AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
THE MAJESTIC COMPANIES, LTD.,
a Delaware corporation
AND
SKYTEX INTERNATIONAL, INC.,
a Nevada corporation
Dated as of Octobr 8, 1998
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and dated as
of 8th day of October, 1998, by and between The Majestic Companies, Ltd., a
Delaware corporation ("Majestic") and SkyTex International, Inc., a Nevada
corporation ("SkyTex"). Majestic and SkyTex are hereinafter sometimes
collectively referred to as the "Constituent Corporations".
W I T N E S S E T H:
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WHEREAS, Majestic's authorized capital consists of 20,000,000 shares of
capital stock, consisting of 18,000,000 shares of common stock, $.01 par value
(the "Common Stock"), of which 16,191,863 shares are issued and outstanding, and
2,000,000 shares of preferred common stock, $0.01 par value (the "Preferred
Stock"), of which no shares are issued and outstanding and owned by the current
stockholders (the "Stockholders"); and
WHEREAS, SkyTex's authorized capital consists of 50,000,000 shares of
common stock, $.001 par value (the "SkyTex Stock"), 2,500,000 shares of which
are issued and outstanding; and
WHEREAS, SkyTex, and Majestic desire that Majestic be merged into SkyTex
(the "Merger") on the terms and conditions set forth in this Agreement; and
WHEREAS, SkyTex and Majestic entered into a letter of intent dated October
2, 1998 (the "Letter of Intent"), which Letter of Intent calls for the parties
to enter into a definitive agreement, being this Agreement, as the terms and
conditions set for in the Letter of Intent.
NOW, THEREFORE, in consideration of the premises and the mutual and
dependent promises hereinafter set forth, and other good and valuable
consideration, the adequacy and receipt of which are hereby mutually
acknowledged, the parties hereby agree as follows:
1. THE MERGER
1.1. Merger; Surviving Corporation. Upon the performance of all
covenants and obligations of the parties contained herein and upon the
fulfillment of all conditions to the obligations of the parties contained herein
(other than such covenants, obligations and conditions as shall have been waived
in accordance with the terms hereof), and in accordance with the general
corporation laws of Delaware and Nevada (the "Corporate Laws"), at the Effective
Time (as defined in Section 2.1), Majestic shall be merged with and into SkyTex,
and SkyTex shall be the surviving corporation (the "Surviving Corporation") and
shall continue its corporate existence under the laws of
Nevada. The name of the Surviving Corporation shall be amended to be The
Majestic Companies, Ltd. At the Effective Time, the separate existence of
Majestic shall cease.
1.2. Effect of the Merger. At the Effective Time, all rights, privileges,
powers and franchises, whether public or private, all the property, real,
personal and mixed, of each of the Constituent Corporations, all debts due to
either of them on whatever account and all other things in action belonging to
either of them shall be vested in the Surviving Corporation without further act
or deed; and all property, rights, privileges, powers and franchises and all and
every other interest shall be thereafter as effectively the property of the
Surviving Corporation as they were of the Constituent Corporations; and the
title to any real estate, whether vested by deed or otherwise, in either of the
Constituent Corporations shall not revert or be in any way impaired by reason of
the Merger; and the Surviving Corporation shall thenceforth be liable for all
debts, liabilities and duties of each of the Constituent Corporation, and all
said debts, liabilities and duties shall thenceforth attach to and become the
debts, liabilities and duties of the Surviving Corporation. No liability or
obligation due or to become due at the Effective Time, and no claim or demand
for any cause then existing against either of the Constituent Corporations shall
be released or impaired by the Merger, and all rights of creditors and all liens
upon property of either of the Constituent Corporations shall be preserved
unimpaired.
1.3. Surviving Corporation Organization.
(a) After the Effective Time, the Articles of Incorporation and
Bylaws of SkyTex shall continue as the Articles of Incorporation and Bylaws of
the Surviving Corporation unless and until amended in accordance with their
terms and as provided by law.
(b) The board of directors of the Surviving Corporation at the
Closing shall consist of four (4) directors nominated by Majestic and one (1)
director nominated by SkyTex and such individuals shall serve until their
respective successors are duly elected and qualified. The officers of Majestic
immediately prior to the Effective Time shall be appointed by the Board of
Directors as the officers of the Surviving Corporation until their respective
successors are duly elected and/or appointed and qualified in the manner
provided in the Articles of Incorporation and Bylaws of the Surviving
Corporation, or as otherwise provided by law.
1.4. Conversion of Shares. The manner of converting or exchanging shares
of the capital stock of the Constituent Corporations shall, by virtue of the
Merger and without any action on the part of the holders thereof, be as follows:
(a) Immediately prior to the Closing, Xxxxxxx X. Xxxxxxxxx, Xxxxx X.
Xxxxxxx, XX and Golden Capital Corporation shall collectively exchange a total
of 2,575,000 shares of Majestic's common stock for various considerations from
SkyTex including 750,000 warrants for shares of common stock of SkyTex. The
terms of such warrants shall provide for exercise of a ratable portion of the
aggregate warrants during each succeeding calendar quarter for a period of two
(2) years (at the rate of 93,750
warrants per quarter) and for an additional two-year period for the exercise of
all such warrants. The exercise price for the warrants shall be the current par
value of SkyTex's common stock. The shares of Majestic stock to be exchanged
hereunder shall, upon exchange, be canceled, and retired by SkyTex and
thereafter shall be of no further force and effect.
(b) At the Closing, the Stockholders of Majestic shall be entitled
to receive and shall be issued one (1) share of SkyTex Stock for each one and
ninety eight one-hundredths (1.98) shares of Common Stock held at the Effective
Time, which shares of SkyTex Stock shall be validly issued, fully paid and
non-assessable shares of common stock, par value $.001. As of the Effective Time
and upon issuance of SkyTex Stock as set forth above, all shares of Common Stock
and Preferred Stock of Majestic shall be of no further force and effect,
excepting the right to receive SkyTex Stock therefor. Any fractional shares of
SkyTex Stock shall be rounded up to the next highest number.
1.5. SkyTex Loan.
(a) A condition to the Closing shall be that Majestic furnish or
make arrangements for a loan to SkyTex at the Closing in an amount of not less
than Two Hundred and Sixty Thousand Dollars ($260,000) (the "Loan"). The terms
of the Loan shall provide for a term to December 31, 1999, interest only
payments in November and December of 1998 and a amortizing monthly payment in
the amount of $23,100.69 each month during 1999. The Loan shall bear interest at
the fixed interest rate of 12% per annum. The Loan shall be secured by
collateral as agreed upon by the parties thereto. The Loan shall be used by
SkyTex only for the purpose of acquiring the business operations of third
parties.
2. CLOSING
2.1. The Closing and Effective Time of the Merger.
(a) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, or on such later
other date as SkyTex and Majestic shall agree, SkyTex and Majestic shall file a
certificate of merger substantially in the form attached as Exhibit C hereto
(the "Certificate of Merger") with the Delaware Secretary of State (the
"Delaware Secretary of State") and articles of merger substantially in the form
attached as Exhibit D (the "Articles of Merger") with the Secretary of State of
the State of Nevada (the "Nevada Secretary of State"), and will make all other
filings or recordings required by the Corporation Laws in connection with the
Merger. The closing of the transactions contemplated by this Agreement (the
"Closing") shall occur immediately prior to, and the Merger shall become
effective at, the time at which the Certificate of Merger is duly filed with the
Delaware Secretary of State and the Articles of Merger are duly filed with the
Nevada Secretary of State, or at such later time as is specified by mutual
consent of the parties hereto. When used in this Agreement, the term "Effective
Date" or "Effective Time" shall mean the date on or time at which the Merger
becomes effective by filing and recordation of the later of, or
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as so provided in, the Certificate of Merger and the Articles of Merger. The
date of the Closing is referred to herein as the "Closing Date."
(b) The Closing shall be held at the offices of Patton, Boggs,
L.L.P., 000 X. Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 at 11:00 a.m. on November
3, 1998, or at such other place and time as SkyTex and Majestic shall agree;
provided, however, that if Majestic reasonably believes that any of the
conditions set forth in Section 5 will not be satisfied, Majestic shall have the
right by written notice to SkyTex and Stockholders to postpone the Closing from
time to time for up to an aggregate of 60 business days; and, if SkyTex
reasonably believes that any of the conditions set forth in Section 6 will not
be satisfied, SkyTex shall have the right by written notice to Majestic to
postpone the Closing from time to time for up to an aggregate of 60 business
days. In the event that the Closing does not occur as herein contemplated, any
party hereto not then in default hereunder shall have the right to terminate
such party's obligations under this Agreement (by written notice to the other
parties), without liability hereunder.
2.2. Surrender of Stockholders' Stock Certificates. Each certificate
evidencing the Common Stock outstanding immediately prior to the Effective Date
shall, on or after the Effective Time, be deemed for all corporate purposes to
represent and evidence only the right to receive the shares of SkyTex Stock to
be received in accordance with Section 1.4(a). Except as provided in the next
succeeding sentence, until tender by a stockholder of a certificate evidencing
Common Stock, a Stockholder of Majestic shall not have any right to receive
SkyTex Stock. The Surviving Corporation shall issue SkyTex Stock on account of
any Common Stock certificate which has been lost, stolen or destroyed upon
receipt of satisfactory evidence of ownership of the Common Stock represented
thereby and of such loss, theft or destruction, and after appropriate
indemnification.
2.3. Surrender of Majestic Stock Certificates. Promptly after the
Effective Date, the Surviving Corporation shall issue in the name of each holder
of Majestic Stock a stock certificate representing the appropriate number of
shares of SkyTex Stock of the Surviving Corporation in exchange for the
certificate or certificates which formerly represented shares of Majestic Stock,
which shall be immediately cancelled.
