ACQUISITION AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 8, 0000
XXXXXXX
XXXXX XXXX ENTERPRISES, LTD.
AND
ISES CORPORATION
TABLE OF CONTENTS
ARTICLE 1. The Merger 4
Section 1.1. The Merger 4
Section 1.2. Effective Time 4
Section 1.3. Closing of the Merger 4
Section 1.4. Effects of the Merger 4
Section 1.5. Board of Directors and Officers 4
Section 1.6. Conversion of Shares 5
Section 1.7. Exchange of Certificates 4
Section 1.8. Stock Options 6
Section 1.9. Taking of Necessary Action; Further Action 6
ARTICLE 2. Representations and Warranties of WREI 6
Section 2.1. Organization and Qualification 6
Section 2.2. Capitalization of WREI 7
Section 2.3.Authority Relative to this Agreement; Recommendation. 7
Section 2.4. SEC Reports; Financial Statements 8
Section 2.5. Information Supplied 8
Section 2.6. Consents and Approvals; No Violations 8
Section 2.7. No Default 9
Section 2.8. No Undisclosed Liabilities; Absence of Changes 9
Section 2.9. Litigation 9
Section 2.10. Compliance with Applicable Law 9
Section 2.11. Employee Benefit Plans; Labor Matters 10
Section 2.12. Environmental Laws and Regulations 11
Section 2.13. Tax Matters 11
Section 2.14. Title To Property 11
Section 2.15. Intellectual Property 12
Section 2.16. Insurance 12
Section 2.17. Vote Required 12
Section 2.18. Tax Treatment 12
Section 2.19. Affiliates 12
Section 2.20. Certain Business Practices 12
Section 2.21. Insider Interests 12
Section 2.22. Opinion of Financial Adviser 12
Section 2.23. Brokers 12
Section 2.24. Disclosure 13
Section 2.25. No Existing Discussion 13
Section 2.26. Material Contracts 13
ARTICLE 3. Representations and Warranties of ISES. 13
Section 3.1. Organization and Qualification 13
Section 3.2. Capitalization of ISES 14
Section 3.3.Authority Relative to this Agreement; Recommendation 14
Section 3.4. SEC Reports; Financial Statements 15
Section 3.5. Information Supplied 15
Section 3.6. Consents and Approvals; No Violations 15
Section 3.7. No Default 15
Section 3.8 No Undisclosed Liabilities; Absence of Changes 16
Section 3.9. Litigation 16
Section 3.10. Compliance with Applicable Law 16
Section 3.11. Employee Benefit Plans; Labor Matters 16
Section 3.12. Environmental Laws and Regulations 17
Section 3.13. Tax Matters 18
Section 3.14. Title to Property 18
Section 3.15. Intellectual Property 18
Section 3.16. Insurance 18
Section 3.17. Vote Required 18
Section 3.18. Tax Treatment 18
Section 3.19. Affiliates 19
Section 3.20. Certain Business Practices 19
Section 3.21. Insider Interests 19
Section 3.22. Opinion of Financial Adviser 19
Section 3.23. Brokers 19
Section 3.24. Disclosure 19
Section 3.25. No Existing Discussions 19
Section 3.26. Material Contracts 19
ARTICLE 4. Covenants 20
Section 4.1. Conduct of Business of WREI 20
Section 4.2. Conduct of Business of ISES 21
Section 4.3. Preparation of 8-K and the Proxy Statement 22
Section 4.4. Other Potential Acquirers 23
Section 4.5. Meetings of Stockholders 23
Section 4.6. OTC:BB Listing 23
Section 4.7. Access to Information 23
Section 4.8. Additional Agreements; Reasonable Efforts. 23
Section 4.9.Employee Benefits; Stock Option and Employee Purchase Plans
23
Section 4.10. Public Announcements 24
Section 4.11. Indemnification 24
Section 4.12. Notification of Certain Matters 24
ARTICLE 5. Conditions to Consummation of the Merger
Conditions to Each Party's Obligations to Effect the25
Section 5.1. Merger 25
Section 5.2. Conditions to the Obligations of WREI 25
Section 5.3. Conditions to the Obligations of ISES 25
ARTICLE 6. Termination; Amendment; Waiver 26
Section 6.1. Termination 26
Section 6.2. Effect of Termination 27
Section 6.3. Fees and Expenses 27
Section 6.4. Amendment 27
Section 6.5. Extension; Waiver 27
ARTICLE 7. Miscellaneous 27
Section 7.1. Nonsurvival of Representations and Warranties 27
Section 7.2. Entire Agreement; Assignment 27
Section 7.3. Validity 27
Section 7.4. Notices 27
Section 7.5. Governing Law 28
Section 7.6. Descriptive Headings 28
Section 7.7. Parties in Interest 28
Section 7.8. Certain Definitions 28
Section 7.9. Personal Liability 29
Section 7.10. Specific Performance 29
Section 7.11. Counterparts 29
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of
February 8, 2000, is between White Rock Enterprises, Ltd., a Nevada
corporation ("WREI"), and ISES Corporation, a Iowa corporation ("ISES").
Whereas, the Boards of Directors of WREI and ISES each have, in light of
and subject to the terms and conditions set forth herein, (i) determined that
the Merger (as defined below) is fair to their respective stockholders and in
the best interests of such stockholders and (ii) approved the Merger in
accordance with this Agreement;
Whereas, for Federal income tax purposes, it is intended that the Merger
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
Whereas, WREI and ISES desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
to prescribe various conditions to the Merger.
Now, therefore, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, WREI and ISES hereby agree as follows:
ARTICLE I
The Merger
Section 1.1. The Merger. At the Effective Time (as defined below) and
upon the terms and subject to the conditions of this Agreement and in
accordance with the General Corporation Law of the state of Nevada (the
"NGCL"), ISES shall be merged with and into WREI (as defined below) (the
''Merger`). Following the Merger, WREI shall continue as the surviving
corporation (the "Surviving Corporation"), shall continue to be governed by
the laws of the jurisdiction of its incorporation or organization and the
separate corporate existence of ISES shall cease. Prior to the Effective
Time, the parties hereto shall mutually agree as to the name of the Surviving
Corporation; however, initially the Surviving Corporation shall be named ISES
Corporation, a Nevada corporation. The Merger is intended to qualify as a
tax-free reorganization under Section 368 of the Code as relates to the non-
cash exchange of stock referenced herein.
Section 1.2. Effective Time. Subject to the terms and conditions set forth in
this Agreement, a Certificate of Merger (the "Merger Certificate") shall be
duly executed and acknowledged by each of ISES and WREI, and thereafter the
Merger Certificate reflecting the Merger shall be delivered to the Secretary
of State of the State of Nevada for filing pursuant to the NGCL on the
Closing Date (as defined in Section 1.3). The Merger shall become effective
at such time as a properly executed and certified copy of the Merger
Certificate is duly filed by the Secretary of State of the State of Nevada in
accordance with the NGCL or such later time as the parties may agree upon and
set forth in the Merger Certificate (the time at which the Merger becomes
effective shall be referred to herein as the "Effective Time").
Section 1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Article 5
(the "Closing Date"), at the offices of Sperry Young & Xxxxxxxxxx, 0000 X.
Xxxxxxxx Xx., Xxxxx 000, Xxx Xxxxx, Xxxxxx, unless another time, date or
place is agreed to in writing by the parties hereto.
Section 1.4. Effects of the Merger. The Merger shall have the effects
set forth in the NGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights,
privileges, powers of ISES shall vest in the Surviving Corporation, and all
debts, liabilities and duties of ISES shall become the debts, liabilities and
duties of the Surviving Corporation.
Section 1.5. Board of Directors and Officers of WREI. At or prior to the
Effective Time, each of ISES and WREI agrees to take such action as is
necessary (i) to cause the number of directors comprising the full Board of
Directors of WREI to be five (5) persons and (ii) to cause Xxxx Xxxxxxx, Xxxx
Xxxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxxxxx and Xxxx Xxxxx (the "ISES Designee") to
be elected as director of WREI. In addition, WREI majority stockholders of
WREI prior to the Effective Time shall take all action necessary to cause, to
the greatest extent practicable, the ISES Designee to serve on WREI's Board
of Directors. If the ISES Designee, respectively, shall decline or be unable
to serve as a director prior to the Effective Time, ISES shall nominate
another person to serve in such person's stead which such person shall be
subject to approval of the other party. From and after the Effective Time,
and until successors are duly elected or appointed and qualified in
accordance with applicable law, Xxxx Xxxxxxx shall be Chief Executive
Officer, President Chairman, Secretary, and Treasurer of WREI.
Section 1.6. Conversion of Shares.
(a) At the Effective Time, each share of common stock, no par value per
share of ISES (individually a "ISES Share" and collectively, the "ISES
Shares") issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of ISES,
WREI, or the holder thereof, be converted into and shall become fully paid
and nonassessable WREI common shares determined by dividing (i) Ten Million
(10,000,000), by (ii) the total number of shares of ISES, Two Thousand
(2,000) outstanding immediately prior to the Effective Time (such quotient,
the "Exchange Ratio"). The holder of one or more shares of ISES common stock
shall be entitled to receive in exchange therefor a number of shares of WREI
Common Stock equal to the product of (x) (the number of shares of ISES common
stock (2,000)), times (y) (the Exchange Ratio. WREI Shares and ISES Shares
are sometimes referred to collectively herein as "Shares." By way of example,
10,000,000 / 2,000 = 5,000 (the Exchange Ratio). The number of shares of ISES
common stock held by a stockholder (1,000) times the Exchange Ratio of 5000
equals 5,000,000 shares of WREI Shares to be issued.
(b) At the Effective Time, in addition to the common shares of WREI to
be issued, each share of common stock, par value $.001 per share of ISES
(individually a "ISES Share" and collectively, the "ISES Shares") issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of ISES, WREI, or the holder
thereof, be converted into and shall become fully paid and nonassessable WREI
preferred shares determined by dividing (i) Ten Thousand (10,000), by (ii)
the total number of shares of ISES, Two Thousand (2,000) outstanding
immediately prior to the Effective Time (such quotient, the "Exchange
Ratio"). The holder of one or more shares of ISES common stock shall be
entitled to receive in exchange therefor a number of shares of WREI preferred
stock equal to the product of (x) (the number of shares of ISES Common Stock
(2,000)), times (y) (the Exchange Ratio. WREI Shares and ISES Shares are
sometimes referred to collectively herein as "Shares." By way of example,
10,000/2,000 = 5 (the Exchange Ratio). The number of shares of ISES common
stock held by a stockholder (1,000) times the Exchange Ratio of 5 equals
5,000 shares of WREI preferred shares to be issued.
