AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement")
dated this ______ day of July, 1997, between Southwest Industrial Products, Inc.
(the "Company"), a Texas corporation, and Onyx-Five, Inc. (the "Purchaser") a
Minnesota corporation,
WHEREAS, the Company desires to merge with the Purchaser and the
Purchaser with the Company, all upon the terms and subject to the conditions of
this Agreement and the Plan of Merger attached as Exhibit A (the "Plan of
Merger"); and
WHEREAS, the Company and the Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
merger of the Company;
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions herein
contained, the parties agree as follows:
ARTICLE 1
THE MERGER; CLOSING; EFFECTIVE TIME
1.1 THE MERGER. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in section 1.4) the Company shall be merged
with and into the Purchaser and the separate corporate existence of the Company
shall cease (the "Merger"). The Purchaser shall be the surviving corporation in
the Merger (sometimes referred to as the "Surviving Corporation") and shall
continue to be governed by the laws of the State of Minnesota, and the separate
corporate existence of the Purchaser with all its rights, privileges, immunities
and franchises shall continue unaffected by the Merger.
1.2 TERMS OF MERGER. The Company shall transfer all of its shares of
its stock to the Purchaser. The Purchaser agrees to issue 10,000,000 shares of
its common stock to the shareholders of the Company. The Board of Directors
shall be Xxxxxxx Xxxxxx, Xxxxx Xxxxxxx and Xxxx Xxxxxxx, the Board of Directors
shall then elect the officers of the Company.
1.3 CLOSING. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Xxxxxxx Xxxxxxx, Minneapolis, Minnesota on the first
business day on which the last to be fulfilled or waived of the conditions set
forth in Article VII shall be fulfilled or waived in accordance with this
Agreement, at such time as the Company and Purchaser may agree, or (ii) on such
other date and/or at such other place and time as the Company and Purchaser may
agree.
1.4 EFFECTIVE TIME. As soon as practicable following fulfillment or
waiver of the conditions specified in Article VII, and provided that this
Agreement has not been terminated or abandoned pursuant to Article VIII, the
Company and the Purchaser will cause the Articles of Merger (the "Articles of
Merger") to be executed and filed with the Secretary of State of Minnesota (the
"State Commission"). The merger shall become effective on the date on which the
Secretary of State issues a Certificate of Merger, and such time is referred to
as the "Effective Time".
ARTICLE II
ARTICLES OF INCORPORATION AND BY-LAWS OF THE
SURVIVING COMPANY
2.1 THE ARTICLES OF INCORPORATION. The Articles of Incorporation of the
Purchaser (the "Articles") in effect at the Effective Time shall be Articles of
Incorporation of the Surviving Corporation, in accordance with the Minnesota
Statutes.
2.2 THE BY-LAWS. The By-Laws of the Purchaser in effect at the
Effective Time shall be the By-Laws of the Surviving Corporation, unless duly
amended in accordance with its terms and the Minnesota Statutes.
ARTICLE III
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
3.1 OFFICERS AND DIRECTORS. The directors and officers of the Purchaser
at the Effective Time shall, from and after the Effective Time, be directors and
officers, of the Surviving Corporation, until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Articles and By-Laws.
ARTICLE IV
CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
4.1 At the Effective Time, all shares of common stock of the Company
issued and outstanding immediately prior to the Effective Time shall be
exchanged for validly issued, fully paid and nonassessable shares of the
Purchaser.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 CORPORATE ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas. The Company has the corporate power and authority to
carry on its respective businesses as they are now being conducted. The Company
has made available to Purchaser a complete and correct copy of the Company's
Articles, and the Company's By-Laws. The Company's Articles and By-Laws so
delivered are in full force and effect.
5.2 CORPORATE AUTHORITY. Subject only to approval of this Agreement and
the Plan of Merger by the holders of a majority of the outstanding shares, the
Company has the requisite corporate power and authority and has taken all
corporate action necessary in order to execute and deliver this Agreement and to
consummate the transactions contemplated. This Agreement is a valid and binding
agreement of the Company.
