Exhibit 2.2
AGREEMENT
AND
PLAN OF MERGER
BY AND AMONG
LOCH EXPLORATION, INC.,
(DESIGN AUTOMATION SYSTEMS, INC.)
AND
THE SHAREHOLDERS OF
XXXX SOLUTIONS, INC.
(A MISSOURI CORPORATION)
AND
XXXX SOLUTIONS, INC.
(A WHOLLY OWNED SUBSIDIARY OF LOCH EXPLORATIONS, INC.)
(A TEXAS CORPORATION)
TABLE OF CONTENTS
ARTICLES PAGE
ARTICLE I REPRESENTATIONS COVENANTS, AND WARRANTIES
OF LOCX........................................ 1
1.01 Organization.............................. 1
1.02 Capitalization............................ 2
1.03 Subsidiaries and Predecessor Corporations. 2
1.04 Financial Statements...................... 2
1.05 Information............................... 3
1.06 Options or Warrants....................... 3
1.07 Absence of Certain Changes or Events...... 3
1.08 Litigation and Proceedings................ 4
ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES
OF XXXX SHAREHOLDERS........................... 4
2.01 Ownership of XXXX Solutions, Inc. ........ 4
ARTICLE III REPRESENTATIONS, COVENANTS AND WARRANTIES
OF XXXX SOLUTIONS, INC......................... 5
3.01 Organization.............................. 5
3.02 Capitalization............................ 5
3.03 Subsidiaries and Predecessor Corporations. 5
3.04 Financial Statements...................... 5
3.05 Information............................... 7
3.06 Options or Warrants....................... 7
3.07 Absence of Certain Changes or Events...... 7
3.08 Title and Related Matters................. 8
3.09 Litigation and Proceedings................ 9
3.10 Contracts................................. 9
3.11 Material Contract Defaults................ 10
3.12 No Conflict With Other Instruments........ 10
3.13 Governmental Authorizations............... 10
3.14 Compliance With Laws and Regulations...... 10
3.15 Insurance................................. 11
3.16 Approval of Agreement..................... 11
3.17 Material Transactions or Affiliations..... 11
3.18 Labor Relations........................... 11
3.19 Incorporated Schedules.................... 12
3.20 Assistance in Registration................ 12
3.21 Year 2000................................. 13
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ARTICLES PAGE
ARTICLE IV PLAN .......................................... 13
4.01 The Agreement............................. 13
4.02 Closing................................... 14
4.03 Closing Events............................ 14
4.04 Piggyback Register........................ 14
ARTICLE V SPECIAL COVENANTS.............................. 19
5.01 Access to Properties and Records.......... 19
5.02 Delivery of Books and Records............. 19
5.03 Special Covenants and Representations
Regarding the exchanged Stock............. 19
5.04 Third Party Consents and Certificates..... 20
5.05 Actions Prior to Closing.................. 20
5.06 Indemnification........................... 21
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS
OF LOCX........................................ 22
6.01 Accuracy of Representations............... 22
6.02 Officer's Certificates.................... 22
6.03 No Material Adverse Change................ 22
6.04 Good Standing............................. 22
6.05 Other Items............................... 22
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXX
SOLUTIONS, INC. AND XXXX SOLUTIONS, INC.
SHAREHOLDERS................................... 23
7.01 Accuracy of Representations............... 23
7.02 Officer's Certificate..................... 23
7.03 No Material Adverse Change................ 23
7.04 Good Standing............................. 23
7.05 Other Items............................... 24
ARTICLE VIII TERMINATION.................................... 24
8.01 Termination............................... 24
8.02 Effect of Termination..................... 24
ARTICLE IX MISCELLANEOUS.................................. 24
9.01 Brokers................................... 24
9.02 Governing Law............................. 25
9.03 Notices................................... 25
9.04 Arbitration............................... 25
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ARTICLES PAGE
9.05 Confidentiality........................... 26
9.06 Schedules; Knowledge...................... 26
9.07 Third Party Beneficiaries................. 27
9.08 Entire Agreement.......................... 27
9.09 Survival.................................. 27
9.10 Counterparts.............................. 27
9.11 Amendment or Waiver....................... 27
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AGREEMENT
AND
PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement'), is entered into as of this 31st day of March, 1999, by and
among Loch Exploration, Inc., a Texas corporation ("LOCX"), XXXX Solutions,
Inc., a Missouri corporation ("XXXX") and Xxxx Xxxxxx and Xxxxxx X. Xxxxxxxxx
(XXXX shareholders) who are the beneficial owners of 300 shares of common stock
of XXXX ("Common Stock"), which constitutes 100% of the outstanding capital
stock of XXXX and XXXX Solutions, Inc., a Texas corporation and wholly-owned
subsidiary of LOCX ("XXXX Texas").
PREMISES
This Agreement provides for the acquisition, through a forward
triangular merger (the "Merger") by XXXX into XXXX Texas of all of the issued
and outstanding shares of XXXX solely in exchange for cash and voting shares of
LOCX, on the terms and conditions hereinafter provided, all for the purpose of
effecting a so-called "tax-free" reorganization pursuant to Section 368 of the
Internal Revenue Code of 1986, as amended.
AGREEMENT
NOW THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF LOCX
As an inducement to, and to obtain the reliance of XXXX and XXXX
shareholders, LOCX represents and warrants as follows:
SECTION 1.01. ORGANIZATION. LOCX and XXXX Texas are corporations duly
organized, validly existing, and in good standing under the laws of the State of
Texas. LOCX and XXXX Texas each have the corporate power and is duly authorized,
qualified, franchised, and licensed under all applicable laws, regulations,
ordinances, and orders of public authorities to own all of its properties and
assets and to carry on its business in all material respects as it is now being
conducted, including qualification to do business as a foreign corporation in
the states in which the character and location of the assets owned by it or the
nature of the business transacted by it requires qualification. Included in
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Schedule 1.01 are complete and correct copies of the articles of incorporation,
as amended, and bylaws of each of LOCX and XXXX Texas as in effect on the date
hereof. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not, violate any provision of these articles of
incorporation or bylaws. Each of LOCX and XXXX Texas has taken, or will take
prior to Closing, (as defined in Article IX) all action required by laws, its
articles of incorporation, its bylaws, or otherwise to authorize the execution
and delivery of this Agreement. Each of LOCX and XXXX Texas has full power,
authority, and legal right and has taken all action required by law, its
certificate of incorporation, bylaws, and otherwise to consummate the
transactions herein contemplated.
SECTION 1.02. CAPITALIZATION. The authorized capitalization of LOCX
consists of 50,000,000 shares of common stock, $0.01 par value per share, of
which 20,159,986 shares are currently issued and outstanding. A shareholder list
is set forth in Schedule 1.02(a). All issued and outstanding shares are legally
issued, fully paid, and non-assessable and not issued in violation of the
pre-emptive or other rights of any person. There are employee incentive options
outstanding as shown by Schedule 1.06.
SECTION 1.03. SUBSIDIARIES AND PREDECESSOR CORPORATIONS. Except for
XXXX Texas and except as set forth on Schedule 1.03, LOCX does not have any
subsidiaries and does not own, beneficially or of record, any shares of any
other corporation.
