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EXHIBIT 2.1
* * * * *
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
INDEX, INC.,
NEWMAN ACQUISITION CORPORATION,
NEWMAN COMMUNICATIONS CORPORATION
AND
LITTLE & COMPANY INVESTMENT SECURITIES
* * * * *
AUGUST 12, 1996
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ARTICLE/SECTION PAGE
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Articles of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Conversion of Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Class C Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF INDEX AND THE MERGER SUB . . . . . . . . . . . . . 4
3.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Certain Corporate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . 5
3.6 Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND LITCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Capitalization and Ownership of the Company . . . . . . . . . . . . . . . . . . . . 6
4.3 Certain Corporate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.5 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . 7
4.6 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . 7
4.7 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.9 Events Subsequent to Financial Statements . . . . . . . . . . . . . . . . . . . . . 8
4.10 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.11 Tax Returns and Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.12 Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.13 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.14 Questionable Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.15 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.16 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.18 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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4.19 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.20 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.21 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.22 Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.23 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.24 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.25 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.26 Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 5 CONDUCT OF BUSINESS PENDING THE CLOSING . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Conduct of Business by the Company Pending the Closing . . . . . . . . . . . . . . . 15
5.2 Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 6 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.1 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.2 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.3 Meetings of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.4 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.5 Reimbursement of LITCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 7 CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.1 Conditions to Obligations of Each Party to Effect the Closing . . . . . . . . . . . 19
7.2 Additional Conditions to Index's and the Merger
Sub's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Additional Conditions to the Company's and LITCO's Obligations . . . . . . . . . . . 21
ARTICLE 8 REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1 Indemnification by LITCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.2 Indemnification by Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.3 Conditions of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.5 Remedies Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 9 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.2 Termination by Any Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.3 Termination by Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.4 Effect of Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . 25
9.5 Material Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 10 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.2 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.4 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.5 Separate Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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10.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.8 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.9 Parties In Interest; No Third Party Beneficiaries . . . . . . . . . . . . . . . . . 26
10.10 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.11 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.12 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SCHEDULES
Schedule 4.2
Schedule 4.9
Schedule 4.20
Schedule 4.25
EXHIBITS
Exhibit A
Exhibit B
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of August 12, 1996 (this
"Agreement"), is made and entered into by and among Index, Inc., a Texas
corporation ("Index"), Newman Acquisition Corporation, a Nevada corporation and
a wholly-owned subsidiary of Index (the "Merger Sub"), Newman Communications
Corporation, a New Mexico corporation (the "Company") and Little & Company
Investment Securities, a Texas corporation ("LITCO").
RECITALS
WHEREAS, the respective Boards of Directors of Index, the Merger Sub,
the Company and LITCO have adopted resolutions approving and adopting the
proposed merger (the "Merger") of the Company with the Merger Sub upon the
terms and conditions hereinafter set forth in this Agreement;
WHEREAS, LITCO, which holds approximately 61% of the issued and
outstanding common stock of the Company, will enter into this Agreement for the
purpose of making certain representations, warranties, covenants and
agreements;
WHEREAS, Index is entering into that Agreement and Plan of Merger with
Sepco Industries, Inc., a Texas corporation and Sepco Acquisition Corporation,
a Nevada corporation (the "Sepco Merger Agreement") simultaneously with this
Agreement;
WHEREAS, the Merger and the merger contemplated by the Sepco Merger
Agreement (the "Sepco Merger") will be effected simultaneously; and
WHEREAS, the Merger and the Sepco Merger are both intended to qualify
as a tax-free transaction under Sections 351 and 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing premises, the
representations, warranties and agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the conditions set forth herein, the parties
hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.3 hereof), the Merger Sub shall be
merged with and into the Company and the separate corporate existence of the
Merger Sub shall thereupon cease. The Company shall be the surviving
corporation in the Merger. The Merger shall have the effects set forth in the
applicable provisions of the Nevada General Corporation Law (the "NGCL") and
the New Mexico Business Corporation Act (the "NMBCA").
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1.2 Closing. The closing of the Merger (the "Closing") shall take place at
10:00 a.m., local time, at the offices of Fulbright & Jaworski L.L.P., located
at 1301 McKinney, Houston, Texas 77010 on the next business day after the
shareholder approvals set forth in Section 6.3 hereof have been completed, or
as soon as the conditions set forth in Article 7 have been satisfied or waived
or as soon as practicable thereafter; provided, however, that the date of the
Closing shall not be later than December 31, 1996, unless the parties hereto
otherwise mutually agree in writing. Such date is herein referred to as the
"Closing Date." At the Closing, the parties hereto shall deliver or cause to
be delivered the certificates and other documents set forth in Article 7.
1.3 Effective Time of the Merger. If all the conditions to the Merger set
forth in Article 7 shall have been fulfilled or waived in accordance herewith
and this Agreement shall not have been terminated as provided in Article 9, the
parties hereto shall cause Articles of Merger (the "Articles of Merger") that
meet the requirements of the applicable provisions of the NGCL and the NMBCA,
respectively, to be properly executed and filed with the Secretary of State of
the States of Nevada and New Mexico, respectively, on the Closing Date. The
Merger shall be effective at the time of acceptance of the filing of the
Articles of Merger with the Secretary of State of the States of Nevada and New
Mexico in accordance with the NGCL and the NMBCA, respectively, or at such
later time which the parties hereto shall have agreed upon and designated in
such filing as the effective time of the Merger (the "Effective Time").
1.4 Articles of Incorporation and By-Laws. The Articles of Incorporation
and By-Laws of the Company in effect immediately prior to the Effective Time
shall continue to be the Articles of Incorporation and By-Laws of the Company
subsequent to the Effective Time, subject always to the right of the Company to
amend its Articles of Incorporation and By-Laws in accordance with the laws of
the State of New Mexico and the provisions of its Articles of Incorporation and
By-Laws.
1.5 Directors and Officers. The directors and officers of the Merger Sub
immediately prior to the Effective Time shall be the directors and officers of
the Company and shall hold such positions from the Effective Time until their
respective successors are duly elected or appointed and qualify in the manner
provided in the Articles of Incorporation and By-Laws of the Company or as
otherwise provided by law.
ARTICLE 2
CONVERSION OF SHARES
2.1 Conversion of Company Common Stock. At the Effective Time, by virtue
of the Merger and without any action required on the part of Index, the
Company, the Merger Sub or any holder of capital stock of any of them:
(a) Subject to the limitations contained herein, each share of
common stock of the Company, no par value (the "Company Common
Stock"), issued and outstanding immediately prior to the Effective
Time shall be automatically converted into the right to receive
one-fourth of one share of common stock of Index, par value $.01 per
share
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(the "Index Common Stock").
(b) All shares of common stock of the Merger Sub issued and
outstanding immediately prior to the Effective Time shall be cancelled
and cease to be outstanding.
2.2 Class C Warrants. The Company's Class C Warrants shall be adjusted as
provided in Section 7 of that Warrant Agreement by and between the Company and
General Securities Transfer Agency, Inc. dated September 13, 1993.
2.3 Stock Certificates. At or following the Effective Time, each holder
of an outstanding certificate or certificates representing the Company Common
Stock shall surrender the same to Index and Index shall, in exchange therefor,
cause to be issued to the holder of such certificate(s) a new certificate
representing shares of Index Common Stock in accordance with Section 2.1, less
any amount required to be withheld under applicable federal, state or local tax
requirements, and the surrendered certificate(s) shall be cancelled. Until so
surrendered and exchanged, each such certificate shall represent solely the
right to receive shares of Index Common Stock in accordance with Section 2.1,
without interest and less any tax withholding.
