b), since December 31, 2002 there has
been (a) no material adverse change in the assets or liabilities, or in the
business or condition, financial or otherwise, or in the results of operations
or prospects, of GPEH whether as a result of any legislative or regulatory
change, revocation of any license or rights to do business, fire, explosion,
accident, casualty, labor trouble, flood, drought, riot, storm, condemnation or
act of God or other public force or otherwise and (b) no material adverse change
in the assets or liabilities, or in the business or condition, financial or
otherwise, or in the results of operations or prospects, of GPEH and to the best
knowledge, information and belief of GPEH, no fact or condition exists or is
contemplated or threatened which might cause such a change in the future.
4.4 Books and Records. The minute books of GPEH, all the contents of which
have been previously made available to Dr. Owl and their representatives,
contain accurate records of all meetings of, and action taken by (including
action taken by written consent) the Shareholders and the Board of Directors of
GPEH. Except as set forth on Schedule 4.4 attached hereto, GPEH does not have
any of its respective 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) which (including all means of access thereto and
therefrom) are not under the exclusive ownership and direct control of GPEH.
4.5 Title to Properties; Encumbrances.
(a) Except as set forth on Schedule 4.5 attached hereto, GPEH and its
subsidiaries have good, valid and marketable title to (a) all of its
properties and assets (real and personal, tangible and intangible),
including, without limitation, all of the properties and assets
reflected in the balance sheet included as part of the GPEH Financial
Statements, except as indicated in the Schedules hereto; and (b) all
of the properties and assets purchased by GPEH or its subsidiaries
since December 31, 2002 all of which purchases as of a date not more
than two days prior to the date of this Agreement, have been set forth
on Schedule 4.5 attached hereto; in each case subject to no
encumbrance, lien, charge or other restriction of any kind or
character, except for (i) liens reflected in the balance sheet,
included as part of the GPEH Financial Statements; (ii) liens
consisting of zoning or planning restrictions, easements, permits and
other restrictions or limitations on the use of real property or
irregularities in title thereto which do not materially detract from
the value of, or impair the use of, such property by GPEH in the
operation of its business; (iii) liens for current taxes, assessments
or governmental charges or levies on property not yet due and
delinquent; and (iv) liens described on Schedule 4.5 attached hereto
(liens of the type described in clause (i), (ii) and (iii) above are
hereinafter sometimes referred to as "Permitted Liens").
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(b) The rights, properties and other assets presently owned, leased or
licensed, by GPEH and its subsidiaries reflected on the balance sheet
included in the GPEH Financial Statements or acquired since December
31, 2002 include all rights, properties and other assets necessary to
permit GPEH to conduct its business in the same manner as its business
has heretofore been conducted. All such properties and assets owned or
leased by GPEH are in satisfactory condition and repair, other than
ordinary wear and tear.
To the knowledge of GPEH, no structure or improvement on the real
property leased by GPEH, whether now existing or intended to be
constructed pursuant to existing plans and specifications, violates,
or if completed would violate, any applicable zoning or building
regulations or ordinances or similar federal, state or municipal law.
4.6 Leases. Schedule 4.6 attached hereto, contains an accurate and complete
list and description of the terms of all leases to which either GPEH or any of
its subsidiaries is a party (as lessee or lessor). Each lease listed on Schedule
4.6 (or required to be set forth on Schedule 4.6) is in full force and effect;
all rents and additional rents due to date on each such lease have been paid; in
each case, the lessee has been in peaceable possession since the commencement of
the original term of such lease and is not in default thereunder and no waiver,
indulgence or postponement of the lessee's obligations thereunder has been
granted by the lessor; and there exists no event of default or event,
occurrence, condition or act (including the consummation of the transactions
contemplated hereby) which, with the giving of notice, the lapse of time or the
happening of any further event or condition, would become a default under such
lease. Neither GPEH nor any of its subsidiaries has violated any of the terms or
conditions under any such lease in any material respect, and, to the best
knowledge, information and belief of GPEH, all of the covenants to be performed
by any other party under any such lease have been fully performed. The property
leased by GPEH or any of its subsidiaries in a state of good maintenance and
repair and is adequate and suitable for the purposes for which it is presently
being used.
4.7 Material Contracts. Except as set forth on Schedule 4.7 attached
hereto, neither GPEH nor its subsidiaries has nor is bound by:
(a) any agreement, contract or commitment relating to the employment of
any person by GPEH or its subsidiaries, or any bonus, deferred
compensation, pension, profit sharing, employee option, employee stock
purchase, retirement or other employee benefit plan;
(b) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other
distribution in respect of its shares;
(c) any loan or advance to, or investment in, any individual, partnership,
joint venture, corporation, trust, unincorporated organization,
government or other entity (each a "Person") or any agreement,
contract or commitment relating to the making of any such loan,
advance or investment;
(d) any guarantee or other contingent liability in respect of any
indebtedness or obligation of any Person (other than the endorsement
of negotiable instruments for collection in the ordinary course of
business);
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(e) any management service, consulting or any other similar type contract;
(f) any agreement, contract or commitment limiting the freedom of GPEH or
any subsidiary to engage in any line of business or to compete with
any Person;
(g) any agreement, contract or commitment not entered into in the ordinary
course of business which involves $250,000 or more and is not
cancelable without penalty or premium within 30 days; or
(h) any agreement, contract or commitment which might reasonably be
expected to have a potential adverse impact on the business or
operations of GPEH or any subsidiary; or
(i) any agreement, contract or commitment not reflected in the GPEH
Financial Statement under which GPEH or any subsidiary is obligated to
make cash payments of, or deliver products or render services with a
value greater than $100,000 individually or $300,000 in the aggregate,
or receive cash payments of, or receive products or services with a
value greater than $100,000 individually or $300,000 in the aggregate,
and any other agreement, contract or commitment which is material to
the conduct of the business of GPEH.
Each contract or agreement set forth on Schedule 4.7 is in full force and
effect and there exists no default or event of default or event, occurrence,
condition or act (including the consummation of the transactions contemplated
hereby) which, with the giving of notice, the lapse of time or the happening of
any other event or condition, would become a default or event of default
thereunder. Neither GPEH or any subsidiary has violated any of the terms or
conditions of any contract or agreement set forth on Schedule 4.7 in any
material respect, and, to the best knowledge, information and belief of GPEH,
all of the covenants to be performed by any other party thereto have been fully
performed. Except as set forth on Schedule 4.7, the consummation of the
transactions contemplated hereby does not constitute an event of default (or an
event, which with notice or the lapse of time or both would constitute a
default) under any such contract or agreement.
4.8 Restrictive Documents. Except as set forth on Schedule 4.8 attached
hereto, neither GPEH or any subsidiary, nor Shareholder is subject to, or a
party to, any charter, by-law, 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, which
could materially adversely affect the business practices, operations or
condition of GPEH or any of its assets or property ("GPEH's Property", which for
the purposes of this Agreement includes the assets and property of all of GPEH's
subsidiaries), or which would prevent consummation of the transactions
contemplated by this Agreement, compliance by the Shareholders with the terms,
conditions and provisions hereof or the continued operation of "GPEH's Business"
(which shall include the business of all GPEH's subsidiaries) after the date
hereof or the Closing on substantially the same basis as heretofore operated or
which would restrict the ability of GPEH to conduct business in any area.