3. REPRESENTATIONS AND WARRANTIES AND COVENANTS OF MAJESTIC.
Majestic hereby represents, warrants and agrees as follows:
3.1. Organization and Good Standing.
(a) Majestic is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the legal right
and all necessary corporate power and authority to own all of its assets and to
carry on its business as it is now being conducted, and the character of the
properties owned or leased by Majestic and the nature of the business transacted
by Majestic do not require that Majestic be qualified to do business as a
foreign corporation in any jurisdiction
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other than the State of California in which jurisdiction Majestic has so
qualified and is in good standing.
(b) A copy of the Certificate of Incorporation, as amended, of
Majestic (certified by the Delaware Secretary of State as of a recent date) and
the By-Laws, as amended, of Majestic (certified by the Secretary of Majestic as
of the date hereof) have been delivered to SkyTex, are complete and correct and
reflect all amendments to such documents.
3.2. Capitalization. Majestic's authorized capital stock consists of
18,000,000 shares of common stock, $.01 par value (the "Common Stock") and
2,000,000 shares of preferred stock, ($0.01 par value (the "Preferred Stock"). A
total of 16,191,863 shares of Common Stock are outstanding, all of which are
validly issued, fully paid and non-assessable and are not subject to pre-emptive
rights. No shares of Preferred Stock are issued and outstanding. Schedule 3.2
sets forth a list of all stockholders of Majestic and the number of shares held
by each stockholder. No securities convertible into equity securities of
Majestic have been issued. Other than this Agreement and the capital stock and
warrants set forth on Schedule 3.2 hereof, there are no outstanding warrants,
options, rights, agreements, calls or commitments (i) to which Majestic is a
party relating to the authorized but unissued Common Stock of Majestic or
providing for the authorization or issuance of additional shares of the capital
stock of Majestic, or (ii) to which Majestic or any other person or entity is a
party relating to the issued and outstanding Common Stock.
3.3. Subsidiaries. Schedule 3.3 sets forth the name, authorized capital
stock and the record ownership of the outstanding shares of capital stock of
each corporation as to which Majestic owns more than ten percent (10%) of its
outstanding capital stock (each such corporation, a "Subsidiary"). All of the
outstanding shares of capital stock of each Subsidiary have been validly issued
and are fully paid and nonassessable. Other than as set forth on Schedule 3.3,
there are no other issued or outstanding equity securities of any Subsidiary,
and there are no other issued or outstanding equity securities of any of
Subsidiary convertible at any time into equity securities of any Subsidiary. No
Subsidiary is subject to any commitment or obligation that would require the
issuance or sale of additional shares of its capital stock at any time under
options, subscriptions, warrants, rights or any other obligations.
3.4. Title to Shares. Each Stockholder now owns, and has good, valid and
marketable title to the shares of Common Stock to be exchanged by him pursuant
to this Agreement free and clear of any Liens. Other than this Agreement, there
are no agreements, understandings or commitments between Stockholders and any
person or entity with respect to the sale, transfer or other disposition of any
of such shares of Common Stock.
3.5. Authority; Validity of Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by Majestic does not, and will not, violate any provisions
of the Certificate of
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Incorporation or By-Laws of Majestic or violate any provision of, or cause a
default under, or result in the acceleration of any obligation under, any
agreement, instrument, lease, Lien, Judgment, statute, law, rule or regulation
to which Majestic is a party or by which Majestic or the property of Majestic
may be bound or affected, or conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute a default (or give rise to any
right of termination, cancellation or acceleration) under, or result in the
creation of any Lien upon any of the assets of Majestic under any note,
indenture, mortgage, lease, agreement, contract, purchase order or other
instrument or document to which Majestic is a party or by which any of the
Company or the assets of the Company is bound or affected. Except as set forth
in Schedule 3.5, the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby by Majestic does not,
and will not, require the consent or approval of, or filing with, any court or
administrative or governmental authority, or any other third party. Majestic has
the full legal right, power and authority to enter into this Agreement and to
carry out the transactions herein contemplated. The execution, delivery and
performance of this Agreement have been duly authorized and approved by all
necessary corporate action on the part of Majestic, subject to approval of the
stockholders of Majestic as required by Section 8.5 hereof. This Agreement, when
executed, will constitute the legal, valid and binding agreement of Majestic,
enforceable against Majestic in accordance with its terms, subject only to any
applicable bankruptcy, insolvency or other laws affecting creditors' rights
generally, and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3.6. Financial Statements. Attached as Schedule 3.6. is the unaudited
consolidated balance sheet for Majestic as of September 30, 1998, a related
statement of income, and a stockholders' equity for such period. All such
financial statements (i) are in accordance with the books and records of
Majestic and (ii) present accurately, fairly and in accordance with generally
accepted accounting principles applied on a consistent basis the financial
position and results of operations and changes in financial position of Majestic
as of the date and for the period indicated.
3.7. Accounts and Notes Receivable. Schedule 3.7 lists the obligors and
outstanding balances of all accounts and notes receivable of Majestic; all such
accounts and notes receivable are reflected on the Balance Sheet. The accounts
and notes receivable of Majestic reflected or shown on the Balance Sheet arose
and will arise from bona fide transactions in the ordinary course of business,
and will have been collected or be fully collectible in the book amounts
thereof, after taking into account the reserve for doubtful accounts shown on
the Balance Sheet.
3.8. Inventories. All of the inventories of Majestic, including work in
progress inventories, consist of a quality and quantity usable and saleable in
the ordinary and usual course of the business. The quantities of each type of
inventory are not excessive, but are reasonable and warranted in the present
circumstances of Majestic.
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Except as set forth in Schedule 3.8, the value, quantities and types of
inventories of Majestic in all material respects are as reflected in the Balance
Sheet.
3.9. Absence of Undisclosed Liabilities. Except as set forth in Schedule
3.9 and as reflected in the Balance Sheet, (i) Majestic has no liabilities of
any nature (matured or unmatured, fixed or contingent); (ii) all reserves
established by Majestic and set forth in the Balance Sheet are adequate; and
(iii) there are no loss contingencies (as such term is used in Statement of
Financial Accounting Standards No. 5 issued by the Financial Accounting
Standards board in March, 1975) which are not adequately disclosed in the
Balance Sheet as required by said Statement No. 5.
3.10. Absence of Certain Changes or Events.
3.10.1. Financial Condition; Assets and Operations. Except as
disclosed in writing to SkyTex prior to the date of this Agreement, since
September 30, 1998 there has been no material adverse change in Majestic's
financial condition, properties, business, prospects or results of operations,
and no material adverse change in the equity or long-term debt of Majestic or
decrease in net working capital of Majestic as compared with the amounts shown
on the Balance Sheet (all as determined in accordance with generally accepted
accounting principles consistently applied throughout the applicable period).
Since September, 1998, Majestic has conducted its business only in the usual and
ordinary manner and in the ordinary course of business.
3.10.2. Capital Stock, Options, Dividends, etc. Since September 30,
1998, there has not been (i) any change in Majestic's authorized, issued or
outstanding capital stock, except in the ordinary course of business and for
valid consideration; (ii) any pledge, hypothecation or other encumbrance of any
shares of Majestic's capital stock; the granting of any stock option or right to
purchase shares of Majestic's capital stock; (iii) any issuance of any security
convertible into shares of Majestic's capital stock; (iv) any purchase,
redemption, retirement or other acquisition or sale of any shares of Majestic's
capital stock; or (v) any declaration, setting aside or payment of any dividend
or the making of any other distribution or payment in respect of Majestic's
capital stock.
3.10.3. Sale or Pledge of Assets; Incurring of Indebtedness. Since
September 30, 1998, (i) there has not occurred any sale or lease of capital
assets of Majestic with an original cost in excess of $10,000 for any single
item; (ii) no Lien has been imposed on any of the properties or assets of
Majestic; (iii) no indebtedness has been incurred, assumed or guaranteed by
Majestic, except in the ordinary course of business; or (iv) there has been no
entering into or termination by Majestic of any material agreement, other than
the Letter of Intent and this Agreement, except in the ordinary course of
business. There are no agreements, understandings or commitments between
Majestic or Stockholders and any person or entity with respect to any merger,
consolidation or sale of substantially all assets by Majestic.
3.11. Assets; Encumbrances. Schedule 3.11 lists or describes: (i) all
capitalized improvements located on premises leased or owned by Majestic; and
(ii) by
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location, all capitalized machinery, office equipment, furniture, fixtures,
components, tools and similar personal property owned or leased (identifying
those leased) by Majestic which are used or useful in connection with its
business, along with a brief description of each, with items having a value of
less than $10,000 grouped together for identification. Except as set forth in
Schedule 3.11 or as reflected in the Balance Sheet, Majestic has good and
marketable title to all property and assets, real, personal or mixed, tangible
or intangible, reflected in the Balance Sheet, free and clear of all Liens. The
tangible assets of Majestic are in good operating condition, well-maintained,
free from any material defects, and are adequate for the operation of Majestic's
business as presently conducted, except for technological obsolescence. Since
September 30, 1998, there has been no material damage or destruction of
Majestic's property by fire or other casualty, whether or not covered by
insurance.
3.12. Leases. All leases for any property leased by Majestic are listed on
Schedule 3.12. With respect to such leases, (i) all are legally valid and
binding on Majestic or as the case may be on the other parties thereto and in
full force and effect; (ii) no material event of default or event which would
constitute a material event default but for the requirement that notice be
given, a period of time elapse, or both, has occurred or is continuing; (iii)
none of the rights of Majestic thereunder will be impaired by the execution,
delivery or performance of this Agreement; (iv) all of the rights of Majestic
thereunder will be enforceable by Majestic after the Closing without the consent
or agreement of any other party; (v) Majestic has furnished or made available to
SkyTex true and correct copies of all leases listed in Schedule 3.12, as amended
to date; and (vi) no offset or defense presently exists with respect to any
rents or other sums payable or to become payable by any lessee under a lease of
any property owned by Majestic.