SECTION 1.04. FINANCIAL STATEMENTS. LOCX (i) has delivered or will
cause to be delivered to XXXX true and correct copies of Form 10-K for the
fiscal year ended December 31, 1998 ("Form 10-K") and (ii) has delivered its
Form 10-Q ("Form 10-Q"). As of their respective dates, the Form 10-K and Form
10-Q did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Form 10-K and Form 10-Q present fairly the financial condition,
assets, liabilities, and stockholders' equity of LOCX as of its date; each such
statement of income and statement of retained earnings presents fairly the
results of operations of LOCX for the period indicated and each such statement
of changes in financial position presents fairly the information purported to be
shown therein. The financial statements referred to in this Section 1.04 have
been prepared in accordance with GAAP consistently applied throughout the
periods involved, are correct and complete in all material respects and are in
accordance with the books and records of LOCX, which books and records are also
complete and correct in all material respects and have been maintained in
accordance with sound business and accounting practices.
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SECTION 1.05. INFORMATION. The information concerning LOCX set forth in
this Agreement and in Schedules attached hereto is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading.
SECTION 1.06. OPTIONS OR WARRANTS. Existing options, warrants, calls,
or commitments of any character relating to the authorized and unissued LOCX
common stock are set forth in Schedule 1.06.
SECTION 1.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except
as set forth in Schedule 1.07 since December 31, 1998:
A. There has not been (i) any material adverse change in the
business, operations, properties, assets, or condition of
LOCX; or (ii) any damage, destruction, or loss to LOCX
(whether or not covered by insurance) materially and adversely
affecting the business, operations, properties, assets, or
condition of LOCX;
B. LOCX has not (i) amended its certificate of incorporation
or bylaws; (ii) declared or made, or agreed to declare or
make, any payment of dividends or distributions of any
assets of any kind whatsoever to stockholders or
purchased or redeemed, or agreed to purchase or redeem,
any of its capital stock; (iii) waived any rights of
value which in the aggregate are extraordinary or
material considering the business of LOCX; (iv) made any
material change in its method of management, operation,
or accounting; (v) entered into any other material
transaction; (vi) made any accrual or arrangement for
payment of bonuses or special compensation of any kind or
any severance or termination pay to any present or former
officer of employee; (vii) increased the rate of
compensation payable or to become payable by it to any of
its officers or directors or any of its employees whose
monthly compensation exceeds $20,000; or (viii) made any
increase in any profit sharing, bonus, deferred
compensation, insurance, pension, retirement, or other
employee benefit plan, payment, or arrangement made to,
for, or with its officers, directors, or employees; and
C. LOCX has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or
liability (absolute or contingent); (ii) paid any material
obligation or liability (absolute or contingent) other than
current liabilities reflected in or shown on the most recent
LOCX balance sheet; (iii) sold or transferred, or agreed to
sell or transfer, any
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of its assets, properties, or rights (except assets,
properties, or rights not used or useful in its business
which, in the aggregate have a value of less than $20,000), or
canceled, or agreed to cancel, any debts or claims (except
debts or claims which in the aggregate are of a value of less
than $1,000); (iv) made or permitted any amendment or
termination of any contract, agreement, or license to which it
is a party if such amendment or termination is material,
considering the business of LOCX; or (v) issued, delivered, or
agreed to issue or deliver any stock, bonds, or other
corporate securities including debentures (whether authorized
and unissued or held as treasury stock).
SECTION 1.08. LITIGATION AND PROCEEDINGS. Except as expressly disclosed
in the Form 10-K or Form 10-Q, there is no proceeding by or before (or, to the
best knowledge of LOCX, any investigation by) any governmental or other
instrumentality or agency or before any court or other arbitrator of any kind,
pending, or, to the knowledge of LOCX, threatened against or affecting LOCX or
any of its properties or rights, except for such actions, suits, proceedings,
arbitrations or investigations that do not have and are not reasonably likely to
have, individually or in the aggregate, a material adverse effect on the
condition of LOCX. There are no proceedings pending or, to the best knowledge of
LOCX, threatened, seeking to prevent or challenging the transactions
contemplated by this agreement. LOCX is not subject to any judgment, order or
decree entered in any proceeding, that has had or could have a material adverse
effect on the condition of LOCX.
SECTION 1.09. COMPLIANCE WITH APPLICABLE SECURITY LAWS. LOCX has
complied in all material respects with all provisions of the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934 as applicable to LOCX.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF XXXX SHAREHOLDERS
As an inducement to, and to obtain reliance of LOCX, the XXXX
shareholders represent and warrant as follows:
SECTION 2.01. OWNERSHIP OF XXXX SHARES. The XXXX shareholders hereby
represent and warrant that they are legal and beneficial owners of the number of
XXXX shares set forth opposite his name on Schedule 2.01 hereof, free and clear
of any claims, charges, equities, liens, security interests, and encumbrances
whatsoever, and he has full right, power, and authority to transfer, assign,
convey, and deliver its XXXX shares; and delivery of such shares at the closing
will convey to LOCX good and marketable
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title to such shares free and clear of any claims, charges, equities, liens,
security interests, and encumbrances whatsoever, except for restrictions on
resale imposed by federal and state securities laws.
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF XXXX SOLUTIONS, INC. AND ITS SHAREHOLDER
As an inducement to, and to obtain the reliance of LOCX, XXXX and the
XXXX shareholders represent and warrant as follows:
SECTION 3.01. ORGANIZATION. XXXX is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Missouri.
XXXX has the corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, including
qualification to do business as a foreign corporation in the states in which the
character and location of the assets owned by it or the nature of the business
transacted by it requires qualification. Included in Schedule 3.01 are complete
and correct copies of the articles of incorporation, as amended, and bylaws of
XXXX as in effect on the date hereof. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof will not, violate any
provision of these articles of incorporation or bylaws. XXXX has taken the, or
will take prior to closing, all action required by laws, its articles of
incorporation, its bylaws, the rules of any applicable stock exchange, or
otherwise to authorize the execution and delivery of this Agreement. XXXX has
full power, authority, and legal right and has taken all action required by law,
its certificate of incorporation, bylaws, and otherwise to consummate the
transactions herein contemplated.
SECTION 3.02. CAPITALIZATION. The authorized capitalization of XXXX
consists of 30,000 shares of common stock, at par value of $1.00 per share, of
which 300 shares are currently issued and outstanding. All issued and
outstanding shares are legally issued, fully paid, and non-assessable and not
issued in violation of the pre-emptive or other rights of any person. There are
no options, warrants, rights or convertible securities outstanding to purchase
any capital stock of XXXX.
SECTION 3.03. SUBSIDIARIES AND PREDECESSOR CORPORATIONS. XXXX does not
have any subsidiaries and does not own, beneficially or of record, any shares of
any other corporation.
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SECTION 3.04. FINANCIAL STATEMENTS.
A. Included in Schedule 3.04 (a) is an unaudited balance sheet,
statement of operations and cash flow of XXXX for 12 months
ended December 31, 1998.
B. All such financial statements have been prepared in
accordance with generally accepted accounting principles.