2.4 Fractional Shares. No fractional shares of Index Common Stock shall be
issued in the Merger. In the event that a holder of the Company Common Stock
would otherwise be entitled to receive any fractional shares of Index Common
Stock as a result of the Merger, such holder shall be entitled to receive, in
lieu thereof, an amount of cash to be determined by multiplying $1.00 by the
fraction of a share of Index Common Stock to which such holder would otherwise
have been entitled.
2.5 Dissenting Shares. Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time not voted in favor of the
Merger, the holder of which has given written notice of the exercise of
dissenter's rights and has perfected such rights as required by the NMBCA is
herein called a "Dissenting Share." Dissenting Shares shall not be converted
into or represent the right to receive shares of Index Common Stock pursuant to
this Section 2 and shall be entitled only to such rights as are available to
such holder pursuant to the NMBCA, unless the holder thereof shall have
withdrawn or forfeited his dissenter's rights. Each holder of Dissenting
Shares shall be entitled to receive the value of such Dissenting Shares held by
him in accordance with the applicable provisions of the NMBCA. Index will
promptly pay to any holder of Dissenting Shares such amount as such holder
shall be entitled to receive in accordance with the applicable provisions of
the NMBCA. If any holder of Dissenting Shares shall effectively withdraw or
forfeit his dissenter's rights under the NMBCA, such Dissenting Shares shall be
converted into the right to receive shares of Index Common Stock in accordance
with this Section 2.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
INDEX AND THE MERGER SUB
Index and the Merger Sub hereby jointly and severally represent and
warrant to the Company and LITCO as follows:
3.1 Organization. Each of Index and the Merger Sub has been duly
incorporated, is validly existing as a corporation and is in good standing
under the laws of its state of incorporation, and has the requisite corporate
power to carry on its business in such state as now conducted.
3.2 Capitalization. The total number of shares of stock of all classes
which Index shall have the authority to issue is 110,000,000 shares, of which
the following designations have been made: 100,000,000 shares of common stock,
1,000,000 shares of preferred stock, par value $1.00 per share and 1,000,000
shares of convertible preferred stock, par value $100 per share. As of the
date of this Agreement, (a) 100 shares of common stock of Index are issued and
outstanding, (b) no shares of preferred stock are issued and outstanding, and
(c) no shares of convertible preferred stock are issued and outstanding. All
of the issued and outstanding shares of common stock of Index are validly
issued, fully paid, nonassessable and free of preemptive rights. All shares of
Index Common Stock issuable in accordance with this Agreement will be, when so
issued, duly authorized, validly issued, fully paid and nonassessable. The
authorized capital stock of the Merger Sub consists of 100,000 shares of common
stock, par value $.10 per share, of which 100 shares are outstanding and are
validly issued, fully paid and nonassessable and are owned by Index.
3.3 Certain Corporate Matters. Index is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction in which the
ownership of its properties, the employment of its personnel or the conduct of
its business requires it to be so qualified, except where the failure to so
qualify would not have a material adverse effect on Index's financial
condition, results of operations or business. Index has the requisite corporate
power and authority and all authorizations, licenses and permits necessary to
carry on the business in which it is engaged and to own and use the properties
owned and used by it except such authorization, licenses and permits the
failure of which to possess would not have a material adverse effect on the
financial condition, results of operations or business of Index.
3.4 Authority Relative to this Agreement. Each of Index and the Merger
Sub has the requisite corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution, delivery
and performance of this Agreement by Index and the Merger Sub and the
consummation by Index and the Merger Sub of the transactions contemplated
hereby have been duly authorized by the Boards of Directors of each of Index
and the Merger Sub and, subject to stockholder approval as set forth in this
Agreement, no other
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actions on the part of Index or the Merger Sub are necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Index and the Merger Sub and
constitutes, subject to stockholder approval as set forth in this Agreement, a
valid and binding agreement of each of Index and the Merger Sub, enforceable
against Index and the Merger Sub in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity.
3.5 Consents and Approvals; No Violations. Except as may be required
under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act"), the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (the
"Exchange Act"), state securities or blue sky laws, and the filing and
recordation of the Articles of Merger as required by the NGCL and the NMBCA, no
filing with, and no permit, authorization, consent or approval of, any public
body or authority is necessary for the consummation by Index and the Merger Sub
of the transactions contemplated by this Agreement. Neither the execution and
delivery of this Agreement by Index or the Merger Sub nor the consummation by
Index or the Merger Sub of the transactions contemplated hereby, nor compliance
by Index or the Merger Sub with any of the provisions hereof, will (a) conflict
with or result in any breach of any provisions of the Articles of Incorporation
or By-Laws of Index or the Articles of Incorporation or By-Laws of the Merger
Sub, (b) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default of a material nature (or give rise
to any right of termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, agreement or other instrument or obligation, of a material
nature, to which Index or any of its subsidiaries is a party or by which any of
them or their properties or assets may be bound or (c) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Index, any of its
subsidiaries or any of their properties or assets, except in the case of
clauses (b) and (c) for violations, breaches or defaults which in the aggregate
would not have a material adverse effect on the financial condition or results
of operations of Index and its subsidiaries taken as a whole. The parties
hereto agree and acknowledge that Sepco Industries, Inc. was required to obtain
and has obtained the written consent of Fleet Capital Corporation as required
under that Second Amended and Restated Loan and Security Agreement by and
between Sepco Industries, Inc. and Fleet Capital Corporation dated April 1,
1994, as amended.
3.6 Information Supplied. None of the information provided by Index for
use in the Registration Statement (as defined in Section 6.2 hereof) and
contained therein will, as of the date that the Registration Statement is filed
with the Securities and Exchange Commission (the "Commission"), on the date it
is declared effective or at the time of the meeting of the shareholders of the
Company 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 were made, not misleading. The registration
statement and prospectus contained in the Registration Statement will comply,
in all material respects, as to form with the provisions of the Exchange Act
and the Securities Act.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND LITCO
The Company and LITCO hereby jointly and severally represent and
warrant to Index and the Merger Sub as follows:
4.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and has the requisite corporate power and authority to carry on its business as
now conducted in all applicable jurisdictions.
4.2 Capitalization and Ownership of the Company. The Company's entire
authorized capital stock consists of 10,000,000 shares of common stock, of
which 2,552,064 shares are outstanding and 2,000,000 shares of preferred stock,
no par value, of which none are outstanding. All of the shares of Company
Common Stock have been duly authorized and are validly issued, fully paid and
nonassessable and have not been issued in violation of any pre-emptive rights.
Except as set forth on Schedule 4.2 hereto, there are no outstanding or
authorized options, rights, warrants, calls, convertible securities, rights to
subscribe, conversion rights or other agreements or commitments to which the
Company or LITCO are parties or which are binding upon the Company or LITCO
providing for the issuance by the Company or transfer by the Company or LITCO
of additional shares of the Company's capital stock and the Company has not
reserved any shares of its capital stock for issuance, nor are there any
outstanding stock option rights, phantom equity or similar rights, contracts,
arrangements or commitments. There are no voting trusts or any other agreements
or understandings, written or oral, with respect to the voting of the Company's
capital stock.