3.13. Agreements. Majestic is not a party to any written or oral (i)
contract, agreement, arrangement, understanding or commitment for the future
purchase of fixed assets or for the future purchase of materials, supplies or
equipment involving payments by Majestic of more than $25,000 or in excess of
normal operating requirements; (ii) indenture or other contract, agreement,
arrangement, understanding or commitment relating to the borrowing of money or
to the mortgaging, pledging or otherwise placing a Lien on any assets of
Majestic; (iii) contract, agreement, arrangement, understanding or commitment
for capital expenditures in excess of $25,000; (iv) guaranty of any obligations,
whether for borrowed money or otherwise, or other commitment under which
Majestic is or may be liable for the debts of others; (v) contract, agreement,
arrangement, understanding or commitment under which Majestic is obligated to
pay any broker's fees, finder's fees or any such similar fees, to any third
party for any reason; (vi) partnership, joint venture, joint operating, joint
marketing or similar contract, agreement, arrangement, understanding or
commitment; (vii) agreement vesting a power of attorney in any third party; or
(viii) any other contract, agreement, arrangement, understanding or commitment
which is material to the business of Majestic, and which is not otherwise set
forth on any Schedule hereto. Except as set forth in Schedule 3.13, Majestic is
not engaged in any negotiations
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which, if reduced to a written contract of a type required to be disclosed
pursuant to this Section 3.13, would be required to be set forth in Schedule
3.13. With respect to the contracts, agreements, arrangements, understandings
and commitments listed in Schedule 3.13, (i) all are legally valid and binding
on Majestic or as the case may be on the other parties thereto and in full force
and effect; (ii) no material event of default or event which would constitute a
material event of default but for the requirement that notice be given, a period
of time elapse, or both has occurred or is continuing; (iii) none of the rights
of Majestic thereunder will be impaired by the execution, delivery or
performance of this Agreement; (iv) all of the rights of Majestic thereunder
will be enforceable by Majestic after the Closing Date without the consent or
agreement of any other party, except as disclosed on Schedule 3.13 or 3.5; and
(v) Majestic has furnished or made available to SkyTex true and correct copies
of all written agreements and other documents listed in Schedule 3.13, as
amended to date.
3.14. Equity Investments. Schedule 3.14 lists all equity and proprietary
holdings in any corporation, association, trust, partnership or other entity
including, but not limited to, stocks, bonds, negotiable instruments, other
interests currently owned by or held in the name of Majestic.
3.15. Burdensome Restrictions. Majestic is not (i) obligated under any
contract or agreement not a part of or described in a Schedule to this Agreement
or (ii) subject to any commitment, charter or other corporate restriction which
materially and adversely affects, or is expected by Stockholders in the future
materially and adversely to affect, its business, properties, assets, prospects
or condition (financial or otherwise).
3.16. Intellectual Property Rights. Except in each case as set forth in
Schedule 3.16:
(a) Majestic owns, possesses, or has the right to use all
Intellectual Property Rights (as hereinafter defined) necessary or required for
the conduct of their business as presently conducted or as currently proposed to
be conducted in the future, including, but not limited to, those Intellectual
Property Rights identified in said Schedule 3.16;
(b) no royalties or other amounts are payable by Majestic to other
persons by reason of the ownership or use of Intellectual Property Rights except
as set forth in any licenses therefor; and
(c) (i) no product or service marketed or sold or currently proposed
to be marketed or sold in the future by Majestic violates or will violate any
license or infringes or will infringe any Intellectual Property Rights of
others, (ii) Majestic has not received any notice that any of their Intellectual
Property Rights or the operation or currently proposed operation of Majestic's
businesses conflicts or will conflict with Intellectual Property Rights of
others, and (iii) there is not any reasonable basis to believe that any such
violation, infringement or conflict will or may exist.
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(d) Majestic is not a party or subject to any contract or agreement
which currently requires, or upon the passage of time or occurrence of an event
or contingency (whether of default or otherwise) will require, the conveyance
of, or disclosure of secret processes or formulae related to, any Intellectual
Property Right necessary or required for the conduct of its business.
As used herein, the term "Intellectual Property Rights" means all
licenses, patents, trademarks, service marks, trade names, copyrights,
inventions, trade secrets, customer lists, proprietary processes and formulae,
applications for patents, trademarks and copyrights, and other industrial and
intellectual property rights.
3.17. Books of Account; Returns and Reports. The books of account of
Majestic fairly and reflect all of Majestic's items of income and expense, and
all assets and liabilities and accruals, capital and surplus, and are prepared
and maintained in form and substance adequate for preparing audited financial
statements, in accordance with generally accepted accounting principles
consistently applied. Majestic has filed all reports and returns required by any
law or regulation to be filed for Majestic, and has duly paid or accrued on its
books of account all applicable duties and charges due (or assessed against
them) pursuant to such reports. There has been no material transaction with
respect to the business or operations of Majestic which is not fully described
in such books of account, herein or on the schedules hereto.
3.18. No Defaults. Majestic is not in violation or default (i) under its
Certificate of Incorporation or its By-Laws, (ii) under any note, indenture,
mortgage, lease, agreement, franchise agreement, contract, purchase order or
other instrument or document to which Majestic is a party or by which it or any
of its assets is bound or affected, or (iii) with respect to any order, writ,
law, regulation, statute, rule, injunction or decree of any court or any
Federal, state, local or other governmental agency or instrumentality. There
exists no condition, event or act which, with or without the passage of time or
the giving of notice or both, could conflict with or result in any breach of any
of the terms, conditions or provisions of, or constitute a default (or give rise
to any right of termination, cancellation or acceleration) under, or result in
the creation of any Lien upon any of the assets of Majestic under any note,
indenture, mortgage, lease, agreement, contract, purchase order or other
instrument or document or order, writ, injunction or decree.
3.19. Tax Returns. The provisions for taxes reflected in the Balance
Sheet is sufficient for the payment of all unpaid Fees, Taxes and Other Charges
of Majestic, whether or not disputed, which were then, are or may become payable
by Majestic at any time as a result of events occurring on or before the Balance
Sheet Date. Majestic has timely and duly filed all United States Federal, state
and local and non-United States tax returns which are required to be filed and
has paid, or in its books made provision for the payment of, all Fees, Taxes and
Other Charges which said returns disclose as having become due and payable or
which have become due and payable pursuant to any assessment received. Majestic
has not received from any authority any notice of underpayment of any Fees,
Taxes and Other Charges. No administrative
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or judicial proceedings relating to the tax liability of Majestic are pending
and, to the knowledge of Majestic, the institution of any such proceedings is
not contemplated by any authority. Majestic has not filed any consent or
agreement under Section 341(f) of the Internal Revenue Code of 1986, as amended,
nor has Majestic waived restrictions on assessment or collection of taxes or
consented to the extension of any statute of limitations with respect to
taxation.
3.20. Insurance. Schedule 3.20 sets forth each insurance policy
(specifying the insurer, the amount of coverage, the type of insurance, the
policy number, the expiration date, the annual premium and any pending claims
thereunder) maintained by Majestic on its properties, assets, business or
personnel, including, without limitation, product liability, fidelity, business
interruption and other liability insurance, and true and complete copies of the
most recent inspection reports, if any, received from insurance underwriters as
to the conditions of the properties and assets owned, leased, occupied and
operated by Majestic. No notice from any insurance carrier insuring Majestic has
been received by Majestic claiming that Majestic is in default with respect to
any provision contained in any insurance policy, and Majestic has not failed to
give any notice or present any claim under any insurance policy in due and
timely fashion. The insurance maintained by Majestic on its assets, business and
personnel is in type and amount adequate for Majestic's business and in
accordance with the standards of the industry in which Majestic operates, and is
under policies currently in effect and issued by insurers of recognized
responsibility.
3.21. Compliance with Laws, etc. Majestic is in compliance with all
Federal, state, local and foreign laws, ordinances, regulations and orders
applicable to its business, and the business of Majestic as currently conducted
and as proposed to be conducted in the future is not and will not conflict in
any way materially adverse to Majestic with any such law, ordinance, regulation
or order. Majestic has obtained all Federal, state, local and foreign
governmental consents, authorizations, licenses, registrations, permits and
approvals material to or necessary for the ownership of its properties and
assets and the conduct of its business; all such licenses, registrations and
permits are in full force and effect; there have been no violations in respect
of any such authorization, license, registration or permit in any way materially
adverse to Majestic; and no proceeding is pending or, to the Knowledge of
Majestic threatened, to revoke or limit any such authorization, license,
registration or permit.
3.22. Related Transactions. Except as set forth in Schedule 3.22, no
current or former stockholder, director, officer, employee, consultant or
independent contractor of Majestic is currently, directly or indirectly, a party
to any transaction with Majestic providing for the furnishing of services by or
to, the rental of real or personal property to or from, the loan of money to or
from, or otherwise requiring the payment of consideration to or from, any such
person. With respect to such agreements and transactions set forth in Schedule
3.22, each constitutes a bona fide, arms-length transaction, is commercially
reasonable, and reasonably benefits Majestic.
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3.23. Litigation. Except as disclosed in Schedule 3.23, (i) there is no
Proceeding pending or threatened against or relating to Majestic or its
properties or business or the transactions contemplated by this Agreement, (ii)
there is no basis for any Proceeding against or relating to Majestic or its
properties or business or the transactions contemplated by this Agreement, and
(iii) Majestic is not subject to any outstanding Judgment. There is no
Proceeding pending or threatened, which would prevent or interfere with the
consummation of the transactions contemplated by this Agreement.
3.24. Employment of Officers, Employees and Consultants.
(a) Schedule 3.24 sets forth (i) the name of, and the current annual
salary and other compensation (including benefits such as provision of an
automobile, insurance, retirement plans, etc.) or the rate of compensation
payable by Majestic to each director, officer, employee, consultant, independent
contractor, and stockholder of Majestic, (ii) each loan or advance (other than
routine travel advances) made by Majestic to any director, officer, employee,
consultant, independent contractor or stockholder of Majestic, and the current
status thereof, whether or not presently outstanding and (iii) the names of all
persons or entities that have been employed by Majestic since January 1, 1998,
as consultants or other similar independent contractors and the amount of
compensation paid to or for the benefit of each such person or entity since such
date.