The unaudited balance sheet presents fairly as of its
date the financial condition of XXXX. XXXX did not have,
as of the date of such balance sheet, except as and to
the extent reflected or reserved against therein, any
liabilities or obligations (absolute or contingent) which
should be reflected in a balance sheet or the notes
thereto, prepared in accordance with generally accepted
accounting principles, and all assets reflected therein
are properly reported and present fairly the value of the
assets of XXXX in accordance with generally accepted
accounting principles. The statements of income,
stockholders' equity, and changes in financial condition
reflect fairly the information required to be set forth
therein by generally accepted accounting principles.
X. XXXX has filed all state, federal, and local income tax
returns required to be filed by it from inception to the
date hereof. Included in Schedule 3.04(c) are true and
correct copies of the federal income tax returns of XXXX
filed since 1996. Except as set forth on Schedule
3.04(c) none of such federal income tax returns have been
examined by the Internal Revenue Service. Each of such
income tax returns reflects the taxes due for the period
covered thereby, except for amounts which, in the
aggregate, are immaterial.
X. XXXX does not owe any unpaid federal, state, county,
local, or other taxes (including any deficiencies,
interest, or penalties) through the date hereof, for
which XXXX may be liable in its own right or as a
transferee of the assets of, or as a successor to, any
other corporation or entity. Furthermore, except as
accruing in the normal course of business, XXXX does not
owe any accrued and unpaid taxes to date of this
Agreement.
E. The books and records, financial and otherwise, of XXXX are in
all material respects complete and correct and have been
maintained in accordance with good business and accounting
practices.
X. XXXX has good and valid title to its assets and, to the
best knowledge of the XXXX shareholders, except as set
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forth in Schedule 3.04(f) or the financial statements of XXXX
or the notes thereto, has no material contingent liabilities,
direct or indirect, matured or unmatured.
SECTION 3.05. INFORMATION. The information concerning XXXX set forth in
this Agreement and in Schedules attached hereto is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading.
SECTION 3.06. OPTIONS OR WARRANTS. There are no existing options,
warrants, calls, or commitments of any character relating to the authorized and
unissued XXXX common stock.
SECTION 3.07. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in this Agreement or Schedule 3.07, since February 15, 1999:
A. There has not been (i) any material adverse change in the
business, operations, properties, assets, or condition of
XXXX; or (ii) any damage, destruction, or loss to XXXX
(whether or not covered by insurance) materially and adversely
affecting the business, operations, properties, assets, or
condition of XXXX;
X. XXXX has not (i) amended its certificate of incorporation
or bylaws; (ii) declared or made, or agreed to declare or
make, any payment of dividends or distributions of any
assets of any kind whatsoever to stockholders or
purchased or redeemed, or agreed to purchase or redeem,
any of its capital stock; (iii) waived any rights of
value which in the aggregate are extraordinary or
material considering the business of XXXX; (iv) made any
material change in its method of management, operations,
or accounting; (v) entered into any other material
transaction; (vi) made any accrual or arrangement for
payment of bonuses or special compensation of any kind or
any severance or termination pay to any present or former
officer or employee; (vii) increased the rate of
compensation payable or to become payable by it to any of
its officers or directors or any of its employees whose
monthly compensation exceeds $2,000; or (viii) made any
increase in any profit sharing, bonus, deferred
compensation, insurance, pension, retirement, or other
employee benefit plan, payment, or arrangement made to,
for, or with its officers, directors, or employees;
X. XXXX has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or
liability (absolute or contingent) except
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liabilities incurred in the ordinary course of business; (ii)
paid any material obligation or liability (absolute or
contingent) other than current liabilities reflected in or
shown on the most recent XXXX balance sheet, and current
liabilities incurred since that date in the ordinary course of
business; (iii) sold or transferred, or agreed to sell or
transfer, any of its assets, properties, or rights (except
assets, properties, or rights not used or useful in its
business which, in the aggregate have a value of less than
$2,000), or canceled, or agreed to cancel, any debts or claims
(except debts or claims which in the aggregate are of a value
of less than $2,000); (iv) made or permitted any amendment or
termination of any contract, agreement, or license to which it
is a party if such amendment or termination is material,
considering the business of XXXX; or (v) issued, delivered, or
agreed to issue or deliver any stock, bonds or other corporate
securities including debentures (whether authorized or
unissued or held as treasury stock); and
D. To the best knowledge of the XXXX shareholders, XXXX has not
become subject to any law or regulation which materially and
adversely affects, or in the future could reasonably be
expected to materially and adversely affect, the business,
operations, properties, assets, or condition of XXXX.
SECTION 3.08. TITLE AND RELATED MATTERS. XXXX has good and valid title
to all of its properties, inventory, interests in properties, and assets, real
and personal, which are reflected in the most recent balance sheet or acquired
after that date (except properties, interests in properties, and assets sold or
otherwise disposed of since such date in the ordinary course of business), free
and clear of all liens, pledges, charges, or encumbrances except (a) statutory
liens or claims not yet due and payable and/or delinquent; (b) such
imperfections of title and easements as do not and will not materially detract
from or interfere with the present or proposed use of the properties subject
thereto or affected thereby or otherwise materially impair present business
operations on such properties; and (c) as described in Schedule 3.08. Except as
set forth in Schedule 3.08, XXXX owns, free and clear of any liens, claims,
encumbrances, royalty interests, or other restrictions or limitations of any
nature whatsoever, any and all products it is currently manufacturing, including
the underlying technology and data, and all procedures, techniques, marketing
plans, business plans, methods of management, or other information utilized in
connection with XXXX'x business. Except as set forth in Schedule 3.08, no third
party has any right to and XXXX has not received any notice of infringement of
or conflict with asserted rights of others with respect to any product,
technology, data,
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trade secrets, know-how, proprietary techniques, trademarks, service marks,
tradenames, or copyrights which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling, or finding, would have a materially adverse
affect on the business, operations, financial condition, income, or business
prospects of XXXX or any material portion of its properties, assets, or rights.
SECTION 3.09. LITIGATION AND PROCEEDINGS. Except as set forth in
Schedule 3.09, there are no actions, suits, proceedings, or investigations
pending or, to the knowledge of XXXX or the XXXX shareholders after reasonable
investigation, threatened by or against XXXX or affecting XXXX or its
properties, at law or in equity, before any court or other governmental agency
or instrumentality, domestic or foreign, or before any arbitrator of any kind.
XXXX or the XXXX shareholders do not have any knowledge of any default on its
part with respect to any judgment, order, writ, injunction, decree, award, rule,
or regulation of any court, arbitrator, or governmental agency or
instrumentality or of any circumstances which, after reasonable investigation,
would result in the discovery of such a default.
SECTION 3.10. CONTRACTS.
