SHARE EXCHANGE AGREEMENT
BY AND AMONG
CNG COMMUNICATIONS, INC.
A DELAWARE CORPORATION
AND
COMMERCIAL LABOR MANAGEMENT, INC.
A NEVADA CORPORATION
DATED: AUGUST 6, 1998
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SHARE EXCHANGE AGREEMENT
CNG COMMUNICATIONS, INC.
AND
COMMERCIAL LABOR MANAGEMENT, INC.
This Share Exchange Agreement ("Agreement"), dated as of August 6, 1998,
among CNG COMMUNICATIONS, INC. ("CNG"), a Delaware Corporation, COMMERCIAL
LABOR MANAGEMENT, INC. ("CLM"), a Nevada Corporation, and those shareholders of
CNG COMMUNICATIONS, INC. ("CNG Shareholders") listed on Schedule 1 to this
agreement.
W I T N E S S E T H:
A. THE PARTIES. CNG and CLM are corporations duly organized under the
laws of the State of Delaware and Nevada, respectively.
B. PLAN OF REORGANIZATION. The CNG Shareholders are the owners of all of
the issued and outstanding common stock of CNG (the "CNG Common Stock"). It is
the intention that all of the issued and outstanding stock of CNG shall be
acquired by CLM in exchange solely for its voting stock. For federal income tax
purposes it is intended that this exchange shall qualify as a tax-free
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
C. EXCHANGE OF SHARES. CLM and the CNG Shareholders agree that all of
the common shares issued and outstanding of CNG shall be exchanged with CLM for
31,480,000 shares of the common stock, $.001 par value, of CLM ("CLM Common
Stock"). The pro rata numbers of the CLM shares, on the closing date, shall be
delivered to the individual shareholders in exchange for their CNG shares as
hereinafter set forth.
D. AGREEMENT. The parties hereto wish to enter into this Agreement
pursuant to the provisions of the Nevada Statutes.
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
THE SHARE EXCHANGE
1.1
(a) Subject to the terms and conditions set forth herein, on the
Closing Date (as herein defined), CLM agrees to purchase from the CNG
Shareholders, and the
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CNG Shareholders agree to sell to CLM, all of their shares of CNG Common
Stock. In consideration for said purchase, the CNG Shareholders agree to
purchase from CLM, and CLM agrees to sell to the CNG Shareholders, 31,480,000
shares of CLM Common Stock (the "Exchange Shares"), to be distributed among
the CNG Shareholders pro rata to their CNG Common Stock. The transactions
contemplated by this Agreement shall be completed at a closing ("Closing") on
a closing date ("Closing Date") which shall be as soon as possible after all
regulatory approvals and shareholder approvals are obtained in accordance
with law as set forth in this Agreement, but no later than 30 days after the
date of this Agreement.
(b) On the Closing Date, all of the documents to be furnished to CLM
and CNG, including the documents to be furnished pursuant to Article VII of this
Agreement, shall be delivered to Xxxxxxx X. Xxxxxxx, Esq., to be held in escrow
until the Closing Date or the date of termination of this Agreement, whichever
first occurs, and thereafter shall be promptly distributed to the parties as
their interests may appear.
1.2 The Articles of Incorporation and the Bylaws of CLM shall be as shown
in Exhibit "A" and Exhibit "B" attached hereto and incorporated herein by this
reference. The persons identified on Exhibit "C" shall become the directors and
officers of CLM at the Closing Date.
ARTICLE II
ISSUANCE AND EXCHANGE OF SHARES
2.1 On the Closing Date, each of the CNG Shareholders shall surrender the
certificate or certificates representing shares of CNG Common Stock to CLM.
Promptly following surrender, CLM shall issue the CLM Common Stock to the CNG
Shareholders pursuant to Section 1.1.
2.2 The stock transfer books of CNG shall be closed on the Closing Date,
and thereafter no transfers of the stock of CNG shall be made. CNG shall
appoint an exchange agent ("Exchange Agent") to accept surrender of the
certificates representing the common shares of CNG, and to deliver in exchange
for such surrendered certificates, shares of CLM common stock. The
authorization of the Exchange Agent may be terminated by CLM after six months
following the Closing Date. Upon termination of such authorization, any shares
of CNG and any funds held by the Exchange Agent for payment to CNG shareholders
pursuant to this Agreement shall be transferred to CLM or its designated agent
who shall thereafter perform the obligations of the Exchange Agent. If
outstanding certificates for shares of CNG are not surrendered or the payment
for them not claimed prior to such date on which such payments would otherwise
escheat to or become the property of any governmental unit or agency, the
unclaimed items shall, to the extent permitted by abandoned property and other
applicable law, become the property of CLM (and to the extent not in its
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possession shall be paid over to it), free and clear of all claims or interest
of any persons previously entitled to such items. Notwithstanding the
foregoing, neither the Exchange Agent nor any party to this Agreement shall be
liable to any holder of CNG shares for any amount paid to any governmental unit
or agency having jurisdiction of such unclaimed item pursuant to the abandoned
property or other applicable law of such jurisdiction.