(b) No third party may assert any valid claim against Majestic or
SkyTex with respect to (i) the continued employment by or association with
Majestic of any of the present directors, officers or employees of, or
independent contractors to, Majestic, or (ii) the continued use by Majestic or
any of the present directors, officers or employees of Majestic of any
information which Majestic or any present director, officer or employee of
Majestic would be prohibited from using under any prior agreements or
arrangements or under any laws, including, without limitation, laws applicable
to unfair competition, trade secrets or proprietary information.
(c) Except as set forth in Schedule 3.24, there are no grievances,
disputes or controversies pending or threatened between Majestic and any of its
or their present or former directors, officers, employees, consultants or
independent contractors, and Majestic is not currently subject to any claims by
present or former directors, officers, employees, consultants or independent
contractors, including, without limitation, claims for wages, salaries,
commissions or benefits.
3.25. Employment Contracts, Profit Sharing Plans, etc. Schedule 3.25 sets
forth all employment contracts, bonus, stock option, stock purchase, profit
sharing, pension, retirement, medical insurance, disability insurance, incentive
or other compensation or retirement arrangements to which Majestic is a party
(together with and including all Majestic Employee Plans) and all amendments or
modifications, if any, thereto accompanied by certified copies of any
agreements, including trust agreements, embodying such contracts, plans or
arrangements, together with certified copies of any
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determination letters issued by the Internal Revenue Service or U.S. Department
of Labor with respect thereto. Each Majestic Employee Plan and other employment
benefit set forth on Schedule 3.25 is in compliance with all applicable Federal,
state and local laws, ordinances and regulations.
3.26. Investment in Competing Business. No director or officer of Majestic
owns of record or beneficially (i) any equity interest or any other financial or
profit interest in any firm, corporation, partnership, joint venture, trust,
association or other entity (a "Business Entity") which is in competition with
Majestic with respect to any line of Majestic's products in any market (a
"Competing Business"), or (ii) more than three per cent (3%) of the outstanding
capital stock of any Competing Business which is publicly traded on any
recognized exchange or in the over-the-counter market.
3.27. Compliance with Environmental Laws. Without in any way limiting the
generality of Section 3.21, Majestic is in substantial compliance with all
applicable laws, governmental rules, ordinances, regulations and orders
pertaining to the presence, management, release, discharge, and disposal of
toxic or hazardous waste material or substances, pollutants (including
conventional pollutants) and contaminants ("Waste"), including, without
limitation, the Emergency Planning and Community Right to Know Act (Title III of
Superfund Amendments and Reauthorization Act of 1986), 42 U.S.C. ss.11001 et
seq., the Occupational Safety and Health Act, 29 U.S.C. ss.660, and the
standards, including hazard communications and the reporting, labeling and
document retention standards relating to hazardous substances, wastes, materials
and/or chemicals promulgated thereunder, the federal Clean Water Act, 33 U.S.C.
ss.1251 et seq., the federal Clean Air Act, 42 U.S.C. ss.7401 et seq., the
federal Resource Conservation and Recovery Act, 42 U.S.C. ss.6901 et seq., the
Comprehensive Environmental Response Compensation and Liability Act (CERCLA), 42
U.S.C. ss.9601 et seq., the Toxic Substances Control Act, 15 U.S.C. ss.2601 et
seq., as well as applicable state and local law, including state law
implementing such federal statutes, and with applicable federal, state, and
local regulations implementing any of the foregoing environmental laws.
3.28. Labor Relations. Majestic is not a party to any collective
bargaining agreement or other labor contract. There has not been any effort to
organize the employees of Majestic not belonging to any union, and no
application or complaint has been filed by a union or employee of Majestic with
the National Labor Relations Board.
3.29. Minute Books, Records, etc. The minute books of Majestic contain
complete and accurate records of all actions of the stockholders and Board of
Directors of Majestic, including, without limitation, all committees of either.
The minute books, stock certificate books and stock ledgers of Majestic contain
no errors or omissions, and there has been no transaction involving the business
of Majestic which, according to accepted legal practice, should have been set
forth in such books other than those in fact set forth therein.
4. REPRESENTATIONS AND WARRANTIES OF XXXXXX
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XxxXxx hereby represents, warrants and agrees as follows:
4.1. Organization and Good Standing.
(a) SkyTex is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada and has the legal right and
all necessary corporate power and authority to own all of its assets and to
carry on its business as it is now being conducted, and the character of the
properties owned or leased by SkyTex and the nature of the business transacted
by SkyTex do not require that SkyTex be qualified to do business as a foreign
corporation in any other jurisdiction.
(b) A copy of the Articles of Incorporation, as amended, of SkyTex
(certified by the Secretary of State of Nevada as of a recent date) and the
By-Laws, as amended, of SkyTex (certified by the Secretary of SkyTex as of the
date hereof) and attached hereto on Schedule 4.1 are complete and correct and
reflect all amendments to such documents.
4.2. Capitalization. SkyTex's authorized capital stock consists of
50,000,000 shares of common stock, $.001 par value (the "SkyTex Stock"). No
other equity securities of SkyTex have been authorized for issuance. A total of
2,500,000 shares of SkyTex Stock are outstanding, all of which are
validly issued, fully paid and non-assessable and are not subject to pre-emptive
rights. Schedule 4.2 sets forth a list of all stockholders of SkyTex and the
number of shares held by each stockholder. No securities convertible into equity
securities of SkyTex have been issued. There are no outstanding warrants,
options, rights, agreements, calls or commitments (i) to which SkyTex is a party
relating to the authorized but unissued SkyTex Stock or providing for the
authorization or issuance of additional shares of the capital stock of SkyTex,
or (ii) to which SkyTex or any other person or entity is a party relating to the
issued and outstanding SkyTex Stock.
4.3. Subsidiaries. Schedule 4.3 sets forth the name, authorized capital
stock and the record ownership of the outstanding shares of capital stock of
each corporation as to which SkyTex owns more than ten percent (10%) of its
outstanding capital stock (each such corporation, a "Subsidiary"). All of the
outstanding shares of capital stock of each Subsidiary have been validly issued
and are fully paid and nonassessable. Other than as set forth on Schedule 4.3,
there are no other issued or outstanding equity securities of any Subsidiary,
and there are no other issued or outstanding equity securities of any of
Subsidiary convertible at any time into equity securities of any Subsidiary. No
Subsidiary is subject to any commitment or obligation that would require the
issuance or sale of additional shares of its capital stock at any time under
options, subscriptions, warrants, rights or any other obligations.
4.4. Title to Shares. Each stockholder of SkyTex has good, valid and
marketable title to the shares of SkyTex Stock free and clear of any Liens.
Other than this Agreement and any agreements disclosed to Majestic or as set for
on Schedule 4.4, there are no agreements, understandings or commitments between
such
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stockholders and any person or entity with respect to the sale, transfer or
other disposition of any of such shares of SkyTex Stock.
4.5. Authority; Validity of Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby by SkyTex do not, and will not, violate any provisions of
the Articles of Incorporation or By-Laws of SkyTex or violate any provision of,
or cause a default under, or result in the acceleration of any obligation under,
any agreement, instrument, lease, Lien, Judgment, statute, law, rule or
regulation to which SkyTex is a party or by which SkyTex or the property of
SkyTex may be bound or affected, or conflict with or result in any breach of any
of the terms, conditions or provisions of, or constitute a default (or give rise
to any right of termination, cancellation or acceleration) under, or result in
the creation of any Lien upon any of the assets of SkyTex under any note,
indenture, mortgage, lease, agreement, contract, purchase order or other
instrument or document to which SkyTex is a party or by which SkyTex or the
assets of SkyTex are bound or affected. Except as set forth in Schedule 4.5, the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby by SkyTex does not, and will not, require
the consent or approval of, or filing with, any court or administrative or
governmental authority, or any other third party. SkyTex has the full legal
right, power and authority to enter into this Agreement and to carry out the
transactions herein contemplated. The execution, delivery and performance of
this Agreement have been duly authorized and approved by all necessary corporate
action on the part of SkyTex, subject to approval of the stockholders of SkyTex
as required by Section 9.5 hereof. This Agreement, when executed, will
constitute the legal, valid and binding agreement of SkyTex, enforceable against
SkyTex in accordance with its terms, subject only to any applicable bankruptcy,
insolvency or other laws affecting creditors' rights generally, and to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.6. Financial Statements. Attached as Schedule 4.6. is the unaudited
consolidated balance sheet for SkyTex as of August 31, 1997, December 31, 1996
and December 31, 1995, and the related audited statement of income, and
stockholders' equity and changes in financial position for the years ending on
the foregoing dates, in each case including the notes thereto and certified by
Xxxxx X. Xxxxxxxx, P.C., independent certified public accountants. Attached as
Schedule 4.6(A) is the unaudited consolidated balance sheet of SkyTex as of
September 30, 1998 (the "Balance Sheet"), and the related unaudited statement or
income, stockholders' equity and changes in financial position for the period
ended September 30, 1998 in each case including the notes thereto. (August 31,
1997, is hereinafter sometimes referred to as the "Audit Date"; September 30,
1998 is hereinafter sometimes referred to as the "Balance Sheet Date".) All such
financial statements (i) are in accordance with the books and records of SkyTex
and (ii) present accurately, fairly and in accordance with generally accepted
accounting principles applied on a consistent basis the financial
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position and results of operations and changes in financial position of SkyTex
as of the date and for the period indicated.
4.7. Accounts and Notes Receivable. Schedule 4.7 lists the obligors and
outstanding balances of all accounts and notes receivable of SkyTex; all such
accounts and notes receivable are reflected on the Balance Sheet. The accounts
and notes receivable of SkyTex reflected or shown on the Balance Sheet arose and
will arise from bona fide transactions in the ordinary course of business, and
will have been collected or be fully collectible in the book amounts thereof,
after taking into account the reserve for doubtful accounts shown on the Balance
Sheet.