5.3 COMPLIANCE. The execution and delivery of this Agreement by the
Company does not, and the consummation of the transactions contemplated by the
Company will not, constitute or result in (i) a breach or violation of, or a
default under, the Articles or By-Laws of the Company or (ii) a breach or
violation of, a default under, the acceleration of, or the creation of a lien,
pledge, security interest or other encumbrance on assets pursuant to (with or
without the giving of notice or the lapse of time), any provision of any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation ("Contracts") of the Company, or any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or non-governmental
permit or license to which the Company is subject, except, in the case of clause
(ii) above, for such breaches, violations, defaults, or accelerations which,
alone or in the aggregate, will not have a material adverse effect on the
financial condition, properties, business or results of operations of the
Company.
5.4 BROKERS AND FINDERS. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated.
5.5 FINANCIAL STATEMENTS. The financial statements as of May 31, 1997,
which have been delivered to Purchaser ("Company Financial Statements") are
complete, accurate, and fairly present the financial condition of the Company as
of the date and the results of its operation for the periods covered. To the
best
knowledge of the Company, there are no liabilities, either fixed or contingent,
not reflected in the financial statements other than contracts or obligations in
the ordinary and usual course of business, constituting liens or other
liabilities which, if disclosed, would alter substantially the financial
condition of the Company as reflected in the financial statements. These
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied.
5.6 LITIGATION AND PROCEEDINGS. To the best knowledge of the Company,
it is not involved in any pending litigation or governmental investigation or
proceeding not reflected in the financial statements, or otherwise disclosed in
the Schedules and, to the best knowledge of the Company, no litigation, claims,
assessments, or governmental investigation or proceeding is threatened against
the Company.
5.7 TAX RETURNS. The Company has filed all tax returns, forms, or
reports, which are due or required to be filed by it prior to this date and has
paid or made adequate provisions for the payment of all taxes, penalty fees, or
assessments which have or may become due pursuant to such returns or pursuant to
any assessments received.
5.8 TITLE AND RELATED MATTERS. The Company has good and marketable
title to all of its licenses, copyrights, trademark, patents, patents pending,
properties, inventory, interests in properties, and other assets, real and
personal, free and clear of all mortgages, liens, pledges, charges, or
encumbrances except (i) statutory liens or claims not yet delinquent; (ii) such
imperfections of title and easements as do not and will not materially detract
from or interfere with the present or proposed use of the assets or properties
subject thereto or affected thereby or otherwise materially impair present
business operations on such properties or in connection with such assets; and
(iii) as described in the financial statements or in Company Schedules. The
Company owns, free and clear of any liens, claims, encumbrances, royalty
interests, or other restrictions or limitations of any nature whatsoever, any
and all procedures, techniques, business plans, methods of management, or other
information utilized in the conduct of the Company's business or operations,
whether or not the value thereof is reflected in the most recent balance sheet
included in the Company Schedules. The plants, structures, and equipment of the
Company that are necessary or used in the operations of the business of the
Company are in good operating condition and repair, normal wear and tear
excepted.
5.10 COMPANY SCHEDULES. The Company has delivered to Purchaser the
following schedules which are collectively referred to as the "Schedules" and
which consist of separate schedules dated as of the date of execution of this
Agreement and instruments and data as of the same date, all certified by the
chief executive officer of the Company, as complete, true, and correct:
(A) A schedule containing complete and correct copies of the articles
of
Incorporation and Bylaws of Company in effect as of the date of this
Agreement;
(B) A schedule containing a description of all real property owned or
leased by the Company, together with a description of every mortgage,
deed of trust, pledge, lien, agreement, encumbrance, claim, or equity
interest of any nature whatsoever in real property with copies of the
underlying documentation;
(C) A schedule describing all material contracts, employee agreements,
licenses, agreements, or other instruments to which the Company is a
party or by which it or its properties or assets are bound;
(D) A schedule describing all loans and mortgages for which Company is
obligated and the terms;
(E) A schedule setting forth a description of any material adverse
change in business, operations, property, inventory, assets, or
condition of the Company since May 31, 1997;
(F) A schedule of all litigation or governmental investigation or
proceeding which is pending or which, to the best knowledge of
management, is threatened or contemplated;
(G) A schedule of all outstanding options and warrants to acquire
shares of common stock;
(H) A schedule describing all joint ventures, partnerships or
corporations in which the Company owns an interest or a right to
acquire an interest;
(I) A schedule of all documents, disclosures, or representations
required to be disclosed by this Agreement or required to be disclosed
in order to set forth all material facts regarding Acquiree.