(b) At the Effective Time, each ISES Share held in the treasury of ISES,
by ISES immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of ISES or WREI be canceled,
retired and cease to exist and no payment shall be made with respect thereto.
Section 1.7. Exchange of Certificates.
(a) Prior to the Effective Time, WREI shall enter into an agreement
with, and shall deposit with, Sperry Young & Xxxxxxxxxx, or such other agent
or agents as may be satisfactory to WREI and ISES (the "Exchange Agent'), for
the benefit of the holders of ISES Shares, for exchange through the Exchange
Agent in accordance with this Article I: (i) certificates representing the
appropriate number of WREI Shares to be issued to holders of ISES Shares
issuable pursuant to Section 1.6 in exchange for outstanding ISES Shares.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding ISES Shares (the "Certificates") whose shares were converted into
the right to receive WREI Shares pursuant to Section 1.6: (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as ISES and WREI may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing WREI Shares. Upon surrender of a
Certificate to the Exchange Agent, together with such letter of transmittal,
duly executed, and any other required documents, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole WREI Shares and, if applicable, a check
representing the cash consideration to which such holder may be entitled on
account of the Cash Fund, which such holder has the right to receive pursuant
to the provisions of this Article I, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of ISES Shares
which are not registered in the transfer records of ISES, a certificate
representing the proper number of WREI Shares may be issued to a transferee
if the Certificate representing such ISES Shares is presented to the Exchange
Agent accompanied by all documents required by the Exchange Agent or WREI to
evidence and effect such transfer and by evidence that any applicable stock
transfer or other taxes have been paid. Until surrendered as contemplated by
this Section 1.7, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
certificate representing WREI Shares as contemplated by this Section 1.8.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to WREI Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the WREI Shares represented thereby until the holder of
record of such Certificate shall surrender such Certificate.
(d) In the event that any Certificate for ISES Shares or WREI Shares
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange therefor, upon the making of an affidavit of that fact by the holder
thereof such WREI Shares and cash in lieu of fractional WREI Shares, if any,
as may be required pursuant to this Agreement; provided, however, that WREI
or the Exchange Agent, may, in its respective discretion, require the
delivery of a suitable bond, opinion or indemnity.
(e) All WREI Shares issued upon the surrender for exchange of ISES
Shares in accordance with the terms hereof (including any cash paid pursuant
to Section 1.10 shall be deemed to have been issued in full satisfaction of
all rights pertaining to such ISES Shares. There shall be no further
registration of transfers on the stock transfer books of either of ISES or
WREI of the ISES Shares or WREI Shares which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to WREI for any reason, they shall be canceled and exchanged as
provided in this Article I.
(f) No fractional WREI Shares shall be issued in the Merger, but in lieu
thereof each holder of ISES Shares otherwise entitled to a fractional WREI
Share shall, upon surrender of its, his or her Certificate or Certificates,
be entitled to receive an additional share to round up to the nearest round
number of shares.
(g) The WREI Preferred Convertible Shares, shall be automatically
convertible into the Common Shares of WREI two years from the Closing Date,
at the rate of 1000 Common Shares for each convertible preferred share.
Section 1.8. At the Effective Time, each outstanding option to purchase
ISES Shares, if any (a "ISES Stock Option" or collectively, "ISES Stock
Options") issued pursuant to any ISES Stock Option Plan or ISES Long Term
Incentive Plan whether vested or unrested, shall be cancelled.
Section 1.9. Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, ISES or WREI reasonably determines that any deeds,
assignments, or instruments or confirmations of transfer are necessary or
desirable to carry out the purposes of this Agreement and to vest WREI with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of ISES, the officers and directors of WREI and ISES
are fully authorized in the name of their respective corporations or
otherwise to take, and will take, all such lawful and necessary or desirable
action.
ARTICLE 2
Representations and Warranties of WREI
Except as set forth on the Disclosure Schedule delivered by WREI to ISES
(the "WREI Disclosure Schedule"), WREI hereby represents and warrants to ISES
as follows:
Section 2.1. Organization and Qualification.
(a) WREI is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power and
authority would not have a Material Adverse Effect (as defined below) on
WREI. When used in connection with WREI, the term "Material Adverse Effect"
means any change or effect (i) that is or is reasonably likely to be
materially adverse to the business, results of operations, condition
(financial or otherwise) or prospects of WREI, other than any change or
effect arising out of general economic conditions unrelated to any business
in which WREI is engaged, or (ii) that may impair the ability of WREI to
perform its obligations hereunder or to consummate the transactions
contemplated hereby.
(b) WREI has heretofore delivered to ISES accurate and complete copies
of the Certificate of Incorporation and Bylaws (or similar governing
documents), as currently in effect, of WREI. Except as set forth on Schedule
2.1 of the WREI Disclosure Schedule, WREI is duly qualified or licensed and
in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing
would not have a Material Adverse Effect on WREI.
Section 2.2. Capitalization of WREI.
(a) The authorized capital stock of WREI consists of: (i) Fifty Million
(50,000,000) WREI Shares, of which, as of December 31, 1999, 4,896,000 WREI
Shares were issued and outstanding, and no WREI Shares were held in treasury.
In addition, concurrent with the Execution of the Plan of Merger, the
authorized preferred stock shall be Twenty Million (20,000,000) shares at
$.001 par value. All of the outstanding WREI Shares have been duly authorized
and validly issued, and are fully paid, nonassessable and free of preemptive
rights. Except as set forth herein, as of the date hereof, there are no
outstanding (i) shares of capital stock or other voting securities of WREI,
(ii) securities of WREI convertible into or exchangeable for shares of
capital stock or voting securities of WREI, except for the preferred shares
of WREI, (iii) options or other rights to acquire from WREI and, except as
described in the WREI SEC Reports (as defined below), no obligations of WREI
to issue, any capital stock, voting securities or securities convertible into
or exchangeable for capital stock or voting securities of WREI, and (iv)
equity equivalents, interests in the ownership or earnings of WREI or other
similar rights (collectively, "WREI Securities"). As of the date hereof,
except as set forth on Schedule 2.2(a) of the WREI Disclosure Schedule there
are no outstanding obligations of WREI or its subsidiaries to repurchase,
redeem or otherwise acquire any WREI Securities or stockholder agreements,
voting trusts or other agreements or understandings to which WREI is a party
or by which it is bound relating to the voting or registration of any shares
of capital stock of WREI. For purposes of this Agreement, ''Lien" means, with
respect to any asset (including, without limitation, any security) any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind
in respect of such asset.
(b) The WREI Shares constitute the only class of equity securities of
WREI registered or required to be registered under the Exchange Act.
(c) WREI does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including membership
interests) of any entity, other than as specifically disclosed in the
disclosure documents.
Section 2.3. Authority Relative to this Agreement; Recommendation.
(a) WREI has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of WREI (the "WREI Board") and no other corporate
proceedings on the part of WREI are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby, except, as referred to in
Section 2.17, the approval and adoption of this Agreement by the holders of
at least a majority of the then outstanding WREI Shares. This Agreement has
been duly and validly executed and delivered by WREI and constitutes a valid,
legal and binding agreement of WREI, enforceable against WREI in accordance
with its terms.
(b) The WREI Board has resolved to recommend that the stockholders of
WREI approve and adopt this Agreement.
Section 2.4. SEC Reports; Financial Statements.
(a) WREI has filed all required forms, reports and documents with the
Securities and Exchange Commission (the "SEC") since September 30, 1999, each
of which has complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and the Exchange Act (and the rules and regulations promulgated
thereunder, respectively), each as in effect on the dates such forms, reports
and documents were filed. WREI has heretofore delivered or promptly will
deliver prior to the Effective Date to ISES, in the form filed with the SEC
(including any amendments thereto but excluding any exhibits), (i) its Annual
Report on Form 10-KSB for the fiscal year ended September 30, 1999, (ii) all
definitive proxy statements relating to WREI's meetings of stockholders
(whether annual or special) held since September 30, 1999, if any, and (iii)
all other reports or registration statements filed by WREI with the SEC since
September 30, 1999 (all of the foregoing, collectively, the "WREI SEC
Reports"). None of such WREI SEC Reports, including, without limitation, any
financial statements or schedules included or incorporated by reference
therein, contained, when filed, any untrue statement of a material fact or
omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited financial statements of WREI included in the WREI SEC Reports fairly
present, in conformity with generally accepted accounting principles applied
on a consistent basis (except as may be indicated in the notes thereto), the
financial position of WREI as of the dates thereof and its results of
operations and changes in financial position for the periods then ended. All
material agreements, contracts and other documents required to be filed as
exhibits to any of the WREI SEC Reports have been so filed.
(b) WREI has heretofore made available or promptly will make available
to ISES a complete and correct copy of any amendments or modifications which
are required to be filed with the SEC but have not yet been filed with the
SEC, to agreements, documents or other instruments which previously had been
filed by WREI with the SEC pursuant to the Exchange Act.
Section 2.5. Information Supplied. None of the information supplied or
to be supplied by WREI for inclusion or incorporation by reference in
connection with the Merger (the "Proxy Statement") will at the date mailed to
stockholders of WREI and at the times of the meeting or meetings of
stockholders of WREI to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement, insofar as it relates to the meeting of
WREI's stockholders to vote on the Merger, will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
Section 2.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1916, as amended (the ''HSR Act''), the rules of the National Association
of Securities Dealers, Inc. ("NASD"), the filing and recordation of the
Merger Certificate as required by the NGCL, and as set forth on Schedule 2.6
of the WREI Disclosure Schedule no filing with or notice to, and no permit,
authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency or authority (a
"Governmental Entity") is necessary for the execution and delivery by WREI of
this Agreement or the consummation by WREI of the transactions contemplated
hereby, except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice would not
have a Material Adverse Effect on WREI.
Except as set forth in Section 2.6 of the WREI Disclosure Schedule,
neither the execution, delivery and performance of this Agreement by WREI nor
the consummation by WREI of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
Certificate of Incorporation or Bylaws (or similar governing documents) of
WREI, (ii) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or Lien) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which WREI is a party or by which any of its properties or assets may be
bound, or (iii) violate any order, writ, injunction, decree, law, statute,
rule or regulation applicable to WREI or any of its properties or assets,
except in the case of (ii) or (iii) for violations, breaches or defaults
which would not have a Material Adverse Effect on WREI.