2.3 No fractional shares of CLM stock shall be issued as a result of the
Agreement. Shares shall be rounded to nearest whole share.
ARTICLE III
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF CNG COMMUNICATIONS, INC.
No representations or warranties are made by any director, officer,
employee or shareholder of CNG as individuals, except as and to the extent
stated in this Agreement or in a separate written statement that has been
delivered to CLM hereunder (the "CNG Disclosure Statement"), if any. CNG hereby
represents, warrants and covenants to CLM except, as stated in the CNG
Disclosure Statement, as follows:
3.1 CNG is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has the corporate power
and authority to own or lease its properties and to carry on its business as it
is now being conducted in every jurisdiction in which the failure to do so would
have a material adverse effect on its business, properties or ability to
conduct the business currently conducted by it. The copies of the Articles of
Incorporation and Bylaws of CNG previously furnished to CLM are correct and
complete, and the minute books of CNG contain a record, which is complete and
accurate in all material respects, of all meetings, and all corporate actions of
the shareholders and board of directors of CNG.
3.2 Authorized equity capitalization of CNG consists of 20,000,000 shares
of common stock with no par value, of which 4,000,000 shares are issued and
outstanding. CNG has authorized 5,000,000 shares of preferred stock, of which
no shares are issued and outstanding.
3.3 CNG has the requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement.
3.4 Neither the making of nor the compliance with the terms and provisions
of this Agreement and consummation of the transactions contemplated herein by
CNG will result in a breach or violation of the Articles of Incorporation or
Bylaws of CNG.
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3.5 The execution, delivery and performance of this Agreement has been
duly authorized and approved by CNG's Board of Directors.
3.6 CNG will deliver to CLM consolidated audited financial statements of
CNG, as of December 31, 1997 and unaudited first quarter 1998 financial
statements within 30 days of the Closing Date. All such statements, herein
sometimes called "CNG Financial Statements", are, or will be at the time they
are delivered, complete and correct in all material respects and, together with
the notes to these financial statements, present fairly the financial position
and results of operations of CNG for the periods included, subject in the case
of unaudited interim statements, to normal year-end accounting adjustments and
the absence of complete footnote disclosure. The December 31, 1997, statements
will have been prepared in accordance with generally accepted accounting
principles.
3.7 Since the dates of the CNG Financial Statements, there have not been
any material adverse changes in the business or condition, financial or
otherwise of CNG.
3.8 There are no legal proceedings or regulatory proceedings involving
material claims pending, or to the knowledge of CNG, threatened against CNG or
affecting any of its assets or properties, and CNG is not in any material breach
or violation of or default under any contract or instrument to which CNG is a
party, and no event has occurred which with the lapse of time or action by a
third party could result in a material breach or violation of or default by CNG
under any contract or other instrument to which CNG is a party or by which it or
any of its properties may be bound or affected, or under its respective Articles
of Incorporation or Bylaws, nor is there any court or regulatory order pending,
applicable to CNG.
3.9 CNG has no obligations or liabilities whether accrued, absolute,
contingent, liquidated or otherwise whether due or to become due regardless of
when asserted, except:
a. To the extent reflected or taken into account in the CNG Financial
Statements and not heretofore paid or discharged,
b. To the extent specifically set forth in or incorporated by reference
in the CNG Disclosure Statement,
c. Liabilities incurred in the ordinary course of business consistent
with past practice since the date of the March 31, 1998, financial statement
(none of which relates to breach of contract, breach of warranty, tort,
infringement or violation of law, or which arose out of any action, suit, claim,
governmental investigation or arbitration proceeding),
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d. Normal accruals, reclassifications, and audit adjustments which would
be reflected on an audited financial statement,
e. Liabilities incurred in the ordinary course of business, and
f. Liabilities which are not material in scope or amount.
3.10 The representations and warranties of CNG in this Agreement shall be
true and correct as of the date hereof and as of the Closing Date.
3.11 CNG will deliver to CLM a copy of each of the federal income tax
returns of CNG for the year ending December 31, 1997, and for any additional
open years. The provisions for taxes payable by CNG are believed by CNG to
be sufficient for payment of all accrued and unpaid federal, state, county
and local taxes of CNG (including any penalties or interest payable) whether
or not disputed as of the date of such financial statements reflecting such
provisions. All returns and reports of other information required or
requested by federal, state, county, and local tax authorities have been
filed or supplied in a timely fashion, and all such information is true and
correct in all material respects. Provision has been made for the payment of
all taxes due to date by CNG, including taxes for the current year ending
December 31, 1997. No federal income tax return of CNG is currently under
audit.
