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EXHIBIT 2.1
MERGER AGREEMENT
THIS MERGER AGREEMENT (the "Agreement") is made as this 22nd day of
March, 2000, by and between Hawkeye Corporation, a Delaware corporation
(hereinafter referred to as "Hawkeye"), and Internet Service Network, Inc., a
Florida corporation (together all hereinafter referred to as "ISNI").
BACKGROUND:
As of the Closing Date (as defined below), ISNI shall merge (the
"Merger") with and into Hawkeye and all of the issued and outstanding stock of
ISNI (the "ISNI Stock") shall be, subject to the terms, conditions and covenants
of this Agreement, exchanged for and converted into shares of voting $0.0001 par
value Common Stock of Hawkeye (the "Hawkeye Stock") as hereinafter provided;
and,
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
1. THE EXCHANGE OF SHARES.
On the Closing Date and pursuant to the Merger, all of the issued and
outstanding shares of ISNI Stock (the "ISNI Exchange Shares") shall be converted
into and exchanged for a total of 24,000,000 shares of Hawkeye Common Stock (the
"Hawkeye Exchange Shares") as follows:
List of the current shareholders of ISNI,
and How Many shares each of them receives.
Werner K. Ebner 1,000
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Total Hawkeye Exchange Shares 24,000,000
In addition to the foregoing, ISNI will pay the sum of $25,000 as a
consulting fee payable to Coral Capital Partners, Inc. upon delivery of this
Agreement and the balance of $100,000 payable to Coral Capital Partners, Inc. at
the closing of the Merger. Said $25,000 is a good faith deposit which will be
the property of Coral Capital Partners, Inc. should ISNI fail to close on the
Closing date. If Hawkeye fails or refuses to close for any reason other than
those contained in this Agreement, said $25,000 will be returned to ISNI. The
total fees payable to Coral are $125,000.
2. DELIVERY OF SHARES.
2.1 Delivery. At the Closing the Stockholders, as the holder of all
outstanding certificates representing shares of ISNI Stock, shall, upon
surrender of such certificates, receive the Hawkeye Exchange Shares which shall
be delivered to the Stockholders at the principal office of the Stockholders, or
at the place of Closing.
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2.2 Unrestricted Nature of Shares. As provided in Section 14 of this
Agreement, the Hawkeye Exchange Shares will be issued in reliance on Section
4(2) of the Securities Act of 1933 (the "Act") and will be "restricted
securities" as that term is defined in Rule 144 of the Act.
3. ISNI APPROVALS.
The Board of Directors and Stockholders of ISNI shall deliver actions by
unanimous written consent approving this Agreement and the Merger together with
the certificates representing the ISNI Exchange Shares, duly endorsed in blank
by the Stockholders or accompanied by blank stock powers, with signatures
Medallion Guaranteed by a national bank, and with all necessary transfer tax and
other revenue stamps, acquired at the Stockholder's expense, affixed and
canceled. The Stockholders agree to cure any deficiencies with respect to the
endorsement of the certificates or other documents of conveyance with respect to
such ISNI Exchange Shares or with respect to the stock powers accompanying any
ISNI Exchange Shares.
4. CLOSING.
The exchange and delivery of shares referred to in Section 2 hereof
(hereinafter referred to as the "Closing") shall take place on the 22nd day of
March, 2000 at the offices of Hawkeye or at such other time and date as Hawkeye
and ISNI may in writing designate, which date shall be referred to as the
"Closing Date." Time is of the essence. The effective date for accounting/tax
purposes shall be March 22, 2000.
5. REPRESENTATIONS AND WARRANTIES OF ISNI.
ISNI represent and warrant that all of the following representations and
warranties shall, except as otherwise disclosed herein, be true at the time of
Closing and that such representations and warranties as made at the time of
Closing shall survive the Closing for a period of two (2) years from the Closing
Date (which date is hereinafter called the "Expiration Date").