4.8. Inventories. All of the inventories of SkyTex, including work in
progress inventories, consist of a quality and quantity usable and saleable in
the ordinary and usual course of the business. The quantities of each type of
inventory are not excessive, but are reasonable and warranted in the present
circumstances of SkyTex. Except as set forth in Schedule 4.8, the value,
quantities and types of inventories of SkyTex in all material respects are as
reflected in the Balance Sheet.
4.9. Absence of Undisclosed Liabilities. Except as set forth in Schedule
4.9 and as reflected in the Balance Sheet, (i) SkyTex has no material
liabilities of any nature (matured or unmatured, fixed or contingent); (ii) all
reserves established by SkyTex and set forth in the Balance Sheet are adequate;
and (iii) there are no loss contingencies (as such term is used in Statement of
Financial Accounting Standards No. 5 issued by the Financial Accounting
Standards board in March, 1975) which are not adequately disclosed in the
Balance Sheet as required by said Statement No. 5.
4.10. Absence of Certain Changes or Events.
4.10.1. Financial Condition; Assets and Operations. Except as
disclosed in writing to Majestic prior to the date of this Agreement, since
September 30, 1998 there has been no material adverse change in SkyTex's
financial condition, properties, business, prospects or results of operations,
and no material adverse change in the equity or long-term debt of SkyTex or
decrease in net working capital of SkyTex as compared with the amounts shown on
the Balance Sheet (all as determined in accordance with generally accepted
accounting principles consistently applied throughout the applicable period).
Since September 30, 1998, SkyTex has conducted its business only in the usual
and ordinary manner and in the ordinary course of business.
4.10.2. Capital Stock, Options, Dividends, etc. Since September 30,
1998, there has not been (i) any change in SkyTex's authorized, issued or
outstanding capital stock except in the ordinary course of business and for
valid consideration; (ii) any pledge, hypothecation or other encumbrance of any
shares of SkyTex's capital stock; the granting of any stock option or right to
purchase shares of SkyTex's capital stock; (iii) any issuance of any security
convertible into shares of SkyTex's capital stock; (iv) any purchase,
redemption, retirement or other acquisition or sale of any shares of SkyTex's
capital stock except on the ordinary course of business
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and for valid consideration; or (v) any declaration, setting aside or payment of
any dividend or the making of any other distribution or payment in respect of
SkyTex's capital stock.
4.10.3. Sale or Pledge of Assets; Incurring of Indebtedness. Since
September 30, 1998, (i) there has not occurred any sale or lease of capital
assets of SkyTex with an original cost in excess of $10,000 for any single item;
(ii) no Lien has been imposed on any of the properties or assets of SkyTex;
(iii) no indebtedness has been incurred, assumed or guaranteed by SkyTex, except
in the ordinary course of business; or (iv) there has been no entering into or
termination by SkyTex of any material agreement, other than the Letter of Intent
and this Agreement, except in the ordinary course of business. There are no
agreements, understandings or commitments between SkyTex or Stockholders and any
person or entity with respect to any merger, consolidation or sale of
substantially all assets by SkyTex.
4.11. Assets; Encumbrances. Schedule 4.11 lists or describes: (i) all
capitalized improvements located on premises leased or owned by SkyTex; and (ii)
by location, all capitalized machinery, office equipment, furniture, fixtures,
components, tools and similar personal property owned or leased (identifying
those leased) by SkyTex which are used or useful in connection with its
business, along with a brief description of each, with items having a value of
less than $10,000 grouped together for identification. Except as set forth in
Schedule 4.11 or as reflected in the Balance Sheet, SkyTex has good and
marketable title to all property and assets, real, personal or mixed, tangible
or intangible, reflected in the Balance Sheet, free and clear of all Liens. The
tangible assets of SkyTex are in good operating condition, well-maintained, free
from any material defects, and are adequate for the operation of SkyTex's
business as presently conducted, except for technological obsolescence. Since
September 30, 1998, there has been no material damage or destruction of SkyTex's
property by fire or other casualty, whether or not covered by insurance.
4.12. Leases. All leases for any property leased by SkyTex are listed on
Schedule 4.12. With respect to such leases, (i) all are legally valid and
binding on SkyTex or as the case may be on the other parties thereto and in full
force and effect; (ii) no material event of default or event which would
constitute a material event default but for the requirement that notice be
given, a period of time elapse, or both, has occurred or is continuing; (iii)
none of the rights of SkyTex thereunder will be impaired by the execution,
delivery or performance of this Agreement; (iv) all of the rights of SkyTex
thereunder will be enforceable by SkyTex after the Closing without the consent
or agreement of any other party; (v) SkyTex has furnished or made available to
Majestic true and correct copies of all leases listed in Schedule 4.12, as
amended to date; and (vi) no offset or defense presently exists with respect to
any rents or other sums payable or to become payable by any lessee under a lease
of any property owned by SkyTex.
4.13. Agreements. SkyTex is not a party to any written or oral (i)
contract, agreement, arrangement, understanding or commitment for the future
purchase of fixed
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assets or for the future purchase of materials, supplies or equipment involving
payments by SkyTex of more than $25,000 or in excess of normal operating
requirements; (ii) indenture or other contract, agreement, arrangement,
understanding or commitment relating to the borrowing of money or to the
mortgaging, pledging or otherwise placing a Lien on any assets of SkyTex; (iii)
contract, agreement, arrangement, understanding or commitment for capital
expenditures in excess of $25,000; (iv) guaranty of any obligations, whether for
borrowed money or otherwise, or other commitment under which SkyTex is or may be
liable for the debts of others; (v) contract, agreement, arrangement,
understanding or commitment under which SkyTex is obligated to pay any broker's
fees, finder's fees or any such similar fees, to any third party for any reason;
(vi) partnership, joint venture, joint operating, joint marketing or similar
contract, agreement, arrangement, understanding or commitment; (vii) agreement
vesting a power of attorney in any third party; or (viii) any other contract,
agreement, arrangement, understanding or commitment which is material to the
business of SkyTex, and which is not otherwise set forth on any Schedule hereto.
Except as set forth in Schedule 4.13, SkyTex is not engaged in any negotiations
which, if reduced to a written contract of a type required to be disclosed
pursuant to this Section 4.13, would be required to be set forth in Schedule
4.13. With respect to the contracts, agreements, arrangements, understandings
and commitments listed in Schedule 4.13, (i) all are legally valid and binding
on SkyTex or as the case may be on the other parties thereto and in full force
and effect; (ii) no material event of default or event which would constitute a
material event of default but for the requirement that notice be given, a period
of time elapse, or both has occurred or is continuing; (iii) none of the rights
of SkyTex thereunder will be impaired by the execution, delivery or performance
of this Agreement; (iv) all of the rights of SkyTex thereunder will be
enforceable by SkyTex after the Closing Date without the consent or agreement of
any other party, except as disclosed on Schedule 4.13 or 3.5; and (v) SkyTex has
furnished or made available to Majestic true and correct copies of all written
agreements and other documents listed in Schedule 4.13, as amended to date.
4.14. Equity Investments. Schedule 4.14 lists all equity and proprietary
holdings in any corporation, association, trust, partnership or other entity
including, but not limited to, stocks, bonds, negotiable instruments, other
interests currently owned by or held in the name of SkyTex.
4.15. Burdensome Restrictions. SkyTex is not (i) obligated under any
contract or agreement not a part of or described in a Schedule to this Agreement
or (ii) subject to any commitment, charter or other corporate restriction which
materially and adversely affects, or is expected by Stockholders in the future
materially and adversely to affect, its business, properties, assets, prospects
or condition (financial or otherwise).
4.16. Intellectual Property Rights. Except in each case as set forth in
Schedule 4.16:
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(a) SkyTex owns, possesses, or has the right to use all Intellectual
Property Rights (as hereinafter defined) necessary or required for the conduct
of their business as presently conducted or as currently proposed to be
conducted in the future, including, but not limited to, those Intellectual
Property Rights identified in said Schedule 4.16;
(b) no royalties or other amounts are payable by SkyTex to other
persons by reason of the ownership or use of Intellectual Property Rights except
as set forth in any licenses therefor; and
(c) (i) no product or service marketed or sold or currently proposed
to be marketed or sold in the future by SkyTex violates or will violate any
license or infringes or will infringe any Intellectual Property Rights of
others, (ii) SkyTex has not received any notice that any of their Intellectual
Property Rights or the operation or currently proposed operation of SkyTex's
businesses conflicts or will conflict with Intellectual Property Rights of
others, and (iii) there is not any reasonable basis to believe that any such
violation, infringement or conflict will or may exist.
(d) SkyTex is not a party or subject to any contract or agreement
which currently requires, or upon the passage of time or occurrence of an event
or contingency (whether of default or otherwise) will require, the conveyance
of, or disclosure of secret processes or formulae related to, any Intellectual
Property Right necessary or required for the conduct of its business.
As used herein, the term "Intellectual Property Rights" means all
licenses, patents, trademarks, service marks, trade names, copyrights,
inventions, trade secrets, customer lists, proprietary processes and formulae,
applications for patents, trademarks and copyrights, and other industrial and
intellectual property rights.
4.17. Books of Account; Returns and Reports. The books of account of
SkyTex fairly and reflect all of SkyTex's items of income and expense, and all
assets and liabilities and accruals, capital and surplus, and are prepared and
maintained in form and substance adequate for preparing audited financial
statements, in accordance with generally accepted accounting principles
consistently applied. SkyTex has filed all reports and returns required by any
law or regulation to be filed for SkyTex, and has duly paid or accrued on its
books of account all applicable duties and charges due (or assessed against
them) pursuant to such reports. There has been no material transaction with
respect to the business or operations of SkyTex which is not fully described in
such books of account, herein or on the schedules hereto.