Section 2.7. No Default. Except as set forth in Section 2.7 of the WREI
Disclosure Schedule, WREI is not in breach, default or violation (and no
event has occurred which with notice or the lapse of time or both would
constitute a breach default or violation) of any term, condition or provision
of (i) its Certificate of Incorporation or Bylaws (or similar governing
documents), (ii) any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which WREI is now a
party or by which any of its respective properties or assets may be bound or
(iii) any order, writ injunction, decree, law, statute, rule or regulation
applicable to WREI or any of its respective properties or assets, except in
the case of (ii) or (iii) for violations, breaches or defaults that would not
have a Material Adverse Effect on WREI. Except as set forth in Section 2.7 of
the WREI Disclosure Schedule, each note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which WREI
is now a party or by which its respective properties or assets may be bound
that is material to WREI and that has not expired is in full force and effect
and is not subject to any material default thereunder of which WREI is aware
by any party obligated to WREI thereunder.
Section 2.8. No Undisclosed Liabilities; Absence of Changes. Except as
set forth in Section 2.8 of the WREI Disclosure Schedule and except as and to
the extent publicly disclosed by WREI in the WREI SEC Reports, as of
September 30, 1999, WREI does not have any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be
required by generally accepted accounting principles to be reflected on a
balance sheet of WREI (including the notes thereto) or which would have a
Material Adverse Effect on WREI. Except as publicly disclosed by WREI, since
September 30, 1999, WREI has not incurred any liabilities of any nature,
whether or not accrued, contingent or otherwise, which could reasonably be
expected to have, and there have been no events, changes or effects with
respect to WREI having or which reasonably could be expected to have, a
Material Adverse Effect on WREI. Except as and to the extent publicly
disclosed by WREI in the WREI SEC Reports and except as set forth in Section
2.8 of the WREI Disclosure Schedule, since September 30,1999, there has not
been (i) any material change by WREI in its accounting methods, principles or
practices (other than as required after the date hereof by concurrent changes
in generally accepted accounting principles), (ii) any revaluation by WREI of
any of its assets having a Material Adverse Effect on WREI, including,
without limitation, any write-down of the value of any assets other than in
the ordinary course of business or (iii) any other action or event that would
have required the consent of any other party hereto pursuant to Section 4.1
of this Agreement had such action or event occurred after the date of this
Agreement.
Section 2.9. Litigation. Except as publicly disclosed by WREI in the
WREI SEC Reports, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of WREI, threatened against WREI
or any of its subsidiaries or any of their respective properties or assets
before any Governmental Entity which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on WREI or could
reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement. Except as publicly disclosed by
WREI in the WREI SEC Reports, WREI is not subject to any outstanding order,
writ, injunction or decree which, insofar as can be reasonably foreseen in
the future, could reasonably be expected to have a Material Adverse Effect on
WREI or could reasonably be expected to prevent or delay the consummation of
the transactions contemplated hereby.
Section 2.10. Compliance with Applicable Law. Except as publicly
disclosed by WREI in the WREI SEC Reports, WREI holds all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the `'WREI
Permits"), except for failures to hold such permits, licenses, variances,
exemptions, orders and approvals which would not have a Material Adverse
Effect on WREI. Except as publicly disclosed by WREI in the WREI SEC Reports,
WREI is in compliance with the terms of the WREI Permits, except where the
failure so to comply would not have a Material Adverse Effect on WREI. Except
as publicly disclosed by WREI in the WREI SEC Reports, the business of WREI
is not being conducted in violation of any law, ordinance or regulation of
any Governmental Entity except that no representation or warranty is made in
this Section 2.10 with respect to Environmental Laws (as defined in Section
2.12 below) and except for violations or possible violations which do not,
and, insofar as reasonably can be foreseen, in the future will not, have a
Material Adverse Effect on WREI. Except as publicly disclosed by WREI in the
WREI SEC Reports, no investigation or review by any Governmental Entity with
respect to WREI is pending or, to the knowledge of WREI, threatened, nor, to
the knowledge of WREI, has any Governmental Entity indicated an intention to
conduct the same, other than, in each case, those which WREI reasonably
believes will not have a Material Adverse Effect on WREI.
Section 2.11. Employee Benefit Plans; Labor Matters.
(a) Except as set forth in Section 2.11(a) of the WREI Disclosure
Schedule with respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), maintained or contributed to at
any time by WREI or any entity required to be aggregated with WREI pursuant
to Section 414 of the Code (each, a "WREI Employee Plan"), no event has
occurred and to the knowledge of WREI, no condition or set of circumstances
exists in connection with which WREI could reasonably be expected to be
subject to any liability which would have a Material Adverse Effect on WREI.
(b) (i) No WREI Employee Plan is or has been subject to Title IV of
ERISA or Section 412 of the Code; and (ii) each WREI Employee Plan intended
to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
Internal Revenue Service determination letter, and nothing has occurred which
could reasonably be expected to adversely affect such determination.
(c) Section 2.11(c) of the WREI Disclosure Schedule sets forth a true
and complete list, as of the date of this Agreement, of each person who holds
any WREI Stock Options, together with the number of WREI Shares which are
subject to such option, the date of grant of such option, the extent to which
such option is vested (or will become vested as a result of the Merger), the
option price of such option (to the extent determined as of the date hereof),
whether such option is a nonqualified stock option or is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Section 2.11(c) of the WREI
Disclosure Schedule also sets forth the total number of such incentive stock
options and such nonqualified options. WREI has furnished ISES with complete
copies of the plans pursuant to which the WREI Stock Options were issued.
Other than the automatic vesting of WREI Stock Options that may occur without
any action on the part of WREI or its officers or directors, WREI has not
taken any action that would result in any WREI Stock Options that are
unvested becoming vested in connection with or as a result of the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(d) WREI has made available to ISES (i) a description of the terms of
employment and compensation arrangements of all officers of WREI and a copy
of each such agreement currently in effect; (ii) copies of all agreements
with consultants who are individuals obligating WREI to make annual cash
payments in an amount exceeding $60,000; (iii) a schedule listing all
officers of WREI who have executed a non-competition agreement with WREI and
a copy of each such agreement currently in effect; (iv) copies (or
descriptions) of all severance agreements, programs and policies of WREI with
or relating to its employees, except programs and policies required to be
maintained by law; and (v) copies of all plans, programs, agreements and
other arrangements of WREI with or relating to its employees which contain
change in control provisions all of which are set forth in Section 2.11(d) of
the WREI Disclosure Schedule.
(e) There shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any WREI Employee
Plan or any agreement or arrangement disclosed under this Section 2.11 solely
by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) There are no controversies pending or, to the knowledge of WREI,
threatened, between WREI and any of their employees, which controversies have
or could reasonably be expected to have a Material Adverse Effect on WREI.
Neither WREI nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by WREI or any of its subsidiaries (and neither WREI nor any of its
subsidiaries has any outstanding material liability with respect to any
terminated collective bargaining agreement or labor union contract), nor does
WREI know of any activities or proceedings of any labor union to organize any
of its or employees. WREI has no knowledge of any strike, slowdown, work
stoppage, lockout or threat thereof, by or with respect to any of its
employees.
Section 2.12. Environmental Laws and Regulations.
(a) Except as publicly disclosed by WREI in the WREI SEC Reports, (i)
WREI is in material compliance with all applicable federal, state, local and
foreign laws and regulations relating to pollution or protection of human
health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"), except for non-compliance that would
not have a Material Adverse Effect on WREI, which compliance includes, but is
not limited to, the possession by WREI of all material permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof; (ii) WREI has not received
written notice of, or, to the knowledge of WREI, is the subject of, any
action, cause of action, claim, investigation, demand or notice by any person
or entity alleging liability under or non-compliance with any Environmental
Law (an ''Environmental Claim") that could reasonably be expected to have a
Material Adverse Effect on WREI; and (iii) to the knowledge of WREI, there
are no circumstances that are reasonably likely to prevent or interfere with
such material compliance in the future.
(b) Except as publicly disclosed by WREI, there are no Environmental
Claims which could reasonably be expected to have a Material Adverse Effect
on WREI that are pending or, to the knowledge of WREI, threatened against
WREI or, to the knowledge of WREI, against any person or entity whose
liability for any Environmental Claim WREI has or may have retained or
assumed either contractually or by operation of law.
Section 2.13. Tax Matters.
(a) Except as set forth in Section 2.13 of the WREI Disclosure Schedule:
(i) WREI has filed or has had filed on its behalf in a timely manner (within
any applicable extension periods) with the appropriate Governmental Entity
all income and other material Tax Returns (as defined herein) with respect to
Taxes (as defined herein) of WREI and all Tax Returns were in all material
respects true, complete and correct; (ii) all material Taxes with respect to
WREI have been paid in full or have been provided for in accordance with GAAP
on WREI's most recent balance sheet which is part of the WREI SEC Documents.
(iii) there are no outstanding agreements or waivers extending the statutory
period of limitations applicable to any federal, state, local or foreign
income or other material Tax Returns required to be filed by or with respect
to WREI; (iv) to the knowledge of WREI none of the Tax Returns of or with
respect to WREI is currently being audited or examined by any Governmental
Entity; and (v) no deficiency for any income or other material Taxes has been
assessed with respect to WREI which has not been abated or paid in full.
(b) For purposes of this Agreement, (i) "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, sales, use, ad valorem, goods and services, capital,
transfer, franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation, property or
other taxes, customs duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority and (ii) "Tax Return"
shall mean any report, return, documents declaration or other information or
filing required to be supplied to any taxing authority or jurisdiction with
respect to Taxes.
Section 2.14. Title to Property. WREI has good and defensible title to
all of its properties and assets, free and clear of all liens, charges and
encumbrances except liens for taxes not yet due and payable and such liens or
other imperfections of title, if any, as do not materially detract from the
value of or interfere with the present use of the property affected thereby
or which, individually or in the aggregate, would not have a Material Adverse
Effect on WREI; and, to WREI's knowledge, all leases pursuant to which WREI
leases from others real or personal property are in good standing, valid and
effective in accordance with their respective terms, and there is not, to the
knowledge of WREI, under any of such leases, any existing material default or
event of default (or event which with notice of lapse of time, or both, would
constitute a default and in respect of which WREI has not taken adequate
steps to prevent such a default from occurring) except where the lack of such
good standing, validity and effectiveness, or the existence of such default
or event, would not have a Material Adverse Effect on WREI.