5.1 Due Organization. ISNI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and is duly
authorized, qualified and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to carry on its businesses in the
places and in the manner as now conducted except where the failure to be so
authorized, qualified or licensed would not have a material adverse effect on
the business of ISNI taken as a whole. Copies of the Articles of Incorporation,
Bylaws, each as amended, stock records and minute books of ISNI as heretofore
made available to Hawkeye, are correct and complete.
5.2 Authorization. ISNI have full legal right, power and authority to
enter into this Agreement, and the exchange of ISNI Exchange Shares for Hawkeye
Exchange Shares, pursuant to the provisions of this Agreement will transfer
valid title in the ISNI Exchange Shares to Hawkeye, free and clear of all liens,
encumbrances and claims of every kind.
5.3 Capital Stock of ISNI. The authorized capital stock of ISNI consists
solely of 10,000,000 shares of voting Common Stock, $0.10 par value, of which
1,000 shares are issued and outstanding. All of the issued and outstanding
shares of the capital stock of ISNI are owned by the Stockholders, and are free
and clear of all liens, encumbrances and claims of every kind. All of the issued
and outstanding shares of ISNI Stock have been duly authorized and validly
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issued, are fully paid and nonassessable, are owned of record and beneficially
by the Stockholders and further, such shares were offered, issued, sold and
delivered by ISNI in compliance with all applicable state and federal laws
concerning the issuance of securities.
5.4 Transactions in Capital Stock. No option, warrant, call, conversion
right or commitment of any kind exists which obligates ISNI to issue any of its
authorized but unissued capital stock, except as noted in "Exhibit 5.4." In
addition, ISNI has no obligation (contingent or otherwise) to purchase, redeem
or otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof.
5.5 Financial Statements. ISNI has delivered to Hawkeye copies of
unaudited financial and must prepare within sixty (60) days from the Closing
Date audited financial statements to be filed with the Securities and Exchange
Commission. The ISNI financial statements will be prepared in accordance with
generally accepted accounting principles and applied on a consistent basis
throughout the periods indicated. The ISNI financial statements will present
fairly the financial condition of ISNI as of the date indicated thereon, and
such Statements of Earnings, and Cash Flows and Retained Earnings will present
fairly the results of its respective operations for the periods indicated
thereon.
5.6 Property. ISNI has delivered to Hawkeye an accurate list and summary
description (Schedule 5.6) of all property (real and personal) owned by ISNI.
The ISNI property constitutes all of the property, real or personal, owned by
ISNI.
5.7 Material Contracts and Commitments. ISNI is not a party to, nor bound
by, any material contracts, or commitments (including, but not limited to, joint
venture or partnership agreements, contracts with any labor organizations, loan
agreements, indemnity or guaranty agreements, bonds, mortgages, options to
purchase land, liens, pledges or other security agreements) other than as
disclosed on "Exhibit 5.7" hereto.
5.8 Conformity with Law. ISNI is not in material default under any law or
regulation or under any order of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over either of them which would have a material adverse
effect on their businesses, taken as a whole; and there are no claims, actions,
suits or proceedings, pending or threatened, against or affecting ISNI, at law
or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over either of them and no notice of any claim, action, suit
or proceeding, whether pending or threatened, has been received. ISNI has
conducted and is conducting its business in compliance with the requirements,
standards, criteria and conditions set forth in applicable federal, state and
local statutes, ordinances, permits, licenses, orders, approvals, variances,
rules and regulations and is not in violation of any of the foregoing which
might materially and adversely affect the business, operations, affairs,
prospects, properties, assets, profits or condition (financial or otherwise) of
them, taken as a whole.
5.9 Taxes. ISNI has timely filed all requisite federal and other tax
returns for all fiscal periods ended; and there are no open years, examinations
in progress or claims against them for federal and other taxes (including
penalties and interest) for any period. ISNI and its subsidiaries will conform
their taxable year end to that of Hawkeye.