4.9 Litigation. Except as set forth on Schedule 4.9 attached hereto, there
is no action, suit, proceeding at law or in equity, arbitration or
administrative or other proceeding by or before (or to the best knowledge,
information and belief of GPEH any investigation by) any governmental or other
instrumentality or agency, pending, or, to the best knowledge, information and
belief of GPEH or any subsidiary, threatened, against or affecting GPEH or any
subsidiary, or any of their respective properties or rights, or against the
Shareholders, other than such items which are insignificant and immaterial and
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which do not adversely affect (i) the right or ability of GPEH's Business to
carry on business as now conducted; (ii) the condition, whether financial or
otherwise, or properties of GPEH; or (iii) the consummation of the transactions
contemplated hereby and the Shareholders do not know of any valid basis for any
such action, proceeding or investigation. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, governmental or
regulatory body or arbitration tribunal by which either the Shareholders or
GPEH, or any officer, director or employee of GPEH, or the securities, assets,
properties or business of any of them is bound, other than any such items which
are insignificant and immaterial and which do not and will not adversely affect
(i) the right of GPEH to carry on its business as now conducted and as proposed
to be conducted by Dr. Owl after the consummation of the transactions
contemplated by this Agreement; (ii) the condition, whether financial or
otherwise, or properties of GPEH; or (iii) the consummation of the transactions
contemplated hereby.
4.10 Taxes. Except as set forth on Schedule 4.10, GPEH and its subsidiaries
have filed or caused to be filed, within the times and within the manner
prescribed by law, all federal, state, local and foreign tax returns and tax
reports which are required to be filed by, or with respect to, GPEH and its
subsidiaries. Such returns and reports reflect accurately all liability for
taxes of GPEH for the periods covered thereby. Except as set forth on Schedule
4.10, all federal, state, local and foreign income, profits, franchise,
employment, sales, use, occupancy, excise and other taxes and assessments, stock
and transfer taxes (including interest and penalties) payable by, or due from,
GPEH and its subsidiaries, have been fully paid and fully provided for in the
books and GPEH Financial Statements. No examination of any tax return of GPEH or
its subsidiaries, is currently in progress. There are no outstanding agreements
or waivers extending the statutory period of limitation applicable to any tax
return of GPEH or its subsidiaries. Schedule 4.10 attached hereto lists all tax
sharing contracts, agreements or arrangements to which GPEH is a party and all
such contracts, agreements and arrangements have been terminated prior to the
Closing with no liability or obligation to GPEH and its subsidiaries.
4.11 Liabilities. Except as set forth on Schedule 4.11, GPEH on a
consolidated basis has no outstanding claims, liabilities or indebtedness,
contingent or otherwise, which are not properly reflected in the GPEH Financial
Statements in a manner consistently with past practice, other than liabilities
incurred subsequent to December 31, 2002 in the ordinary course of business not
exceeding $250,000 individually or $500,000 in the aggregate; the reserves
reflected in the GPEH Financial Statements are adequate, appropriate and
reasonable. Neither GPEH nor any of its subsidiaries is in default in respect of
the terms or conditions of any indebtedness, except where such default would not
have a material adverse effect on the business assets or prospects of GPEH.
4.12 Insurance. Set forth on Schedule 4.12, attached hereto, is a brief
description of insurance policies (specifying the insurer, the policy number or
coverage note number with respect to binders and the amount of any deductible,
describing the pending claims if such claims exceed the applicable policy
limits) which GPEH or its subsidiaries maintain with respect to its business,
properties or employees. Such policies are valid, binding and, to our knowledge,
enforceable in accordance with their terms and are in full force and effect and
are free from any right of termination on the part of the insurance carriers.
Such policies, with respect to their amounts and types of coverage, are adequate
to insure fully against risks to which GPEH and its subsidiaries and their
respective property and assets are normally exposed in the operation of their
businesses. Neither GPEH nor any of its subsidiaries is in default with respect
to any material provision in any such policy or binder and has not failed to
give any notice or present any claim under any such policy or binder in due and
timely fashion, and neither GPEH nor any of its subsidiaries has received any
notice of cancellation or non-renewal with respect to any such policy or binder.
Except for claims set forth on Schedule 4.12, there are no outstanding unpaid
claims under any such policy or binder which have gone unpaid for more than 45
days or as to which the carrier has disclaimed liability.
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4.13 Intellectual Properties. The operation of the business of GPEH or any
of its subsidiaries requires no rights under Intellectual Property (as
hereinafter defined) other than rights under Intellectual Property listed on
Schedule 4.13 attached hereto, and rights granted to GPEH or any of its
subsidiaries pursuant to agreements listed on Schedule 4.13. Since inception of
GPEH or any of its subsidiaries, neither the business of GPEH or any of its
subsidiaries made use of Intellectual Property rights other than rights under
Intellectual Property listed on Schedule 4.13 and rights granted to GPEH or any
of its subsidiaries pursuant to agreements listed on Schedule 4.13. Except as
otherwise set forth on Schedule 4.13, either GPEH or any of its subsidiaries
owns all right, title and interest in the Intellectual Property listed on
Schedule 4.13 including, without limitation, exclusive rights to use and license
the same. Each item of Intellectual Property listed on Schedule 4.13 has been
duly registered with, filed in, or issued by the appropriate domestic or foreign
governmental agency, to the extent required, and each such registration, filing
and issuance remains in full force and effect. Except as set forth on Schedule
4.13, no claim adverse to the interests of GPEH or any of its subsidiaries in
the Intellectual Property or agreements listed on Schedule 4.13 has been made in
litigation. To the best knowledge, information and belief of the Shareholders,
no such claim has been threatened or asserted, no basis exists for any such
claim, and no Person has infringed or otherwise violated the rights of GPEH or
any of its subsidiaries in any of the Intellectual Property or agreements listed
on Schedule 4.13. Except as set forth on Schedule 4.13, no litigation is pending
wherein GPEH or any of its subsidiaries is accused of infringing or otherwise
violating the Intellectual Property right of another, or of breaching a contract
conveying rights under Intellectual Property. To the best knowledge, information
and belief of the Shareholders, no such claim has been asserted or threatened
against GPEH or any of its subsidiaries, nor are there any facts that would give
rise to such a claim. For purposes of this Section 4.13 and Section 5.13,
"Intellectual Property" means domestic and foreign patents, patent applications,
registered and unregistered trademarks and service marks, trade names,
registered and unregistered copyrights, computer programs, data bases, trade
secrets and proprietary information. Shareholders will transfer any Intellectual
Property owned by it and used in GPEH's Business to Dr. Owl.