Section 2.15. Intellectual Property.
(a) WREI owns, or possesses adequate licenses or other valid rights to
use, all existing United States and foreign patents, trademarks, trade names,
service marks, copyrights, trade secrets and applications therefor that are
material to its business as currently conducted (the "WREI Intellectual
Property Rights").
(b) The validity of the WREI Intellectual Property Rights and the title
thereto of WREI is not being questioned in any litigation to which WREI is a
party.
(c) Except as set forth in Section 2.15(c) of the WREI Disclosure
Schedule, the conduct of the business of WREI as now conducted does not, to
WREI's knowledge, infringe any valid patents, trademarks, trade names,
service marks or copyrights of others. The consummation of the transactions
completed hereby will not result in the loss or impairment of any WREI
Intellectual Property Rights, except as related to a Manufacturing Exclusive
License Agreement with the Licensee dated October 28, 1998. WREI is a party
to a Manufacturing and Marketing Exclusive License Agreement dated October
28, 1998 and the Addendum dated February 22, 2000, relating to WREI's
patented technologies, process technologies and "Know-how" related to the
boot dryer. Pursuant to the Addendum as set forth in the 2.6 Disclosure
Schedule attached, the rights to this Intellectual Property have been
mutually terminated as a result of this Merger.
(d) WREI has taken steps it believes appropriate to protect and maintain
its trade secrets as such, except in cases where WREI has elected to rely on
patent or copyright protection in lieu of trade secret protection.
Section 2.16. Insurance. WREI currently does not maintain general
liability and other business insurance.
Section 2.17. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding WREI Shares is the only vote of the
holders of any class or series of WREI's capital stock necessary to approve
and adopt this Agreement and the Merger.
Section 2.18. Tax Treatment. Neither WREI nor, to the knowledge of WREI,
any of its affiliates has taken or agreed to take action that would prevent
the Merger from constituting a reorganization qualifying under the provisions
of Section 368(a) of the Code.
Section 2.19. Affiliates. Except for Principal WREI Stockholders and the
directors and executive officers of WREI, each of whom is listed in Section
2.19 of the WREI Disclosure Schedule, there are no persons who, to the
knowledge of WREI, may be deemed to be affiliates of WREI under Rule 1-02(b)
of Regulation S-X of the SEC (the "WREI Affiliates").
Section 2.20. Certain Business Practices. None of WREI or any directors,
officers, agents or employees of WREI has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties
or campaigns or violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended (the "FCPA"), or (iii) made any other unlawful payment.
Section 2.21. Insider Interests. Except as set forth in Section 2.21 of
the WREI Disclosure Schedule, neither the principal WREI shareholders nor any
officer or director of WREI has any interest in any material property, real
or personal, tangible or intangible, including without limitation, any
computer software or WREI Intellectual Property Rights, used in or pertaining
to the business of WREI, expect for the ordinary rights of a stockholder or
employee stock optionholder.
Section 2.22. Opinion of Financial Adviser. No advisers, as of the date
hereof, have delivered to the WREI Board a written opinion to the effect
that, as of such date, the exchange ratio contemplated by the Merger is fair
to the holders of WREI Shares.
Section 2.23. Brokers. No broker, finder or investment banker (other
than the WREI Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to ISES) is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of WREI other
than the WREI Financial Adviser Agreement whereby WREI shall issue common
restricted shares to Pursuit Capital LLC, 1,000,000 shares, and Regency Group
Limited, Inc., 1,000,000 shares.
Section 2.24. Disclosure. No representation or warranty of WREI in this
Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to ISES pursuant hereto or in connection
herewith contains, as of the date of such representation, warranty or
instrument, or will contain any untrue statement of a material fact or, at
the date thereof, omits or will omit to state a material fact necessary to
make any statement herein or therein, in light of the circumstances under
which such statement is or will be made, not misleading.
Section 2.25. No Existing Discussions. As of the date hereof, WREI is
not engaged, directly or indirectly, in any discussions or negotiations with
any other party with respect to any Third Party Acquisition (as defined in
Section 4.4).
Section 2.26. Material Contracts.
(a) WREI has delivered or otherwise made available to ISES true, correct
and complete copies of all contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which WREI is a
party affecting the obligations of any party thereunder) to which WREI is a
party or by which any of its properties or assets are bound that are,
material to the business, properties or assets of WREI taken as a whole,
including, without limitation, to the extent any of the following are,
individually or in the aggregate, material to the business, properties or
assets of WREI taken as a whole, all: (i) employment, product design or
development, personal services, consulting, non-competition, severance,
golden parachute or indemnification contracts (including, without limitation,
any contract to which WREI is a party involving employees of WREI); (ii)
licensing, publishing, merchandising or distribution agreements; (iii)
contracts granting rights of first refusal or first negotiation; (iv)
partnership or joint venture agreements; (v) agreements for the acquisition,
sale or lease of material properties or assets or stock or otherwise entered
into since September 30, 1999; (vi) contracts or agreements with any
Governmental Entity. and (vii) all commitments and agreements to enter into
any of the foregoing (collectively, together with any such contracts entered
into in accordance with Section 4.1 hereof, the "WREI Contracts"). WREI is
not a party to or bound by any severance, golden parachute or other agreement
with any employee or consultant pursuant to which such person would be
entitled to receive any additional compensation or an accelerated payment of
compensation as a result of the consummation of the transactions contemplated
hereby.
(b) Each of the WREI Contracts is valid and enforceable in accordance
with its terms, and there is no default under any WREI Contract so listed
either by WREI or, to the knowledge of WREI, by any other party thereto, and
no event has occurred that with the lapse of time or the giving of notice or
both would constitute a default thereunder by WREI or, to the knowledge of
WREI, any other party, in any such case in which such default or event could
reasonably be expected to have a Material Adverse Effect on WREI.
(c) No party to any such WREI Contract has given notice to WREI of or
made a claim against WREI with respect to any breach or default thereunder,
in any such case in which such breach or default could reasonably be expected
to have a Material Adverse Effect on WREI.
ARTICLE 3
Representations and Warranties of ISES
Except as set forth on the Disclosure Schedule delivered by ISES to WREI
(the "ISES Disclosure Schedule"), ISES hereby represents and warrants to WREI
as follows:
Section 3.1. Organization and Qualification.
(a) Each of ISES and its subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has all requisite power and authority to
own, lease and operate its properties and to carry on its businesses as now
being conducted, except where the failure to be so organized, existing and in
good standing or to have such power and authority would not have a Material
Adverse Effect (as defined below) on ISES. When used in connection with ISES,
the term "Material Adverse Effect'' means any change or effect (i) that is or
is reasonably likely to be materially adverse to the business, results of
operations, condition (financial or otherwise) or prospects of ISES and its
subsidiaries, taken as a whole, other than any change or effect arising out
of general economic conditions unrelated to any businesses in which ISES and
its subsidiaries are engaged, or (ii) that may impair the ability of ISES to
consummate the transactions contemplated hereby.
(b) ISES has heretofore delivered to WREI accurate and complete copies
of the Certificate of Incorporation and Bylaws (or similar governing
documents), as currently in effect, of ISES. Each of ISES and its
subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
or licensing necessary except in such jurisdictions where the failure to be
so duly qualified or licensed and in good standing would not have a Material
Adverse Effect on ISES.
Section 3.2. Capitalization of ISES.
(a) As of December 31, 1999, the authorized capital stock of ISES
consists of; (i) One Hundred Thousand(100,000) ISES common Shares, no par
value, 2,000 common Shares were issued and were outstanding, and (ii) no
preferred shares were authorized. All of the outstanding ISES Shares have
been duly authorized and validly issued, and are fully paid, nonassessable
and free of preemptive rights.
(b) Except as set forth in Section 3.2(b) of the ISES Disclosure
Schedule, ISES is the record and beneficial owner of all of the issued and
outstanding shares of capital stock of its subsidiaries.
(c) Except as set forth in Section 3.2(c) of the ISES Disclosure
Schedule, between December 31, 1999 and the date hereof, no shares of ISES's
capital stock have been issued and no ISES Stock options have been granted.
Except as set forth in Section 3.2(a) above, as of the date hereof, there are
no outstanding (i) shares of capital stock or other voting securities of
ISES, (ii) securities of ISES or its subsidiaries convertible into or
exchangeable for shares of capital stock or voting securities of ISES, (iii)
options or other rights to acquire from ISES or its subsidiaries, or
obligations of ISES or its subsidiaries to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock
or voting securities of ISES, or (iv) equity equivalents, interests in the
ownership or earnings of ISES or its subsidiaries or other similar rights
(collectively, "ISES Securities"). As of the date hereof, there are no
outstanding obligations of ISES or any of its subsidiaries to repurchase,
redeem or otherwise acquire any ISES Securities. There are no stockholder
agreements, voting trusts or other agreements or understandings to which ISES
is a party or by which it is bound relating to the voting or registration of
any shares of capital stock of ISES except for a Tri-Party Agreement between
ISES, Xxxx Xxxxxxx, and certain employees (the "Option Employees") of ISES
whereby Xxxx Xxxxxxx has granted to the Option Employees rights to purchase
shares of Common Stock held by Xxxx Xxxxxxx, which option shares, when issued
may be subject to employee registration rights.
(d) Except as set forth in Section 3.2(d) of the ISES Disclosure
Schedule, there are no securities of ISES convertible into or exchangeable
for, no options or other rights to acquire from ISES, and no other contract,
understanding, arrangement or obligation (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of any capital
stock or other ownership interests in, or any other securities of, any
subsidiary of ISES.
(e) The ISES Shares constitute the only class of equity securities of
ISES or its subsidiaries.
(f) Except as set forth in Section 3.2(f) of the ISES Disclosure
Schedule, ISES does not own directly or indirectly more than fifty percent
(50%) of the outstanding voting securities or interests (including membership
interests) of any entity.
Section 3.3. Authority Relative to this Agreement; Recommendation.
(a) ISES has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of ISES (the "ISES Board"), and no other corporate
proceedings on the part of ISES are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby, except, as referred to in
Section 3.17, the approval and adoption of this Agreement by the holders of
at least a majority of the then outstanding ISES Shares. This Agreement has
been duly and validly executed and delivered by ISES and constitutes a valid,
legal and binding agreement of ISES, enforceable against ISES in accordance
with its terms.
(b) The ISES Board has resolved to recommend that the stockholders of
ISES approve and adopt this Agreement.