4.3 Certain Corporate Matters. The Company is duly licensed or qualified
to do business and is in good standing as a foreign corporation in every
jurisdiction in which the character of the Company's properties or nature of
the Company's business requires it to be so licensed or qualified other than
such jurisdictions in which the failure to be so licensed or qualified does
not, or insofar as can reasonably be foreseen, in the future will not, have a
material adverse effect on its financial condition, results of operations or
business. The Company has full corporate power and authority and all
authorizations, licenses, variances, exemptions, orders, contracts, approvals
and permits necessary to carry on the business in which it is engaged or in
which it proposes presently to engage and to own and use the properties owned
and used by it. The Company has delivered to Index true, accurate and complete
copies of its Articles of Incorporation and By-Laws, which reflect all
amendments made thereto at any time prior to the date of this Agreement. The
records of meetings of the shareholders and Board of Directors of the Company
are complete and correct in all material respects. The stock records of the
Company and the shareholder lists of the Company that the Company has
previously furnished to Index are complete and correct in all material respects
and accurately reflect the record ownership and the beneficial ownership of all
the outstanding shares of the Company's capital
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stock and all other outstanding securities issued by the Company. The Company
is not in default under or in violation of any provision of its Articles of
Incorporation or By-Laws in any material respect. The Company is not in
default or in violation of any restriction, lien, encumbrance, indenture,
contract, lease, sublease, loan agreement, note or other obligation or
liability by which it is bound or to which any of its assets is subject.
4.4 Subsidiaries. The Company does not own, directly or indirectly, any
of the capital stock of any other corporation or any equity, profit sharing,
participation or other interest in any corporation, partnership, joint venture
or other entity.
4.5 Authority Relative to this Agreement. Each of the Company and LITCO
has the requisite corporate power and authority to enter into this Agreement
and carry out its obligations hereunder. The execution, delivery and
performance of this Agreement by both the Company and LITCO and the
consummation of the transactions contemplated hereby have been duly authorized
by the Boards of Directors of each of the Company and LITCO and, subject to
shareholder approval as set forth in this Agreement, no other actions on the
part of the Company or LITCO are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of the Company and LITCO and constitutes,
subject to shareholder approval as set forth in this Agreement, a valid and
binding obligation of the Company and LITCO, enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally or
by general principles of equity.
4.6 Consents and Approvals; No Violations. Except as may be required
under the Securities Act, the Exchange Act, state securities or blue sky laws,
and the filing and recordation of the Articles of Merger as required by the
NGCL and the NMBCA, no filing with, and no permit, authorization, consent or
approval of, any public body or authority is necessary for the consummation by
the Company of the transactions contemplated by this Agreement. Neither the
execution and delivery of this Agreement by the Company nor the consummation by
the Company of the transactions contemplated hereby, nor compliance by the
Company with any of the provisions hereof, will (a) conflict with or result in
any breach of any provisions of the Articles of Incorporation or By-Laws of
Company, (b) 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, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, contract,
agreement or other instrument or obligation to which the Company is a party or
by which it or any of its properties or assets may be bound or (c) violate any
order, law, resolution, writ, injunction, decree, statute, rule or regulation
applicable to the Company, or any of its properties or assets, except in the
case of clauses (b) and (c) for violations, breaches or defaults which in the
aggregate would not have a material adverse effect on the financial condition
or results of operations of the Company taken as a whole.
4.7 Reports. The Company has filed all reports required to be filed with
the Securities and Exchange Commission (the "Commission") pursuant to the
Exchange Act (collectively, the
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"Reports"). The Company has delivered to Index copies of all Reports filed with
Commission since March 26, 1994. None of the Reports, as of their respective
dates, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.8 Financial Statements. The Company has delivered to Index the
following audited financial statements: (a) its balance sheets as of December
31, 1995 and March 25, 1995; (b) its statements of operations for the nine
months ended December 31, 1995 and 1994 and for the years ended March 25, 1995
and March 26,1994; (c) its statements of cash flows for the nine months ended
December 31, 1995 and 1994 and for the years ended March 25, 1995 and March
26,1994; (d) its statements of changes in shareholders' equity for the nine
months ended December 31, 1995 and 1994; and (e) its statements of changes in
shareholders' equity for the years ended March 25, 1995 and March 26, 1994. In
addition, the Company has delivered to Index the following unaudited financial
statements:(a) its balance sheet as of March 31, 1996; (b) its statement of
operations for the three months ended March 31, 1996; and (c) its statement of
cash flows for the three months ended March 31,1996. Such financial statements
are herein collectively referred to as the "Financial Statements." The
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods covered
thereby and present fairly the financial condition of the Company as of such
dates and the results of its operations and changes in cash flows for such
periods.
4.9 Events Subsequent to Financial Statements. Since March 31, 1996, there
has not been:
(a) Any adverse change in the financial condition, results of
operations or business of the Company;
(b) Any sale, lease, transfer, license or assignment of any assets,
tangible or intangible, of the Company;
(c) Any damage, destruction or property loss, whether or not covered
by insurance, affecting adversely the properties or business of the
Company;
(d) Any declaration or setting aside or payment of any dividend or
distribution with respect to the shares of capital stock of the
Company or any redemption, purchase or other acquisition of any such
shares;
(e) Any subjection to any lien on any of the assets, tangible or
intangible, of the Company;
(f) Any incurrence of indebtedness or liability or assumption of
obligations by the Company;
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(g) Any waiver or release by the Company of any right of any material
value;
(h) Any increase in compensation or benefits to officers or directors
of the Company;
(i) Any change made or authorized in the Articles of Incorporation or
By-laws of the Company;
(j) Except as set forth on Schedule 4.9 hereto, any issuance,
transfer, sale or other disposition by the Company of any shares of
its capital stock or other equity securities, or any grant of any
options, warrants or other rights to purchase or obtain (including
upon conversion or exercise) shares of its capital stock or other
equity securities; or
(k) Any loan to or other transaction with any officer, director or
shareholder of the Company giving rise to any claim or right of the
Company against any such person or of such person against the Company.
4.10 Undisclosed Liabilities. The Company has no material liability or
obligation of any nature whatsoever, either direct or indirect, matured or
unmatured, accrued, absolute, contingent or otherwise.
4.11 Tax Returns and Audits. The Company has duly and timely filed or
caused to be filed all returns, reports or similar statements (including any
attached schedules) required to be filed with respect to any tax including,
without limitation, all information returns, claims for refunds, amended
returns and declarations of estimated tax (collectively, the "Tax Returns").
For the purpose of this Agreement, "tax" shall include any federal, state,
local or foreign income, gross receipts, windfall profits, severance, property,
production, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, ad valorem, transfer, stamp or
environmental tax, or any other tax or similar assessment or charge, together
with any interest or penalty, addition to tax or additional amount imposed by
any governmental authority. The Company has paid in full or fully reserved
against in the Financial Statements all taxes, interest, penalties, assessments
and deficiencies due or claimed to be due by it to foreign, federal, state or
local taxing authorities. All Tax Returns are complete and accurate and
disclose all taxes required to be paid. The income Tax Returns filed by the
Company are not being, to the knowledge of the Company, examined by the
Internal Revenue Service (the "IRS") or other applicable taxing authorities for
any period. All taxes or estimates thereof that are due as of December 31,
1995, or are claimed or asserted by any taxing authority to be due as of such
date, have been (a) timely and appropriately paid so as to avoid penalties for
underpayment or (b) accrued for on the balance sheet as of December 31, 1995,
as contained in the Financial Statements. Except for amounts not yet due and
payable, all tax liabilities to which the properties of the Company may be
subject have been paid and discharged. The provisions for income and other
taxes payable reflected in the Financial Statements make adequate provision for
all then accrued and unpaid taxes of the Company. There are no tax liens on any
property of the Company, nor are there any pending or threatened examinations,
actions, suits, investigations, audits, assessments or tax claims asserted.