3.12 CNG has no employee benefit plan, including non-qualified stock
awards, options, and consulting fees for independent contractors.
3.13 No representation or warranty by CNG in this Agreement, the CNG
Disclosure Statement or any certificate delivered pursuant hereto contains any
untrue statement of a material fact or omits to state any material fact
necessary to make such representation or warranty not misleading.
3.14 INTELLECTUAL PROPERTY. All trade names, inventions, discoveries,
ideas, research, engineering, methods, practices, processes, systems, formulae,
designs, drawings, products, projects, improvements, developments, know-how, and
trade secrets which are used in the conduct of CNG's business, whether
registered or unregistered (collectively the "Proprietary Rights") are owned by
CNG. To the knowledge of each Seller and CNG, CNG created or developed such
Proprietary Rights and such Proprietary Rights are not subject to any
restriction, lien, encumbrance, right, title or interest in others. All of the
foregoing Proprietary Rights that are not in the public domain stand solely in
the name of CNG and not in the name of any shareholder, director, officer,
agent, partner or employee or anyone else known to any Seller or CNG, and none
of the same have any right, title, interest, restriction, lien or encumbrance
therein or thereon or thereto. To the knowledge of each Seller and CNG, CNG's
ownership and use of the Proprietary Rights do not and will not infringe upon,
conflict with or violate in any material respect any patent, copyright, trade
secret or
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other lawful proprietary right of any other party. No claim is pending or,
to the knowledge of any Seller or CNG, threatened to the effect that the
operations of CNG infringe upon or conflict with the asserted rights of any
other person under any of the Proprietary Rights, and to the knowledge of
each Seller and CNG there is no reasonable basis for any such claim (whether
or not pending or threatened). No claim is pending, or to the knowledge of
each Seller and CNG, threatened to the effect that any such Proprietary
Rights owned or licensed by CNG, or which CNG otherwise has the right to use,
is invalid or unenforceable by CNG and there is no reasonable basis for any
such claim (whether or not pending or threatened). CNG has not granted or
assigned to any other person or entity any right to manufacture, have
manufactured, assemble or sell the products or proposed products or to
provide the services or proposed services of Seller.
3.15 a. LIENS. Except as disclosed on Schedule 3.15(a), no one other
than Seller has any right, title, interest, lien, claim, security interest,
restriction or encumbrance in, on or to CNG's assets.
b. MATERIAL CONTRACTS. Other than as disclosed on Schedule 3.15(b),
Seller does not have any material obligation, contract, agreement, lease,
sublease, commitment or understanding of any kind, nature or description, oral
or written, fixed or contingent due or to become due, existing or inchoate.
c. NO UNDISCLOSED LIABILITIES. CNG does not have any material
liabilities or obligations, including, without limitation, contingent
liabilities for the performance of any obligation, except for (i) liabilities or
obligations which are disclosed or fully provided for in CNG's Financial
Statements, (ii) liabilities or obligations disclosed in this Agreement or in
any Exhibit or Schedule to this Agreement, and (iii) liabilities not in excess
of $2,000 in the aggregate.
3.16 ENVIRONMENTAL MATTERS. (i) CNG has not received notice of any
violation of or investigation relating to any environmental or pollution law,
regulation, or ordinance with respect to assets now or previously owned or
operated by CNG that has not been fully and finally resolved; (ii) To the
knowledge of CNG, all permits, licenses and other authorizations which are
required under United States, federal, state, provincial and local laws with
respect to pollution or protection of the environment ("Environmental Laws")
relating to assets now owned or operated by CNG or any of its subsidiaries,
including Environmental Laws relating to actual or threatened emissions,
discharges or releases of pollutants, contaminants or hazardous or toxic
materials or wastes ("Pollutants"), have been obtained and are effective, and,
with respect to assets previously owned or operated by CNG, were obtained and
were effective during the time of CNG's operation; (iii) To the knowledge of
CNG, no conditions exist on, in or about the properties now or previously owned
or operated by CNG or any third-party properties to which any Pollutants
generated by CNG were sent or released that could give rise on the part of CNG
to liability under any Environmental Laws, claims by third
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parties under Environmental Laws or under common law or the occurrence of
costs to avoid any such liability or claim; and (iv) to the knowledge of CNG,
all operators of CNG's assets are in compliance with all terms and conditions
of such Environmental Laws, permits, licenses and authorizations, and are
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in such laws or contained in any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder, relating to CNG's assets.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF COMMERCIAL LABOR MANAGEMENT, INC..
No representations or warranties are made by any director, officer,
employee or shareholder of CLM as individuals, except as and to the extent
stated in this Agreement or in a separate written statement.
CLM hereby represents, warrants and covenants to CNG, except as stated in
the CLM Disclosure Statement, as follows:
4.1 CLM is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, and has the corporate power and
authority to own or lease its properties and to carry on its business as it is
now being conducted. The Articles of Incorporation and Bylaws of CLM, copies of
which have been delivered to CNG, are complete and accurate, and the minute
books of CLM contain a record, which is complete and accurate in all material
respects, of all meetings, and all corporate actions of the shareholders and
Board of Directors of CLM.