5.11 CORPORATE ORGANIZATION AND QUALIFICATION. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota. The Purchaser has the corporate power and authority
to carry on its respective businesses as they are now being conducted. The
Purchaser has made available to the Company a complete and correct copy of the
Purchaser's Articles, and the Purchaser's By-Laws. The Purchaser's Articles and
By-Laws so delivered are in full force and effect.
5.12 CORPORATE AUTHORITY. Subject only to approval of this Agreement
and the Plan of Merger by the holders of a majority of the outstanding shares,
the Purchaser has the requisite corporate power and authority and has taken all
corporate action necessary in order to execute and deliver this Agreement and to
consummate the transactions contemplated. This Agreement is a valid and binding
agreement of the Purchaser.
5.13 COMPLIANCE. The execution and delivery of this Agreement by the
Purchaser do not, and the consummation of the transactions contemplated by the
Purchaser will not, constitute or result in (i) a breach or violation of, or a
default under, the Articles or By-Laws of the Purchaser or (ii) a breach or
violation of, a default under, the acceleration of or the creation of a lien,
pledge, security interest or other encumbrance on assets pursuant to (with or
without the giving of notice or the lapse of time), any provision of any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation ("Contracts") of the Purchaser or any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or non-governmental
permit or license to which the Purchaser is subject, except, in the case of
clause (ii) above, for such breaches, violations, defaults, or accelerations
which, alone or in the aggregate, will not have a material adverse effect on the
financial condition, properties, business or results of operations of the
Purchaser.
5.14 BROKERS AND FINDERS. Neither the Purchaser nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated.
ARTICLE VI
COVENANTS
6.1 ACQUISITION PROPOSALS. The Company will, and shall direct (and
shall use its best efforts to cause) all of its officers and directors and
employees and any investment banker, attorney, accountant or other agent
retained by the Company not to, initiate or solicit any inquiries or the making
of any proposal with respect to, or, except to the extent required by fiduciary
obligations under applicable laws, as advised in writing by counsel, engage in
negotiations concerning, or provide any confidential information or data or to
have any discussions with, any person relating to, any acquisition, business
combination or purchase of all or any significant portion of the assets of, or
any equity interest in, the Company. The Company will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted with respect to any of the foregoing. The Company will
notify Purchaser immediately if any such inquiries or proposals are received by,
any such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with the Company.