A. Schedule 3.10 lists all material contracts, agreements,
franchises, license agreements, or other commitments to which
XXXX is a party or by which it or any of its assets, products,
technology, or properties are bound;
B. All contracts, agreements, franchises, license agreements, and
other commitments to which XXXX is a party or by which its
properties are bound and which are material to the operations
of XXXX taken as a whole are valid and enforceable by XXXX in
all respects, except as limited by bankruptcy and insolvency
laws and by other laws affecting the rights of creditors
generally;
X. XXXX is not a party to or bound by, and the properties of
XXXX are not subject to: any contract, agreement, other
commitment or instrument; any charter or other corporate
restriction; or any judgment, order, writ, injunction,
decree, or award, which materially and adversely affects,
or in the future may (as far as XXXX can now foresee)
materially and adversely affect, the business,
operations, properties, assets, or condition of XXXX; and
D. Except as included or described in Schedule 3.10 or reflected
in the most recent XXXX balance sheet, XXXX is not a party to
any oral or written (i) contract for the employment of any
officer or employee which is not terminable on 30 days or less
notice; (ii) profit
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sharing, bonus, deferred compensation, stock option, severance
pay, pension benefit or retirement plan, agreement, or
arrangement covered by Title IV of the Employee Retirement
Income Security Act, as amended; (iii) agreement, contract, or
indenture relating to the borrowing of money; (iv) guaranty of
any obligation, other than one on which XXXX is a primary
obligor, of the borrowing of money or otherwise, excluding
endorsements made for collection and other guaranties of
obligations, which in the aggregate do not exceed more than
one year or providing for payments in excess of $10,000 in the
aggregate; (vi) collective bargaining agreement; (vii)
agreement with any present or former officer or director of
XXXX or (viii) contract, agreement, or other commitment
involving payments by it of more than $10,000 in the
aggregate.
SECTION 3.11. MATERIAL CONTRACT DEFAULTS. Except as set forth in
Schedule 3.11, XXXX is not in default in any material respect under the terms of
any outstanding contract, agreement, lease, or other commitment which is
material to the business, operations, properties, assets, or condition of XXXX
and there is no event of default in any material respect under any such
contract, agreement, lease, or other commitment in respect of which XXXX or the
XXXX shareholders have not taken adequate steps to prevent such a default from
occurring.
SECTION 3.12. NO CONFLICT WITH OTHER INSTRUMENTS. Except as set forth
in Schedule 3.12, the execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in the breach of any
term or provision of, or constitute an event of default under, any material
indenture, mortgage, deed of trust, or other material contract, agreement, or
instrument to which XXXX is a party or to which any of its properties or
operations are subject.
SECTION 3.13. GOVERNMENTAL AUTHORIZATIONS. Set forth in Schedule 3.13
is a description of all licenses, franchises, permits, and other governmental
authorizations that are legally required to enable it to conduct its business in
all material respects as conducted on the date hereof. Except for compliance
with federal and state securities and corporation laws, as hereinafter provided,
no authorization, approval, consent, or order of, or registration, declaration,
or filing with, any court or other governmental body is required in connection
with the execution and delivery by XXXX of this Agreement and the consummation
by XXXX of the transactions contemplated hereby.
SECTION 3.14. COMPLIANCE WITH LAWS AND REGULATIONS. Except as set forth
in Schedule 3.14, XXXX has complied with all applicable statutes and regulations
of any federal, state, or other
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governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets, or condition of XXXX or except to the extent that noncompliance would
not result in the incurrence of any material liability for XXXX.
SECTION 3.15. INSURANCE. All the insurable properties of XXXX are
insured in their full replacement value against all risks customarily insured
against by persons operating similar properties in localities where such
properties are located and under valid and enforceable policies by insurers of
recognized responsibility. Such policy or policies containing substantially
equivalent coverage will be outstanding on the date of consummation of the
transactions contemplated by this Agreement. Set forth on Schedule 3.15 is a
list of all policies or binders of fire, liability, product liability, worker's
compensation, vehicular or other insurance held by or on behalf of XXXX
(specifying for each such policy the insurer, the policy number or covering note
number with respect to binders, and each pending claim thereunder, if any, and
setting forth the aggregate amount paid out under each policy through the date
hereof.
SECTION 3.16. APPROVAL OF AGREEMENT. The board of directors and
shareholders of XXXX have authorized the execution and delivery of this
Agreement and have approved the transactions contemplated hereby. A copy of the
board of directors and shareholders minutes are attached as Schedule 3.16.
SECTION 3.17. MATERIAL TRANSACTIONS OR AFFILIATIONS. Set forth in
Schedule 3.17 is a description of every material contract, agreement, or
arrangement between XXXX and any predecessor and any person who was at the time
of such contract, agreement or arrangement an officer, director, or person
owning of record, or known by XXXX or XXXX shareholders who own beneficially, 5%
or more of the issued and outstanding common stock of XXXX and which is to be
performed in whole or in part after the date hereof or which was entered into
not more than three years prior to the date hereof. In all of such transactions,
the amount paid or received, whether in cash, in services, or in kind, is, had
been during the full term thereof, and is required to be during the unexpired
portion of the term thereof, no less favorable to XXXX than terms available from
otherwise unrelated parties in arm's length transactions. Except as disclosed in
Schedule 3.17 or otherwise disclosed herein, no officer, director, or 5%
shareholder of XXXX has, or has had since inception of XXXX, any interest,
direct or indirect, in any material transaction with XXXX. There are no
commitments by XXXX, whether written or oral, to lend any funds to, borrow any
money from, or enter into any other material transaction with, any such
affiliated person.
- 11 -
SECTION 3.18. LABOR RELATIONS. XXXX has not had a work stoppage
resulting from labor problems. To the knowledge of XXXX and the XXXX
shareholders, no union or other collective bargaining organization is organizing
or attempting to organize any employee of XXXX.
SECTION 3.19. XXXX SCHEDULES. XXXX has delivered to LOCX as part of
this Agreement the following additional schedules, all certified by the chief
executive officer of XXXX as complete, true, and correct:
A. Schedule 3.19(a) containing a description of all real property
owned by XXXX together with a description of every mortgage,
deed of trust, pledge, lien, agreement, encumbrance, claim, or
equity interest of any nature whatsoever in such real
property;
B. Schedule 3.19(b) listing the accounts receivable and
notes and other obligations receivable of XXXX as of
December 31, 1998, or that arose thereafter other than in
the ordinary course of business of XXXX, indicating the
debtor and amount, and classifying the accounts to show
in reasonable detail the length of time, if any, overdue,
and stating the nature and amount of any refunds, set
offs, reimbursements, discounts, or other adjustments
which are in the aggregate material and due to or claimed
by such creditor; and
C. Schedule 3.19(c) listing the accounts payable and notes
and other obligations payable of XXXX as of December 31,
1998, or that arose thereafter other than in the ordinary
course of the business of XXXX, indicating the creditor
and amount, classifying the accounts to show in
reasonable detail the length of time, if any, overdue,
and stating the nature and amount of any refunds, set-
offs, reimbursements, discounts, or other adjustments
which in the aggregate are material and due or payable
to XXXX respecting such obligations.
SECTION 3.20. ASSISTANCE IN REGISTRATION. XXXX and the shareholders of
XXXX represent and warrant that they will execute all additional instruments and
do all things reasonably requested by LOCX in order to assist LOCX in the
registration under the Securities Act of 1933. LOCX is registering the Shares
which are being distributed to LOCX shareholders as of December 2, 1998. LOCX
agrees to provide the Holder with respect to the resale of the Shares and any
other securities issued or issuable at any time or from time to time in respect
of the Shares upon a stock split, stock dividend, recapitalization or other
similar event involving LOCX (collectively, the "Securities") unlimited rights
to register the resale under the Securities Act of 1933, as amended
- 12 -
("Securities Act") on a "piggyback" basis in a firm commitment underwritten
offering of LOCX securities, subject to the provisions of this Agreement.