4.2 The aggregate number of shares which CLM is authorized to issue is
50,000,000 shares of common stock with a par value of $.001 per share, of which
2,607,610 shares of such common stock are issued and outstanding, fully paid and
non-assessable on the Closing Date. CLM has no outstanding options, warrants or
other rights to purchase, or subscribe to, or securities convertible into or
exchangeable for any shares of capital stock. CLM has authorized 2,000,000
shares of Preferred Stock, of which no shares are issued and outstanding.
4.3 CLM has the requisite corporate power and authority to enter into and
to consummate the transactions contemplated by this Agreement.
4.4 Neither the making of nor the compliance with the terms and provisions
of this Agreement and consummation of the transactions contemplated herein by
CLM will conflict with or result in a breach or violation of the Articles of
Incorporation or Bylaws of CLM.
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4.5 The execution of this Agreement has been duly authorized and
approved by the CLM's Board of Directors and its shareholders.
4.6 CLM has delivered to CNG unaudited financial statements of CLM dated
June 30, 1998 and audited financial statements dated December 31, 1997. All
such statements, herein sometimes called "CLM Financial Statements" are (and
will be) complete and correct in all material respects and, together with the
notes to these financial statements, present fairly the financial position and
results of operations of CLM for the periods indicated. All statements of CLM
will have been prepared in accordance with generally accepted accounting
principles.
4.7 Since the dates of the CLM Financial Statements, there have not been
any material adverse changes in the business or condition, financial or
otherwise, of CLM. CLM does not have any material liabilities or obligations,
secured or unsecured except as shown on the CLM Financial Statements (whether
accrued, absolute, contingent or otherwise).
4.8 CLM has delivered to CNG a list and description of all pending legal
proceedings involving CLM, none of which will materially adversely affect them,
and, except for these proceedings, there are no legal proceedings or regulatory
proceedings involving material claims pending, or, to the knowledge of the
officers of CLM, threatened against CLM or affecting any of its assets or
properties, and CLM is not in any material breach or violation of or default
under any contract or instrument to which CLM is a party, and no event has
occurred which with the lapse of time or action by a third party could result in
a material breach or violation of or default by CLM under any contract or other
instrument to which CLM is a party or by which it or any of its respective
properties may be bound or affected, or under their respective Articles of
Incorporation or Bylaws, nor is there any court or regulatory order pending,
applicable to CLM.
4.9 CLM shall not enter into or consummate any transactions prior to the
Closing Date other than in the ordinary course of business and will pay no
dividend or increase the compensation of officers and will not enter into any
agreement or transaction which would adversely affect its financial condition.
4.10 CLM is not a party to any contract performable in the future which
will adversely affect it.
4.11 The representations and warranties of CLM shall be true and correct
as of the date hereof and as of the Closing Date.
4.12 CLM has delivered, or will deliver within two weeks of the date of
this Agreement, to CNG, all of its corporate books and records for review, and
true and correct copies of CLM tax returns for 1997, if any. CLM will also
deliver to CNG on or
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before the Closing Date any reports relating to the financial and business
condition of CLM which occur after the date of this Agreement and any other
reports sent generally to its shareholders after the date of this Agreement.
4.13 CLM has no employee benefit plan in effect as of the date of this
Agreement.
4.14 No representation or warranty by CLM in this Agreement or in CLM's
filings with the Securities and Exchange Commission, the CLM Disclosure
Statement or any certificate delivered pursuant hereto contains any untrue
statement of a material fact or omits to state any material fact necessary to
make such representation or warranty not misleading.
4.15 CLM agrees that all rights to indemnification now existing in favor
of the employees, agents, directors or officers of CNG and its subsidiaries, as
provided in the Articles of Incorporation or Bylaws or otherwise in effect on
the date hereof, shall survive the transactions contemplated hereby in
accordance with their terms, and CLM expressly assumes such indemnification
obligations of CNG.
4.16. INDEMNITY.
a. INDEMNITY. Commercial Labor Management, Inc. and the current
officers of CLM (collectively, the "Indemnifying Parties") shall execute at
closing an agreement to indemnify CLM and CNG ("Indemnified Parties")
incorporating the terms contained in this subsection and shall hold each of them
harmless from all fines, penalties, FICA, FUTA, SUTA, damages, claims, liens and
other expenses, including but not limited to, expenses of investigation, expert
fees, attorney's fees and court costs ("Damages and Expenses") arising out of or
related to any claim hereafter resulting from the prior business operations of
CLM (individually the "Claim" and collectively the "Claims"), and shall pay the
same upon written demand. This indemnity will be in effect for a period of two
years from the Closing Date.