4.18. No Defaults. SkyTex is not in violation or default (i) under its
Articles of Incorporation or its By-Laws, (ii) under any note, indenture,
mortgage, lease, agreement, franchise agreement, contract, purchase order or
other instrument or document to which SkyTex is a party or by which it or any of
its assets is bound or affected or (iii) with respect to any order, writ, law,
regulation, statute, rule, injunction or decree of any court or any Federal,
state, local or other governmental agency or instrumentality. There exists no
condition, event or act which, with or without the
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passage of time or the giving of notice or both, could conflict with or result
in any breach of any of the terms, conditions or provisions of, or constitute a
default (or give rise to any right of termination, cancellation or acceleration)
under, or result in the creation of any Lien upon any of the assets of SkyTex
under any note, indenture, mortgage, lease, agreement, contract, purchase order
or other instrument or document or order, writ, injunction or decree.
4.19. Tax Returns. The provisions for taxes reflected in the Balance Sheet
is sufficient for the payment of all unpaid Fees, Taxes and Other Charges of
SkyTex, whether or not disputed, which were then, are or may become payable by
SkyTex at any time as a result of events occurring on or before the Balance
Sheet Date. SkyTex has timely and duly filed all United States Federal, state
and local and non-United States tax returns which are required to be filed and
have paid, or in its books made provision for the payment of, all Fees, Taxes
and Other Charges which said returns disclose as having become due and payable
or which have become due and payable pursuant to any assessment received. The
last year for which the United States Internal Revenue Service has completed its
formal audit and review of the United States income tax returns of the Company
is the year ended December 31, 199_, and the results of such audit are properly
reflected in the financial statements referred to in Section 4.6. SkyTex has not
received from any authority any notice of underpayment of any Fees, Taxes and
Other Charges. No administrative or judicial proceedings relating to the tax
liability of SkyTex are pending and, to the knowledge of SkyTex, the institution
of any such proceedings is not contemplated by any authority. SkyTex has not
filed any consent or agreement under Section 341(f) of the Internal Revenue Code
of 1986, as amended, nor has SkyTex waived restrictions on assessment or
collection of taxes or consented to the extension of any statute of limitations
with respect to taxation.
4.20. Insurance. Schedule 4.20 sets forth each insurance policy
(specifying the insurer, the amount of coverage, the type of insurance, the
policy number, the expiration date, the annual premium and any pending claims
thereunder) maintained by SkyTex on its properties, assets, business or
personnel, including, without limitation, product liability, fidelity, business
interruption and other liability insurance, and true and complete copies of the
most recent inspection reports, if any, received from insurance underwriters as
to the conditions of the properties and assets owned, leased, occupied and
operated by SkyTex. No notice from any insurance carrier insuring SkyTex has
been received by SkyTex claiming that SkyTex is in default with respect to any
provision contained in any insurance policy, and SkyTex has not failed to give
any notice or present any claim under any insurance policy in due and timely
fashion. The insurance maintained by SkyTex on its assets, business and
personnel is in type and amount adequate for SkyTex's business and in accordance
with the standards of the industry in which SkyTex operates, and is under
policies currently in effect and issued by insurers of recognized
responsibility.
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4.21. Compliance with Laws, etc. SkyTex is in compliance with all Federal,
state, local and foreign laws, ordinances, regulations and orders applicable to
its business, and the business of SkyTex as currently conducted and as proposed
to be conducted in the future is not and will not conflict in any way materially
adverse to SkyTex with any such law, ordinance, regulation or order. SkyTex has
obtained all Federal, state, local and foreign governmental consents,
authorizations, licenses, registrations, permits and approvals material to or
necessary for the ownership of its properties and assets and the conduct of its
business; all such licenses, registrations and permits are in full force and
effect; there have been no violations in respect of any such authorization,
license, registration or permit in any way materially adverse to SkyTex; and no
proceeding is pending or, to the Knowledge of SkyTex threatened, to revoke or
limit any such authorization, license, registration or permit.
4.22. Related Transactions. Except as set forth in Schedule 4.22, no
current or former stockholder, director, officer, employee, consultant or
independent contractor of SkyTex is currently, directly or indirectly, a party
to any transaction with SkyTex providing for the furnishing of services by or
to, the rental of real or personal property to or from, the loan of money to or
from, or otherwise requiring the payment of consideration to or from, any such
person. With respect to such agreements and transactions set forth in Schedule
4.22, each constitutes a bona fide, arms-length transaction, is commercially
reasonable, and reasonably benefits SkyTex.
4.23. Litigation. Except as disclosed orally and in Schedule 4.23, (i)
there is no Proceeding pending or threatened against or relating to SkyTex or
its properties or business or the transactions contemplated by this Agreement,
(ii) there is no basis for any Proceeding against or relating to SkyTex or its
properties or business or the transactions contemplated by this Agreement, and
(iii) SkyTex is not subject to any outstanding Judgment. There is no Proceeding
pending or threatened, which would prevent or interfere with the consummation of
the transactions contemplated by this Agreement.
4.24. Employment of Officers, Employees and Consultants.
(a) Schedule 4.24 sets forth (i) the name of, and the current annual
salary and other compensation (including benefits such as provision of an
automobile, insurance, retirement plans, etc.) or the rate of compensation
payable by SkyTex to each director, officer, employee, consultant, independent
contractor, and stockholder of SkyTex, and the profit sharing, bonus or other
form of extra compensation paid or payable by SkyTex to or for the benefit of
each such person for the year ended December 31, 1997; (ii) any increase, since
January 1, 1998, in the total compensation paid, payable or to become payable by
SkyTex to each such person, (iii) each loan or advance (other than routine
travel advances) made by SkyTex to any director, officer, employee, consultant,
independent contractor or stockholder of SkyTex, and the current status thereof,
whether or not presently outstanding and (iv) the names of all persons or
entities that have been employed by SkyTex since January 1, 1997, as
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consultants or other similar independent contractors and the amount of
compensation paid to or for the benefit of each such person or entity since such
date.
(b) No third party may assert any valid claim against SkyTex, or
with respect to (i) the continued employment by or association with SkyTex of
any of the present directors, officers or employees of, or independent
contractors to, SkyTex, or (ii) the continued use by SkyTex or any of the
present directors, officers or employees of SkyTex of any information which
SkyTex or any present director, officer or employee of SkyTex would be
prohibited from using under any prior agreements or arrangements or under any
laws, including, without limitation, laws applicable to unfair competition,
trade secrets or proprietary information.
(c) Except as set forth in Schedule 4.24, there are no grievances,
disputes or controversies pending or threatened between SkyTex and any of its or
their present or former directors, officers, employees, consultants or
independent contractors, and SkyTex is not currently subject to any claims by
present or former directors, officers, employees, consultants or independent
contractors, including, without limitation, claims for wages, salaries,
commissions or benefits.
4.25. Employment Plans. Schedule 4.25 sets forth all employment contracts,
bonus, stock option, stock purchase, profit sharing, pension, retirement,
medical insurance, disability insurance, incentive or other compensation or
retirement arrangements to which SkyTex is a party (together with and including
all SkyTex Employee Plans) and all amendments or modifications, if any, thereto
accompanied by certified copies of any agreements, including trust agreements,
embodying such contracts, plans or arrangements, together with certified copies
of any determination letters issued by the Internal Revenue Service or U.S.
Department of Labor with respect thereto. Each SkyTex Employee Plan and other
employment benefit set forth on Schedule 4.25 is in compliance with all
applicable Federal, state and local laws, ordinances and regulations.
4.26. Investment in Competing Business. No director or officer of SkyTex
owns of record or beneficially (i) any equity interest or any other financial or
profit interest in any firm, corporation, partnership, joint venture, trust,
association or other entity (a "Business Entity") which is in competition with
SkyTex with respect to any line of SkyTex's products in any market (a "Competing
Business"), or (ii) more than three per cent (3%) of the outstanding capital
stock of any Competing Business which is publicly traded on any recognized
exchange or in the over-the-counter market.
4.27. Environmental Matters. Without in any way limiting the generality
of Section 4.21, SkyTex is in substantial compliance with all applicable laws,
governmental rules, ordinances, regulations and orders pertaining to the
presence, management, release, discharge, and disposal of toxic or hazardous
waste material or substances, pollutants (including conventional pollutants) and
contaminants ("Waste"), including, without limitation, the Emergency Planning
and Community Right to Know Act (Title III of Superfund Amendments and
Reauthorization Act of 1986), 42 U.S.C.
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ss.11001 et seq., the Occupational Safety and Health Act, 29 U.S.C. ss.660, and
the standards, including hazard communications and the reporting, labeling and
document retention standards relating to hazardous substances, wastes, materials
and/or chemicals promulgated thereunder, the federal Clean Water Act, 33 U.S.C.
ss.1251 et seq., the federal Clean Air Act, 42 U.S.C. ss.7401 et seq., the
federal Resource Conservation and Recovery Act, 42 U.S.C. ss.6901 et seq., the
Comprehensive Environmental Response Compensation and Liability Act (CERCLA), 42
U.S.C. ss.9601 et seq., the Toxic Substances Control Act, 15 U.S.C. ss.2601 et
seq., as well as applicable state and local law, including state law
implementing such federal statutes, and with applicable federal, state, and
local regulations implementing any of the foregoing environmental laws.
4.28. Labor Relations. SkyTex is not a party to any collective bargaining
agreement or other labor contract. There has not been any effort to organize the
employees of SkyTex not belonging to any union, and no application or complaint
has been filed by a union or employee of SkyTex with the National Labor
Relations Board.
4.29. Minute Books, Records, etc. The minute books of SkyTex contain
complete and accurate records of all actions of the stockholders and Board of
Directors of SkyTex, including, without limitation, all committees of either.
The minute books, stock certificate books and stock ledgers of SkyTex contain no
errors or omissions, and there has been no transaction involving the business of
SkyTex which, according to accepted legal practice, should have been set forth
in such books other than those in fact set forth therein.