Section 3.4. SEC Reports; Financial Statements. ISES is not required to
file forms, reports and documents with the SEC.
Section 3.5. Information Supplied. None of the information supplied or
to be supplied by ISES for inclusion or incorporation by reference to (i) the
8-K will, at the time the 8-K is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and (ii)
the Proxy Statement will, at the date mailed to stockholders of WREI, if any,
and at the times of the meeting or meetings of stockholders of WREI to be
held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement,
insofar as it relates to the meeting of ISES's stockholders to vote on the
Merger, will comply as to form in all material respects with the provisions
of the Exchange Act and the rules and regulations thereunder, and the 8-K
will comply as to form in all material respects with the provisions of the
Securities Act and the rules and regulations thereunder.
Section 3.6. Consents and Approvals; No Violations. Except as set forth
in Section 3.6 of the ISES Disclosure Schedule, and for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, the rules of the NASD, and the
filing and recordation of the Merger Certificate as required by the NGCL, no
filing with or notice to, and no permit, authorization, consent or approval
of, any Governmental Entity is necessary for the execution and delivery by
ISES of this Agreement or the consummation by ISES of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on ISES.
Neither the execution, delivery and performance of this Agreement by
ISES nor the consummation by ISES of the transactions contemplated hereby
will (i) conflict with or result in any breach of any provision of the
respective Certificate of Incorporation or Bylaws (or similar governing
documents) of ISES or any of ISES's subsidiaries, (ii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which ISES or any of SRCis
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or (iii) violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to ISES or
any of ISES's subsidiaries or any of their respective properties or assets,
except in the case of (ii) or (iii) for violations, breaches or defaults
which would not have a Material Adverse Effect on ISES.
Section 3.7. No Default. None of ISES or any of its subsidiaries is in
breach, default or violation (and no event has occurred which with notice or
the lapse of time or both would constitute a breach, default or violation) of
any term, condition or provision of (i) its Certificate of Incorporation or
Bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which ISES or any of its subsidiaries is now a party or by
which any of them or any of their respective properties or assets may be
bound or (iii) any order, writ, injunction, decree, law, statute, rule or
regulation applicable to ISES, its subsidiaries or any of their respective
properties or assets, except in the case of (ii) or (iii) for violations,
breaches or defaults that would not have a Material Adverse Effect on ISES.
Each note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which ISES or any of its subsidiaries is
now a party or by which any of them or any of their respective properties or
assets may be bound that is material to ISES and its subsidiaries taken as a
whole and that has not expired is in full force and effect and is not subject
to any material default thereunder of which ISES is aware by any party
obligated to ISES or any subsidiary thereunder.
Section 3.8. No Undisclosed Liabilities; Absence of Changes. Except as
and to the extent disclosed by ISES in the ISES, none of ISES or its
subsidiaries had any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by generally
accepted accounting principles to be reflected on a consolidated balance
sheet of ISES and its consolidated subsidiaries (including the notes thereto)
or which would have a Material Adverse Effect on ISES. Except as disclosed by
ISES, none of ISES or its subsidiaries has incurred any liabilities of any
nature, whether or not accrued, contingent or otherwise, which could
reasonably be expected to have, and there have been no events, changes or
effects with respect to ISES or its subsidiaries having or which could
reasonably be expected to have, a Material Adverse Effect on ISES. Except as
and to the extent disclosed by ISES there has not been (i) any material
change by ISES in its accounting methods, principles or practices (other than
as required after the date hereof by concurrent changes in generally accepted
accounting principles), (ii) any revaluation by ISES of any of its assets
having a Material Adverse Effect on ISES, including, without limitation, any
write-down of the value of any assets other than in the ordinary course of
business or (iii) any other action or event that would have required the
consent of any other party hereto pursuant to Section 4.2 of this Agreement
had such action or event occurred after the date of this Agreement.
Section 3.9. Litigation. Except as set forth in Schedule 3.9 of the ISES
Disclosure Schedule there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of ISES, threatened against ISES
or any of its subsidiaries or any of their respective properties or assets
before any Governmental Entity which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on ISES or could
reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement. Except as disclosed by ISES,
none of ISES or its subsidiaries is subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen in the
future, could reasonably be expected to have a Material Adverse Effect on
ISES or could reasonably be expected to prevent or delay the consummation of
the transactions contemplated hereby.
Section 3.10. Compliance with Applicable Law. Except as disclosed by
ISES, ISES and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for
the lawful conduct of their respective businesses (the "ISES Permits"),
except for failures to hold such permits, licenses, variances, exemptions,
orders and approvals which would not have a Material Adverse Effect on ISES.
Except as disclosed by ISES, ISES and its subsidiaries are in compliance with
the terms of the ISES Permits, except where the failure so to comply would
not have a Material Adverse Effect on ISES. Except as disclosed by ISES, the
businesses of ISES and its subsidiaries are not being conducted in violation
of any law, ordinance or regulation of any Governmental Entity except that no
representation or warranty is made in this Section 3.10 with respect to
Environmental Laws and except for violations or possible violations which do
not, and, insofar as reasonably can be foreseen, in the future will not, have
a Material Adverse Effect on ISES. Except as disclosed by ISES no
investigation or review by any Governmental Entity with respect to ISES or
its subsidiaries is pending or, to the knowledge of ISES, threatened, nor, to
the knowledge of ISES, has any Governmental Entity indicated an intention to
conduct the same, other than, in each case, those which ISES reasonably
believes will not have a Material Adverse Effect on ISES.
Section 3.11. Employee Benefit Plans; Labor Matters.
(a) With respect to each employee benefit plan, program, policy,
arrangement and contract (including, without limitation, any "employee
benefit plan," as defined in Section 3(3) of ERISA), maintained or
contributed to at any time by ISES, any of its subsidiaries or any entity
required to be aggregated with ISES or any of its subsidiaries pursuant to
Section 414 of the Code (each, a "ISES Employee Plan"), no event has occurred
and, to the knowledge of ISES, no condition or set of circumstances exists in
connection with which ISES or any of its subsidiaries could reasonably be
expected to be subject to any liability which would have a Material Adverse
Effect on ISES.
(b) (i) No ISES Employee Plan is or has been subject to Title IV of
ERISA or Section 412 of the Code; and (ii) each ISES Employee Plan intended
to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code is the subject of a favorable
Internal Revenue Service determination letter, and nothing has occurred which
could reasonably be expected to adversely affect such determination.
(c) Section 3.11(c) of the ISES Disclosure Schedule sets forth a true
and complete list, as of the date of this Agreement, of each person who holds
any ISES Stock Options, together with the number of ISES Shares which are
subject to such option, the date of grant of such option, the extent to which
such option is vested (or will become vested as a result of the Merger), the
option price of such option (to the extent determined as of the date hereof),
whether such option is a nonqualified stock option or is intended to qualify
as an incentive stock option within the meaning of Section 422(b) of the
Code, and the expiration date of such option. Section 3.11(c) of the ISES
Disclosure Schedule also sets forth the total number of such incentive stock
options and such nonqualified options. ISES has furnished WREI with complete
copies of the plans pursuant to which the ISES Stock Options were issued.
Other than the automatic vesting of ISES Stock Options that may occur without
any action on the part of ISES or its officers or directors, ISES has not
taken any action that would result in any ISES Stock Options that are
unvested becoming vested in connection with or as a result of the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(d) ISES has made available to WREI (i) a description of the terms of
employment and compensation arrangements of all officers of ISES and a copy
of each such agreement currently in effect; (ii) copies of all agreements
with consultants who are individuals obligating ISES to make annual cash
payments in an amount exceeding $60,000; (iii) a schedule listing all
officers of ISES who have executed a non-competition agreement with ISES and
a copy of each such agreement currently in effect; (iv) copies (or
descriptions) of all severance agreements, programs and policies of ISES with
or relating to its employees, except programs and policies required to be
maintained by law; and (v) copies of all plans, programs, agreements and
other arrangements of the ISES with or relating to its employees which
contain change in control provisions.
(e) Except as disclosed in Section 3.11(e) of the ISES Disclosure
Schedule there shall be no payment, accrual of additional benefits,
acceleration of payments, or vesting in any benefit under any ISES Employee
Plan or any agreement or arrangement disclosed under this Section 3.11 solely
by reason of entering into or in connection with the transactions
contemplated by this Agreement.
(f) There are no controversies pending or, to the knowledge of ISES
threatened, between ISES or any of its subsidiaries and any of their
respective employees, which controversies have or could reasonably be
expected to have a Material Adverse Effect on ISES. Neither ISES nor any of
its subsidiaries is a party to any collective bargaining agreement or other
labor union contract applicable to persons employed by ISES or any of its
subsidiaries (and neither ISES nor any of its subsidiaries has any
outstanding material liability with respect to any terminated collective
bargaining agreement or labor union contract), nor does ISES know of any
activities or proceedings of any labor union to organize any of its or any of
its subsidiaries' employees. ISES has no knowledge of any strike, slowdown,
work stoppage, lockout or threat thereof by or with respect to any of its or
any of its subsidiaries' employees.
Section 3.12. Environmental Laws and Regulations.
(a) Except as disclosed by ISES, (i) each of ISES and its subsidiaries
is in material compliance with all Environmental Laws, except for
non-compliance that would not have a Material Adverse Effect on ISES, which
compliance includes, but is not limited to, the possession by ISES and its
subsidiaries of all material permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms
and conditions thereof; (ii) none of ISES or its subsidiaries has received
written notice of, or, to the knowledge of ISES, is the subject of, any
Environmental Claim that could reasonably be expected to have a Material
Adverse Effect on ISES; and (iii) to the knowledge of ISES, there are no
circumstances that are reasonably likely to prevent or interfere with such
material compliance in the future.
(b) Except as disclosed by ISES, there are no Environmental Claims which
could reasonably be expected to have a Material Adverse Effect on ISES that
are pending or, to the knowledge of ISES, threatened against ISES or any of
its subsidiaries or, to the knowledge of ISES, against any person or entity
whose liability for any Environmental Claim ISES or its subsidiaries has or
may have retained or assumed either contractually or by operation of law.