b. WRITTEN NOTICE. Promptly after the receipt of notice of any
Claim, such party (the "Indemnified Party") will give written notice of such
Claim to the Party ("the Indemnifying Party"), it being understood that if the
Indemnifying Party does not receive notice in time to contest the determination
of such liability, then the Indemnifying Party shall not be obligated to
indemnify with respect thereto.
c. SETTLEMENT. The Indemnifying Party shall have the right: (a) to
settle all indemnifiable matters subject to this Agreement upon the written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld, except in the event such settlement subjects the Indemnified Party or
any of its customers to any criminal liability; and (b) to defend, through
counsel of its own choosing and at its own expense, any Claim. The Indemnified
Party shall cooperate with the Indemnifying Party provided that the
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Indemnified Party shall have the right fully to participate in such defense
at its own expense. No Indemnified Party shall pay or voluntarily permit the
determination of any liability which is subject to this Agreement while the
Indemnifying Party is negotiating the settlement thereof or contesting the
matter.
d. DEFENSE. In the event that the Indemnifying Party does not
defend or settle any indemnifiable matter hereunder, the Indemnified Party shall
have the rights of the Indemnifying Party to settle and defend Claims specified
in this paragraph, and the Indemnifying Party shall pay to the Indemnified Party
all Damages, settlement costs, legal fees and expenses as they are incurred.
e. BREACH. In the event of a breach of the indemnity agreement by
the Indemnifying Parties, the Indemnified Parties shall have the immediate right
to seek a judgment against Indemnifying Parties and Indemnifying Parties agree
to pay all attorneys fees and costs relating to any such action to enforce this
agreement.
4.17 NO OPTIONS OR WARRANTS. CLM represents that no outstanding options
or warrants for its unissued shares exist. All preferred stock of CLM due for
redemption as of the date hereof shall have been redeemed as of closing date, if
any.
4.18 INTELLECTUAL PROPERTY. All trade names, inventions, discoveries,
ideas, research, engineering, methods, practices, processes, systems, formulae,
designs, drawings, products, projects, improvements, developments, know-how, and
trade secrets which are used in the conduct of CLM's business, whether
registered or unregistered (collectively the "Proprietary Rights") are owned by
CLM. To the knowledge of each Seller and CLM, CLM created or developed such
Proprietary Rights and such Proprietary Rights are not subject to any
restriction, lien, encumbrance, right, title or interest in others. All of the
foregoing Proprietary Rights that are not in the public domain stand solely in
the name of CLM and not in the name of any shareholder, director, officer,
agent, partner or employee or anyone else known to any Seller or CLM and none of
the same have any right, title, interest, restriction, lien or encumbrance
therein or thereon or thereto. To the knowledge of each Seller and CLM, CLM's
ownership and use of the Proprietary Rights do not and will not infringe upon,
conflict with or violate in any material respect any patent, copyright, trade
secret or other lawful proprietary right of any other party, and no claim is
pending or, to the knowledge of any Seller or CLM, threatened to the effect that
the operations of CLM infringe upon or conflict with the asserted rights of any
other person under any of the Proprietary Rights, and to the knowledge of each
Seller and CLM there is no reasonable basis for any such claim (whether or not
pending or threatened). No claim is pending, or to the knowledge of each Seller
and CLM, threatened to the effect that any such Proprietary Rights owned or
licensed by CLM, or which CLM otherwise has the right to use, is invalid or
unenforceable by CLM and there is no reasonable basis for any such claim
(whether or not pending or threatened). CLM has not granted or assigned to any
other person or
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entity any right to manufacture, have manufactured, assemble or sell the
products or proposed products or to provide the services or proposed services
of Seller.
4.19 a. LIENS. Except as disclosed on Schedule 4.19(a), no one other
than Seller has any right, title, interest, lien, claim, security interest,
restriction or encumbrance in, on or to CLM's assets.
b. MATERIAL CONTRACTS. Other than as disclosed on Schedule 4.19(b),
Seller does not have any material obligation, contract, agreement, lease,
sublease, commitment or understanding of any kind, nature or description, oral
or written, fixed or contingent due or to become due, existing or inchoate.
c. NO UNDISCLOSED LIABILITIES. CLM does not have any material
liabilities or obligations, including, without limitation, contingent
liabilities for the performance of any obligation, except for (i) liabilities or
obligations which are disclosed or fully provided for in CLM's Financial
Statements, (ii) liabilities or obligations disclosed in this Agreement or in
any Exhibit or Schedule to this Agreement, and (iii) liabilities not in excess
of $2,000 in the aggregate.