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5.10 Absence of Changes. Since the date of the ISNI financial statements,
there has not been:
(a) any material adverse change in the financial condition,
assets, liabilities (contingent or otherwise), income or business of
ISNI;
(b) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
ISNI;
(c) any change in the authorized capital of ISNI or in their
respective securities outstanding or any change in their respective
ownership interests or any grant of any options, warrants, calls,
conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of ISNI;
(e) any transaction by ISNI outside the ordinary course of their
respective businesses.
5.11 Deposit Accounts; Powers of Attorney. ISNI has delivered to Hawkeye
an accurate schedule as of the date of the Agreement, of:
(a) the name of each financial institution in which ISNI has
accounts or safe deposit boxes;
(b) the names in which the accounts or boxes are held;
(c) the type of account; and
(d) the name of each person authorized to draw thereon or have
access thereto.
ISNI has also set forth the name of each person, corporation, firm or other
entity holding a general or special power of attorney from ISNI and a
description of the terms of such power.
5.12 Environmental Matters. ISNI has no knowledge of any assertion by any
governmental agency or other regulatory authority of any environmental lien or
action.
5.13 Validity of Obligations. The execution and delivery of this
Agreement by ISNI is subject to Board of Directors' approval. The performance of
the transactions contemplated herein have been duly and validly authorized by
the Board of Directors of ISNI, and this Agreement has been duly and validly
authorized by all necessary corporate action and is a legal, valid and binding
obligation of ISNI.
5.14 Relations with Government. ISNI has not made, offered or agreed to
offer anything of value to any governmental official, political party or
candidate for government office nor has it otherwise taken any action which
would cause ISNI to be in violation of the Foreign Corrupt Practices Act of
1977, as amended or any law of similar effect.
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5.15 Disclosure. This Agreement and all other documents and information
furnished to Hawkeye and its representatives pursuant hereto do not and will not
include any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading. If ISNI or the
Stockholders become aware of any fact or circumstance which would change a
representation or warranty of ISNI or the Stockholders in this Agreement or any
representation made on behalf of ISNI, ISNI and the Stockholders shall
immediately give notice of such fact or circumstance to Hawkeye. However, such
notification shall not relieve either ISNI or the Stockholders of their
respective obligations under this Agreement, and at the sole option of Hawkeye,
the truth and accuracy of any and all warranties and representations of ISNI, or
on behalf of ISNI and of the Stockholders at the date of this Agreement and at
the closing, shall be a precondition to the consummation of this transaction.
5.16 Employee Benefit Plans. ISNI does not maintain or otherwise have any
liability (whether direct or indirect, actual or contingent) in respect of any
employee pension benefit plan (as such term is defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")} or under
any "employee welfare benefit plan" {as such term is defined in Section 3(1) of
ERISA}.
5.17 Subsidiaries. ISNI does not currently have any subsidiaries.
5.18 Predecessor Status: ISNI. ISNI has not owned any predecessor
companies. ISNI has never been a subsidiary or division of another corporation
nor been a part of an acquisition which was later rescinded.
6. REPRESENTATIONS AND WARRANTIES OF HAWKEYE.
Hawkeye represents and warrants that all of the following representations
and warranties be true at the time of Closing and that such representations and
warranties as made at the time of Closing shall survive the Closing for a period
of two (2) years from the Closing Date (which date is hereinafter called the
"Expiration Date"), unless otherwise modified by documents furnished to ISNI.
6.1 Due Organization. Hawkeye is duly organized, validly existing and in
good standing under the laws of the State of Delaware, and is duly authorized,
qualified and licensed under all applicable laws, regulations, ordinances and
orders of public authorities to carry on its business in the places and in the
manner as now conducted except where the failure to be so authorized, qualified
or licensed would not have a material adverse effect on the business of Hawkeye
taken as a whole. Copies of the Articles of Incorporation, Bylaws, stock records
and minute books of Hawkeye as heretofore made available to ISNI, are complete
and correct.