4.14 Compliance with Laws. Neither GPEH nor any of its subsidiaries, nor to
the knowledge of GPEH, the Shareholders, any officer, director or employee of
GPEH or any of its subsidiaries is in violation of any applicable order,
judgment, injunction, award or decree, related to, arising out of or affecting
GPEH's Business or properties, the violation of which would have a material
adverse effect on the business assets or prospects of GPEH. Neither GPEH nor any
of its subsidiaries, nor to the knowledge of GPEH, any officer, director or
employee of either GPEH or its subsidiaries is in violation of any federal,
state, local or foreign law, ordinance, regulation or any other requirement of
any governmental or regulatory body, court or arbitrator (including, without
limitation, laws relating to the environment and OSHA and the Americans with
Disabilities Act) other than insignificant or immaterial violations which do not
and will not adversely affect (i) GPEH's Business or Property; (ii) the business
proposed to be conducted by Dr. Owl after the consummation of the transactions
contemplated by this Agreement; or (iii) the consummation of the transactions
contemplated by this Agreement. Each permit, license, order or approval of any
governmental or regulatory body or other applicable authority ("Permits") that
is material to the conduct of GPEH's Business is in full force and effect, no
violations are or have been recorded in respect of any permit and no proceeding
is pending or, to the knowledge of the Shareholders or GPEH, threatened, to
revoke or limit any Permit, which revocation or limitation could have an adverse
effect on GPEH's Business or Property or the business to be conducted by Dr. Owl
after the consummation of the transactions contemplated by this Agreement.
Schedule 4.14 contains a list of all Permits. Except as set forth on Schedule
4.14, no approval or consent of any person is needed in order that the Permits
continue in full force and effect following the consummation of the transactions
contemplated by this Agreement.
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4.15 Employment Relations.
(a) GPEH and each of its subsidiaries is in compliance with all federal,
state or other applicable laws, domestic or foreign, respecting
employment and employment practices, terms and conditions of
employment and wages and hours, and has not and is not engaged in any
unfair labor practice;
(b) no unfair labor practice complaint against GPEH or any of its
subsidiaries is currently pending before the National Labor Relations
Board nor has such a complaint been pending in the last two years;
(c) there is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against or involving GPEH or any of its
subsidiaries nor has one existed during the last two years;
(d) no representation question exists respecting the employees of GPEH or
any of its subsidiaries;
(e) no grievance which might have an adverse effect upon GPEH or any of
its subsidiaries or the conduct of GPEH's Business exists, no
arbitration proceeding arising out of or under any collective
bargaining agreement is pending and no claim therefor has been
asserted;
(f) Neither GPEH nor any of its subsidiaries is a party to, nor does there
otherwise exist, any union, collective bargaining agreement or similar
agreement with respect to the employees of GPEH or any of its
subsidiaries and no collective bargaining agreement or similar
agreement is currently being negotiated by GPEH or any of its
subsidiaries; and
(g) Neither GPEH nor any of its subsidiaries has experienced any labor
difficulty during the last two years. There has not been, and to the
best knowledge, information and belief of the Shareholders there will
not be, any adverse change in relations with employees of GPEH or any
of its subsidiaries as a result of any announcement of the
transactions contemplated by this Agreement.
4.16 Employee Benefit Plans.
(a) Schedule 4.16 contains a complete list, as of March 31, 2003, of all
employees of GPEH and its subsidiaries, including their names, job
titles, salaries and dates of hire. Schedule 4.16 contains a true and
complete list and accurate description of each employee welfare
benefit plan (an "Employee Welfare Plan"), as defined in Section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained currently or at any time by GPEH or any other
organization which as of the Closing is a member of a controlled group
of organizations within the meaning of Section 414(b), (c), (m) or (o)
of the Internal Revenue Code of 1986, as amended, (the "Code"), of
which GPEH is a member (an "ERISA Affiliate"), or to which GPEH or any
ERISA Affiliate contributes or is required to contribute or
contributed or was required to contribute at any time. Schedule 4.16
contains a true and complete list and accurate description of each
10
employee pension benefit plan, as defined in Section 3(2) of ERISA (an
"Employee Pension Plan"), maintained currently or at any time by GPEH
or any ERISA affiliate or to which GPEH or any ERISA Affiliate
contributes or is required to contribute or contributed or was
required to contribute at any time. The Employee Welfare Plans, the
Employee Pension Plans and the other plans listed on Schedule 4.16 are
collectively referred to herein as the "Plans." Neither GPEH nor any
ERISA Affiliate has maintained at any time, nor does it contribute to
or has it contributed to or is or was required to contribute to: (i)
any multi-employer plan (as defined in Section 3(37) of ERISA); or
(ii) any funded or unfunded medical, health or life insurance plans or
arrangements for current or future retirees or terminated employees.
(b) With respect to each current Plan, Dr. Owl has been provided
heretofore with true and complete copies of: (i) all Plan documents
and all documents or instruments establishing or constituting any
related trust, annuity contract or other funding instrument, and any
amendments thereto; (ii) the most recent determination letter received
from the IRS; (iii) the most recent financial statement; (iv) the most
recent IRS Form 5500; and (v) written descriptions of all non-written
agreements relating to the Plans. All current Plans, all Plan
documents and all documents or instruments establishing or
constituting any related trust, annuity contract or other funding
instrument, and any amendments thereto, comply in all material
respects with the provisions of ERISA and the Code and applicable
laws, rules and regulations. All necessary governmental approvals for
all current Plans have been obtained and favorable determinations as
to the qualification under the Code of each of the current Plans, and
for any Code Section 501(c)(9) trust maintained in connection with any
current Employee Welfare Plan, and each amendment thereto, have been
made by the IRS, or have been applied for and no event has occurred
and no facts or circumstances exist that may cause the loss of any
such qualification or may cause any such application to be denied.
(c) Except as set forth on Schedule 4.16, the administration of all Plans
has been consistent with, and in compliance in all material respects
with, applicable requirements of the Code and ERISA, including,
without limitation, compliance on a timely basis with all requirements
for reporting, disclosure and requirements for the continuation of
group health insurance. Neither GPEH, any ERISA Affiliate nor any Plan
fiduciary (as defined in Section 3(21) of ERISA), with respect to any
Plan, has engaged in any transaction or acted or failed to act in any
manner that violates Section 404 or 406 of ERISA or engaged in any
prohibited transaction (as defined in Section 4975(c)(1) of the Code)
for which there exists neither a statutory nor regulatory exemption or
for which an exemption has not been obtained. All obligations required
to be performed by GPEH or any ERISA Affiliate under each Plan have
been performed, and GPEH is not in violation of the terms of any Plan,
nor does GPEH or the Shareholders have any knowledge of any existing
violation by any other party of any term or requirement of or
applicable to any current Plan. All contributions required by law to
have been made under any Plan, or to any trusts or funds established
thereunder or in connection therewith, have been made by the due dates
thereof (including any valid extensions).
(d) No claims, suits or other proceedings are pending or threatened, and
no facts or circumstances exist that could provide a basis for any
such claim, suit or other proceeding, by any of GPEH's or any ERISA
Affiliate's current or former employees, any participant (as defined
in Section 3(7) of ERISA) to any Plan maintained at any time by GPEH
11
or any ERISA Affiliate to which GPEH contributes or has contributed or
is or was required to contribute, any fiduciary of any Plan, any
beneficiary (as defined in Section 3(8) of ERISA) of any such person
or by any governmental body, agency or instrumentality thereof
relating to or affecting any Plan, other than usual and ordinary
claims for benefits by eligible persons. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will constitute: (i) a termination of employment
or other event entitling any person to any additional or other
benefits, or that would otherwise modify any benefits or the vesting
of any benefits, under any Plan maintained at any time by GPEH or any
ERISA affiliate, or to which GPEH or any ERISA Affiliate contributes
or has contributed or is or was required to contribute; or (ii) a
violation of Section 404 or 406 of ERISA or a prohibited transaction
(as defined in Section 4975(c)(1) of the Code) for which there exists
neither a statutory nor regulatory exemption or for which an exemption
has not been obtained.