4.30. Authorizations and Business Licenses. All material current
authorizations or business licenses which have been obtained by or issued to the
Company are listed in Schedule 4.30 and are legal, valid and in full force and
effect.
5. COVENANTS OF MAJESTIC
Majestic covenants as follows:
5.1. Investigation. SkyTex and its authorized representatives shall have
the right at any reasonable time to investigate the financial, technical and
operating aspects of Majestic; Majestic will give to SkyTex and its authorized
representatives full access at all reasonable times to all records and all other
properties of Majestic; Majestic will permit SkyTex to make copies thereof or
extracts therefrom; and Majestic will secure for SkyTex the full cooperation of
all officers, directors and employees of Majestic in connection with such
investigation. Nothing contained in this Section shall relieve Stockholders from
any liability which may arise from any breach of warranty, covenant,
representation or agreement contained in this Agreement.
5.2. Operation in Usual Manner. Unless expressly approved in writing by
SkyTex, from and after the date of this Agreement until the Effective Time,
Majestic shall carry on its business in substantially the same manner as it has
heretofore. Without limitation of the foregoing, Majestic shall not, except in
the ordinary course of
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business: (i) borrow money or otherwise incur indebtedness; (ii) issue
additional stock or options or other rights; agreements or commitments relating
to its share capital; (iii) declare any dividends or other distributions; (iv)
enter into employment or consulting arrangements with officers or directors, (v)
grant other than normal increases in salary, bonuses and other compensation to
its officers, employees, and consultants; or (vi) enter into any contract,
agreement or undertaking or take any other action outside of the ordinary course
of business without obtaining SkyTex's prior written approval.
5.3. Inconsistent Actions. Majestic will not take any action, or omit the
taking of any action, which would result in the breach of any representation or
warranty or the violation of any covenant contained in this Agreement.
5.4. Notice of Material Contracts. From and after the date of this
Agreement until the Effective Time, Majestic shall not enter into any new
material contract, agreement, or other commitment without having first used its
best efforts to furnish SkyTex with prior notice (either written or oral)
thereof as much in advance as is reasonably possible. Such notice may be given
by telex, telecopy, or other means of telecommunications, and if given orally
shall be promptly confirmed in writing. Provision of such notice shall not
relieve Majestic of its obligations under any other provision of this Agreement,
including Section 5.3; nor upon receiving such notice shall SkyTex be deemed to
have consented to the matter that is the subject of notice.
6. COVENANTS OF SKYTEX
SkyTex covenants as follows:
6.1. Investigation. Majestic and its authorized representatives shall have
the right at any reasonable time to investigate the financial, technical and
operating aspects of SkyTex; SkyTex will give to Majestic and its authorized
representatives full access at all reasonable times to all records and all other
properties of SkyTex; SkyTex will permit Majestic to make copies thereof or
extracts therefrom; and SkyTex will secure for Majestic the full cooperation of
all officers, directors and employees of SkyTex in connection with such
investigation. Nothing contained in this Section shall relieve Stockholders from
any liability which may arise from any breach of warranty, covenant,
representation or agreement contained in this Agreement.
6.2. Operation in Usual Manner. Unless expressly approved in writing by
Majestic, from and after the date of this Agreement until the Effective Time,
SkyTex shall carry on its business in substantially the same manner as it has
heretofore. Without limitation of the foregoing, SkyTex shall not, except in the
ordinary course of business: (i) borrow money or otherwise incur indebtedness;
(ii) issue additional stock or options or other rights; agreements or
commitments relating to its share capital; (iii) declare any dividends or other
distributions; (iv) enter into employment or consulting arrangements with
officers or directors; (v) grant other than normal increases in salary, bonuses
and other compensation to its officers, employees, and consultants; or (vi)
enter into any contract, agreement or undertaking or take any other action
outside of the ordinary course of business without obtaining Majestic's prior
written approval.
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6.3. Inconsistent Actions. SkyTex will not take any action, or omit the
taking of any action, which would result in the breach of any representation or
warranty or the violation of any covenant contained in this Agreement.
6.4. Notice of Material Contracts. From and after the date of this
Agreement until the Effective Time, SkyTex shall not enter into any new material
contract, agreement, or other commitment without having first used its best
efforts to furnish Majestic with prior notice (either written or oral) thereof
as much in advance as is reasonably possible. Such notice may be given by telex,
telecopy, or other means of telecommunications, and if given orally shall be
promptly confirmed in writing. Provision of such notice shall not relieve SkyTex
of its obligations under any other provision of this Agreement, including
Section 6.3; nor upon receiving such notice shall Majestic be deemed to have
consented to the matter that is the subject of notice.
7. ADDITIONAL AGREEMENTS OF THE PARTIES
7.1. Post Merger Operations. The operations of the Surviving Corporation
shall be as follows:
7.1.1. Name Change. Following the Closing, SkyTex shall take all
appropriate actions required to amend its corporate name to be "The Majestic
Companies, Ltd.", a Nevada corporation and to change the stock ticker symbol to
a symbol reflecting the new corporate name.
7.1.2. Corporate Offers. Following the Closing, the Surviving
Corporation shall maintain its corporate offices at the current offices
maintained by Majestic in San Diego, California.
7.1.3. Officers and Directors. Following the Closing, the officers
and directors of the surviving corporation shall be as set forth in Section 2
hereof.
7.2. Stockholder Approval. SkyTex and Majestic will call and hold their
respective stockholders meetings as promptly as practicable and in accordance
with applicable laws for the purpose of voting upon the approval of the Merger.
Unless otherwise requested by applicable fiduciary duties, SkyTex and Majestic
shall recommend approval of the Merger and the transactions set forth herein to
their respective stockholders and shall use all reasonable efforts to solicit
from their respective stockholders proxies in favor of the adoption of this
Agreement and approval of the transactions set forth herein.
7.3. Tax Treatment. Each of SkyTex and Majestic shall use its best efforts
to cause the Merger to qualify, and will not take any actions which to its
knowledge could reasonably be expected to prevent the merger from qualifying, as
a reorganization under the provisions of Section 368 of the Code.
7.4. Amendment of Employment Agreement. At the Closing, the Executive
Employment Agreement by and between Majestic and Xxxxxxx X. Xxxxxxxxx shall be
assumed by SkyTex and amended or restated to provide (i) for an annual salary of
One
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Hundred Eighty Thousand Dollars ($180,000), payable in cash in an amount of
Fifteen Thousand Dollars (15,000) per month; (ii) for an automobile allowance of
One Thousand Dollars ($1,000) per month; (iii) a term of five (5) years from the
date of Closing; (iv) a key man life insurance policy of One Million Dollars
($1,000,000); and (v) the accrual of stock options for the remainder of the term
thereof (without prejudice to the stock options which accrued and vested as of
June 1, 1997 and June 1, 1998), as determined by the Board of Directors of the
surviving corporation from time to time.
7.5. Press Releases. SkyTex and Majestic will consult with each other
before issuing, and provide each other the opportunity to review, comment upon
and concur with and use reasonable efforts to agree on, any press release or
other public statements with respect to the transactions contemplated by this
Agreement, and shall not issue any such press release or make any such public
statement prior to such consultation, except as either party may determine is
required by applicable law.
8. CONDITIONS PRECEDENT TO MAJESTIC OBLIGATIONS
All obligations of Majestic under this Agreement are subject to the
fulfillment, prior to or at the Closing Date, of each of the following
conditions:
8.1. Misrepresentations. Majestic shall not have discovered any material
error, misstatement or omission in the representations and warranties made by
SkyTex in this Agreement or any default under or breach of any covenant or
agreement of SkyTex contained in this Agreement.
8.2. Representations and Warranties Accurate. All representations and
warranties of SkyTex contained in this Agreement shall have been true when made
and shall be true in all respects on and as of the Closing Date as if the
representations and warranties were made on and as of the Closing Date; and
SkyTex shall have performed and complied with all agreements, covenants and
conditions required by this Agreement to be performed or complied with prior to
or at the Closing Date.
8.3. Litigation Affecting Closing. No Proceeding against SkyTex shall be
pending or threatened before any court or any administrative or governmental
authority to restrain or prohibit or to obtain damages or other relief in
connection with the consummation of the transactions contemplated by this
Agreement, and no investigation that might eventuate in any such Proceeding
shall be pending or threatened.
8.4. Third Party Consents. All approvals, consents and releases by third
parties which are necessary and advisable for the Merger and the transactions
contemplated herein on the part of SkyTex shall have been obtained and shall be
satisfactory to Majestic in form and substance, and originals or certified
copies thereof shall have been delivered to Majestic.
8.5. Stockholder Approval. The stockholders of Majestic shall have
approved the Merger on the terms and conditions of this Agreement as required by
applicable laws.
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8.6. No Material Adverse Change. At any time after this Agreement there
shall not have occurred any material adverse change relating to SkyTex.
9. CONDITIONS PRECEDENT TO SKYTEX'S OBLIGATIONS
All obligations of SkyTex under this Agreement are subject to the
fulfillment, prior to or at the Closing Date, of each of the following
conditions:
9.1. Misrepresentations. An investigation to be made by SkyTex and its
authorized representatives does not disclose, and SkyTex has not otherwise
discovered any material error, misstatement or omission in the representations
and warranties made by Majestic or Stockholders in this Agreement or any default
under or breach of any covenant or agreement of Majestic contained in this
Agreement.
9.2. Representations and Warranties Accurate. All representations and
warranties of Majestic contained in this Agreement shall have been true when
made and shall be true in all respects on and as of the Closing Date as if the
representations and warranties were made on and as of the Closing Date; Majestic
shall have performed and complied with all agreements, covenants and conditions
required by this Agreement to be performed or complied with by it or him prior
to or at the Closing Date. and shall have caused Majestic to perform and comply
with all agreements and covenants required by this Agreement to be performed or
complied with by Majestic.