6.2 INTERIM OPERATIONS OF THE COMPANY. The Company covenants and agrees
that after this date and prior to the Effective Time (unless
Purchaser shall otherwise agree in writing and except as otherwise contemplated
by this Agreement):
(a) the business of the Company shall be conducted only in the
ordinary and usual course and, to the extent consistent
therewith, the Company shall use its reasonable best efforts
to preserve its business organization intact and maintain its
existing relations with customers, suppliers, employees and
business associates;
(b) the Company shall not materially modify or amend or terminate
any of its material contracts or waive, release or assign any
material rights or claims, except in the ordinary and usual
course of business;
6.3 MEETINGS OF THE SHAREHOLDERS. As soon as practicable after this
date, Purchaser and the Company shall prepare a joint proxy/registration
statement (the "Registration Statement"), which shall comply as to form with all
applicable law and its governing instruments to convene a meeting of its
shareholders as promptly as practicable to consider and vote upon the approval
of this Agreement and the Plan of Merger and the Merger. Subject to fiduciary
requirements of applicable law, the respective boards of directors of each of
Purchaser and the Company shall recommend such approval and take all lawful
action to solicit such approval; provided, however, and notwithstanding any
other provision in this Agreement to the contrary, if either Purchaser or the
Company should experience any development or combination of developments having
a material adverse effect on the financial condition, properties, business or
results of operations of Purchaser, taken as a whole, or the Company, taken as a
whole, as the case may be, other than as a result of factors affecting the
industry or the economy generally, then the board of directors of the other
Company may withdraw its recommendation of the merger and may postpone the
meeting of its shareholders to allow adequate time to disseminate relevant
disclosure material. The Company agrees, as to information with respect to the
Company, its officers, directors, and shareholders contained when the
Registration Statement becomes effective and at the date of the meeting of the
respective shareholders of Purchaser and the Company, will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated or necessary to make the statement not misleading.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO OBLIGATIONS OF PURCHASER AND COMPANY. The respective
obligations of Purchaser and the Company to consummate the
merger are subject to the fulfillment of each of the following conditions, any
or all of which may be waived in whole or in part by Purchaser or the Company as
the case may be, to the extent permitted by applicable law:
(a) Shareholder Approval. This Agreement shall have been duly
approved by the holders of (i) at least a majority of the
voting power of the outstanding shares of the Purchaser common
stock, voting together as a single class, in accordance with
applicable law and the Certificate of Incorporation and
By-Laws of Purchaser and (ii) a majority of the outstanding
shares, in accordance with applicable law and the Articles and
By-Laws of the Company.
(b) Continuing Warranties, Certificate. The representations and
warranties of the Company contained in this Agreement shall be
correct on and as of the Effective Time in all material
respects with the same effect as though made and as of such
date, except for the changes contemplated by this Agreement,
and the Company shall have performed in all material respects
all of its obligations to be performed, and Purchaser shall
have received at the Effective Time a certificate to that
effect, dated the Effective Time, and executed on behalf of
the Company by an executive officer of the Company.
Notwithstanding anything in the foregoing to the contrary,
this Section 7.1(b) shall be deemed to have been fulfilled
regardless of whether the representations contained in Section
5.1 shall not be so correct or the covenants in Sections 6.1
and 6.2 to the extent it is applied to these sections.
7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to consummate the merger are subject to the fulfillment of each of the
following conditions, any or all of which may be waived in whole or in part by
the Company to the extent permitted by applicable law:
(a) Shareholder Approval. This Agreement shall have been duly
approved by the holders of (i) at least a majority of the
voting power of the outstanding shares of the Purchaser common
stock, voting together as a single class, in accordance with
applicable law and the Certificate of Incorporation and
By-Laws of Purchaser and (ii) a majority of the outstanding
shares, in accordance with applicable law and the Articles and
By-Laws of the Purchaser.
(b) Continuing Warranties, Certificate. The representations and
warranties of the Purchaser contained in this Agreement shall
be correct on and as of the Effective Time in all material
respects with the same effect as though made and as of such
date, except for the changes contemplated by this Agreement,
and the Purchaser shall have performed in all
material respects all of its obligations to be performed, and
Company shall have received at the Effective Time a
certificate to that effect, dated the Effective Time, and
executed on behalf of the Purchaser by an executive officer of
the Purchaser.
ARTICLE VIII
TERMINATION
8.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the merger may be abandoned at any time prior to the Effective Time, before or
after the approval by shareholders of the parties by the mutual consent of
Purchaser and the Company by action of their respective boards of directors.