The Company has not been granted
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any extensions of limitation periods applicable to tax claims. Since May 1991,
except jurisdictions in which the Company filed Tax Returns, no claim has been
made by a taxing authority that the Company is or may be subject to taxation by
that jurisdiction. All copies of Tax Returns delivered to Index by the Company
are true and correct, and any and all notices from foreign, federal, state and
local taxing authorities, tax examination reports and statements of
deficiencies assessed against or agreed to by the Company since May 1991 have
been made available to Index. The Company is not a party to, or bound by, any
tax indemnity, tax sharing or tax allocation agreement. The Company is not a
member of an "affiliated group," as defined in Section 1504(a) of the Code and
is not the owner of an interest in a partnership, joint venture, trust, limited
liability company or other entity or organization. All positions taken on
federal Tax Returns that could give rise to a penalty for substantial
understatement pursuant to Section 6662(d) of the Code have been disclosed on
such Tax Returns. The Company has not agreed to and is not required to make
any adjustment pursuant to Section 481(a) of the Code (or any predecessor
provision) by reason of any change in any accounting method. The Company has
no application pending with any taxing authority requesting permission for any
changes in any accounting method, and the IRS has not proposed any such
adjustment or change in accounting method. The Company is not subject to any
limitation under Section 382 or Section 383 of the Code.
Index shall have sole control over any contest relating to federal,
state, local, or foreign tax assessments or proposed assessments against the
Company. Index shall promptly notify LITCO of any audit or examination of the
books and records of the Company undertaken by the tax authorities, any tax
assessments or proposed assessments or any extension of the statute of
limitations applicable to any Tax Returns of the Company relating to any
taxable year or periods ending on or prior to the Closing Date and shall
provide LITCO with periodic reports regarding the status of such audit or
examination. LITCO shall be entitled to participate in (but not control) any
such contest at its sole cost. Index shall not settle or otherwise compromise
any such contest in a manner which results in liability to LITCO under this
Agreement without the written consent of LITCO, which consent shall not be
unreasonably withheld.
4.12 Property. The Company does not own or lease any real or personal
property.
4.13 Books and Records. The books and records of the Company fairly reflect
the transactions to which the Company is a party or by which its properties are
bound.
4.14 Questionable Payments. Neither the Company nor LITCO nor any
employee, agent or representative of either of them has, directly or
indirectly, made any bribes, kickbacks, illegal payments or illegal political
contributions using Company funds or made any payments from the Company's funds
to governmental officials for improper purposes or made any illegal payments
from the Company's funds to obtain or retain business.
4.15 Environmental Matters.
(a) Definitions. For the purpose of this Agreement, the following
terms shall have
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the meaning herein specified:
(i) "Governmental Authority" shall mean the United States,
each state, each county, each city and each other political
subdivision in which the Company's business is located, and
any court, political subdivision, agency or instrumentality
with jurisdiction over the Company's business.
(ii) "Environmental Laws" shall mean (A) the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C.A. 9601 et seq.
("CERCLA"), (B) the Resource Conservation and Recovery Act, as
amended by the Hazardous and Solid Waste Amendment of 1984, 42
U.S.C.A. 6901 et seq. ("RCRA"), (C) the Clean Air Act, 42
U.S.C.A. 7401 et seq., (D) the Federal Water Pollution Control
Act, as amended, 33 U.S.C.A. 1251 et seq., (E) the Toxic
Substances Control Act, 15 U.S.C.A. 2601 et seq., (F) all
applicable state laws, and (G) all other laws and ordinances
relating to municipal waste, solid waste, air pollution, water
pollution and/or the handling, discharge, disposal or recovery
of on-site or off-site hazardous substances or materials, as
each of the foregoing has been or may hereafter be amended
from time to time.
(iii) "Hazardous Materials" shall mean, among others, (A) any
"hazardous waste" as defined by the RCRA, and regulations
promulgated thereunder; (B) any "hazardous substance" as
defined by CERCLA, and regulations promulgated thereunder; (C)
any "toxic pollutant" as defined in the Federal Water
Pollution Prevention and Control Act, as amended, 33 U.S.C.
1251 et seq., (commonly known as "CWA" for "Clear Water Act"),
and any regulations thereunder; (D) any "hazardous air
pollutant" as defined in the Air Pollution Prevention and
Control Act, as amended, 42 U.S.C. 7401 et seq. (commonly
known as "CAA" for "Clear Air Act") and any regulations
thereunder; (E) asbestos; (F) polychlorinated biphenyls; (G)
underground storage tanks, whether empty, filled or partially
filled with any substance; (H) any substance the presence of
which on the Business Location (as hereinafter defined) is
prohibited by any Environmental Laws; and (I) any other
substance which is regulated by any Environmental Laws.
(iv) "Hazardous Materials Contamination" shall mean the
contamination (whether presently existing or hereafter
occurring) of the improvements, facilities, soil, groundwater,
air or other elements on or at the location of the Company at
211 West Wall Street, Midland, Texas 79701, or at any other
location where the Company conducts or has conducted business
(collectively, the "Business Location") by Hazardous
Materials, or the contamination of the buildings, facilities,
soil, groundwater, air or other elements on or any other
specific property or general area, as a result of Hazardous
Materials emanating from the operations of the Company's
business.
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Notwithstanding the foregoing, if any Environmental Law is
amended so as to broaden the meaning of any term defined in it, such
broader meaning shall apply subsequent to the effective date of such
amendment. Where a defined term in this Agreement derives its meaning
from a statutory reference, for the purposes of this Agreement any
regulatory definition promulgated pursuant to the applicable statute
shall be deemed to be applicable to the extent its definition is
broader than the statutory reference and any reference or citation to
a statute or regulation shall be deemed to include any amendments to
that statute or regulation and judicial and administrative
interpretations of it. To the extent that any state laws or
regulations establish a meaning for a term defined in this Agreement
through reference to a federal Environmental Law that is broader than
the meaning specified in such federal Environmental Law, such broader
meaning set forth in the state Environmental Law shall apply. Any
specific references to a law shall include any amendments to it
promulgated from time to time.
(b) Representations and Warranties. Based on the foregoing, the
Company and LITCO jointly and severally represent and warrant that,
to their best knowledge and belief:
(i) There has been no failure by the Company to comply with
all applicable requirements of Environmental Laws relating to
the Company, the Company's operations, and the Company's
manufacture, processing, distribution, use, treatment,
generation, recycling, reuses, sale, storage, handling,
transportation or disposal of any Hazardous Material and
neither the Company nor LITCO is aware of any facts or
circumstances which could materially impair such compliance
with all applicable Environmental Laws.
(ii) Neither LITCO nor the Company has, through the Closing
Date, received notice from any Governmental Authority or any
other person of any actual or alleged violation of any
Environmental Laws, nor is any such notice anticipated.
(iii) Neither the Company nor LITCO will do or permit anything
that will cause the Company to be in violation of any
requirements of Environmental Laws, or do or permit anything
to be done that would materially and adversely affect the
financial condition of the Company or subject the Company to
any enforcement actions under any Environmental Laws.
(iv) The Company has not obtained and is not required to
obtain any permits, licenses or similar authorizations to
construct, occupy, operate or use any buildings, improvements,
fixtures and equipment owned or leased by the Company by
reason of any Environmental Laws.