9.3. Litigation Affecting Closing. No Proceeding against Majestic shall be
pending or threatened before any court or any administrative or governmental
authority to restrain or prohibit or to obtain damages or other relief in
connection with the consummation of the transactions contemplated by this
Agreement, and no investigation that might eventuate in any such Proceeding
shall be pending or threatened.
9.4. Third Party Consents. All approvals, consents and releases by third
parties which are necessary and advisable for the Merger and the transactions
contemplated herein on the part of SkyTex shall have been obtained and shall be
satisfactory to SkyTex in form and substance, and originals or certified copies
thereof shall have been delivered to SkyTex.
9.5. Stockholder Approval. The stockholders of SkyTex shall have approved
the Merger on the terms and conditions of this Agreement as required by
applicable laws.
9.6. No Material Adverse Change. At any time after this Agreement there
shall not have occurred any material adverse change relating to Majestic.
10. BROKERS
The parties acknowledge a commission to Shogun Investments Group, Ltd.
(the "Shogun Commission") and its agents and representatives (including, but not
limited to Xxxxxx Xxxxxxx and Xxxxx Xxxxxx) of 210,000 shares of SkyTex Stock,
which commission shall be payable by SkyTex from SkyTex Stock that is issued at
the
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Closing and is restricted stock. Excepting the Shogun Commission, SkyTex and
Majestic represent to each other that all negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
SkyTex and Majestic and their respective representatives without the
intervention of any person or firm in such manner as to give rise to any valid
claim against any of the parties hereto for a brokerage commission, finder's fee
or other like payment to any person or entity.
11. INDEMNIFICATION.
11.1. Indemnification of Majestic. SkyTex agrees to indemnify and hold
harmless Majestic, and its directors, officers, shareholders, employees and
agents against and in respect of any and all loss, liability, claims, fines,
damages, expenses or deficiencies resulting (i) from any intentional
misrepresentation, breach of or any default under any representation or
warranty, or breach of or default under any covenant or agreement on the part of
SkyTex under this Agreement or any certificate or other instrument furnished or
caused to be furnished by SkyTex with respect to the transactions herein
contemplated; (ii) from any material misstatement made knowingly and
intentionally or in a reckless manner or any omission to state a material fact
made knowingly and intentionally or in a reckless manner, in any information
submitted by SkyTex or in connection with the transactions contemplated by this
Agreement; (iii) from any claim or assertion of facts by a third party; and (iv)
from any and all actions, suits, proceedings, demands, assessments, Judgments,
costs, reasonable attorneys' fees and other expenses incidental to or arising
out of or by reason of any of the foregoing, including interest on any amount
payable pursuant to any of the foregoing. If Majestic becomes aware of any facts
which could give rise to a claim under this Section 11.1, it shall give prompt
notice to SkyTex and if such facts involve the commencement of a proceeding by a
third party, Majestic shall give SkyTex an opportunity to cooperate in the
defense thereof.
11.2. Limitation of Liability. Notwithstanding Section 11.1, SkyTex shall
not be obligated to pay, in the aggregate, more than $250,000.00 in losses and
from the first anniversary of the Closing Date to the second anniversary
thereof, not more than $100,000.00 in losses. SkyTex shall have no further
liability pursuant to this Section 11 for any claims or other cause of action of
which they are not notified within two (2) years from the Closing Date.
11.3. Indemnification of SkyTex. Majestic agrees to indemnify and hold
harmless SkyTex, its directors, officers, stockholders, employees and agents
against and in respect of any and all loss, liability, claims, fines, damage,
expense or deficiency resulting (i) from any intentional misrepresentation,
breach of or default under any representation or warranty, or breach of or
default under any covenant or agreement on the part of Majestic under this
Agreement; (ii) from any material misstatement made knowingly and intentionally
or in a reckless manner, or any omission to state a material fact made knowingly
and intentionally or in a reckless manner, in any information submitted by
Majestic in connection with the transactions contemplated by
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this Agreement; (iii) from any claim or assertion of facts by a third party; and
(iv) from any and all actions, suits, proceedings, demands, assessments,
Judgments, costs, reasonable legal fees and other expenses incidental to or
arising out of or by reason of any of the foregoing, including interest on any
amount payable pursuant to any of the foregoing. If SkyTex becomes aware of any
facts which could give rise to a claim under this Section 11.3, SkyTex shall
give prompt notice to Majestic and if such facts involve the commencement of a
proceeding by a third party, SkyTex shall give Majestic an opportunity to
cooperate in the defense thereof.
11.4. Limitation of Liability. Notwithstanding Section 11.3, Majestic
shall not be obligated to pay, in the aggregate, more than $250,000.00 in losses
and from the first anniversary of the Closing Date to the second anniversary
thereof, more than $100,000.00 of losses. Majestic shall have no further
liability pursuant to this Section 11 for any claims or other cause of action of
which it is not notified within two (2) years from the Closing Date.
12. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All of the representations, warranties, covenants and agreements made in
or pursuant to this Agreement, including but not limited to the indemnification
obligations of the parties hereto to one another as provided herein, shall
survive the Closing and any investigation made by or on behalf of any party
hereto for a period of two (2) years from the Closing Date.
13. BEST EFFORTS TO OBTAIN SATISFACTION OF CONDITIONS
SkyTex and Majestic agree to use their best efforts to obtain the
satisfaction of the conditions specified in this Agreement.
14. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon, and inure to the benefit of, each of
the parties hereto and their respective heirs, legal representatives, successors
and assigns.
15. ENTIRE AGREEMENT; EFFECT ON PRIOR DOCUMENTS
This Agreement and the other documents referred to herein or delivered
pursuant hereto contain the entire Agreement among the parties with respect to
the transactions contemplated hereby and supersede all prior negotiations,
commitments, agreements and understandings among them with respect thereto.
16. NOTICES
All notices, requests, consents and other communications hereunder to any
party shall be deemed to be sufficient if contained in a written instrument
delivered in person or duly sent by facsimile, overnight courier service or
first-class registered or certified mail, postage prepaid, addressed to such
party at the address set forth below
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or such other address as may hereafter be designated in writing by the addressee
to the addressor:
(i) if to Majestic, to:
The Majestic Companies, Ltd.
0000 Xxx Xxx Xxxxx Xxxxx
0xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx,
President & Chief Executive Officer
Fax: (000) 000-0000
with a copy to:
Xxxxxx Xxxxx, LLP
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, XX
Fax: (000) 000-0000
(ii) if to SkyTex, to:
SkyTex International, Inc.
00000 Xxxxx Xxxx Xxxxxxxxx
#000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxx
Fax: (000) 000-0000
17. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original instrument, and all such counterparts
together shall constitute but one Agreement.
18. HEADINGS
The headings of the various sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
19. NOUNS AND PRONOUNS
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Whenever the context may require, any pronouns used herein shall include
the corresponding masculine, feminine or neuter forms, and the singular form of
names and pronouns shall include the plural and vice-versa.
20. GOVERNING LAW
This Agreement shall be governed by, and construed and enforced in
accordance with, the substantive laws of the State of Delaware, without regard
to its principles of conflicts of laws.
21. SEVERABILITY
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
22. AMENDMENT; WAIVER
Any provision of this Agreement may only be amended or waived if such
amendment or waiver is in writing; and, if an amendment, executed by all parties
hereto and, if a waiver, executed by the party which is waiving the term,
condition or right.
23. EXPENSES
Each party shall be responsible for its own expenses in connection with
all matters relating to the transactions contemplated hereby.
24. CERTAIN DEFINITIONS
For purposes of this Agreement:
24.1. "Closing Date" means the date determined pursuant to Section 2.1
hereof on which the Closing shall occur and the transactions contemplated by
this Agreement shall be consummated.
24.2. "Code" means the Internal Revenue Code of 1986, as amended.
24.3. "SkyTex Employee Plan" means all SkyTex Pension Plans and all SkyTex
Welfare Plans taken together.
24.4. "SkyTex Pension Plan" means any "employee pension benefit plan" as
such term is defined in Section 3 of ERISA which SkyTex has maintained, has made
contributions to, or has been obligated to make contributions to since September
1, 1974.
24.5. "SkyTex Welfare Plan" means any "employee welfare benefit plan" as
such term is defined in Section 3 of ERISA which SkyTex maintains or to which it
makes contributions.
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24.6. "Constructive Knowledge" means that a person is deemed to have
knowledge of a particular fact or circumstance if a reasonable person made aware
of all the facts and circumstances actually known to the person whose knowledge
is in question would be put on notice of the existence of such particular fact
or circumstance.
24.7. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
24.8. "Fees, Taxes and Other Charges" means all United States Federal,
state or local or non-United States fees (including, without limitation, filing,
license, recording and registration fees, taxes (including, without limitation,
income, franchise, excise, sales, use, transfer, and property (real or personal,
tangible or intangible)), assessments, levies, imposts, duties, charges or
withholdings of any nature whatsoever, together with any and all penalties,
fines, additions thereto or interest thereon.
24.9. "Intellectual Property" shall have the meaning set forth in Section
3.16.
24.10. "Judgment" means any judgment, decree, writ, injunction or order of
any court or administrative authority or any arbitration award.
24.11. "Knowledge" means both actual knowledge or Constructive Knowledge.
24.12. "Liens" means all mortgages, claims, charges, liens, encumbrances,
restrictions, options, pledges, calls, commitments, security interests,
conditional sales agreements, leases, and other restrictions of any kind and
nature.
24.13. "Proceeding" means any litigation, administrative proceeding,
investigation or arbitration.
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IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the day and year first above written.
WITNESS: THE MAJESTIC COMPANIES, LTD.
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxxxx (SEAL)
----------------------- ---------------------------------
Xxxxxxx X. Xxxxxxxxx, President &
Chief Executive Officer
SKYTEX INTERNATIONAL, INC.
/s/ Xxxx Xxxxxxx By: /s/ Xxxxx Xxxxxx (SEAL)
----------------------- ----------------------------------
Xxxxx Xxxxxx, President
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