(e) Neither GPEH nor any ERISA Affiliate maintains any Plans that are
subject to the requirements of Section 412 of the Code.
4.17 Environmental Laws and Regulations.
(a) Neither GPEH nor any of its subsidiaries has generated, transported or
disposed of any hazardous material (defined below) since inception.
(b) Neither GPEH nor any of its subsidiaries has Hazardous Materials at
any site or facility owned or operated presently or at any previous
time by GPEH or any of its subsidiaries.
GPEH and its subsidiaries are in compliance in all material respects with
all applicable federal, state and local laws and regulations relating to product
registration, pollution control and environmental contamination including, but
not limited to, all laws and regulations governing the generation, use,
collection, discharge, or disposal of Hazardous Materials and all laws and
regulations with regard to record keeping, notification and reporting
requirements respecting Hazardous Materials. Neither GPEH nor any of its
subsidiaries has been alleged to be in violation of, and has not been subject to
any administrative or judicial proceeding pursuant to, such laws or regulations
either now or any time during the past three years. There are no facts or
circumstances which GPEH or the Shareholders reasonably expects could form the
basis for the assertion of any Environmental Claim (as defined below) against
GPEH or any of its subsidiaries relating to environmental matters including, but
not limited to, any Environmental Claim arising from past or present
environmental practices asserted under CERCLA (as defined below) and RCRA (as
defined below), or any other federal, state or local environmental statute,
which GPEH or the Shareholders believes might have an adverse effect on the
business, results of operations, financial condition or prospects of GPEH and
its subsidiaries taken as a whole.
For purposes of this Section 4.17, the following terms shall have the
following meanings: (A) "Hazardous Materials" shall mean materials defined as
"hazardous substances", "hazardous wastes" or "solid wastes" in (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. xx.xx. 9601--5657, and any amendments thereto ("CERCLA"); (ii) the
Resource Conservation and Recovery Act, 42 U.S.C. ss.ss.6901-6987 and any
amendments thereto ("RCRA"); and (iii) any similar federal, state or local
environmental statute; and (B) "Environmental Claim" shall mean any and all
claims, demands, causes of actions, suits, proceedings, administrative
proceedings, losses, judgments, decrees, debts, damages, liabilities, court
costs, attorneys' fees and any other expenses incurred, assessed or sustained by
or against GPEH or any of its subsidiaries.
12
4.18 No Changes Since the December 31, 2002 Balance Sheet Date. Except as
disclosed in Schedule 4.18, since the December 31, 2002 Balance Sheet, GPEH has
not on a consolidated basis:
(a) incurred any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except liabilities and obligations
in the ordinary course of business and consistent with past practice,
resulting in an increase for the liabilities shown on the December 31,
2002 Balance Sheet of more than $100,000 in the aggregate;
(b) permitted any of its material assets to be subjected to any mortgage,
pledge, lien, security interest, encumbrance, restriction or charge of
any kind (other than Permitted Liens);
(c) sold, transferred or otherwise disposed of any material assets except
inventory sold in the ordinary course of business and consistent with
past practice;
(d) made any single capital expenditure or commitment therefor, in excess
of $50,000 or made aggregate capital expenditures and commitments
therefor in excess of $100,000;
(e) declared or paid any dividend or made any distribution on any shares,
or redeemed, purchased or otherwise acquired any shares or any option,
warrant or other right to purchase or acquire any such shares;
(f) made any bonus or profit sharing distribution or payment of any kind;
(g) increased its indebtedness for borrowed money, or made any loan to any
Person;
(h) written off as uncollectible any notes or accounts receivable, except
immaterial write-downs or write-offs in the ordinary course of
business and consistent with past practice which do not exceed
$100,000 in the aggregate charged to applicable reserves, and none of
which individually or in the aggregate is material to GPEH on a
consolidated basis;
(i) granted any increase in the rate of wages, salaries, bonuses or other
remuneration or benefits of any executive employee or other employees
or consultants, except as set forth on Schedule 4.16;
(j) canceled or waived any claims or rights of substantial value;
(k) made any change in any method of accounting or auditing practice;
(l) otherwise conducted its business or entered into any transaction,
except in the usual and ordinary manner and in the ordinary course of
business and consistent with past practices;
(m) paid, discharged or satisfied any claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) other than the payment,
discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities and obligations reflected
and reserved against in GPEH's December 31, 2002 Balance Sheet or
incurred in the ordinary course of business and consistent with past
practice since the December 31, 2002 Balance Sheet;
13
(n) paid, loaned or advanced any amount to, or sold, transferred or leased
any properties or assets (real, personal or mixed, tangible or
intangible to, or entered into any agreement or arrangement of any
kind with, any of its officers, directors or shareholders or any
affiliate or associate of its officers, directors or shareholders,
except compensation to officers at rates not exceeding the rate of
compensation in effect as of the December 31, 2002 Balance Sheet Date;
(o) suffered any material adverse changes in its working capital,
financial condition, assets, liabilities (absolute, accrued,
contingent or otherwise), reserves, business operations or prospects;
or
(p) agreed, whether or not in writing, to do any of the foregoing.
4.19 Certain Business Practices. No officer, director, employee, agent or
other representative of GPEH or any of its subsidiaries, has directly or
indirectly, within the past two years, given or agreed to give any illegal,
unethical or improper gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder GPEH or any of its subsidiaries in connection with an actual or proposed
transaction.
4.20 Subsidiaries. Except as set forth on Schedule 4.20, GPEH has no
subsidiaries or interest in any corporation, partnership, joint venture or other
entity.
4.21 Disclosure. To the best of GPEH's knowledge and belief, neither this
Agreement, nor the GPEH Financial Statements referred to in Section 4.3 hereof,
any Schedule, exhibit or certificate attached hereto or delivered in accordance
with the terms hereof or any document or statement in writing which has been
supplied by or on behalf of the Shareholders or by or on behalf of any of GPEH's
directors or officers in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact, or omits any
statement of a material fact necessary in order to make the statements contained
herein or therein not misleading. There is no fact known to the GPEH which could
materially and adversely affect the business, prospects or financial condition
of GPEH or any of its subsidiaries or their respective properties or assets,
which has not been set forth in this Agreement, the GPEH Financial Statements
referred to in Section 4.3 hereof (including the footnotes thereto), any
Schedule, exhibit or certificate attached hereto or delivered in accordance with
the terms hereof or any document or statement in writing which has been supplied
by or on behalf of the Shareholder or by or on behalf of any of GPEH's directors
or officers in connection with the transactions contemplated by this Agreement.
4.22 Broker's or Finder's Fees. No agent, broker, person or firm acting on
behalf of the Shareholders or GPEH is, or will be, entitled to any commission or
broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated by this
Agreement.