Section 3.13. Tax Matters. Except as set forth in Section 3.13 of the
ISES Disclosure Schedule: (i) ISES and each of its subsidiaries has filed or
has had filed on its behalf in a timely manner (within any applicable
extension periods) with the appropriate Governmental Entity all income and
other material Tax Returns with respect to Taxes of ISES and each of its
subsidiaries and all Tax Returns were in all material respects true, complete
and correct; (ii) all material Taxes with respect to ISES and each of its
subsidiaries have been paid in full or have been provided for in accordance
with GAAP on ISES's most recent balance sheet which is part of the ISES SEC
Documents; (iii) there are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal, state, local or
foreign income or other material Tax Returns required to be filed by or with
respect to ISES or its subsidiaries; (iv) to the knowledge of ISES none of
the Tax Returns of or with respect to ISES or any of its subsidiaries is
currently being audited or examined by any Governmental Entity; and (v) no
deficiency for any income or other material Taxes has been assessed with
respect to ISES or any of its subsidiaries which has not been abated or paid
in full.
Section 3.14. Title to Property. ISES and each of its subsidiaries have
good and defensible title to all of their properties and assets, free and
clear of all liens, charges and encumbrances except liens for taxes not yet
due and payable and such liens or other imperfections of title, if any, as do
not materially detract from the value of or interfere with the present use of
the property affected thereby or which, individually or in the aggregate,
would not have a Material Adverse Effect on ISES; and, to ISES's knowledge,
all leases pursuant to which ISES or any of its subsidiaries lease from
others real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, to the knowledge of
ISES, under any of such leases, any existing material default or event of
default (or event which with notice or lapse of time, or both, would
constitute a material default and in respect of which ISES or such subsidiary
has not taken adequate steps to prevent such a default from occurring) except
where the lack of such good standing, validity and effectiveness, or the
existence of such default or event of default would not have a Material
Adverse Effect on ISES.
Section 3.15. Intellectual Property.
(a) Each of ISES and its subsidiaries owns, or possesses adequate
licenses or other valid rights to use, all existing United States and foreign
patents, trademarks, trade names, services marks, copyrights, trade secrets,
and applications therefor that are material to its business as currently
conducted (the "ISES Intellectual Property Rights").
(b) Except as set forth in Section 3.15(b) of the ISES Disclosure
Schedule the validity of the ISES Intellectual Property Rights and the title
thereto of ISES or any subsidiary, as the case may be, is not being
questioned in any litigation to which ISES or any subsidiary is a party.
(c) The conduct of the business of ISES and its subsidiaries as now
conducted does not, to SRCis knowledge, infringe any valid patents,
trademarks, tradenames, service marks or copyrights of others. The
consummation of the transactions contemplated hereby will not result in the
loss or impairment of any ISES Intellectual Property Rights.
(d) Each of ISES and its subsidiaries has taken steps it believes
appropriate to protect and maintain its trade secrets as such, except in
cases where ISES has elected to rely on patent or copyright protection in
lieu of trade secret protection.
Section 3.16. Insurance. ISES and its subsidiaries maintain general
liability and other business insurance that ISES believes to be reasonably
prudent for its business.
Section 3.17. Vote Required. The affirmative vote of the holders of at
least a majority of the outstanding ISES Shares is the only vote of the
holders of any class or series of ISES's capital stock necessary to approve
and adopt this Agreement and the Merger.
Section 3.18. Tax Treatment. Neither ISES nor, to the knowledge of ISES,
any of its affiliates has taken or agreed to take any action that would
prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
Section 3.19. Affiliates. Except for the directors and executive
officers of ISES, each of whom is listed in Section 3.19 of the ISES
Disclosure Schedule, there are no persons who, to the knowledge of ISES, may
be deemed to be affiliates of ISES under Rule 1-02(b) of Regulation S-X of
the SEC (the "ISES Affiliates").
Section 3.20. Certain Business Practices. None of ISES, any of its
subsidiaries or any directors, officers, agents or employees of ISES or any
of its subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or
violated any provision of the FCPA, or (iii) made any other unlawful payment.
Section 3.21. Insider Interests. Except as set forth in Section 3.21 of
the ISES Disclosure Schedule, no officer or director of ISES has any interest
in any material property, real or personal, tangible or intangible, including
without limitation, any computer software or ISES Intellectual Property
Rights, used in or pertaining to the business of ISES or any subsidiary,
except for the ordinary rights of a stockholder or employee stock
optionholder.
Section 3.22. Opinion of Financial Adviser. No advisers, as of the date
hereof, have delivered to the ISES Board a written opinion to the effect
that, as of such date, the exchange ratio contemplated by the Merger is fair
to the holders of ISES Shares.
Section 3.23. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finders or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of ISES.
Section 3.24. Disclosure. No representation or warranty of ISES in this
Agreement or any certificate, schedule, document or other instrument
furnished or to be furnished to WREI pursuant hereto or in connection
herewith contains, as of the date of such representation, warranty or
instrument, or will contain any untrue statement of a material fact or, at
the date thereof, omits or will omit to state a material fact necessary to
make any statement herein or therein, in light of the circumstances under
which such statement is or will be made, not misleading.
Section 3.25. No Existing Discussions. As of the date hereof, ISES is
not engaged, directly or indirectly, in any discussions or negotiations with
any other party with respect to any Third Party Acquisition (as defined in
Section 5.4).
Section 3.26. Material Contracts.
(a) ISES has delivered or otherwise made available to WREI true, correct
and complete copies of all contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which ISES is a
party affecting the obligations of any party thereunder) to which ISES or any
of its subsidiaries is a party or by which any of their properties or assets
are bound that are, material to the business, properties or assets of ISES
and its subsidiaries taken as a whole, including, without limitation, to the
extent any of the following are, individually or in the aggregate, material
to the business, properties or assets of ISES and its subsidiaries taken as a
whole, all: (i) employment, product design or development, personal services,
consulting, non-competition, severance, golden parachute or indemnification
contracts (including, without limitation, any contract to which ISES is a
party involving employees of ISES); (ii) licensing, publishing, merchandising
or distribution agreements; (iii) contracts granting rights of first refusal
or first negotiation; (iv) partnership or joint venture agreements; (v)
agreements for the acquisition, sale or lease of material properties or
assets or stock or otherwise. (vi) contracts or agreements with any
Governmental Entity; and (vii) all commitments and agreements to enter into
any of the foregoing (collectively, together with any such contracts entered
into in accordance with Section 5.2 hereof, the 'ISES Contracts"). Neither
ISES nor any of its subsidiaries is a party to or bound by any severance,
golden parachute or other agreement with any employee or consultant pursuant
to which such person would be entitled to receive any additional compensation
or an accelerated payment of compensation as a result of the consummation of
the transactions contemplated hereby.
(b) Each of the ISES Contracts is valid and enforceable in accordance
with its terms, and there is no default under any ISES Contract so listed
either by ISES or, to the knowledge of ISES, by any other party thereto, and
no event has occurred that with the lapse of time or the giving of notice or
both would constitute a default thereunder by ISES or, to the knowledge of
ISES, any other party, in any such case in which such default or event could
reasonably be expected to have a Material Adverse Effect on ISES.
(c) No party to any such ISES Contract has given notice to ISES of or
made a claim against ISES with respect to any breach or default thereunder,
in any such case in which such breach or default could reasonably be expected
to have a Material Adverse Effect on ISES.
ARTICLE 4
Covenants
Section 4.1. Conduct of Business of WREI. Except as contemplated by this
Agreement or as described in Section 4.1 of the WREI Disclosure Schedule,
during the period from the date hereof to the Effective Time, WREI will
conduct its operations in the ordinary course of business consistent with
past practice and, to the extent consistent therewith, with no less diligence
and effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organization, keep available the service
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end
that goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement or as described in Section 4.1 of the
WREI Disclosure Schedule, prior to the Effective Time, WREI will not, without
the prior written consent of ISES:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) amend the terms of any stock of any class or any other securities
(except bank loans) or equity equivalents.
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of WREI (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person.
(iii) make any loans, advances or capital contributions to, or investments
in, any other person; (iv) pledge or otherwise encumber shares of capital
stock of WREI; or (v) mortgage or pledge any of its material assets, tangible
or intangible, or create or suffer to exist any material Lien thereupon
(other than tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit,
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent WREI from (i) entering into employment
agreements or severance agreements with employees in the ordinary course of
business and consistent with past practice or (ii) increasing annual
compensation and/or providing for or amending bonus arrangements for
employees for fiscal 1999 in the ordinary course of year-end compensation
reviews consistent with past practice and paying bonuses to employees for
fiscal 1999 in amounts previously disclosed to ISES (to the extent that such
compensation increases and new or amended bonus arrangements do not result in
a material increase in benefits or compensation expense to WREI);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions (other than in the ordinary
course of business);
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets including, without
limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to WREI; (iii) authorize any new
capital expenditure or expenditures which, individually is in excess of
$1,000 or, in the aggregate, are in excess of $5,000; provided, however that
none of the foregoing shall limit any capital expenditure required pursuant
to existing contracts;
(k) make any tax election or settle or compromise any income tax
liability material to WREI;
(l) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
WREI;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or in the
ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.1(a) through 4.1(m) or any action which would make
any of the representations or warranties of contained in this Agreement
untrue or incorrect.