6.2 Authorization. Hawkeye has full legal right, power and authority to
enter into this Agreement, and the exchange of the Hawkeye Exchange Shares for
the ISNI Exchange Shares, pursuant to the provisions of this Agreement will
transfer valid title in the Hawkeye Exchange Shares to the Stockholders, free
and clear of all liens, encumbrances and claims of every kind.
6.3 Capital Stock of Hawkeye. The authorized capital stock of Hawkeye
consists solely of 100,000,000 shares of voting common stock, $0.0001 par value,
of which 2,661,000 shares are issued and outstanding and 20,000,000 shares of
preferred stock, $0.0001 par value per share, of which no preferred shares are
outstanding. The Hawkeye Exchange Shares to be delivered to
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the Stockholders at the Closing Date will constitute valid and legally issued
shares of Hawkeye fully paid and nonassessable, and with the exception of
restrictions upon resale, will be legally equivalent in all respects to the
Hawkeye Stock issued and outstanding as of the date hereof.
6.4 Transactions in Capital Stock. Hawkeye has issued to the shareholders
of Hawkeye as of March 9, 2000 1,325,000 Class A Warrants to purchase one share
of Hawkeye Common Stock with an exercise price of $3.00/share and 1,325,000
Class B Warrants to purchase one share of Hawkeye Common Stock with an exercise
at $5.00/share. The warrants have a three-year term and contain provisions
allowing redemption at $0.01 per warrant if the price of the common stock closes
above $4.50 as regards the Class A Warrants and $7.50 as regards the Class B
Warrants for 20 consecutive trading days and providing for registration rights
with respect to the warrants and underlying shares.
6.5 Financial Statements. Hawkeye has delivered to ISNI copies of
Hawkeye's audited financial statement as (hereinafter referred to as the
"Hawkeye Financial Statements") and Statements of Earnings, Cash Flows and
Retained Earnings as filed with the United States Securities and Exchange
Commission in Hawkeye's Registration Statement on Form 10SB. The Hawkeye
Financial Statements were prepared in accordance with generally accepted
accounting principles and applied on a consistent basis throughout the periods
indicated (except as noted). The Hawkeye Financial Statements present fairly the
financial condition of Hawkeye as of the date indicated thereon and such
Statements of Earnings, and Cash Flows and Retained Earnings present fairly the
results of its respective operations for the periods indicated thereon.
6.6 Property. Hawkeye owns no real property.
6.7 Liabilities. Hawkeye has no material liabilities except as previously
disclosed.
6.8 Conformity with Law. Hawkeye is not in material default under any law
or regulation or under any order of any court or federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over them which would have a material
adverse effect on the business, taken as a whole; and, there are no claims,
actions, suits or proceedings, pending or threatened, against or affecting
Hawkeye at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over them and no notice of any claim,
action, suit or proceeding, whether pending or threatened, has been received.
Hawkeye has conducted and is conducting its business in substantial compliance
with the requirements, standards, criteria and conditions set forth in
applicable federal, state and local statutes, ordinances, permits, licenses,
orders, approvals, variances, rules and regulations and is not in violation of
any of the foregoing which might materially and adversely affect the business,
operations, affairs, prospects, properties, assets, profits or condition
(financial or otherwise) of them, taken as a whole.
6.9 Taxes. Hawkeye has timely filed all requisite federal and other tax
returns for all fiscal periods, there are no open years, examinations in
progress or claims against them for federal and other taxes (including penalties
and interest) for any period or periods and no notice of any claim, whether
pending or threatened, for taxes has been received.
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6.10 Absence of Changes. Since the date of the Hawkeye Financial
Statements, there has not been:
(a) any material adverse change in the financial condition,
assets, liabilities (contingent or otherwise), income or business of
Hawkeye;
(b) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
Hawkeye;
(c) any change in the authorized capital of Hawkeye or in their
respective securities outstanding or any change in their respective
ownership interests or any grant of any options, warrants, calls,
conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of Hawkeye;
(e) any transaction by Hawkeye outside the ordinary course of
their respective businesses.