4.23 Copies of Documents. The Shareholders have caused to be made available
for inspection and copying by Dr. Owl and its advisers, true, complete and
correct copies of all documents referred to in this Article 4 or in any Schedule
attached hereto.
14
ARTICLE 5
REPRESENTATIONS OF DR. OWL
--------------------------
Dr. Owl hereby represents and warrants to GPEH and the Shareholders as
follows (it being acknowledged that GPEH and the Shareholders are entering into
this Agreement in material reliance upon each of the following representations
and warranties, and that the truth and accuracy of each, as evidenced by the
execution of this Agreement by a duly authorized officer of Dr. Owl, constitutes
a condition precedent to the obligations of GPEH and the Shareholders
hereunder).
5.1 Existence and Good Standing. Dr. Owl is a corporation duly organized,
validly existing and in good standing under the laws of Texas. Dr. Owl has the
power to own or lease its properties and assets and to carry on its business as
now being conducted. Dr. Owl is not qualified to do business in any foreign
jurisdiction.
5.2 Capitalization. Dr. Owl currently has outstanding 5,142,500 shares of
common stock (on a post-split basis and upon redemption and cancellation of Xx.
Xxxxx'x shares as referenced in Section 7.11 and 7.6 hereof, respectively) and
no shares of preferred stock. All such outstanding shares have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
outstanding options, warrants, rights, calls, commitments, conversion rights,
rights of exchange, plans or other agreements, commitments or arrangements of
any character providing for the purchase, subscription, issuance or sale of any
shares of capital stock of Dr. Owl, other than the exchange of the Dr. Owl Stock
as contemplated by this Agreement.
5.3 Financial Statements and No Material Changes. Dr. Owl has provided
copies of its audited balance sheets, statement of expense and statements of
cash flows as of May 31, 2002, and the unaudited balance sheets, statements of
expense and statement of cash flows as of August 31, 2002, November 30, 2002 and
February 28, 2003 (the "Dr. Owl Financial Statements"). The Dr. Owl Financial
Statements were carefully prepared from the books and records of Dr. Owl, and
contain the footnotes which are required in audited financial statements,
present fairly the financial position, assets and liabilities of Dr. Owl and the
results of its operations, for the respective periods indicated and reflect all
necessary accruals, all in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis. The Dr. Owl Financial
Statements contain all adjustments (consisting of only normal recurring
accruals) required to be made by GAAP, subject to normal year-end adjustments.
Since February 28, 2003, there has been (a) no material adverse change in the
assets or liabilities, or in the business or condition, financial or otherwise,
or in the results of operations or prospects, of Dr. Owl whether as a result of
any legislative or regulatory change, revocation of any license or rights to do
business, fire, explosion, accident, casualty, labor trouble, flood, drought,
riot, storm, condemnation or act of God or other public force or otherwise and
(b) no material adverse change in the assets or liabilities, or in the business
or condition, financial or otherwise, or in the results of operations or
prospects, of Dr. Owl and to the best knowledge, information and belief of Dr.
Owl, no fact or condition exists or is contemplated or threatened which might
cause such a change in the future.
5.4 Books and Records. The minute books of Dr. Owl, all the contents of
which have been previously made available to GPEH and its representatives,
contain accurate records of all meetings of, and action taken by (including
action taken by written consent) the shareholders and its Board of Directors.
Dr. Owl does not have any of its respective 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) which (including all means of
access thereto and therefrom) are not under the exclusive ownership and direct
control of Dr. Owl.
15
5.6 Leases. Dr. Owl does not lease any properties.
5.7 Material Contracts. Dr. Owl is not bound by:
(a) any agreement, contract or commitment relating to the employment of
any person by Dr. Owl, or any bonus, deferred compensation, pension,
profit sharing, employee option, employee stock purchase, retirement
or other employee benefit plan;
(b) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other
distribution in respect of its shares;
(c) any loan or advance to, or investment in, any Person or any agreement,
contract or commitment relating to the making of any such loan,
advance or investment;
(d) any guarantee or other contingent liability in respect of any
indebtedness or obligation of any Person (other than the endorsement
of negotiable instruments for collection in the ordinary course of
business);
(e) any management service, consulting or any other similar type contract;
(f) any agreement, contract or commitment limiting the freedom of Dr. Owl
to engage in any line of business or to compete with any Person;
(g) any agreement, contract or commitment not entered into in the ordinary
course of business which involves $250,000 or more and is not
cancelable without penalty or premium within 30 days; or
(h) any agreement, contract or commitment which might reasonably be
expected to have a potential adverse impact on the business or
operations of Dr. Owl; or
(i) any agreement, contract or commitment not reflected in the Dr. Owl
Financial Statement under which Dr. Owl is obligated to make cash
payments of, or deliver products or render services with a value
greater than $5,000, or receive cash payments of, or receive products
or services with a value greater than $5,000, and any other agreement,
contract or commitment which is material to the conduct of the
business of Dr. Owl.
5.8 Restrictive Documents. Except for requirements by federal and state
securities laws, Dr. Owl is not subject to, or a party to, any charter, by-law,
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, which could materially adversely affect the business
practices, operations or condition of Dr. Owl or any of its assets or property
("Dr. Owl's Property"), or which would prevent consummation of the transactions
contemplated by this Agreement or the continued operation of "Dr. Owl's
Business" after the date hereof or the Closing on substantially the same basis
as heretofore operated or which would restrict the ability of Dr. Owl to conduct
business in any area.
16
5.9 Litigation. Dr. Owl is not a party to any action, suit, proceeding at
law or in equity, arbitration or administrative or other proceeding by or before
(or to the best knowledge, information and belief of Dr. Owl any investigation
by) any governmental or other instrumentality or agency, pending, or, to the
best knowledge, information and belief of Dr. Owl, threatened, against or
affecting Dr. Owl, or any of its properties or rights. There are no outstanding
orders, judgments, injunctions, awards or decrees of any court, governmental or
regulatory body or arbitration tribunal by which Dr. Owl, or any officer,
director or employee of Dr. Owl, or the securities, assets, properties or
business of any of them is bound.
5.10 Taxes. Dr. Owl has filed or caused to be filed, within the times and
within the manner prescribed by law, all federal, state, local and foreign tax
returns and tax reports which are required to be filed by, or with respect to,
Dr. Owl. Such returns and reports reflect accurately all liability for taxes of
Dr. Owl for the periods covered thereby. All federal, state, local and foreign
income, profits, franchise, employment, sales, use, occupancy, excise and other
taxes and assessments, stock and transfer taxes (including interest and
penalties) payable by, or due from, Dr. Owl, has been fully paid and fully
provided for in the books and Dr. Owl Financial Statements. No examination of
any tax return of Dr. Owl is currently in progress. There are no outstanding
agreements or waivers extending the statutory period of limitation applicable to
any tax return of Dr. Owl.
5.11 Liabilities. Dr. Owl on a consolidated basis has no outstanding
claims, liabilities or indebtedness, contingent or otherwise, which are not
properly reflected in the Dr. Owl Financial Statements in a manner consistently
with past practice, other than liabilities incurred subsequent to February 28,
2003 in the ordinary course of business not exceeding $5,000 in the aggregate;
the reserves reflected in the Dr. Owl Financial Statements are adequate,
appropriate and reasonable. Dr. Owl is not in default in respect of the terms or
conditions of any indebtedness, except where such default would not have a
material adverse effect on the business assets or prospects of Dr. Owl.