SECTION 3.21. YEAR 2000. Year 2000 defects resulted from computer
programs being written using two digits rather than four to define the
applicable year. XXXX and the shareholders of XXXX represent and warrant that
XXXX'x operation systems are free from Year 2000 defects, or that if such
defects exist the cost of repair would not have a material adverse effect on the
financial condition of XXXX.
ARTICLE IV
PLAN OF MERGER
SECTION 4.01. THE MERGER.
A. Subject to the provisions of this Agreement, XXXX shall
be merged with and into XXXX Texas in accordance with the
provisions of the Texas Business Corporation Act and the
Missouri General and Business Corporation Act
(collectively, the "Merger Law"), whereupon the separate
existence of XXXX shall cease and XXXX Texas shall be the
surviving corporation (XXXX and XXXX Texas are sometimes
herein referred to as the "Constituent Companies" and
XXXX Texas after the Merger is sometimes herein referred
to as the "Surviving Company".
B. As soon as practicable after satisfaction or, to the
extent permitted hereunder, waiver of all conditions to
the Closing, the Constituent Companies shall execute and
file Articles of Merger, prepared by counsel to LOCX in
a form reasonably acceptable to counsel to XXXX (the
"Articles of Merger"), with both the Secretary of State
of the State of Texas and the Secretary of State of the
State of Missouri in accordance with the Merger Law, and
shall otherwise make all other filings or recordings
required by the Merger Law in connection with the Merger.
The Merger shall become effective at such date and time
as the Articles of Merger is duly filed with, and
accepted by, the Secretary of State of both the State of
Texas and the State of Missouri (the "Effective Time").
C. At the Effective Time, the separate existence of XXXX shall
cease and XXXX shall be merged with and into XXXX Texas and
XXXX Texas shall be the surviving Company.
D. From and after the Effective Time: (i) the Articles of
Incorporation of the Surviving Company shall be the Articles
of Incorporation of XXXX Texas; (ii) the Bylaws
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of XXXX Texas, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Company, until
thereafter amended in accordance with applicable law; (iii)
the directors of XXXX Texas at the Effective Time shall become
the directors of the Surviving Company, until their respective
successors are duly elected or appointed and qualified in
accordance with applicable law; and (iv) the officers of XXXX
Texas at the Effective Time shall become the initial officers
of the Surviving Company, to serve at the pleasure of the
board of directors of the Surviving Company.
E. At the Effective Time by virtue of the Merger and the
applicable provisions of the Merger Law and without any
further action on the part of the Constituent Companies or on
the part of the XXXX shareholders.
(1) each share of common stock of XXXX Texas
outstanding immediately prior to the Effective Time
shall, automatically and without any action on the
part of the holder thereof, be converted into one
share of common stock of the Surviving Company; and
(2) all of the XXXX Common Stock shall, automatically
and without any action on the part of the XXXX
Shareholders, cease to be outstanding and shall be
converted into the right to receive the merger
consideration set forth on Schedule 4.01 (the "Merger
Consideration"). All of the XXXX Common Stock, when
so converted, shall no longer be outstanding and
shall automatically be canceled and retired and shall
cease to exist, and the XXXX Shareholders shall cease
to have any rights with respect thereto, except the
right to receive the Merger Consideration.
SECTION 4.02. CLOSING. The closing ("Closing") of the transactions
contemplated by this Agreement shall be close of business on the 31st day of
March, 1999.
SECTION 4.03. CLOSING EVENTS. At the Closing, each of the respective
parties hereto shall authorize the filing of the Articles of Merger, as provided
in Section 4.01, and shall execute, acknowledge, and deliver (or shall cause to
be executed, acknowledged, and delivered) any and all certificates, schedules,
agreements, resolutions, or other instruments required by this Agreement to be
so delivered at or prior to the Closing, together with such other items as may
be reasonably requested by the parties hereto and their respective legal counsel
in order to effectuate or evidence the transactions contemplated hereby.
- 14 -
SECTION 4.04. PIGGYBACK REGISTRATION RIGHTS. With respect to Xxxx
Xxxxxx and Xxx Xxxxxxxxx'x ("Holder") right to Piggyback on a firm commitment
underwriting of the LOCX securities pursuant to Section 3.20, the parties agree
as follows:
A. (1) LOCX will (i) promptly give to the Holder written
notice of any registration relating to a firm commitment
public offering of LOCX securities; and (ii) include in
such registration (and related qualification under blue
sky laws or other compliance, unless such expense or
terms of such qualification is unreasonable in comparison
to the number of securities to be registered in such
jurisdiction, as determined in the sole discretion of
LOCX), and in the underwriting involved therein, all the
Securities specified in Holder's written request or
requests, herein within 30 days after the date of such
written notice from LOCX.
(2) The right of Holder to registration shall be conditioned
upon Holder's participation in such underwriting, and the
inclusion of the Securities in the underwriting shall be
limited to the extent provided herein. The Holder and all
other holders proposing to distribute their securities through
such underwriting shall (together with LOCX and the other
holders distributing their securities through such
underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such
underwriting by LOCX. Notwithstanding any other provision of
this Agreement, if the managing underwriter determines that
marketing factors require a limitation of the number of shares
to be underwritten, the managing underwriter may limit some or
all of the Securities that may be included in the registration
and underwriting as follows: the number of Securities that may
be included in the registration and underwriting by the Holder
shall be determined by multiplying the number of shares of
Securities of all selling shareholders of LOCX which the
managing underwriter is willing to include in such
registration and underwriting, times a fraction, the numerator
of which is the number of Securities requested to be included
in such registration and underwriting by the Holder, and the
denominator of which is the total number of Securities which
all selling shareholders of LOCX have requested to have
included in such registration and underwriting. To facilitate
the allocation of shares in accordance with the above
provisions, LOCX may round the number of shares allocable to
any such person to the nearest 100 shares. If the Holder
disapproves of the terms of any such underwriting it may elect
to withdraw therefrom by written notice to LOCX and the
managing
- 15 -
underwriter, delivered not less than seven days before the
effective date. Any securities withdrawn from such
underwriting by the Holder shall be withdrawn from such
registration, and shall not be transferred in a public
distribution prior to 120 days after the effective date of the
registration statement relating thereto, or such other shorter
period of time as the underwriters may require.
B. REGISTRATION PROCEDURE. With respect to each Registration
Right, the following provisions shall apply:
(1) The Holder shall be obligated to furnish to LOCX and the
underwriters (if any) such information regarding the
Securities and the proposed manner of distribution of the
Securities as LOCX and the underwriters (if any) may request
in writing and as shall be required in connection with any
registration, qualification or compliance referred to herein
and shall otherwise cooperate with LOCX and the underwriters
(if any) in connection with such registration, qualification
or compliance.
(2) With a view to making available the benefits of certain
rules and regulations of the Commission which may at any time
permit the sale of the Restricted Securities (used herein as
defined in Rule 144 under the Securities Act) to the public
without registration, LOCX agrees to use its best lawful
efforts to:
(a) Make and keep public information available, as
those terms are understood and defined in Rule 144
under the Securities Act, at all times during which
LOCX is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended
("Exchange Act");
(b) File with the Commission in a timely manner all
reports and other documents required of LOCX under
the Securities Act and the Exchange Act (at all times
during which LOCX is subject to such reporting
requirements); and
(c) Remove all restrictive legends and stop transfer
orders applicable to any shares to be sold under Rule
144.