4.20 ENVIRONMENTAL MATTERS. (i) CLM has not received notice of any
violation of or investigation relating to any environmental or pollution law,
regulation, or ordinance with respect to assets now or previously owned or
operated by CLM that has not been fully and finally resolved; (ii) To the
knowledge of CLM, all permits, licenses and other authorizations which are
required under United States, federal, state, provincial and local laws with
respect to pollution or protection of the environment ("Environmental Laws")
relating to assets now owned or operated by CLM or any of its subsidiaries,
including Environmental Laws relating to actual or threatened emissions,
discharges or releases of pollutants, contaminants or hazardous or toxic
materials or wastes ("Pollutants"), have been obtained and are effective, and,
with respect to assets previously owned or operated by CLM, were obtained and
were effective during the time of CLM?s operation; (iii) To the knowledge of
CLM, no conditions exist on, in or about the properties now or previously owned
or operated by CLM or any third-party properties to which any Pollutants
generated by CLM were sent or released that could give rise on the part of CLM
to liability under any Environmental Laws, claims by third parties under
Environmental Laws or under common law or the occurrence of costs to avoid any
such liability or claim; and (iv) to the knowledge of CLM, all operators of
CLM?s assets are in compliance with all terms and conditions of such
Environmental Laws, permits, licenses and authorizations, and are also in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
such laws or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder,
relating to CLM's assets.
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ARTICLE V
OBLIGATIONS OF THE PARTIES PENDING THE CLOSING DATE
5.1 This Agreement shall be duly submitted to the shareholders of CNG for
the purpose of considering and acting upon this Agreement in the manner required
by law at a meeting of shareholders on a date selected by CNG, such date to be
the earliest practicable date. The Board of Directors of CNG, subject to its
fiduciary obligations to shareholders, shall use its best efforts to obtain the
requisite approval of CNG shareholders of this Agreement and the transactions
contemplated herein. CNG and CLM shall take all reasonable and necessary steps
and actions to comply with and to secure CNG shareholder approval of this
Agreement and regulations of such states.
5.2 At all times prior to the Closing Date during regular business hours,
each party will permit the other to examine its books and records and the books
and records of its subsidiaries and will furnish copies thereof on request. It
is recognized that, during the performance of this Agreement, each party may
provide the other parties with information which is confidential or proprietary
information. During the term of this Agreement, and for four years following
the termination of this Agreement, the recipient of such information shall
protect such information from disclosure to persons, other than members of its
own or affiliated organizations and its professional advisers, in the same
manner as it protects its own confidential or proprietary information from
unauthorized disclosure, and not use such information to the competitive
detriment of the disclosing party. In addition, if this Agreement is terminated
for any reason, each party shall promptly return or cause to be returned all
documents or other written records of such confidential or proprietary
information, together with all copies of such writings and, in addition, shall
either furnish or cause to be furnished, or shall destroy, or shall maintain
with such standard of care as is exercised with respect to its own confidential
or proprietary information, all copies of all documents or other written records
developed or prepared by such party on the basis of such confidential or
proprietary information. No information shall be considered confidential or
proprietary if it is (a) information already in the possession of the party to
whom disclosure is made, (b) information acquired by the party to whom the
disclosure is made from other sources, or (c) information in the public domain
or generally available to interested persons or which at a later date passes
into the public domain or becomes available to the party to whom disclosure is
made without any wrongdoing by the party to whom the disclosure is made.
5.3 CLM and CNG shall promptly provide each other with information as to
any significant developments in the performance of this Agreement, and shall
promptly notify the other if it discovers that any of its representations,
warranties and covenants contained in this Agreement or in any document
delivered in connection with this Agreement was not true and correct in all
material respects or became untrue or incorrect in any material respect.
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5.4 All parties to this Agreement shall take all such action as may be
reasonably necessary and appropriate and shall use their best efforts in order
to consummate the transactions contemplated hereby as promptly as practicable.
ARTICLE VI
EXCHANGE PROCEDURE
6.1 At the Closing Date, the exchange shall be effected as set forth in
Nevada General Laws with common stock certificates of CLM being exchanged for
CNG common stock certificates as and when submitted to the Exchange Agent.
ARTICLE VII
CONDITIONS PRECEDENT TO THE
CONSUMMATION OF THE EXCHANGE
The following are conditions precedent to the consummation of the Agreement
on or before the Closing Date:
7.1 Each party shall have performed and complied in all material respects
with all of its obligations hereunder which are to be complied with or performed
on or before the Closing Date and CLM and CNG shall provide one another at the
Closing with an officer's certificate to the effect that such party has
performed each of the acts and undertakings required to be performed by it on or
before the Closing Date pursuant to the terms of this Agreement.
7.2 This Agreement and the transactions contemplated herein shall have
been duly and validly authorized, approved and adopted, at meetings of the
shareholders of CNG duly and properly called for such purpose in accordance with
the applicable laws.