(v) No Hazardous Materials are now located at the Business
Location, and neither LITCO nor the Company has ever caused or
permitted any Hazardous Materials to be generated, placed,
stored, held, handled, located or used at the
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Business Location, any part thereof or at any other site
controlled or utilized by the Company in its operation of its
business.
(vi) Hazardous Materials Contamination does not now and has
never existed on, in, under or at the location of the Company
or at any other site controlled or utilized by the Company in
the operation of its business. No part of the Business
Location or any other site controlled or utilized by the
Company in the operation of its business is being used has
ever been used by others for the release, disposal or
long-term storage of Hazardous Materials, nor is any part of
the Business Location or any other site controlled or utilized
by the Company in the operation of its business otherwise
affected by Hazardous Materials Contamination.
(vii) No investigation, administrative order, consent order
or agreement, litigation or settlement with respect to
Hazardous Materials or Hazardous Materials Contamination is
proposed, threatened, anticipated, pending or otherwise in
existence with respect to the Business Location or with
respect to any other site controlled or utilized by the
Company in the operation of its business. The Business
Location is not currently on, and has never been on, any
federal or state "Superfund" or "Superlien" list.
4.16 Intellectual Property. There are no patents, patent applications,
trade names, trademark or service mark registrations or applications,
registered trade dress rights, common law trademarks or copyright registrations
or applications owned by the Company or which the Company is licensed to use.
To the best knowledge and belief of the Company and LITCO, there are no claims
that any product, activity or operation of the Company infringes upon or
involves, or has resulted in the infringement of, any patents, patent
applications, trade names, trademark or service mark registrations or
applications, registered trade dress rights, common law trademarks or copyright
registrations or applications or any other proprietary right of any other
person, corporation or other entity; and no proceedings have been instituted,
are pending or are threatened with respect thereto.
4.17 Insurance. The Company has no insurance policies in effect.
4.18 Contracts. Except as set forth herein, the Company has no material
contracts, leases, arrangements and commitments (whether oral or written). The
Company is not a party to or bound by or affected by any contract, lease,
arrangement or commitment (whether oral or written) relating to: (a) the
employment of any person; (b) collective bargaining with, or any representation
of any employees by, any labor union or association; (c) the acquisition of
services, supplies, equipment or other personal property; (d) the purchase or
sale of real property; (e) distribution, agency or construction; (f) lease of
real or personal property as lessor or lessee or sublessor or sublessee; (g)
lending or advancing of funds; (h) borrowing of funds or receipt of credit;
(i) incurring of any obligation or liability; or (j) the sale of personal
property.
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4.19 Litigation. The Company is not subject to any judgment or order of
any court or quasijudicial or administrative agency of any jurisdiction,
domestic or foreign, nor is there any charge, complaint, lawsuit or
governmental investigation pending or, to the best knowledge of the Company and
LITCO, threatened against the Company. The Company is not a plaintiff in any
action, domestic or foreign, judicial or administrative. There are no existing
actions, suits, proceedings or investigations of the Company, and neither the
Company nor LITCO know of any basis for such actions, suits, proceedings or
investigations. There are no unsatisfied judgments, orders, writs,
injunctions, decrees or stipulations affecting the Company or to which the
Company is a party.
4.20 Employees. Except as set forth on Schedule 4.20 hereto, the Company
does not have any employees. The Company does not owe any compensation,
bonuses, profit sharing, pension, retirement, stock options or related
appreciation rights, deferred or otherwise, to any current or previous
employees. The Company has no written or oral employment agreements with any
officer or director of the Company. The Company is not a party to or bound by
any collective bargaining agreement. There are no loans or other obligations
payable or owing by the Company to any shareholder, officer, director or
employee of the Company, nor are there any loans or debts payable or owing by
any of such persons to the Company or any guarantees by the Company of any loan
or obligation of any nature to which any such person is a party.
4.21 Employee Benefit Plans. The Company has no (a) non-qualified deferred
or incentive compensation or retirement plans or arrangements, (b) qualified
retirement plans or arrangements, (c) other employee compensation, severance or
termination pay or welfare benefit plans, programs or arrangements or (d) any
related trusts, insurance contracts or other funding arrangements maintained,
established or contributed to by the Company within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
The Company does not have any liability under Title IV of ERISA as a result of
actions or events occurring prior to the Closing.
4.22 Legal Compliance. No claim has been filed against the Company alleging
a violation of any applicable laws and regulations of foreign, federal, state
and local governments and all agencies thereof. The Company holds all of the
material permits, licenses, certificates or other authorizations of foreign,
federal, state or local governmental agencies required for the conduct of its
business as presently conducted.
4.23 Broker's Fees. Neither the Company, LITCO nor anyone on their behalf
has any liability to any broker, finder, investment banker or agent, or has
agreed to pay any brokerage fees, finder's fees or commissions, or to reimburse
any expenses of any broker, finder, investment banker or agent in connection
with the Merger or any similar transaction.
4.24 Disclosure. The representations and warranties and statements of fact
made by the Company and LITCO in this Agreement and in any Schedule hereto are,
as applicable, accurate, correct and complete and do not contain any untrue
statement of a material fact or omit to state
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any material fact necessary in order to make the statements and information
contained herein or therein not misleading.
4.25 Bank Accounts. Except as set forth on Schedule 4.25 hereto, the
Company does not have any account, instrument of deposit or safe deposit box.
4.26 Information Supplied. None of the information supplied by the Company
or LITCO for use in the Registration Statement and contained therein will, as
of the date that the Registration Statement is filed with the Commission, on
the date it is declared effective or at the time of the meeting of the
shareholders of the Company 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 were made, not
misleading. The proxy statement contained in the Registration Statement will
comply, in all material respects, as to form with the provisions of the
Exchange Act.
ARTICLE 5
CONDUCT OF BUSINESS PENDING THE CLOSING
5.1 Conduct of Business by the Company Pending the Closing. The Company
and LITCO jointly and severally covenant and agree that prior to the Closing
Date:
(a) The Company shall conduct its business and operations only in the
usual and ordinary course of business and consistent with past custom
and practice;
(b) The Company shall not directly or indirectly do any of the
following: (i) sell, pledge, dispose of or encumber any of its assets,
except for the repayment of indebtedness owed to LITCO in the amount
of $6,040.00; (ii) amend or propose to amend its Articles of
Incorporation or By-Laws; (iii) split, combine or reclassify any
outstanding shares of its capital stock, or declare, set aside or pay
any dividend or other distribution payable in cash, stock, property or
otherwise with respect to shares of its capital stock; (iv) redeem,
purchase or acquire or offer to acquire any shares of its capital
stock or other securities; (v) create any subsidiaries; or (vi) enter
into or modify any contract, agreement, commitment or arrangement with
respect to any of the foregoing;
(c) The Company shall not, and with respect to the applicable matters
set forth in this Section 5.1(c) (i) and (iv), LITCO shall not, (i)
issue, sell, pledge or dispose of, or agree to issue, sell, pledge or
dispose of, any additional shares of, or any options, warrants,
conversion privileges or rights of any kind to acquire any shares of,
its capital stock; (ii) acquire (by merger, consolidation, acquisition
of stock or assets or otherwise) any corporation, partnership or other
business organization or division or the material assets thereof;
(iii) incur any indebtedness for borrowed money, issue any debt
securities or guarantee any indebtedness to others; or (iv) enter into
or modify any contract, agreement, commitment or arrangement with
respect to any of the foregoing;
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(d) The Company shall not enter into any employment, severance or
similar agreements or arrangements with, or grant any bonus, salary
increase, severance or termination pay to, any officers or directors;
(e) The Company shall not adopt any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement,
trust, fund or arrangement for the benefit or welfare of any employee;
(f) Except as otherwise required by its Articles of Incorporation or
By-Laws, by this Agreement or by applicable law, neither the Company
nor LITCO shall call any meeting of shareholders;
(g) The Company and LITCO shall (i) use their best efforts not to take
any action which would render, or which reasonably may be expected to
render, any representation or warranty made by them in this Agreement
untrue at any time prior to the Closing Date as if then made; and (ii)
notify Index of any emergency or other change in the normal course of
its business or in the operation of its properties and of any tax
audits, tax claims, governmental or third party complaints,
investigations or hearings (or communications indicating that the same
may be contemplated) if such emergency, change, audit, claim,
complaint, investigation or hearing would be material, individually or
in the aggregate, to the financial condition, results of operations or
business of the Company, or to the ability of any of the parties
hereto to consummate the transactions contemplated by this Agreement;
(h) The Company and LITCO shall notify Index promptly of any material
adverse event or circumstance affecting the Company (including the
filing of any material litigation against the Company or the existence
of any dispute with any person or entity which involves a reasonable
likelihood of such litigation being commenced); and
(i) The Company shall comply with all legal requirements and
contractual obligations applicable to its operations and business and
pay all applicable taxes.