(3) All expenses (except for costs of any interim audit
required by underwriters, any underwriting and selling
discounts and commissions and legal fees for Holder's
attorneys) of any registrations permitted pursuant to this
Agreement and of all other offerings by LOCX
- 16 -
(including, but not limited to, the expenses of any
qualifications under the blue-sky or other state securities
laws and compliance with governmental requirements of
preparing and filing any post-effective amendments required
for the lawful distribution of the Securities to the public in
connection with such registration, of supplying prospectuses,
offering circulars or other documents) will be paid by LOCX.
(4) In connection with the preparation and filing of a
registration statement under the Securities Act pursuant to
this Agreement, LOCX will give the Holder, its counsel and
accountants, the opportunity to participate in the preparation
of such registration statement, each prospectus included
therein or filed with the Commission, and each amendment
thereof or supplement thereto, and will give each of them such
access to its books and records and such opportunities to
discuss the business of LOCX with its officers and the
independent public accountants who have certified its
financial statements as shall be necessary to conduct a
reasonable investigation within the meaning of the Securities
Act.
C. INDEMNIFICATION BY LOCX. (1) In the event of any registration
of the Securities of LOCX under the Securities Act, LOCX
agrees to indemnify and hold harmless the Holder and each
other person who participates as an underwriter in the
offering or sale of such securities against any and all
claims, demands, losses, costs, expenses, obligations,
liabilities, joint or several, damages, recoveries and
deficiencies, including interest, penalties and attorneys'
fees (collectively, "Claims"), to which the Holder or
underwriter may become subject under the Securities Act or
otherwise, insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out
of or are based on any untrue statement or alleged untrue
statement of any material fact contained in any registration
statement under which Holder's Securities were registered
under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and LOCX will reimburse the Holders and each such
underwriter for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending
any such Claim (or action or proceeding in respect thereof);
provided that LOCX shall not be liable in any such case to the
extent that any
- 17 -
such Claim (or action or proceeding in respect thereof) or
expense arises out of or is based on an untrue statement or
alleged untrue statement or omission or alleged omission made
in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance on and in conformity with written
information furnished to LOCX through an instrument duly
executed by the Holders specifically stating that it is for
use in the preparation thereof. Such indemnity shall remain in
full force and effect regardless of any investigation made by
or on behalf of the Holders or any such underwriter and shall
survive the transfer of the Securities by the Holder.
(2) INDEMNIFICATION BY THE HOLDER. LOCX may require, as a
condition to including the Securities in any registration
statement filed pursuant to this Agreement, that LOCX shall
have received an undertaking satisfactory to it from the
Holder, to indemnify and hold harmless (in the same manner and
to the same extent as set forth in Section 2.1) LOCX, each
director of LOCX, each officer of LOCX and each other person,
if any, who controls LOCX, within the meaning of the
Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such
registration statement, any preliminary prospectus contained
therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission
was made in reliance on and in conformity with written
information furnished to LOCX through an instrument duly
executed by the Holder specifically stating that it is for use
in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement. Notwithstanding the foregoing, the maximum
liability hereunder which any holder shall be required to
suffer shall be limited to the net proceeds to such Holder
from the Shares sold by such Holder in the offering. Such
indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of LOCX or any such
director, officer or controlling person and shall survive the
transfer of the Securities by the Holder.
(3) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party of notice of the commencement of any action
or proceeding involving a Claim referred to in this Article
Two, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give
written notice to the latter of the
- 18 -
commencement of such action, provided that the failure of any
indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this
Article Two, except to the extent that the indemnifying party
is actually prejudiced by such failure to give notice. In case
any such action is brought against an indemnifying party,
unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying
parties may exist in respect of such Claim, the indemnifying
party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified
party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party
shall, without the consent of the indemnified party, consent
to the entry of any judgment or enter into any settlement that
does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such Claim.
(4) INDEMNIFICATION PAYMENTS. The indemnification required by
this Article shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as
and when bills are received or expense, loss, damage or
liability is incurred.
ARTICLE V
SPECIAL COVENANTS
SECTION 5.01. ACCESS TO PROPERTIES AND RECORDS. LOCX and XXXX will each
afford to the officers and authorized representatives of the other full access
to the properties, books, and records of each other as the case may be, in order
that each may have full opportunity to make such reasonable investigation as it
shall desire to make of the affairs of the other, and each will furnish the
other with such additional financial and operating data and other information as
to the business and properties of each other, as the case may be, as the other
shall from time to time reasonably request.
- 19 -
SECTION 5.02. DELIVERY OF BOOKS AND RECORDS. At the closing, XXXX shall
deliver to LOCX the originals of the corporate minute books, books of account,
contracts, records, and all other books or documents.
SECTION 5.03. SPECIAL COVENANTS AND REPRESENTATIONS REGARDING THE
EXCHANGED STOCK. The consummation of this Agreement and the transactions herein
contemplated, including the issuance of the exchanged LOCX stock to the
shareholders of XXXX as contemplated hereby constitutes the offer and sale of
securities under the Securities Act and applicable state statutes. Such
transaction shall be consummated in reliance on exemptions from the registration
and prospectus delivery requirements of such statutes which depend, inter alia,
upon the circumstances under which the XXXX shareholders acquired such
securities. In connection with reliance upon exemptions from the registration
and prospectus delivery requirements for such transactions, at the Closing the
XXXX shareholders shall deliver to LOCX letters of representation in the form
attached hereto as Schedule 5.03.
SECTION 5.04. THIRD PARTY CONSENTS AND CERTIFICATES. LOCX and XXXX
agree to cooperate with each other in order to obtain any required third party
consents to this Agreement and the transactions herein and therein contemplated.
SECTION 5.05. ACTIONS PRIOR TO CLOSING.
A. From and after the date of this Agreement until the Closing
Date and except as set forth in the Agreement or Schedules
attached hereto or as permitted or contemplated by this
Agreement, LOCX and XXXX respectively, will each:
(i) carry on its business in substantially the same manner as
it has heretofore;
(ii) maintain and keep its properties in states of good repair and
condition as at present, except for depreciation due to
ordinary wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligation under
material contracts, leases, and instruments relating to or
affecting its assets, properties, and business;
(v) use its best efforts to maintain and preserve its
business organization intact, to retain its key
- 20 -
employees, and to maintain its relationship with its
material suppliers and customers; and
(vi) fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal and state
laws and all rules, regulations, and orders imposed by federal
or state governmental authorities.
B. From and after the date of this Agreement until the Closing
Date, neither XXXX nor LOCX will:
(i) make any change in their articles of incorporation
(except as provided for in Section 5.01) or bylaws;
(ii) take any action described in Section 1.07 in the case of LOCX
or Section 3.07 in the case of XXXX (all except as permitted
therein or as disclosed in the applicable party's schedules);
or
(iii) enter into or amend any contract, agreement, or other
instrument of any of the types described in such party's
schedules, except that a party may enter into or amend any
contract, agreement, or other instrument in the ordinary
course of business involving the sale of goods or services.