7.3 No action, suit or proceeding shall have been instituted or shall have
been threatened before any court or other governmental body or by any public
authority to restrain, enjoin or prohibit the transactions contemplated herein,
or which might subject any of the parties hereto or their directors or officers
to any material liability, fine, forfeiture or penalty on the grounds that the
transactions contemplated hereby, the parties hereto or their directors or
officers, have violated any applicable law or regulation or have otherwise acted
improperly in connection with the transactions contemplated hereby, and the
parties hereto have been advised by counsel that, in the opinion of such
counsel, such action, suit or proceeding raises substantial questions of law or
fact which could reasonably be decided adversely to any party hereto or its
directors or officers.
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7.4 All actions, proceedings, instruments and documents required to carry
out this Agreement and the transactions contemplated hereby and the form and
substance of all legal proceedings and related matters shall have been approved
by counsel for CNG and CLM.
7.5 The representations and warranties made by CNG and CLM in this
Agreement shall be true as though such representations and warranties had been
made or given on and as of the Closing Date, except to the extent that such
representations and warranties may be untrue on and as of the Closing Date
because of (1) changes caused by transactions suggested or approved in writing
by CNG and CLM, or (2) events or changes which shall not, in the aggregate, have
materially and adversely affected the business, assets, or financial condition
of CLM or CNG during or arising after the date of this Agreement.
7.6 CNG shall have furnished CLM with:
(1) a certified copy of a resolution or resolutions duly adopted by the
Board of Directors of CNG approving this Agreement and the
transactions contemplated by it and directing the submission thereof
to a vote of the shareholders of CNG;
(2) a certified copy of a resolution or resolutions duly adopted by a
majority of all of the classes of outstanding shares of CNG capital
stock approving this Agreement and the transactions contemplated by
it;
(3) an opinion of its counsel dated as of the Closing Date in accordance
with 7.6 hereof;
(4) an agreement from each "affiliate" of CNG as defined in the rules
adopted under the Securities Act of 1933, as amended, to the effect
that (a) the affiliate is familiar with SEC Rules 144 and 145; (b)
none of the shares of CLM common stock will be transferred by or
through the affiliate in violation of the Federal Securities Laws; (c)
the affiliate will not sell or in any way reduce his risk relative to
any CLM common stock received pursuant to this Agreement until such
time as financial results covering at least 30 days of post-closing
date combined operations shall have been published by CLM on SEC Form
10-Q or otherwise; and (d) the affiliate acknowledges that, except as
provided in Section 7.11 of this Agreement, CLM is under no obligation
to register the sale, transfer, or the disposition of CLM common stock
by the affiliate or to take any action necessary in order to make an
exemption from registration available to the affiliate, but
understands that CLM will satisfy the public information requirements
of Rules 144 and 145 during the three-year period following the
Closing Date.
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(5) Each shareholder of CNG shall sign a Consent/Subscription Agreement as
contained on Exhibit "C".
7.7 CLM shall furnish CNG with a certified copy of a resolution or
resolutions duly adopted by the Board of Directors of CLM, approving this
Agreement and the transactions contemplated by it. CLM shall furnish a legal
opinion to CNG attesting to the proprietary and legality of the transaction
involving the shareholders and the directors of CLM so as to be in accordance
with all applicable laws and the by-laws of CLM.
7.8 CNG shall have concluded and be reasonably satisfied with all of its
due diligence regarding CLM, and CLM shall have concluded and be reasonably
satisfied with all of its due diligence regarding CNG.
7.9 The current officers and directors of CLM shall resign concurrent with
closing, after duly appointing the directors listed on Schedule 7.9 as new
directors to CLM.
7.10 As an incident to the share exchange transactions and as a
predicate and condition to them, CNG has deposited twenty-five thousand eight
hundred and seventy-five ($25,875) dollars in the escrow account of Xxxxxxx
X. Xxxxxxx, Esq. solely for the purpose of paying a maximum of twenty-five
thousand eight hundred and seventy-five ($25,875) dollars of liabilities,
and/or any combination of other claims, actions and/or debts of CLM
simultaneously at the time of closing. In the event any debts, claims and/or
actions either separately and/or combined exceed twenty-five thousand eight
hundred and seventy-five ($25,875) dollars, CLM shall be responsible and
liable to pay such amounts in excess of twenty-five thousand eight hundred
and seventy-five ($25,875) dollars. Prior to closing, CLM shall provide a
detailed list of creditors and/or claimants for the twenty-five thousand
eight hundred and seventy-five ($25,875) dollars including but not limited to
names, amounts, addresses, and telephone numbers of said parties.
7.11 CNG and, after the Closing Date, CLM, covenants that it will
register all of the shares (collectively, the "Affiliate Shares") of CLM
owned by Xxxxxx Xxxxxx, Xxxx X. Xxxxxxxxxx and Xxxx Xxxxxx (collectively, the
"Affiliates") on the first registration statement filed by CLM after the
Closing Date under the Securities Act of 1933, as amended (other than on Form
S-8), in order to register all of the Affiliate Shares under Section 5 of the
Act ("Piggyback Registration Rights"). This covenant by CNG and CLM to
confer Piggyback Registration Rights on the Affiliates is a material
incentive to CLM and the Affiliates entering into this Agreement, and said
Affiliates will have a right to all remedies at law or in equity in the event
of a breach of this covenant by CNG and, after the Closing Date, CLM, and
payment of all damages resulting therefrom.