5.12 Insurance. Dr. Owl does not maintain any insurance policies.
5.13 Intellectual Properties. The operation of the business of Dr. Owl
requires no rights under Intellectual Property other than rights under
Intellectual Property listed on Schedule 5.13 attached hereto. Since inception
of Dr. Owl, the business of Dr. Owl has not made use of Intellectual Property
rights other than rights listed on Schedule 5.13. Dr. Owl owns all right, title
and interest in the Intellectual Property listed on Schedule 5.13. No claim
adverse to the interests of Dr. Owl in the Intellectual Property has been made
in litigation. To best knowledge, information and belief of Dr. Owl, no such
claim has been threatened or asserted, no basis exists for any such claim, and
no Person has infringed or otherwise violated the rights of Dr. Owl in any of
the Intellectual Property. No litigation is pending wherein Dr. Owl is accused
of infringing or otherwise violating the Intellectual Property right of another,
or of breaching a contract conveying rights under Intellectual Property. To the
best knowledge, information and belief of Dr. Owl, no such claim has been
asserted or threatened against Dr. Owl, nor are there any facts that would give
rise to such a claim.
5.14 Compliance with Laws. To the knowledge of Dr. Owl, or any officer,
director or employee of Dr. Owl, Dr Owl is not in violation of any applicable
order, judgment, injunction, award or decree, related to, arising out of or
affecting Dr. Owl's Business or properties, the violation of which would have a
material adverse effect on the business assets or prospects of Dr. Owl. To the
knowledge of Dr. Owl, or any officer, director or employee of Dr. Owl, Dr. Owl
is not in violation of any federal, state, local or foreign law, ordinance,
regulation or any other requirement of any governmental or regulatory body,
court or arbitrator (including, without limitation, laws relating to the
environment and OSHA and the Americans with Disabilities Act). Dr. Owl does not
require any Permit to conduct its business.
17
5.15 Employment Relations. Dr. Owl has one part-time employee, Xxxxxxx
Xxxxx. Dr. Owl is in compliance with all federal, state or other applicable
laws, domestic or foreign, respecting employment and employment practices, terms
and conditions of employment and wages and hours, and has not and is not engaged
in any unfair labor practice. No unfair labor practice complaint against Dr. Owl
is currently pending before the National Labor Relations Board nor has such a
complaint been pending in the last two years. There is no labor strike, dispute,
slowdown or stoppage actually pending or threatened against or involving Dr. Owl
nor has one existed during the last two years. There is no grievance which might
have an adverse effect upon Dr. Owl or the conduct of Dr. Owl's Business. Dr.
Owl is not a party to and has never been a party to any union, collective
bargaining agreement or similar agreement with respect to the employees of Dr.
Owl.
5.16 Employee Benefit Plans. Dr. Owl does not and has not maintained any
Employee Welfare Plans or Employee Pension Plan.
5.17 Environmental Laws and Regulations. Dr. Owl has not generated,
transported or disposed of any Hazardous Material since inception. Dr. Owl does
not have Hazardous Materials at any site or facility operated presently or at
any previous time by Dr. Owl. Dr. Owl is in compliance in all material respects
with all applicable federal, state and local laws and regulations relating to
product registration, pollution control and environmental contamination
including, but not limited to, all laws and regulations governing the
generation, use, collection, discharge, or disposal of Hazardous Materials and
all laws and regulations with regard to record keeping, notification and
reporting requirements respecting Hazardous Materials. Dr. Owl has not been
alleged to be in violation of, and has not been subject to any administrative or
judicial proceeding pursuant to, such laws or regulations either now or any time
during the past three years. There are no facts or circumstances which Dr. Owl
reasonably expects could form the basis for the assertion of any Environmental
Claim against Dr. Owl relating to environmental matters including, but not
limited to, any Environmental Claim arising from past or present environmental
practices asserted under CERCLA and RCRA, or any other federal, state or local
environmental statute, which Dr. Owl believes might have an adverse effect on
the business, results of operations, financial condition or prospects of Dr. Owl
taken as a whole.
5.18 No Changes Since the February 28, 2003 Balance Sheet Date. Since the
February 28, 2003 Balance Sheet, Dr. Owl has not on a consolidated basis:
(a) incurred any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except liabilities and obligations
in the ordinary course of business and consistent with past practice,
resulting in an increase for the liabilities shown on the February 28,
2003 Balance Sheet of more than $5,000 in the aggregate;
(b) permitted any of its material assets to be subjected to any mortgage,
pledge, lien, security interest, encumbrance, restriction or charge of
any kind (other than Permitted Liens);
(c) sold, transferred or otherwise disposed of any material assets except
inventory sold in the ordinary course of business and consistent with
past practice;
(d) made any single capital expenditure or commitment therefor, in excess
of $5,000 or made aggregate capital expenditures and commitments
therefor in excess of $5,000;
18
(e) declared or paid any dividend or made any distribution on any shares,
or redeemed, purchased or otherwise acquired any shares or any option,
warrant or other right to purchase or acquire any such shares;
(f) made any bonus or profit sharing distribution or payment of any kind;
(g) increased its indebtedness for borrowed money, or made any loan to any
Person;
(h) written off as uncollectible any notes or accounts receivable, except
immaterial write-downs or write-offs in the ordinary course of
business and consistent with past practice which do not exceed $5,000
in the aggregate charged to applicable reserves, and none of which
individually or in the aggregate is material to Dr. Owl on a
consolidated basis;
(i) granted any increase in the rate of wages, salaries, bonuses or other
remuneration or benefits of any executive employee or other employees
or consultants;
(j) canceled or waived any claims or rights of substantial value;
(k) made any change in any method of accounting or auditing practice;
(l) otherwise conducted its business or entered into any transaction,
except in the usual and ordinary manner and in the ordinary course of
business and consistent with past practices;
(m) paid, discharged or satisfied any claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) other than the payment,
discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities and obligations reflected
and reserved against in Dr. Owl's February 28, 2003 Balance Sheet or
incurred in the ordinary course of business and consistent with past
practice since the February 28, 2003 Balance Sheet;
(n) paid, loaned or advanced any amount to, or sold, transferred or leased
any properties or assets (real, personal or mixed, tangible or
intangible to, or entered into any agreement or arrangement of any
kind with, any of its officers, directors or shareholders or any
affiliate or associate of its officers, directors or shareholders,
except compensation to officers at rates not exceeding the rate of
compensation in effect as of the February 28, 2003 Balance Sheet;
(o) suffered any material adverse changes in its working capital,
financial condition, assets, liabilities (absolute, accrued,
contingent or otherwise), reserves, business operations or prospects;
or
(p) agreed, whether or not in writing, to do any of the foregoing.
Notwithstanding any of the above, cash reflected in the Dr. Owl's February
28, 2003 Balance Sheet has been distributed to pay creditors.
5.19 Certain Business Practices. No officer, director, employee, agent or
other representative of Dr. Owl, has directly or indirectly, within the past two
years, given or agreed to give any illegal, unethical or improper gift or
19
similar benefit to any customer, supplier, governmental employee or other person
who is or may be in a position to help or hinder Dr. Owl in connection with an
actual or proposed transaction.