Section 4.2. Conduct of Business of ISES. Except as contemplated by this
Agreement or as described in Section 4.2 of the ISES Disclosure Schedule
during the period from the date hereof to the Effective Time, ISES will
conduct its operations in the ordinary course of business consistent with
past practice and, to the extent consistent therewith, with no less diligence
and effort than would be applied in the absence of this Agreement, seek to
preserve intact its current business organization, keep available the service
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end
that goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as otherwise
expressly provided in this Agreement or as described in Section 4.2 of the
ISES Disclosure Schedule, prior to the Effective Time, ISES will not, without
the prior written consent of:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any other securities (except bank loans) or equity
equivalents (including, without limitation, any stock options or stock
appreciation rights;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect
of its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities;
(d) adopt a plan of complete or partial liquidation, dissolution, merger
consolidation, restructuring, recapitalization or other reorganization of
ISES (other than the Merger);
(e) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings or issuances of letters of credit under
existing lines of credit in the ordinary course of business. (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person;
(iii) make any loans, advances or capital contributions to or investments in,
any other person; (iv) pledge or otherwise encumber shares of capital stock
of ISES or its subsidiaries; or (v) mortgage or pledge any of its material
assets, tangible or intangible, or create or suffer to exist any material
Lien thereupon (other than tax Liens for taxes not yet due);
(f) except as may be required by law, enter into, adopt or amend or
terminate any bonus, profit sharing, compensation, severance, termination,
stock option, stock appreciation right, restricted stock, performance unit
stock equivalent, stock purchase agreement, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreement,
trust, plan, fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units); provided, however, that this
paragraph (f) shall not prevent ISES or its subsidiaries from (i) entering
into employment agreements or severance agreements with employees in the
ordinary course of business and consistent with past practice or (ii)
increasing annual compensation and/or providing for or amending bonus
arrangements for employees for fiscal 1999 in the ordinary course of yearend
compensation reviews consistent with past practice and paying bonuses to
employees for fiscal 1999 in amounts previously disclosed to (to the extent
that such compensation increases and new or amended bonus arrangements do not
result in a material increase in benefits or compensation expense to ISES);
(g) acquire, sell, lease or dispose of any assets in any single
transaction or series of related transactions other than in the ordinary
course of business;
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(i) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory of writing-off notes
or accounts receivable other than in the ordinary course of business;
(j) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership, or other business organization or
division thereof or any equity interest therein; (ii) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to ISES; (iii) authorize any new
capital expenditure or expenditures which, individually, is in excess of
$1,000 or, in the aggregate, are in excess of $5,000: provided, however that
none of the foregoing shall limit any capital expenditure required pursuant
to existing contracts;
(k) make any tax election or settle or compromise any income tax
liability material to ISES and its subsidiaries taken as a whole;
(l) settle or compromise any pending or threatened suit, action or claim
which (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which could have a Material Adverse Effect on
ISES;
(m) commence any material research and development project or terminate
any material research and development project that is currently ongoing, in
either case, except pursuant to the terms of existing contracts or except in
the ordinary course of business; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.2(a) through 4.2(m) or any action which would make
any of the representations or warranties of the ISES contained in this
Agreement untrue or incorrect.
Section 4.3. Preparation of 8-K and the Proxy Statement. ISES and shall
promptly prepare and file with the SEC the Proxy Statement, if required by
counsel.
Section 4.4. Other Potential Acquirers.
(a) ISES, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore
with respect to any Third Party Acquisition.
Section 4.5. Meetings of Stockholders. Each of ISES and WREI shall take
all action necessary, in accordance with the respective General Corporation
Law of its respective state, and its respective certificate of incorporation
and bylaws, to duly call, give notice of, convene and hold a meeting of its
stockholders as promptly as practicable, to consider and vote upon the
adoption and approval of this Agreement and the transactions contemplated
hereby. The stockholder votes required for the adoption and approval of the
transactions contemplated by this Agreement shall be the vote required by the
NGCL and its charter and bylaws, in the case of WREI and the Iowa Business
Corporations Act, and its charter and bylaws, in the case of ISES. WREI and
ISES will, through their respective Boards of Directors, recommend to their
respective stockholders approval of such matters
Section 4.6. OTC:BB Listing. The parties shall use all reasonable
efforts to cause the WREI Shares, subject to Rule 144, to be traded on the
Over The Counter Bulletin Board (OTC:BB).
Section 4.7. Access to Information.
(a) Between the date hereof and the Effective Time, WREI will give ISES
and its authorized representatives, and ISES will give WREI and its
authorized representatives, reasonable access to all employees, plants,
offices, warehouses and other facilities and to all books and records of
itself and its subsidiaries, will permit the other party to make such
inspections as such party may reasonably require and will cause its officers
and those of its subsidiaries to furnish the other party with such financial
and operating data and other information with respect to the business and
properties of itself and its subsidiaries as the other party may from time to
time reasonably request.
(b) Between the date hereof and the Effective Time, WREI shall furnish
to ISES, and ISES will furnish to WREI, within 25 business days after the end
of each quarter, quarterly statements prepared by such party in conformity
with its past practices) as of the last day of the period then ended.
(c) Each of the parties hereto will hold and will cause its consultants
and advisers to hold in confidence all documents and information furnished to
it in connection with the transactions contemplated by this Agreement.
Section 4.8. Additional Agreements, Reasonable Efforts. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
(i) cooperating in the preparation and filing of the Proxy Statement and the
8-K, any filings that may be required under the HSR Act, and any amendments
to any thereof; (ii) obtaining consents of all third parties and Governmental
Entities necessary, proper or advisable for the consummation of the
transactions contemplated by this Agreement; (iii) contesting any legal
proceeding relating to the Merger and (iv) the execution of any additional
instruments necessary to consummate the transactions contemplated hereby.
Subject to the terms and conditions of this Agreement, ISES and WREI agree to
use all reasonable efforts to cause the Effective Time to occur as soon as
practicable after the stockholder votes with respect to the Merger. In case
at any time after the Effective Time any further action is necessary to carry
out the purposes of this Agreement, the proper officers and directors of each
party hereto shall take all such necessary action.
Section 4.9. Employee Benefits; Stock Option and Employee Purchase
Plans. Subject to the provisions of Section 1.6(d) hereof, prior to the
Effective Time, WREI will take or cause to be taken all action necessary to
adopt and or revise the employment agreements of Xxxx Xxxxxxx with WREI. It
is the parties' present intent to provide after the Effective Time to
employees of ISES employee benefit plans (other than stock option or other
plans involving the potential issuance of securities of WREI) which, in the
aggregate, are not less favorable than those currently provided by ISES.
Notwithstanding the foregoing, nothing contained herein shall be construed as
requiring the parties to continue any specific employee benefit plans.
Section 4.10. Public Announcements. ISES, and WREI will consult with one
another before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement,
including, without limitation, the Merger, and shall not issue any such press
release or make any such public statement prior to such consultation, except
as may be required by applicable law or by obligations pursuant to any
listing agreement with the NASD Over The Counter Bulletin Board (OTC:BB) as
determined by ISES or WREI.
Section 4.11. Indemnification.
(a) To the extent, if any, not provided by an existing right under one
of the parties' directors and officers liability insurance policies, from and
after the Effective Time, WREI shall, to the fullest extent permitted by
applicable law, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director, officer or employee of the parties hereto or any
subsidiary thereof (each an "Indemnified Party" and, collectively, the
''Indemnified Parties") against all losses, expenses (including reasonable
attorneys' fees and expenses), claims, damages or liabilities or, subject to
the proviso of the next succeeding sentence, amounts paid in settlement
arising out of actions or omissions occurring at or prior to the Effective
Time and whether asserted or claimed prior to, at or after the Effective
Time) that are in whole or in part (i) based on, or arising out of the fact
that such person is or was a director, officer or employee of such party or a
subsidiary of such party or (ii) based on, arising out of or pertaining to
the transactions contemplated by this Agreement. In the event of any such
loss expense, claim, damage or liability (whether or not arising before the
Effective Time), (i) WREI shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to WREI, promptly after statements therefor are
received and otherwise advance to such Indemnified Party upon request
reimbursement of documented expenses reasonably incurred, in either case to
the extent not prohibited by the NGCL or its certificate of incorporation or
bylaws, (ii) WREI will cooperate in the defense of any such matter and (iii)
any determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under the NGCL and
WREI's certificate of incorporation or bylaws shall be made by independent
counsel mutually acceptable to WREI and the Indemnified Party; provided,
however, that WREI shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld). The
Indemnified Parties as a group may retain only one law firm with respect to
each related matter except to the extent there is, in the opinion of counsel
to an Indemnified Party, under applicable standards of professional conduct,
c conflict on any significant issue between positions of any two or more
Indemnified Parties.
(b) In the event WREI or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity or such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to
any person, then and in either such case, proper provision shall be made so
that the successors and assigns of WREI shall assume the obligations set
forth in this Section 4.11.
(c) To the fullest extent permitted by law, from and after the Effective
Time, all rights to indemnification now existing in favor of the employees,
agents, directors or officers of WREI and ISES and their subsidiaries with
respect to their activities as such prior to the Effective Time, as provided
in WREI's and ISES's certificate of incorporation or bylaws, in effect on the
date thereof or otherwise in effect on the date hereof, shall survive the
Merger and shall continue in full force and effect for a period of not less
than six years from the Effective Time.
(d) The provisions of this Section 4.11 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 4.12. Notification of Certain Matters. The parties hereto shall
give prompt notice to the other parties, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at or prior to the Effective
Time, (ii) any material failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, (iii) any notice of, or other communication relating to, a default
or event which, with notice or lapse of time or both, would become a default,
received by such party or any of its subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, under any contract or
agreement material to the financial condition, properties, businesses or
results of operations of such party and its subsidiaries taken as a whole to
which such party or any of its subsidiaries is a party or is subject, (iv)
any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement, or (v) any material adverse
change in their respective financial condition, properties, businesses,
results of operations or prospects taken as a whole, other than changes
resulting from general economic conditions; provided, however, that the
delivery of any notice pursuant to this Section 4.12 shall not cure such
breach or non-compliance or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
ARTICLE 5
Conditions to Consummation of the Merger
Section 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) this Agreement shall have been approved and adopted by the requisite
vote of the stockholders of WREI and ISES;
(b) this Agreement shall have been approved and adopted by the Board of
Directors of WREI and ISES;
(c) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority which prohibits,
restrains, enjoins or restricts the consummation of the Merger;
(d) any waiting period applicable to the Merger under the HSR Act shall
have terminated or expired, and any other governmental or regulatory notices
or approvals required with respect to the transactions contemplated hereby
shall have been either filed or received; and
Section 5.2. Conditions to the Obligations of WREI. The obligation of
WREI to effect the Merger is subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) the representations of ISES contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except to
the extent that the breach thereof would not have a Material Adverse Effect
on ISES) at and as of the Effective Time with the same effect as if made at
and as of the Effective Time (except to the extent such representations
specifically related to an earlier date, in which case such representations
shall be true and correct as of such earlier date), and at the Closing ISES
shall have delivered to WREI a certificate to that effect;
(b) each of the covenants and obligations of ISES to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time
and at the Closing ISES shall have delivered to WREI a certificate to that
effect;
(d) ISES shall have obtained the consent or approval of each person
whose consent or approval shall be required in order to permit the Merger as
relates to any obligation, right or interest of ISES under any loan or credit
agreement, note, mortgage, indenture, lease or other agreement or instrument,
except those for which failure to obtain such consents and approvals would
not, in the reasonable opinion of WREI, individually or in the aggregate,
have a Material Adverse Effect on ISES;
(e) there shall have been no events, changes or effects with respect to
ISES or its subsidiaries having or which could reasonably be expected to have
a Material Adverse Effect on ISES; and
Section 5.3. Conditions to the Obligations of ISES. The respective
obligations of ISES to effect the Merger are subject to the satisfaction at
or prior to the Effective Time of the following conditions:
(a) the representations of WREI contained in this Agreement or in any
other document delivered pursuant hereto shall be true and correct (except to
the extent that the breach thereof would not have a Material Adverse Effect
on WREI) at and as of the Effective Time with the same effect as if made at
and as of the Effective Time (except to the extent such representations
specifically related to an earlier date, in which case such representations
shall be true and correct as of such earlier date), and at the Closing WREI
shall have delivered to ISES a certificate to that effect;
(b) each of the covenants and obligations of WREI to be performed at or
before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time
and at the Closing WREI shall have delivered to ISES a certificate to that
effect;
(c) there shall have been no events, changes or effects with respect to
WREI having or which could reasonably be expected to have a Material Adverse
Effect on WREI.