SECTION 5.06. INDEMNIFICATION.
X. XXXX and the XXXX shareholders hereby agree to indemnify
LOCX and each of the officers, agents and directors of
LOCX as of the date of execution of this Agreement
against any loss, liability, claim, damage, or expense
(including, but not limited to, any and all expense
whatsoever reasonably incurred in investigating,
preparing, or defending against any litigation, commenced
or threatened, or any claim whatsoever), to which it or
they may become subject arising out of or based on any
breach of any representation or warranty of XXXX or the
XXXX shareholders made in this Agreement. The
indemnification provided for in this paragraph shall
survive the Closing and consummation of the transactions
contemplated hereby for a period of two (2) years.
B. LOCX hereby agrees to indemnify XXXX and each of the
officers, agents and directors of XXXX as of the date of
execution of this Agreement against any loss, liability,
claim, damage, or expense (including, but not limited to,
any and all expense whatsoever reasonably incurred in
investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim
whatsoever), to which it or they may become subject
- 21 -
arising out of or based on any breach of any representation or
warranty of LOCX under this Agreement. The indemnification
provided for in this paragraph shall survive the Closing and
consummation of the transactions contemplated hereby for a
period of two (2) years.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF LOCX
The obligations of LOCX under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
SECTION 6.01. ACCURACY OF REPRESENTATIONS. The representations and
warranties made by XXXX and the XXXX shareholders in this Agreement were true
when made and shall be true at the Closing Date with the same force and effect
as if such representations and warranties were made at and as of the Closing
Date (except for changes therein permitted by this Agreement), and XXXX and the
XXXX shareholders shall have performed or complied with all covenants and
conditions required by this Agreement to be performed or complied with by XXXX
and the XXXX shareholders prior to or at the Closing. LOCX shall be furnished
with a certificate, signed by a duly authorized officer of XXXX and dated the
Closing Date, to the foregoing effect.
SECTION 6.02. OFFICER'S CERTIFICATES. LOCX shall have been furnished
with a certificate dated the Closing Date and signed by a duly authorized
officer of XXXX to the effect that no litigation, proceeding, investigation, or
inquiry is pending or, to the best knowledge of XXXX threatened, which might
result in an action to enjoin or prevent the consummation of the transactions
contemplated by this Agreement.
SECTION 6.03. NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business, or operations of XXXX nor shall any event have occurred
which, with the lapse of time or the giving of notice, may cause or create any
material adverse change in the financial condition, business, or operations of
XXXX.
SECTION 6.04. GOOD STANDING. LOCX shall have received a certificate of
good standing from the Secretary of State of the State of Texas or other
appropriate office, dated as of a date within ten days prior to the Closing Date
certifying that XXXX is in good standing as a corporation in the State of Texas
and has filed all tax returns required to have been filed by it to date and has
paid all taxes reported as due thereon.
- 22 -
SECTION 6.05. OTHER ITEMS.
A. LOCX shall have received uniform commercial code certificates
from the appropriate state or local authority or agency for
each county and state in which any personal property of XXXX
with a value in excess of $1,000 is situated, dated as of the
Closing Date, to the effect that there are no liens on such
personal property, other than those disclosed in a schedule
attached hereto.
B. LOCX shall have received such further documents, certificates,
or instruments relating to the transactions contemplated
hereby as LOCX may reasonably request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF XXXX AND THE XXXX SHAREHOLDERS
The obligations of XXXX under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
SECTION 7.01. ACCURACY OF REPRESENTATIONS. The representations and
warranties made by LOCX in this Agreement were true when made and shall be true
as of the Closing Date (except for changes therein permitted by this Agreement)
with the same force and effect as if such representations and warranties were
made at and as of the Closing Date, and LOCX shall have performed and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by LOCX prior to or at the Closing. XXXX shall have been furnished
with a certificate, signed by a duly authorized executive officer of LOCX and
dated the Closing Date, to the foregoing effect.
SECTION 7.02. OFFICER'S CERTIFICATE. XXXX shall have been furnished
with a certificate dated the Closing Date and signed by a duly authorized
executive officer of LOCX to the effect that no litigation, proceeding,
investigation, or inquiry is pending or, to the best knowledge of LOCX
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement.
SECTION 7.03. NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business, or operations of LOCX nor shall any event have occurred
which, with the lapse of time or the giving of notice, may cause or create any
material adverse change in the financial condition, business, or operations of
LOCX.
- 23 -
SECTION 7.04. GOOD STANDING. XXXX shall have received a certificate of
good standing from the Secretary of State of the State of Texas or other
appropriate office, dated as of a date within ten days prior to the Closing Date
certifying that LOCX is in good standing as a corporation in the State of Texas
and has filed all tax returns required to have been filed by it to date and has
paid all taxes reported as due thereon.
SECTION 7.05. OTHER ITEMS.
X. XXXX shall have received uniform commercial code certificates
from the appropriate state or local authority or agency for
each county and state in which any personal property of LOCX
with a value in excess of $1,000 is situated, dated as of the
Closing Date, to the effect that there are no liens on such
personal property, other than those disclosed in a Schedule
attached hereto.
X. XXXX shall have received such further documents, certificates,
or instruments relating to the transactions contemplated
hereby as XXXX may reasonably request.
ARTICLE VIII
TERMINATION
SECTION 8.01. TERMINATION. Certain of the parties may
terminate this Agreement as provided below:
A. LOCX and XXXX may terminate this Agreement by mutual
written consent at any time prior to Closing;
B. LOCX may terminate this Agreement by giving written
notice to XXXX at any time prior to Closing in the event
XXXX is in breach, and XXXX may terminate this Agreement
by giving written notice to LOCX at any time prior to
Closing in the event LOCX is in breach, of any material
representation, warranty, or covenant contained in this
Agreement in any material respect; provided, however, no
party may terminate for such breach by the other party if
the terminating party is itself in breach hereunder;
X. XXXX may terminate this Agreement by giving written notice to
LOCX in the event the Closing has not taken place within sixty
(60) days from the date hereof.
SECTION 8.02. EFFECT OF TERMINATION. If any party terminates
this Agreement in accordance with Section 8.01, all obligations of
the parties hereunder shall terminate without any liability of any
- 24 -
party to the other party (except for any liability of any party then in breach).
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. BROKERS. LOCX and XXXX agree that there were no finders
or brokers involved in bringing the parties together or who were instrumental in
the negotiation, execution, or consummation of this Agreement other than as set
forth in Schedule 9.01. At the Closing, XXXX Texas shall satisfy all such fees
and expenses of Xxxxxxxx Xxxxx in respect to its representation of XXXX and the
XXXX shareholders. XXXX and LOCX each agree to indemnify the other against any
claim by any third person other than those described above for any commission,
brokerage, or finders' fee arising from the trans-actions contemplated hereby
based on any alleged agreement or understanding between the indemnifying party
and such third person, whether express or implied from the actions of the
indemnifying party other than as shown by Schedule 9.01.
SECTION 9.02. GOVERNING LAW. This Agreement shall be governed by,
enforced, and construed under and in accordance with the laws of the United
States of America and, with respect to matters of state law, with the laws of
Texas.