5.2 Other Actions. Unless approved in writing by Index, the Company and
LITCO shall not take any action or permit any action to occur that might
reasonably be expected to result in any of the representations and warranties
of the Company and LITCO contained in this Agreement becoming untrue after the
date hereof or any of the conditions to the Closing set forth in Article 7 of
this Agreement not being satisfied.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Access and Information. Except for information relating to any claims
any party may have against the other, the Company and Index shall each afford
to the other and to the other's
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financial advisors, legal counsel, accountants, consultants and other
representatives full access during normal business hours throughout the period
prior to the Effective Time to all of its books, records, properties and
personnel and, during such period, each shall furnish promptly to the other (a)
a copy of each report, schedule and other document filed or received by it
pursuant to the requirements of federal or state securities laws, and (b) all
other information as such other party may reasonably request. Each party shall
hold in confidence all non-public information until such time as such
information is otherwise publicly available and, if this Agreement is
terminated, each party will upon written request deliver to the other all
documents, work papers and other material obtained by such party or on its
behalf from the other party as a result of this Agreement or in connection
herewith, whether so obtained before or after the execution hereof. As soon as
practicable following the Closing, the Company shall deliver to Index all of
the books and records of the Company.
6.2 Registration Statement. Index and the Company shall cooperate in
preparing a registration statement on Form S- 4 and combined prospectus and
proxy statement, any amendments or supplements thereto and any notices,
reports, letters, proxies or other materials required to be filed with the
Commission in connection with the Merger and the Sepco Merger (collectively,
the registration statement and combined prospectus and proxy statement, any
amendments or supplements thereto and any notices, reports, letters, proxies or
other materials required to be filed with the Commission in connection with the
Merger and the Sepco Merger are herein referred to as the "Registration
Statement"). The parties shall cooperate with each other in providing any
information that the other party may reasonably request to aid in the
preparation of the Registration Statement. The parties will use their
commercially reasonable efforts to respond to the comments of the Commission
with respect to the Registration Statement and will make any further filing
(including amendments and supplements) in connection therewith that may be
necessary, proper or advisable. Index will provide the Company, and the
Company will provide Index, with whatever information and assistance in
connection with the foregoing filings that the filing party reasonably may
request. Index will take all actions that may be necessary, proper or
advisable under state securities laws in connection with the offering and
issuance of Index Common Stock as contemplated herein.
6.3 Meetings of Shareholders.
(a) The Company shall promptly take all action reasonably necessary
in accordance with the NMBCA and its Articles of Incorporation and
By-Laws to convene a meeting of its shareholders to consider and vote
upon the adoption and approval of the Merger and this Agreement. The
Company (i) shall recommend at such meeting, through its Board of
Directors, that the shareholders of the Company vote to adopt and
approve the Merger and this Agreement, (ii) shall use its reasonable
efforts to solicit from shareholders of the Company proxies in favor
of such adoption and approval and (iii) shall take all other action
reasonably necessary to secure a vote of its shareholders in favor of
the adoption and approval of the Merger and this Agreement.
(b) The Merger Sub shall call a special meeting of its sole
stockholder prior to the
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Effective Time to be held in accordance with the laws of the State of
Nevada to consider and vote upon the Merger. The parties hereto
acknowledge and agree that the Merger Sub's sole stockholder may
approve the Merger by written consent in lieu of holding such a
meeting.
(c) Index shall call a special meeting of its shareholders prior to
the Effective Time to be held in accordance with the laws of the State
of Texas to consider and vote upon the Sepco Merger.
6.4 Press Releases. The Company and Index shall consult with each other
as to the form and substance of any press release or other public disclosure of
matters related to this Agreement or any of the transactions contemplated
hereby; provided, however, that nothing in this Section 6.4 shall be deemed to
prohibit any party hereto from making any disclosure that is required to
fulfill such party's disclosure obligations imposed by law, including, without
limitation, federal securities laws.
6.5 Reimbursement of LITCO. On or before the Closing Date, the Company
shall pay to LITCO the amount of $6,040.00 in order to reimburse LITCO for
expenses incurred for the benefit of the Company, which payment is not objected
to by Index.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of Each Party to Effect the Closing. The
respective obligations of each party to effect the Closing shall be subject to
the fulfillment on or prior to the Closing Date of the following conditions:
(a) The Registration Statement shall have been declared effective by
the Commission and no stop order with respect thereto shall be in
effect;
(b) The Merger shall have been approved by the shareholders of Index
and the Company and the stockholder of the Merger Sub, respectively,
in accordance with the laws of the States of Texas, New Mexico and
Nevada, respectively;
(c) The Sepco Merger shall have been approved by the shareholders and
stockholders of Index and Sepco and the stockholder of Sepco
Acquisition Corporation, respectively in accordance with the laws of
the States of Texas and Nevada, respectively; and
(d) No order, injunction or decree shall have been entered and remain
in effect in any action or proceeding before any foreign, federal or
state court or governmental agency or other foreign, federal or state
regulatory or administrative agency or commission that would prevent
or make illegal the consummation of the transactions contemplated
hereby.