6.11 Deposit Accounts; Powers of Attorney. Hawkeye has delivered to ISNI
an accurate schedule as of the date of the Agreement, of:
(a) the name of each financial institution in which Hawkeye has
accounts or safe deposit boxes;
(b) the names in which the accounts or boxes are held;
(c) the type of account; and
(d) the name of each person authorized to draw thereon or have
access thereto.
Hawkeye has delivered the name of each person, corporation, firm or other entity
holding a general or special power of attorney from Hawkeye and a description of
the terms of such power.
6.12 Environmental Matters. Hawkeye has no knowledge of any assertion by
any governmental agency or other regulatory authority of any environmental lien
or action.
6.13 Validity of Obligations. The execution and delivery of this
Agreement by the Hawkeye and the performance of the transactions contemplated
herein have been duly and validly authorized by the Board of Directors of
Hawkeye, and this Agreement has been duly and validly authorized by all
necessary corporate action and is a legal, valid and binding obligation of the
Hawkeye.
6.14 Relations with Government. Hawkeye has not made, offered or agreed
to offer anything of value to any governmental official, political party or
candidate for government office nor has it otherwise taken any action which
would cause Hawkeye to be in violation of the Foreign Corrupt Practices Act of
1977, as amended or any law of similar effect.
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6.15 Disclosure. This Agreement and all other documents and information
furnished to ISNI and its representatives pursuant hereto do not and will not
include any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading. If Hawkeye becomes
aware of any fact or circumstance which would change a representation or
warranty of Hawkeye in this Agreement or any representation made on behalf of
Hawkeye, Hawkeye shall immediately give notice of such fact or circumstance to
ISNI. However, such notification shall not relieve Hawkeye of its obligations
under this Agreement, and at the sole option of ISNI, the truth and accuracy of
any and all warranties and representations of Hawkeye at the date of this
Agreement and at the Closing, shall be a precondition to the consummation of
this transaction.
6.16 Employee Benefit Plans. Hawkeye does not maintain or otherwise have
any liability (whether direct or indirect, actual or contingent) in respect of
any "employee pension benefit plan" (as such term is defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
under any "employee welfare benefit plan" {as such term is defined in Section
3(1) of ERISA}.
6.17 Affiliations and Subsidiaries. Hawkeye does not presently own, of
record or beneficially, or control, directly or indirectly, the capital stock
securities convertible into capital stock of any other equity interest in any
corporation, association or business entity. Hawkeye is not, directly or
indirectly, a participant in any joint venture, partnership or other
non-corporate entity. Further, Hawkeye does not own any subsidiary corporations.
6.18 Predecessor Status; Etc. Hawkeye has not owned any predecessor
companies. Hawkeye has never been a subsidiary or division of another
corporation nor been a part of an acquisition which was later rescinded.
7. COVENANTS OF HAWKEYE AND ISNI PRIOR TO CLOSING.
7.1 Access and Cooperation; ISNI. ISNI will afford to the officers and
authorized representatives of Hawkeye access to all of ISNI's properties, books
and records and will furnish Hawkeye with such additional financial and
operating data and other information as to the business and properties of ISNI
as Hawkeye may from time to time reasonably request. ISNI will cooperate with
Hawkeye, its representatives, engineers, auditors and counsel in the preparation
of any documents or other material which may be required in connection with any
documents or materials required by any governmental agency. Hawkeye will cause
all information obtained in connection with the negotiation and performance of
this Agreement to be treated as confidential in accordance with the provisions
of Section 12 hereof.
7.2 Access and Cooperation; Hawkeye. Hawkeye will afford to the officers
and authorized representatives of ISNI access to all of Hawkeye's properties,
books and records and will furnish ISNI with such additional financial and
operating data and other information as to the business and properties of
Hawkeye as ISNI may from time to time reasonably request. Hawkeye will cooperate
with ISNI, its representatives, engineers, auditors and counsel in the
preparation of any documents or other material which may be required in
connection with any documents or materials required by any governmental agency.