5.20 Subsidiaries. Dr. Owl has no subsidiaries or interest in any
corporation, partnership, joint venture or other entity.
5.21 Disclosure. To the best of Dr. Owl's knowledge and belief, neither
this Agreement, nor the Dr. Owl Financial Statements referred to in Section 5.3
hereof, any Schedule, exhibit or certificate attached hereto or delivered in
accordance with the terms hereof or any document or statement in writing which
has been supplied by or on behalf of Dr. Owl or by or on behalf of any of Dr.
Owl's directors or officers in connection with the transactions contemplated by
this Agreement contains any untrue statement of a material fact, or omits any
statement of a material fact necessary in order to make the statements contained
herein or therein not misleading. There is no fact known to Dr. Owl which could
materially and adversely affect the business, prospects or financial condition
of Dr. Owl or its properties or assets, which has not been set forth in this
Agreement, the Dr. Owl Financial Statements referred to in Section 5.3 hereof
(including the footnotes thereto), any Schedule, exhibit or certificate attached
hereto or delivered in accordance with the terms hereof or any document or
statement in writing which has been supplied by or on behalf of the Shareholder
or by or on behalf of any of Dr. Owl's directors or officers in connection with
the transactions contemplated by this Agreement.
5.22 Broker's or Finder's Fees. No agent, broker, person or firm acting on
behalf of the Dr. Owl is, or will be, entitled to any commission or broker's or
finder's fees from any of the parties hereto, or from any Person controlling,
controlled by or under common control with any of the parties hereto, in
connection with any of the transactions contemplated by this Agreement.
5.23 Approval of the Agreement. The Board of Directors of Dr. Owl has
authorized the execution and delivery of this Agreement and has approved the
transactions contemplated hereby. The approval of the shareholders of Dr. Owl
shall not be required to approve, authorize, or enter into the Agreement or the
transaction contemplated hereby.
5.24 Validity of Dr. Owl Stock. The 15,000,000 shares of Dr. Owl Stock to
be issued to the Shareholders, when issued shall have been duly authorized and
validly issued and fully paid and nonassessable.
5.25 Registration Statement on Form SB-2. Dr. Owl is under no obligation to
file a post effective amendment to its 424B4 prospectus, which went effective on
October 15, 2001.
ARTICLE 6
CONDITIONS TO DR. OWL'S OBLIGATIONS
-----------------------------------
The exchange of the GPEH Shares by Dr. Owl at the Closing is conditioned
upon satisfaction, on or prior to such date, of the following conditions:
6.1 Good Standing and Other Certificates. GPEH and each of its
subsidiaries, as the case may be, shall deliver to Dr. Owl, a Secretary's
certificate, which shall be attached hereto as Exhibit 6.1, with the following
attached as exhibits:
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(a) copies of certificates of incorporation, all amendments thereto, in
each case certified by the Secretary of State or other appropriate
official of its jurisdiction of incorporation or organization;
(b) a certificate from the Secretary of State or other appropriate
official of their respective jurisdictions of incorporation to the
effect that GPEH and each of its subsidiaries are in good standing or
subsisting in such jurisdiction and listing all charter documents
including all amendments thereto, on file;
(c) a copy of the bylaws of GPEH and the operating agreement, regulations
or bylaws of each of its subsidiaries, certified by the respective
Secretary of each entity as being true and correct and in effect on
the Closing.
(d) a resolution of GPEH's Shareholders certified by their respective
Secretary approving the transactions contemplated hereby and
authorizing the President and Secretary of each entity to execute this
Agreement and all documents necessary to consummate the sale of the
Shares.
6.2 Officer Certificate. GPEH shall deliver a certificate of its President,
attached hereto as Exhibit 6.2, stating the following:
(a) Certain Agreements. Except as listed on Schedule 4.7, hereto there are
no management or consulting agreements with any third parties to
provide services to GPEH or any of its subsidiaries.
(b) No Material Adverse Change. Prior to Closing, there shall be no
material adverse change in the assets or liabilities, the business or
condition, financial or otherwise, the results of operations, or
prospects of GPEH or any of its subsidiaries, whether as a result of
any legislative or regulatory change, revocation of any license or
rights to do business, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation or act of God or
other public force or otherwise.
(c) Truth of Representations and Warranties. The representations and
warranties of GPEH contained in this Agreement or in any Schedule
attached hereto shall be true and correct on and as of the Closing
with the same effect as though such representations and warranties had
been made on and as of such date.
(d) Performance of Agreements. All of the agreements of GPEH or any of its
subsidiaries to be performed on or before the Closing pursuant to the
terms hereof shall have been duly performed.
(e) No Litigation Threatened. No action or proceedings shall have been
instituted or threatened before a court or other government body or by
any public authority to restrain or prohibit any of the transactions
contemplated hereby.
6.3 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.
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6.4 Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be satisfactory in form and substance to Dr. Owl and their counsel, and
Dr. Owl shall have received copies of all such documents and other evidences as
they or their counsel may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
6.5 Audited Financial Statements. The completion and delivery of GPEH's
consolidated financial statements together with an unqualified auditors report
for the period ended December 31, 2002.
6.6 Legal Opinion. Xxxxx & Xxxxx, P.C., counsel for GPEH, shall deliver a
legal opinion in the form attached hereto as Exhibit 6.6.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF
--------------------------------
THE SHAREHOLDERS AND GPEH
-------------------------
The obligations of the Shareholders and GPEH at Closing Date are
conditioned upon satisfaction, on or prior to such date, of the following
conditions:
7.1 Secretary's Certificate. Dr. Owl shall have delivered to the
Shareholders, a Secretary's certificate, attached hereto as Exhibit 7.1, with
the following attached as exhibits:
(a) copies of the Articles of Incorporation, including all amendments
thereto, certified by the Secretary of State of the State of Texas and
Bylaws, including all amendments thereto, of Dr. Owl;
(b) copies of resolutions of the Board of Directors of Dr. Owl approving
this Agreement; and
(c) certificates from the Secretary of State of the State of Texas to the
effect that Dr. Owl is in good standing in such State and listing all
charter documents, including all amendments thereto, of Dr. Owl on
file.
7.2 Truth of Representations and Warranties. The representations and
warranties of Dr. Owl contained in this Agreement shall be true and correct on
and as of the Closing with the same effect as though such representations and
warranties had been made on and as of such date, and Dr. Owl shall have
delivered to GPEH a certificate, dated as of the Closing, to such effect.
7.3 Governmental Approvals. All governmental consents and approvals, if
any, necessary to permit the consummation of the transactions contemplated by
this Agreement shall have been received. It is understood that Dr. Owl will be
required to cooperate with GPEH to seek necessary regulatory approvals for the
change in ownership and control of GPEH and its subsidiaries.
7.4 Performance of Agreements. All of the agreements of Dr. Owl to be
performed on or before the Closing pursuant to the terms hereof shall have been
duly performed, and Dr. Owl shall have delivered to GPEH a certificate, dated as
of the Closing, to such effect.