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7.2 Additional Conditions to Index's and the Merger Sub's Obligations. The
obligations of each of Index and the Merger Sub to effect the Closing are
subject to the satisfaction of the following additional conditions on or before
the Closing Date:
(a) The representations and warranties set forth in Article 4 of this
Agreement will be true and correct in all material respects as of the
date hereof and at and as of the Closing Date as though then made;
(b) The Company and LITCO shall have performed, in all material
respects, each obligation and agreement and complied with each
covenant to be performed and complied with by them under Articles 5
and 6 of this Agreement prior to the Closing Date;
(c) All consents by governmental or regulatory agencies or otherwise
that are required for the consummation of the transactions
contemplated hereby or that are required for Index to own, operate or
control the Company or any portion of the assets of the Company to
prevent a breach of or a default under or a termination of any
agreement material to the Company to which the Company is a party or
to which any material portion of the assets of the Company is subject,
will have been obtained;
(d) No action or proceeding before any court or governmental body will
be pending or threatened wherein a judgment, decree or order would
prevent or restrain any of the transactions contemplated hereby or
cause such transactions to be declared unlawful, nullified or
rescinded or which might adversely affect the right of Index to own,
operate or control the Company;
(e) Index and its financial and legal advisors shall have completed a
due diligence review of the business, operations and financial
statements of the Company, the results of which shall be satisfactory
to Index in its sole discretion;
(f) Index will have received from Matthew Blair, Esq., counsel to the
Company, an opinion addressed to Index, dated the Closing Date and
substantially in the form attached hereto as Exhibit A;
(g) No event shall have occurred prior to the Closing which in the
reasonable judgment of Index or the Merger Sub, would materially
affect the purpose of the Merger; and
(h) At the Closing, the Company shall have delivered or caused to be
delivered to Index the following:
(i) a certificate executed by the President and Secretary of
both the Company and LITCO stating that the conditions set
forth in Sections 7.2(a) through (d) of this Agreement have
been satisfied;
(ii) certified copies of the resolutions duly adopted by the
Company's and
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LITCO's Boards of Directors authorizing and approving the
Merger and the execution, delivery and performance of this
Agreement;
(iii) certified copies of resolutions duly adopted by the
Company's and LITCO's shareholders authorizing and approving
the Merger and the execution, delivery and performance of this
Agreement;
(iv) certificates of good standing or comparable certificates
for the Company from the Secretary of State of the State of
New Mexico and for LITCO from the Secretary of State of the
State of Texas and from every jurisdiction where a failure to
be qualified or licensed would have a material adverse effect
on its financial condition, results of operations or business,
dated not earlier than five days prior to the Closing Date;
(v) a certificate of existence or comparable certificates for
LITCO from the Secretary of State of the State of Texas and
for the Company from the Secretary of State of the State New
Mexico, dated not earlier than five days prior to the Closing
Date;
(vi) a copy of each of the Company's and LITCO's Articles of
Incorporation certified as of a recent date by the Secretary
of State of the States of New Mexico and Texas, respectively;
(vii) an incumbency certificate of the officers of the Company
and LITCO;
(viii) resignations from the officers and directors of the
Company, dated as of the Effective Time; and
(ix) such other documents as Index may reasonably request in
connection with the transactions contemplated hereby.
7.3 Additional Conditions to the Company's and LITCO's Obligations. The
obligations of each of the Company and LITCO to effect the Closing are subject
to the satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article 3 of this
Agreement will be true and correct in all material respects as of the
date hereof and at and as of the Closing Date as though then made;
(b) Index shall have performed, in all material respects, each
obligation and agreement and complied with each covenant required to
be performed and complied with by it under Article 6 of this Agreement
prior to the Closing Date;
(c) No action or proceeding before any court or governmental body will
be pending or
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threatened wherein a judgment, decree or order would prevent any of
the transactions contemplated hereby or cause such transactions to be
declared unlawful or rescinded;
(d) The Company shall have received from Fouts & Moore, L.L.P.,
counsel to Index, an opinion addressed to the Company and LITCO, dated
the Closing Date and substantially in the form attached hereto as
Exhibit B; and
(e) On the Closing Date, Index shall have delivered to the Company the
following:
(i) a certificate executed on behalf of Index and the Merger
Sub stating that the conditions set forth in Sections 7.3(a)
through (c) of this Agreement have been satisfied;
(ii) certified copies of resolutions duly adopted by Index's
and the Merger Sub's Boards of Directors authorizing and
approving the Merger and the execution, delivery and
performance of this Agreement;
(iii) certified copies of the resolutions duly adopted by the
shareholder of the Merger Sub authorizing and approving the
Merger and the execution, delivery and performance this
Agreement;
(iv) certified copies of resolutions duly adopted by Index's
Board of Directors authorizing and approving the Sepco Merger
and the execution, delivery and performance of the Sepco
Merger Agreement;
(v) certified copies of resolutions duly adopted by the
shareholders of Index authorizing and approving the Sepco
Merger and the execution, delivery and performance of the
Sepco Merger Agreement;
(vi) certificate of existence for Index from the Secretary of
State of the State of Texas and certificate of existence for
the Merger Sub from the Secretary of State of Nevada, dated
not earlier than five days prior to the Closing Date;
(vii) a copy of Index's Articles of Incorporation certified
by the Secretary of State of the State of Texas;
(viii) a certificate of good standing for the Merger Sub from
the Secretary of State of the State of Nevada and a
certificate of good standing for Index from the Secretary of
State of Texas, dated not earlier than five days prior to the
Closing Date;
(ix) a copy of the Merger Sub's Articles of Incorporation
certified by the Secretary of State of the State of Nevada;
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(x) an incumbency certificate of the officers of Index and
the Merger Sub; and
(xi) such other material documents as the Company may
reasonably request in connection with the transactions
contemplated hereby.
ARTICLE 8
REMEDIES
8.1 Indemnification by LITCO. Subject to the terms and conditions of this
Article 8, LITCO agrees to indemnify, defend and hold Index and its directors,
officers, agents, attorneys and affiliates harmless from and against all
losses, claims, actions, causes of action, fines, obligations, demands,
assessments, penalties, liabilities, costs, damages, attorneys' fees and
expenses (collectively, "Damages"), asserted against or incurred by any such
person or entity (i) by reason of or resulting from a breach of any
representation, warranty, non-fulfillment of any agreement or covenant of the
Company or LITCO contained in this Agreement or in any written statement,
certificate or other document to be delivered in connection herewith or (ii)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any part of the Registration Statement when
such part became effective, or in the Registration Statement or the prospectus
contained therein, as of its date, or any amendment or supplement thereto
relating to information furnished by the Company or LITCO to Index, or arise
out of or are based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading relating to information furnished by the Company or
LITCO to Index.
8.2 Indemnification by Index. Subject to the terms and conditions of this
Article 8, Index hereby agrees to indemnify, defend and hold the Company and
its directors, officers, agents, attorneys and affiliates harmless from and
against all Damages asserted against or incurred by any such person or entity
(i) by reason of or resulting from a breach of any representation, warranty or
covenant of Index contained in this Agreement or (ii) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any part of the Registration Statement when such part became
effective, or in the Registration Statement or the prospectus contained
therein, as of its date, or any amendment or supplement thereto, or arise out
of or are based upon any omission or alleged omission to state therein not
misleading; provided, however, that Index shall not be liable to the Company or
any of its directors, officers, agents, attorneys or affiliates in any such
case to the extent that any Damages arise out of or are based upon an untrue
statement or alleged untrue statement or omission or alleged omission relating
to information furnished by the Company or LITCO to Index for inclusion in the
Registration Statement.
8.3 Conditions of Indemnification. The respective obligations and
liabilities of LITCO and Index (the "indemnifying party") to the other (the
"party to be indemnified") under Sections 8.1 and 8.2 with respect to claims
resulting from the assertion of liability by third parties shall be subject to
the following terms and conditions:
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(a) Within 20 days (or such earlier time as might be required to
avoid prejudicing the indemnifying party's position) after receipt of
notice of commencement of any action evidenced by service of process
or other legal pleading, the party to be indemnified shall give the
indemnifying party written notice thereof together with a copy of such
claim, process or other legal pleading, and the indemnifying party
shall have the right to undertake the defense thereof by
representatives of its own choosing and at its own expense; provided
that the party to be indemnified may participate in the defense with
counsel of its own choice, the fees and expenses of which counsel
shall be paid by the party to be indemnified unless (i) the
indemnifying party has agreed to pay such fees and expenses, (ii) the
indemnifying party has failed to assume the defense of such action or
(iii) the named parties to any such action (including any impleaded
parties) include both the indemnifying party and the party to be
indemnified and the party to be indemnified has been advised by
counsel that there may be one or more legal defenses available to it
that are different from or additional to those available to the
indemnifying party (in which case, if the party to be indemnified
informs the indemnifying party in writing that it elects to employ
separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of
such action on behalf of the party to be indemnified, it being
understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys at any time for the party to be indemnified, which firm
shall be designated in writing by the party to be indemnified).