ARTICLE 6
Termination; Amendment; Waiver
Section 6.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval and adoption of this Agreement by WREI's or ISES's
stockholders:
(a) by mutual written consent of WREI and ISES;
(b) by ISES or WREI if (i) any court of competent jurisdiction in the
United States or other United States Governmental Entity shall have issued a
final order, decree or ruling or taken any other final action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling
or other action is or shall have become nonappealable or (ii) the Merger has
not been consummated by February 25, 2000; provided, however, that no party
may terminate this Agreement pursuant to this clause (ii) if such party's
failure to fulfill any of its obligations under this Agreement shall have
been the reason that the Effective Time shall not have occurred on or before
said date;
(c) by WREI if (i) there shall have been a breach of any representation
or warranty on the part of ISES set forth in this Agreement, or if any
representation or warranty of ISES shall have become untrue, in either case
such that the conditions set forth in Section 5.2(a) would be incapable of
being satisfied by February 25, 2000 (or as otherwise extended), (ii) there
shall have been a breach by ISES of any of their respective covenants or
agreements hereunder having a Material Adverse Effect on ISES or materially
adversely affecting (or materially delaying) the consummation of the Merger,
and ISES, as the case may be, has not cured such breach within 20 business
days after notice by WREI thereof, provided that WREI has not breached any of
its obligations hereunder, (iii) WREI shall have convened a meeting of its
stockholders to vote upon the Merger and shall have failed to obtain the
requisite vote of its stockholders; or (iv) WREI shall have convened a
meeting of its Board of Directors to vote upon the Merger and shall have
failed to obtain the requisite vote;
(d) by ISES if (i) there shall have been a breach of any representation
or warranty on the part of WREI set forth in this Agreement, or if any
representation or warranty of WREI shall have become untrue, in either case
such that the conditions set forth in Section 5.3(a) would be incapable of
being satisfied by February 25, 2000 (or as otherwise extended), (ii) there
shall have been a breach by WREI of its covenants or agreements hereunder
having a Material Adverse Effect on WREI or materially adversely affecting
(or materially delaying) the consummation of the Merger, and WREI, as the
case may be, has not cured such breach within twenty business days after
notice by ISES thereof, provided that ISES has not breached any of its
obligations hereunder, (iii) the WREI Board shall have recommended to WREI's
stockholders a Superior Proposal, (iv) the WREI Board shall have withdrawn,
modified or changed its approval or recommendation of this Agreement or the
Merger or shall have failed to call, give notice of, convene or hold a
stockholders' meeting to vote upon the Merger, or shall have adopted any
resolution to effect any of the foregoing, (v) ISES shall have convened a
meeting of its stockholders to vote upon the Merger and shall have failed to
obtain the requisite vote of its stockholders or (vi) WREI shall have
convened a meeting of its stockholders to vote upon the Merger and shall have
failed to obtain the requisite vote of its stockholders.
Section 6.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part
of any party hereto or its affiliates, directors, officers or stockholders,
other than the provisions of this Section 6.2 and Sections 4.7(c) and 6.3
hereof. Nothing contained in this Section 6.2 shall relieve any party from
liability for any breach of this Agreement.
Section 6.3. Fees and Expenses. Except as specifically provided in this
Section 6.3, each party shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
Section 6.4. Amendment. This Agreement may be amended by action taken by
WREI and ISES at any time before or after approval of the Merger by the
stockholders of WREI and ISES (if required by applicable law) but, after any
such approval, no amendment shall be made which requires the approval of such
stockholders under applicable law without such approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of the
parties hereto.
Section 6.5. Extension; Waiver. At any time prior to the Effective Time,
each party hereto may (i) extend the time for the performance of any of the
obligations or other acts of any other party, (ii) waive any inaccuracies in
the representations and warranties of any other party contained herein or in
any document, certificate or writing delivered pursuant hereto or (iii) waive
compliance by any other party with any of the agreements or conditions
contained herein. Any agreement on the part of any party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party hereto to
assert any of its rights hereunder shall not constitute a waiver of such
rights.
ARTICLE 7
Miscellaneous
Section 7.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 7.1 shall not
limit any covenant or agreement of the parties hereto which by its terms
requires performance after the Effective Time.
Section 7.2. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all other prior agreements and
understandings both written and oral, between the parties with respect to the
subject matter hereof and (b) shall not be assigned by operation of law or
otherwise.
Section 7.3. Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby,
and to such end, the provisions of this Agreement are agreed to be severable.
Section 7.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested), to each other party as follows:
If to ISES:
Xxxx Xxxxxxx
ISES Corporation
0000 00xx Xxxxxx, Xxxxx X
Xxx Xxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxxxxxxx
Xxxxxx Xxxxx & Xxxxxxxxxx
0000 Xxxx Xxxxxxxx Xx. Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
(000) 000-0000
(000) 000-0000
if to WREI:
WHITE ROCK ENTERPRISES, LTD.
Xxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxx, Xxxxx 000
Xxxx, XX
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without regard
to the principles of conflicts of law thereof.
Section 7.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
Section 7.7. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Sections 4.9 and 4.11, nothing
in this Agreement, express or implied, is intended to or shall confer upon
any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 7.8. Certain Definitions. For the purposes of this Agreement,
the term:
(a) "affiliate" means (except as otherwise provided in Sections 2.19,
3.19 and 4.13) a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
the first mentioned person;
(b) "business day" means any day other than a day on which Nasdaq is
closed;
(c) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(d) "knowledge'' or "known'' means, with respect to any matter in
question, if an executive officer of WREI or ISES or its subsidiaries, as the
case may be, has actual knowledge of such matter;
(e) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity; and
(f) "subsidiary" or "subsidiaries" of WREI, ISES or any other person,
means any corporation, partnership, limited liability company, association,
trust, unincorporated association or other legal entity of which WREI, ISES
or any such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, 50% or
more of the capital stock, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of
such corporation or other legal entity.
Section 7.9. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part
of any direct or indirect stockholder of WREI, ISES or Newco or any officer,
director, employee, agent, representative or investor of any party hereto.
Section 7.10. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder; provided, however, that,
if a party hereto is entitled to receive any payment or reimbursement of
expenses pursuant to Sections 6.3(a), (b) or (c), it shall not be entitled to
specific performance to compel the consummation of the Merger.
Section 7.11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same agreement.
In Witness Whereof, each of the parties has caused this Agreement to be duly
executed on its behalf as of the day and year first above written.
ISES Corporation
By:/s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: President
White Rock Enterprises, Ltd.
By:/s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: President
WREI DISCLOSURE SCHEDULE
Schedule 2.1 Organization See Amended
Articles/Bylaws/Minutes
Schedule 2.6 Consents & Approvals Pursuant to the
Manufacturing and Marketing Exclusive
License Agreement of October 28, 19998
and Addendum of February 22, 2000, WREI
had certain Intellectual Property pursuant
to an Exclusive License. Pursuant to the
terms and condition of the attached
Addendum dated February 22, 2000, the
rights have been terminated and a mutual
release of liability executed.
Schedule 2.7 No Default Not Applicable
Schedule 2.8 No Undisclosed Liability None Exist
Schedule 2.9 Litigation None Exist
Schedule 2.10 Compliance with Applicable Law Not Applicable - full
disclosed in 10KSB
Schedule 2.11 Employee Benefit Plans Section 2.11(a) Not Applicable -
None Exist
Section 2.11(b) No Benefit Plan Exist
Section 2.11( c)No Options Exist
Section 2.11(d) No Agreements Exist
Schedule 2.12 Environmental Laws and Regs Not Applicable
Schedule 2.13 Tax Matters None Exist
Schedule 2.14 Title to Property None Exist
Schedule 2.15 Intellectual Property None Exist - See 2.6 above
Schedule 2.16 Insurance None Exist
Schedule 2.17 Vote Required See Shareholder Meeting
Certificate
Schedule 2.18 Tax Treatment Not Applicable
Schedule 2.19 Affiliates Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxx
Schedule 2.20 Certain Business Practices None Exist
Schedule 2.21 Insider Interest None Exist
Schedule 2.22 Opinion of Financial Adviser Waived - None Exist
Schedule 2.23 Broker None Exist
Schedule 4.1 Conduct of Business See Amended & Restated Articles
ISES DISCLOSURE SCHEDULE
Schedule 3.2(b) Subsidiary Stock None Exist
Schedule 3.2(c) Capital Stock Rights None Exist other than as in
Articles
Schedule 3.2(d) Securities conversions None Exist
Schedule 3.2 (f) Subsidiaries None Exist
Schedule 3.6 Consents & Approvals None Required
Schedule 3.7 No Default Not Applicable
Schedule 3.8 No Undisclosed Liability None Exist
Schedule 3.9 Litigation None Exist
Schedule 3.10 Compliance with Applicable Law Not Applicable
Schedule 3.11 Employee Benefit Plans Section 3.11( c)No Options Exist
Section 3.11(e) No Agreements Exist
Schedule 3.12 Environmental Laws and Regs Not Applicable
Schedule 3.13 Tax Matters None Exist
Schedule 3.14 Title to Property None Exist
Schedule 3.15(b) Intellectual Property Provided in Due Diligence
Material
Schedule 3.16 Insurance None Exist
Schedule 3.17 Vote Required See Shareholder Meeting
Certificate
Schedule 3.18 Tax Treatment Not Applicable
Schedule 3.19 Affiliates Xxxx Xxxxxxx
Schedule 3.20 Certain Business Practices None Exist
Schedule 3.21 Insider Interest None Exist
Schedule 3.22 Opinion of Financial Adviser Waived - None Exist
Schedule 3.23 Broker None Exist
Schedule 4.2 Conduct of Business See Amended & Restated Articles