ISNI will cause all information obtained in connection with the negotiation and
performance of this Agreement to be treated as confidential in accordance with
the provisions of Section 12 hereof.
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7.3 Conduct of Business. Stockholders, only where permitted under the
By-laws, shall cause ISNI to:
(a) carry on its business in substantially the same manner as they
have heretofore and not introduce any material new method of management,
operation or accounting;
(b) maintain their respective properties and facilities, including
those held under leases, in as good working order and condition as at
present, ordinary wear and tear excepted;
(c) perform all of their respective material obligations under
agreements relating to or affecting their respective assets, properties
or rights;
(d) keep in full force and effect present insurance policies or
other comparable insurance coverage;
(e) use their best efforts to maintain and preserve their business
organization intact, retain their present employees and maintain their
respective relationships with suppliers, customers and others having
business relations with ISNI;
(f) maintain compliance with all permits, laws, rules and
regulations, consent orders, etc.;
(g) maintain present debt and lease instruments and not enter into
new or amended debt or lease instruments outside of the normal course of
business, without the knowledge and consent of all parties hereto; and
(h) maintain present salaries and commission levels for all
officers, directors, employees and agents.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF ISNI AND COVENANTS.
The obligations of ISNI hereunder are subject to the following
conditions.
8.1 Representations and Warranties; Performance of Obligations. The
representations and warranties of Hawkeye contained in Section 7 shall be
accurate as of the Closing Date as though such representations and warranties
had been made as of that time; and all of the terms, covenants and conditions of
this Agreement to be complied with and performed by Hawkeye on or before the
Closing Date shall have been duly complied with and performed.
8.2 No Litigation. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the acquisition by Hawkeye of the ISNI Exchange Shares and no
governmental agency or body shall have taken any other action or made any
request of Hawkeye as a result of which the management of Hawkeye deems it
inadvisable to proceed with the transactions hereunder.
8.3 No Material Adverse Change. No material adverse change in the results
of operations, financial condition or business of Hawkeye shall have occurred,
and Hawkeye shall not have suffered any material loss or damages to any of its
properties or assets, whether or not
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covered by insurance, since the Hawkeye Financial Statements, which change, loss
or damage materially affects or impairs the ability of Hawkeye to conduct its
business.
8.4 Omitted
8.5 Omitted
8.6 Directors. The Hawkeye board of directors shall consist of five (5)
persons, two of which will be outside directors, unless a majority of Hawkeye
shareholders and directors vote to amend the same after the Closing Date. No
officer or director of Hawkeye will have a criminal record, have been
adjudicated bankrupt, SEC censure, disbarment, loss of his/her professional
license or be under investigation by any of the above.
8.7 Name Change. Hawkeye will change its name to Internet Service
Network, Inc. pursuant to the Merger.
8.8 SEC Reporting. After the Merger, Hawkeye will file all reports
required by the Securities and Exchange Commission in a timely manner.
8.9 Articles and Bylaws. The Certificate of Incorporation and the By-laws
of Hawkeye shall remain in substantially the same form as they currently exist,
unless a majority of Hawkeye shareholders and directors vote to amend the same,
after the Closing Date.
8.10 Form SB-2 Registration Statement. Hawkeye will cause an appropriate
registration statement registering resales of the currently outstanding shares
of Hawkeye Common Stock, the Class A Warrants, the Class B Warrants and the
shares to be issued upon exercises of those warrants (collectively, the
"Securities") to be filed with the Securities and Exchange Commission and the
State of Georgia, and shall use its reasonable best efforts to have said
registration statement declared effective and to remain in effect during the
term of the warrants and to qualify the Securities for issuance and secondary
market trading under the "blue sky" laws of the various states.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF HAWKEYE.
The obligations of Hawkeye hereunder are, at its option, on or prior to
the Closing Date, subject to the following conditions.