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ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1 Anything contained in this Agreement to the contrary notwithstanding,
the Agreement may be terminated and abandoned at any time (whether before or
after the approval and adoption thereof by the shareholders of CNG) prior to the
Closing Date:
(a) By mutual consent of CNG and CLM;
(b) By CNG or CLM, if any condition set forth in Article VII relating to
the other party has not been met or has not been waived;
(c) By CNG or CLM, if any suit, action or other proceeding shall be
pending or threatened by the federal or a state government before any
court or governmental agency, in which it is sought to restrain,
prohibit or otherwise affect the consummation of the transactions
contemplated hereby;
(d) By any party, if there is discovered any material error, misstatement
or omission in the representations and warranties of another party; or
(e) By any party if the Agreement Closing Date is not within 30 days from
the date hereof.
8.2 Any of the terms or conditions of this Agreement may be waived at any
time by the party which is entitled to the benefit thereof, by action taken by
its Board of Directors, provided, however, that such action shall be taken only
if, in the judgment of the Board of Directors taking the action, such waiver
will not have a materially adverse effect on the benefits intended under this
Agreement to the party waiving such term or condition.
ARTICLE IX
TERMINATION OF REPRESENTATION AND
WARRANTIES AND CERTAIN AGREEMENTS
9.1 The respective representations and warranties of the parties hereto
shall expire with, and be terminated and extinguished by consummation of the
Agreement; provided, however, that the covenants and agreements of the parties
hereto shall survive in accordance with their terms.
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ARTICLE X
MISCELLANEOUS
10.1 This Agreement embodies the entire agreement between the parties, and
there have been and are no agreements, representations or warranties among the
parties other than those set forth herein or those provided for herein.
10.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall be deemed
to be an original instrument, but all such counterparts together shall
constitute but one instrument. Counterparts shall include the execution of the
Exchange Agreement and Representations by all shareholders.
10.3 CLM and CNG each agree that if it has employed any investment
bankers, brokers, finders, or intermediaries in connection with the transaction
contemplated hereby who might be entitled to any fee or other payment from CNG
or CLM, such fee or other payment shall be the sole responsibility of the party
entering into such agreement. The parties specifically understand, acknowledge
and agree to honor the contracts with Makefield Investment Banking, Inc. which
call for issuance of 350,000 shares (post reverse split) registered with SEC on
Form S-8, which shares are deemed earned upon the execution of this agreement,
for acquisition and merger services rendered by Makefield Investment Banking,
Inc. The parties agree to issue 400,000 shares of common stock (post reverse
split) registered on Form S-8 for Merger and Acquisition Services rendered by
Millennium Investments, Inc. and 186,296 shares to IBJ Publications for business
services rendered. Under no circumstances shall CLM be obligated to issue
shares registered on Form S-8 which issuance does not comply in full with the
requirements and restrictions for use of Form S-8.
10.4 All parties to this Agreement agree that if it becomes necessary or
desirable to execute further instruments or to make such other assurances as are
deemed necessary, the party requested to do so will use its best efforts to
provide such executed instruments or do all things necessary or proper to carry
out the purpose of this Agreement.
10.5 This Agreement may be amended upon approval of the Board of
Directors of each party provided that the shares issuable hereunder shall not
be amended without approval of the requisite shareholders of CNG.
10.6 Any notices, requests, or other communications required or
permitted hereunder shall be delivered personally or sent by overnight
courier service, fees prepaid, addressed as follows:
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To CNG Communications, Inc.:
0000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxx 00000
To Commercial Labor Management, Inc.:
c/o Law Offices of Xxxx X. Xxxxxxxxxx
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
received.
10.7 No press release or public statement will be issued relating to the
transactions contemplated by this Agreement without prior approval of CNG and
CLM. However, either CNG or CLM may issue at any time any press release or
other public statement it believes on the advice of its counsel that is
obligated to issue in order to avoid liability under the law relating to
disclosures, but the party issuing such press release or public statement shall
make a reasonable effort to give the other party prior notice of and opportunity
to participate in such release or statement.
IN WITNESS WHEREOF, the parties have set their hands and seals this 6th day
of August, 1998.
CNG Communications, Inc. Commercial Labor Management, Inc.
By:__________________________ By:_________________________
President President
Attest:________________________ Attest:______________________
Secretary Secretary
CNG COMMUNICATIONS, INC. SHAREHOLDERS (by signature below or pursuant to
execution of the Exchange Agreement and Representations incorporating this
Agreement by reference.)
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
___________________________ ___________________________
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