SECTION 9.03. NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given in personally delivered to it or
sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram addressed as follows:
If to LOCX, to: Xxxx X. Xxxx
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Xxxxxxx Xxxxxx
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
With copies to: Xxxxxx X. Xxxxxx
0000 X. Xxxx X., Xxxxx 000
Xxxxxxx, Xxxxx 00000
If to XXXX, to: Xxxx Xxxxxx
00 Xxxxxx Xxx Xxxxx
Xxxxxx, Xxxxx 00000
With copies to: Xxx Xxxxxxxxx
0000 Xxxxxx Xx.
Xx. Xxxxx, XX 00000
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or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, or
telegraphed.
SECTION 9.04. ARBITRATION.
A. Any dispute, claim or controversy arising out of or
relating to this Agreement or the interpretation or
breach hereof shall be resolved by binding arbitration
under the commercial arbitration rules of the American
Arbitration Association (the "AAA Rules") to the extent
such AAA Rules are not inconsistent with this Agreement.
Judgment upon the award of the arbitrator(s) may be
entered in any court having jurisdiction thereof or such
court may be asked to judicially confirm the award and
order its enforcement, as the case may be. The demand
for arbitration shall be made by any party hereto within
a reasonable time after the claim, dispute or other
matter in question has arisen, and in any event shall not
be made after the date when institution of legal
proceedings, based on such claim, dispute or other matter
in question, would be barred by this Agreement or the
applicable statute of limitations. The place of
arbitration shall be Houston, Texas. The arbitrator(s)
shall be instructed to render its (their) decision within
sixty (60) days after its (their) selection and to
allocate all costs and expenses of such arbitration
(including legal and accounting fees and expenses of the
respective parties) to the parties in the proportions
that reflect their relative success on the merits
(including the successful assertion of any defenses).
B. Nothing contained in this Section 9.04 shall prevent any party
hereto from seeking any equitable relief to which it would
otherwise be entitled from a court of competent jurisdiction.
SECTION 9.05. CONFIDENTIALITY. Each party hereto agrees with the other
parties that, unless and until the transactions contemplated by this Agreement
have been consummated, it and its representatives will hold in strict confidence
all data and information obtained with respect to another party or any
subsidiary thereof from any representative, officer, director, or employee, or
from any books or records or from personal inspection, or such other party, and
shall not use such data or information or disclose the same to others, except
(i) to the extent such data or information is published, is a matter of public
knowledge, or is required by law to be published; and (ii) to the extent that
such data or information must be used or disclosed in order to consummate the
transactions contemplated by this Agreement.
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SECTION 9.06. SCHEDULES; KNOWLEDGE. Each party is presumed to have full
knowledge of all information disclosed in the other party's schedules delivered
pursuant to this Agreement. Whenever any representation or warranty of LOCX
contained herein or in any other document executed and delivered in connection
herewith is based upon the knowledge of LOCX, such knowledge shall be deemed to
include (i) the best actual knowledge, information and belief of the executive
officers of LOCX and (ii) any information which any such officer would
reasonably be expected to be aware of in the prudent discharge of his duties in
the ordinary course of business (including consultation with legal counsel) on
behalf of LOCX.
Whenever any representation or warranty of XXXX contained herein or in
any other document executed and delivered in connection herewith is based upon
the knowledge of XXXX, such knowledge shall be deemed to include (i) the best
actual knowledge, information and belief of the executive officers of XXXX and
(ii) any information which any such officer would reasonably be expected to be
aware of in the prudent discharge of his duties in the ordinary course of
business (including consultation with legal counsel) on behalf of XXXX.
SECTION 9.07. THIRD PARTY BENEFICIARIES. This contract is solely
between LOCX and XXXX and the XXXX shareholders and, except as specifically
provided, no director, officer, stockholder, employee, agent, independent
contractor, or any other person or entity shall be deemed to be a third party
beneficiary of this Agreement.
SECTION 9.08. ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof, including
This Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations, or warranties, written or oral,
except as set forth herein.
SECTION 9.09. SURVIVAL. The representations, warranties, and covenants
of the respective parties shall survive the Closing Date and the consummation of
the transactions herein contemplated.
SECTION 9.10. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
SECTION 9.11. AMENDMENT OR WAIVER. Every right and remedy provided
herein shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently herewith, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a
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waiver of the same or any other default then, theretofore, or thereafter
occurring or existing. At any time prior to the Closing Date, this Agreement may
be amended by a writing signed by all parties hereto, with respect to any of the
terms contained herein, and any term or condition of this Agreement may be
waived or the time for performance hereof may be extended by a writing signed by
the party or parties for whose benefit the provision is intended.
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
as of the date first above-written.
LOCH EXPLORATION, INC.
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Xxxxxxx Xxxxxx, President
XXXX SOLUTIONS, INC.
(A MISSOURI CORPORATION)
By: /s/ Xxxx Xxxxxx
--------------------------------
Xxxx Xxxxxx, President
XXXX SOLUTIONS, INC.
(A TEXAS CORPORATION)
By: /s/ Xxxx Xxxxxx
--------------------------------
Xxxx Xxxxxx, President
XXXX SHAREHOLDERS
(A MISSOURI CORPORATION)
/s/ Xxxx Xxxxxx
--------------------------------
Xxxx Xxxxxx, Shareholder
/s/ Xxx Xxxxxxxxx
--------------------------------
Xxx Xxxxxxxxx, Shareholder
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MERGER CONSIDERATION
TO SHAREHOLDERS OF XXXX
1. $100,000.00 Cash at closing, being $50,000.00 payable to
Xxxx Xxxxxx and $50,000.00 payable to Xxxxxx X. Xxxxxxxxx.
2. $50,000.00 payable to Xxxx Xxxxxx in quarterly installments of
$12,500.00 each with the first payment ninety (90) days from
date of closing and a like payment every ninety (90) days
thereafter until paid in full.
3. $50,000.00 payable to Xxxxxx X. Xxxxxxxxx in quarterly
installments of $12,500.00 each with the first payment ninety
(90) days from date of closing and a like payment every ninety
(90) days thereafter until paid in full.
4. At closing 600,000 shares of LOCH Exploration, Inc. being
300,000 to Xxxx Xxxxxx and 300,000 to Xxxxxx X. Xxxxxxxxx in a
triangular exchange between LOCH, XXXX and a 100% owned
subsidiary of LOCH, to wit XXXX Solutions, Inc., a Texas
corporation.
5. LOCH covenants the assumption and timely payments of the
transaction fee obligation to Xxxxxxxxx Xxxxx and the bank
loan.
FURTHER AGREEMENT OF THE PARTIES
1. 100,000 shares of LOCH Stock will be distributed to key
employees of XXXX under an incentive option plan approved by
the Board of Directors of LOCH and the current shareholders of
XXXX.
2. From SQLACE gross sales revenue Xxxx Xxxxxx and Xxxxxx X
Xxxxxxxxx for a period of twenty-four (24) months, will each
receive as a royalty 20% of the gross sales revenues. The
royalty percentage will be reviewed every six (6) months
during the 24 month term by the Board of Directors of LOCH and
the current shareholders of XXXX.
Schedule 4.01