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7.5 Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to GPEH and its counsel,
and GPEH shall have received copies of all such documents and other evidences as
they or their counsel may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
7.6 Share Redemption. Xx. Xxxxx shall have delivered to Dr. Owl a
certificate representing 50,000,000 shares of Dr. Owl (on a post-split basis) to
be redeemed and cancelled and returned to the status of authorized but unissued
shares of Dr. Owl.
7.7 Board Representation. At Closing and pursuant to a written consent to
action of the Board of Directors of Dr. Owl in the form attached hereto as
Exhibit 7.7, the Board of Directors (a) shall appoint Xxxxx Xxxxxxxxx and Xxxx
Xxxxx as members of the Board of Directors, and (b) Xx. Xxxxx shall resign as an
officer and director of Dr. Owl and the Board shall appoint Xxxxx Xxxxxx as Xx.
Xxxxx'x replacement.
7.8 Resignation of Auditors. Dr. Owl shall have delivered a resignation
letter from its auditors, Xxxxxx & Xxxxxx, P.L.L.C.
7.9 Shareholder List. Dr. Owl shall deliver a shareholder list certified by
its transfer agent, American Registrar & Transfer Company which shall evidence,
to the extent practicable, the effects of the below referenced forward split,
the issuance of the shares of Dr. Owl Stock to the Shareholders and the
redemption and cancellation of the shares referenced in Section 7.6 above.
7.10 Legal Opinion. Xxxxxx & Xxxxxxxxx, P.C., counsel for Dr. Owl, shall
deliver a legal opinion in the form attached hereto as Exhibit 7.10.
7.11 Stock Split. Dr. Owl shall have completed a five-for-two forward stock
split of its common stock.
7.12 Balance Sheet. Dr. Owl shall have used the cash reflected in Dr. Owl's
February 28, 2003 Balance Sheet to pay all outstanding liabilities as of the
Closing or shall have received waivers from creditors agreeing to waive any
debts owed. As of the date of this Agreement, Dr. Owl shall have no liabilities,
contingent or otherwise.
7.13 OTC Bulletin Board. Dr. Owl is and shall remain eligible for quotation
on the OTC Bulletin Board under the symbol DROW.OB.
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ARTICLE 8
SURVIVAL OF REPRESENTATIONS
---------------------------
8.1 Survival of Covenants and Agreements. The respective representations,
warranties, covenants and agreements of the Shareholders, GPEH and Dr. Owl
contained in this Agreement, or any Schedule attached hereto or any agreement or
document delivered pursuant to this Agreement shall survive for a period of
twelve months from the consummation of the transactions contemplated hereby;
provided, however, that the representations, warranties and agreements made with
regard to taxes and ERISA matters shall survive until the applicable statutes of
limitations have expired; and provided further, however, that with respect to
any covenant, term or provision to be performed hereunder or in any of the
Schedules hereto or any documents or agreements delivered hereunder, the right
of indemnification under this Article 8 shall survive until such covenant, term
or provision has been fully paid, performed or discharged.
ARTICLE 9
MISCELLANEOUS
-------------
9.1 Knowledge of the Shareholders, GPEH or Dr. Owl. Where any
representation or warranty contained in this Agreement is expressly qualified by
reference to the knowledge, information and belief of the Shareholders, GPEH or
Dr. Owl, as the case may be, confirm that they have made due and diligent
inquiry as to the matters that are the subject of such representations and
warranties.
9.2 Expenses. Except as otherwise provided for herein, 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 and financial advisers.
9.3 Governing Law. The interpretation and construction of this Agreement,
and all matters relating hereto, shall be governed by the laws of the State of
Texas applicable to agreements executed and to be performed solely within such
State without regard to conflicts of laws.
9.4 Jurisdiction. Any judicial proceeding brought against any of the
parties to this Agreement on any dispute arising out of this Agreement or any
matter related hereto may be brought in the courts of the State of Texas, or in
the United States District Court for the Texas area, and, by execution and
delivery of this Agreement, each of the parties to this Agreement accepts the
exclusive jurisdiction of such courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement. The prevailing
party or parties in any such litigation shall be entitled to receive from the
losing party or parties all costs and expenses, including reasonable counsel
fees, incurred by the prevailing party or parties.
9.5 Captions. The Article and Section captions used herein for reference
purposes only, and shall not in any way affect the meaning or interpretation of
this Agreement.
9.6 Publicity. Except as otherwise required by law, none of the parties
hereto shall issue any press release or make any other public statement, in each
case relating to, connected with or arising out of this Agreement or the matters
contained herein, without obtaining the prior approval of Dr. Owl and GPEH to
the contents and the manner of presentation and publication thereof. The parties
24
hereto agree that the execution of this Agreement requires the release of
information to the financial press concerning this acquisition and accordingly
agree to promptly issue a press release mutually acceptable to GPEH and Dr. Owl
and to file a Form 8-K report with the Securities and Exchange Commission
containing this agreement and all exhibits and schedules hereto.
9.7 Notices. Any notice or other communication required or permitted
hereunder shall be deemed sufficiently given when delivered in person, one
business day after delivery to a reputable overnight carrier, four business days
if delivered by registered or certified mail, postage prepaid or when sent by
telecopy with a copy following by hand or overnight carrier or mailed, certified
or registered mail, postage prepaid, addressed as follows:
If to GPEH:
GPEH Corp.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: President
with a required copy to:
Xxxxxx Xxxxxxx
Xxxxx & Wylie, P.C.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
If to Dr. Owl:
Xxxxxxx Xxxxx
000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
With a copy to:
Xxxxxx Xxxxxxxxx
Xxxxxx & Xxxxxxxxx, P.C.
Three Riverway, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
9.8 Parties in Interest. This Agreement may not be transferred, assigned,
pledged or hypothecated by any party hereto, other than by operation of law.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.
9.9 Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
9.10 Entire Agreement. This Agreement, including the Schedules hereto and
the other documents referred to herein which form a part hereof, contain the
25
entire understanding of the parties hereto with respect to the subject matter
contained herein and therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
9.11 Amendments. This Agreement may not be changed orally, but only by an
agreement in writing signed by Dr. Owl, the Shareholders and GPEH.
9.12 Severability. In case any provision in this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof will not in any way be affected or impaired
thereby.
9.13 Third Party Beneficiaries. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereof.
9.14 Cooperation After Closing. From and after Closing, each of the parties
hereto shall execute such documents and other papers and take such further
actions as may be reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, each of Dr. Owl, the Shareholders and GPEH have
executed this Agreement, all as of the day and year first above written.
DR. OWL ONLINE, INC.
By: /s/ Xxxxxxx Xxxxx
-------------------------------
Xxxxxxx Xxxxx, President
GPEH CORP.
By: /s/ Xxxxx Xxxxxxxxx
-------------------------------
Xxxxx Xxxxxxxxx, President
THE SHAREHOLDERS:
-----------------
By: /s/ Xxxxx Xxxxxxxxx
---------------------------------------------
Xxxxx Xxxxxxxxx
By: /s/ Xxxx Xxxxx
---------------------------------------------
Xxxx Xxxxx
By: /s/ Xxxxx Xxxxxx
---------------------------------------------
Xxxxx Xxxxxx
By: /s/ Xxxx Xxxxxx
---------------------------------------------
Xxxx Xxxxxx
27