9.1 Representations and Warranties; Performance of Obligations. The
representations and warranties of the Stockholders and ISNI contained in this
Agreement shall be true on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date
and all of the agreements of the Stockholders and ISNI shall have been
performed.
9.2 No Litigation. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the acquisition by Hawkeye of the ISNI Stock, and no governmental
agency or body shall have taken any other action or made any request of Hawkeye
as a result of which the management of Hawkeye deems it inadvisable to proceed
with the transactions hereunder.
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9.3 No Material Adverse Change. No material adverse change in the results
of operations, financial condition or business of ISNI shall have occurred, and
ISNI shall not have suffered any material loss or damages to any of its
properties or assets, whether or not covered by insurance, since the ISNI
Balance Sheet Date, which change, loss or damage materially affects or impairs
the ability of ISNI to conduct its business.
9.4 Counsel Approval. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall have been approved by counsel to Hawkeye.
9.5 Omitted.
9.6 Resignation and Redemption of Shares. At Closing, Gilbert H. Davis
will resign as an officer and director of Hawkeye.
10. INDEMNIFICATION.
10.1 Indemnification by the ISNI. ISNI covenants and agrees that it will
indemnify, defend, protect and hold harmless Hawkeye at all times from and after
the date of this Agreement until the Expiration Date from and against all
claims, damages, actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by Hawkeye in excess of
Ten Thousand Dollars ($10,000) in the aggregate as a result of or incident to
any material breach of the representations and warranties set forth in Section 5
of this Agreement or certificates attached pursuant thereto and any
misrepresentations or nonfulfillment of any agreement on the part of the
Stockholders under this Agreement.
10.2 Indemnification by Hawkeye. Hawkeye covenants and agrees that it
will indemnify and hold harmless ISNI at all times from and after the date of
this Agreement until the Expiration Date from and against all claims, damages
actions, suits, proceedings, demands, assessments, adjustments, costs and
expenses (including specifically, but without limitation, reasonable attorneys'
fees and expenses of investigation) incurred by ISNI in excess of Ten Thousand
Dollars ($10,000) in the aggregate as a result of or incident to any material
breach of the representations and warranties set forth in Section 6 of this
Agreement or on the schedules or certificates attached pursuant thereto and any
misrepresentations or nonfulfillment of any agreement on the part of Hawkeye
under this Agreement.
10.3 Third Person Claims. Promptly after any party hereto (hereinafter
the "Indemnified Party") has received notice of or has knowledge of any claim by
a person not a party to this Agreement ("Third Person") or the commencement of
any action or proceeding by a Third Person, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Sections 10.1 or 10.2, hereof
(hereinafter the "Indemnifying Party"), give the Indemnifying Party written
notice of such claim or the commencement of such action or proceeding. Such
notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof, and such notice shall be effective if delivered
prior to expiration of the period of indemnity pursuant to Sections 10.1 and
10.2. The Indemnifying Party shall have right to defend and settle, at its own
expense and by its own counsel, any such matter so long as the Indemnifying
Party pursues the same in good faith and diligently. If the Indemnifying Party
undertakes to defend or settle, it shall
12
promptly notify the Indemnified Party of its intention to do so, and the
Indemnified Party shall cooperate with the Indemnifying Party and its counsel in
the defense thereof and in any settlement thereof. Such cooperation shall
include, but shall not be limited to, furnishing the Indemnifying Party with any
books, records or information reasonably requested by the Indemnifying Party
that are in the Indemnified Party's possession or control. Notwithstanding the
foregoing, the Indemnified Party shall have the right to participate in any
matter through counsel of its own choosing at its own expense (unless there is a
conflict of interest that prevents counsel for the Indemnifying Party from
representing Indemnified Party, in which case the Indemnifying Party will
reimburse the Indemnified Party for the expenses of its counsel); provided that
the Indemnifying Party's counsel shall always be lead counsel and shall
determine all litigation and settlement steps, strategy and the like. After the
Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability, except to the extent such participation is requested by the
Indemnifying Party, in which event the Indemnified Party shall be reimbursed by
the Indemnifying Party for reasonable additional legal expenses, out-of-pocket
expenses and allocable share of employee compensation incurred in connection
with such participation for any employee whose participation is so requested. If
the Indemnifying Party desires to accept a final and complete settlement of any
such Third Person claim and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party's liability under this Section with
respect to such Third Person claim shall be limited to the amount so offered in
settlement by said Third Person and the Indemnified Party shall reimburse the
Indemnifying Party for any additional costs of defense which it subsequently
incurs with respect to such claim. If the Indemnifying Party does not undertake
to defend such matter to which the Indemnified Party is entitled to
indemnification hereunder, or fails diligently to pursue such defense, the
Indemnified Party may undertake such defense through counsel of its choice, at
the cost and expense of the Indemnifying Party, and the Indemnified Party may
settle such matter, and the Indemnifying Party shall reimburse the Indemnified
Party for the amount paid in such settlement and any other liabilities or
expenses incurred by the Indemnified Party in connection therewith, provided,
however, that under no circumstances shall the Indemnified Party settle any
Third Person claim without the written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld.