(b) In the event that the indemnifying party, by the 30th day after
receipt of notice of any such claim (or, if earlier, by the 10th day
preceding the day on which an answer or other pleading must be served
in order to prevent judgment by default in favor of the person
asserting such claim), does not elect to defend against such claim,
the party to be indemnified will (upon further notice to the
indemnifying party) have the right to undertake the defense,
compromise or settlement of such claim on behalf of and for the
account and risk of the indemnifying party and at the indemnifying
party's expense, subject to the right of the indemnifying party to
assume the defense of such claims at any time prior to settlement,
compromise or final determination thereof.
(c) Notwithstanding the foregoing, the indemnifying party shall not
settle any claim without the consent of the party to be indemnified
unless such settlement involves only the payment of money and the
claimant provides to the party to be indemnified a release from all
liability in respect of such claim. If the settlement of the claim
involves more than the payment of money, the indemnifying party shall
not settle the claim without the prior consent of the party to be
indemnified.
(d) The party to be indemnified and the indemnifying party will each
cooperate with all reasonable requests of the other.
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8.4 Waiver. No waiver by any party of any default or breach by another
party of any representation, warranty, covenant or condition contained in this
Agreement shall be deemed to be a waiver of any subsequent default or breach by
such party of the same or any other representation, warranty, covenant or
condition. No act, delay, omission or course of dealing on the part of any
party in exercising any right, power or remedy under this Agreement or at law
or in equity shall operate as a waiver thereof or otherwise prejudice any of
such party's rights, powers and remedies. All remedies, whether at law or in
equity, shall be cumulative and the election of any one or more shall not
constitute a waiver of the right to pursue other available remedies.
8.5 Remedies Not Exclusive. The remedies provided in this Article 8 shall
not be exclusive of any other rights or remedies available to one party against
the other, either at law or in equity.
ARTICLE 9
TERMINATION
9.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time by the
mutual consent of the parties hereto.
9.2 Termination by Any Party. This Agreement may be terminated and the
Merger may be abandoned by action of the Board of Directors of any party hereto
if a United States federal or state court of competent jurisdiction or United
States federal or state governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable; provided, that the
party seeking to terminate this Agreement pursuant to this clause shall have
used all reasonable efforts to remove such injunction, order or decree.
9.3 Termination by Index. This Agreement may be terminated by Index upon
written notice if the Closing has not occurred by December 31, 1996.
9.4 Effect of Termination and Abandonment. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to this Article 9,
all obligations of the parties hereto shall terminate, except the obligations
of the parties pursuant to Section 6.1.
9.5 Material Breach. This Agreement may be terminated if a material
breach of this Agreement has occurred and such breach has not been cured by the
breaching party within ten business days of receipt of written notice from a
non-breaching party detailing such breach.
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ARTICLE 10
GENERAL PROVISIONS
10.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
sent by overnight courier or mailed by registered or certified mail (postage
prepaid and return receipt requested) to the party to whom the same is so
delivered, sent or mailed at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Index or the Merger Sub:
David R. Little, President
580 Westlake Park Boulevard
Suite 1100
Houston, Texas 77079
Phone: (713) 558-4448
Fax: (713) 558-4448
with a copy to:
Gary A. Messersmith, Esq.
Fouts & Moore, L.L.P.
5555 San Felipe, 17th Floor
Houston, Texas 77066-2726
(b) if to the Company or LITCO:
Glenn A. Little, President
211 West Wall Street
Midland, Texas 79701-4506
Phone: (800) 351-4515
Fax: (915) 682-2560
with a copy to:
Matthew Blair, Esq.
4419 Tanforan
Midland, Texas 79701
10.2 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise stated.
10.3 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated and the parties shall negotiate
in good faith to modify this Agreement to preserve each party's anticipated
benefits under this Agreement.
10.4 Miscellaneous. This Agreement (together with all other documents and
instruments
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referred to herein): (a) constitutes the entire agreement and supersedes all
other prior agreements and undertakings, both written and oral, among the
parties with respect to the subject matter hereof; (b) except as expressly set
forth herein, is not intended to confer upon any other person any rights or
remedies hereunder and (c) shall not be assigned by operation of law or
otherwise, except that Index may assign all or any portion of its rights under
this Agreement to any wholly-owned subsidiary but no such assignment shall
relieve Index of its obligations hereunder, and except that this Agreement may
be assigned by operation of law to any corporation with or into which Index may
be merged.
10.5 Separate Counsel. Each party hereby expressly acknowledges that it
has been advised and urged to seek its own separate legal counsel for advice
with respect to this Agreement.
10.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS,
INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF
TEXAS, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts which together shall constitute a single agreement.
10.8 Amendment. This Agreement may be amended, modified or supplemented
only by an instrument in writing executed by all parties hereto.
10.9 Parties In Interest: No Third Party Beneficiaries. Except as otherwise
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective heirs, legal representatives,
successors and assigns of the parties hereto. This Agreement shall not be
deemed to confer upon any person not a party hereto any rights or remedies
hereunder.
10.10 Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
10.11 Expenses. The parties hereto shall pay all of their own expenses
relating to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel and financial
advisers.
10.12 Survival. The representations, warranties and covenants contained
herein shall survive the Closing.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
INDEX, INC.
By: /s/ David R. Little
----------------------------------
David R. Little, President
NEWMAN ACQUISITION CORPORATION
By: /s/ David R. Little
----------------------------------
David R. Little, President
NEWMAN COMMUNICATIONS CORPORATION
By: /s/ Glenn A. Little
----------------------------------
Glenn A. Little, President
LITTLE & COMPANY INVESTMENT SECURITIES
By: /s/ Glenn A. Little
----------------------------------
Glenn A. Little, President
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SCHEDULE 4.2
The Company currently has 1,650,000 Class C Warrants outstanding. Each
Class C Warrant allows the holder to purchase one share of Company Common Stock
at $2.00 per share until November 22, 1996. The form of the Class C Warrant
certificate is attached as Exhibit A hereto.
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SCHEDULE 4.9
The Company will issue 1,693,564 shares of Company Common Stock to Halter
Financial Group, Inc., a Texas corporation subsequent to the date of this
Agreement.
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SCHEDULE 4.20
Name of Employee: Positions:
----------------- ----------
Glenn A. Little Chairman of the Board and President
Patricia de Little Director, Vice President, Secretary and Treasurer
35
SCHEDULE 4.25
BANK ACCOUNTS
NationsBank of Texas, N.A. Sunwest Bank of Albuquerque, N.A.
Post Office Box 831547 Post Office Box 25500
Dallas, Texas 75283-1547 Albuquerque, New Mexico 87125-0500
(800) 462-6289 (505) 765-2600
Business Economy Checking Funds Checking
Account Number 423-003953-7 Account Number 00-0109-652297
36
The following exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K, promulgated under the Securities Act of 1933, as amended:
Exhibit A -- Opinion of Matthew Blair, Esq.
Exhibit B -- Opinion of Fouts & Moore, L.L.P.
The Company will furnish supplementally a copy of the omitted exhibits to the
Commission upon request.