8.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination
of this Agreement and abandonment of the merger pursuant to this Article VIII,
no party (or any of its directors or officers) shall have any liability or
further obligation to any other party to this Agreement, except as provided in
Section 9.2 and except that nothing will relieve any party from liability for
any breach of this Agreement.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 PAYMENT OF EXPENSES. Whether or not the merger shall be
consummated, each party hereto shall pay its own expenses incident to preparing
for, entering into and carrying out this Agreement and the consummation of the
merger.
9.2 SURVIVAL. The agreements shall survive the consummation of the
merger.
9.3 MODIFICATION OR AMENDMENT. Subject to the Minnesota Statutes, at
any time prior to the Effective Time, the parties may, by written agreement,
make any modification or amendment of this Agreement approved by their
respective boards of directors. This Agreement shall not be modified or amended
except pursuant to an instrument in writing executed and delivered on behalf of
each of the parties. After the Effective Time, none of the agreements may be
amended.
9.4 WAIVER OF CONDITIONS. The conditions to each of the parties'
obligations to consummate the merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.5 COUNTERPARTS. For the convenience of the parties this Agreement may
be executed in any number of counterparts, each such counterpart being deemed to
be an original instrument, and all counterparts shall together constitute the
same agreement.
9.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota regardless of the laws that
might otherwise govern under applicable principles of conflicts of law except
that the provisions of this Agreement relating to the merger shall also be
governed by the laws of the State of Minnesota.
9.7 NOTICES. Any notice, request, instruction, or other document to be
given by any party to the other, shall be in writing and delivered personally or
sent by a registered or certified mail, postage prepaid to the Company to
Xxxxxxx Xxxxxx, Dallas, Texas and to the Purchaser to Xxxxxxx Xxxxxx, Dallas,
Texas, or to such other persons or addresses as may be designated in writing by
the party to receive such notice.
9.8 ENTIRE AGREEMENT, ETC. This Agreement (a) constitutes the entire
agreement, and supersedes all other prior agreements and understandings, both
written and oral, among the parties, with respect to the subject matter and (b)
shall not be assignable by operation of law or obligation to, or rights in
respect of, any persons other than the parties, it being expressly agreed that
all of the persons (and their successors and assigns) who are beneficiaries of
such sections or schedule (whether as individuals or as members of a class or
group) shall be entitled to enforce such sections and schedule against Purchaser
or the surviving corporation or of the Purchaser.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
written above.
SOUTHWEST INDUSTRIAL PRODUCTS, INC.
By:____________________________
Name:_________________________
Title:__________________________
ONYX-FIVE, INC.
By:____________________________
Name:_________________________
Title:__________________________
PLAN OF MERGER
SECTION 1. CORPORATIONS PLANNING TO MERGE.
Southwest Industrial Products, Inc. (Southwest), a Texas corporation
shall be merged with Onyx-Five, Inc. (Onyx), a Minnesota, corporation. At the
Effective Time the corporate existence of Southwest shall cease. Onyx shall be
the surviving corporation, and shall continue to be governed by the laws of the
State of Minnesota.
SECTION 2. TERMS AND CONDITIONS.
2.1 The merger shall be effective upon the issuance of a Certificate of
Merger by the Secretary of State of the State of Minnesota.
2.2 The Articles of Incorporation shall be the Articles of
Incorporation of Onyx.
2.3 The By-Laws shall be the By-Laws of Onyx.
2.4 The Directors and Officers shall be the Directors and Officers of
Onyx.
SECTION 3. MANNER AND BASIS OF CONVERTING THE SHARES.
3.1 At the Effective Time, all of the shares of the common stock of
Southwest issued and outstanding immediately before the Effective Time shall be
retired.
3.2 Promptly after the Effective Time Onyx shall cause to be mailed to
each person who was at the Effective Time a holder of record of shares of
Southwest common stock his pro rata share of 10,000,000 shares of common stock.
IN WITNESS WHEREOF, the parties have executed this Plan of Merger this
____ day of July, 1997.
Southwest Industrial Products, Inc.
by____________________________
President
Onyx-Five, Inc.
by____________________________
President