10.4 Tax Liability. In the event Hawkeye incurs any tax liability in
connection with the transaction described herein, ISNI will promptly reimburse
Hawkeye therefore.
10.5 Method of Payment. All claims paid to the Indemnified Party pursuant
to this indemnity shall be paid in cash.
11. TERMINATION OF AGREEMENT.
Hawkeye or ISNI may, by notice in the manner hereinafter provided on or
before the Closing Date, terminate this Agreement if a material default shall be
made by the other party in the observance or in the due and timely performance
of any of the covenants, agreements or conditions contained herein, and the
curing of such default shall not have been made on or before the Closing Date
and shall not reasonably be expected to occur. ISNI may terminate this Agreement
if Hawkeye's liabilities exceed $5,000 as of the Closing Date. Hawkeye may
terminate this Agreement if: (i) ISNI's business operations, equipment and
marketing rights are
13
burdened by excessive royalties or problems that cannot in the exclusive opinion
of Hawkeye be corrected or eliminated.
12. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
12.1 Hawkeye. Hawkeye recognizes and acknowledges that it has in the
past, currently has, and prior to the Closing Date, will have access to certain
confidential information of ISNI, such as lists of its customers and operations
of ISNI and ISNI's respective businesses. Hawkeye agrees that it will not
disclose such confidential information to any person, firm, corporation,
association, or other entity for any purpose or reason whatsoever, prior to the
Closing Date without ISNI's prior written consent. In the event of a breach or
threatened breach by Hawkeye of the provisions of this Section, ISNI shall be
entitled to an injunction restraining Hawkeye from disclosing, in whole or in
part, such confidential information. Nothing contained herein shall be construed
as prohibiting ISNI from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
12.2 Damages. Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants, and because of the immediate
and irreparable damage that would be caused for which they would have no other
adequate remedy, Hawkeye and ISNI agree that, in the event of a breach by any of
them of the foregoing covenant, the covenant may be enforced against them by
injunctions and restraining orders.
13. FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON
HAWKEYE STOCK.
13.1 Status of Stockholders. Stockholders hereby represents and warrants
to, and covenants with Hawkeye regarding as follows:
(a) The undersigned Stockholders understands that the Hawkeye
Exchange Shares are "restricted securities" as that term is defined in
Rule 144 of the Securities Act of 1933 the shares of Common Stock have
not been approved or disapproved by the United States Securities and
Exchange Commission; any state securities agency; or any foreign
securities agency;
(b) The undersigned Stockholders are not underwriters and would be
acquiring the Hawkeye Exchange Shares of Common Stock solely for
investment for their own account and not with a view to, or for, resale
in connection with any distribution within the meaning of any federal
securities act, state securities act or any other applicable federal or
state laws;
(c) The undersigned Stockholders understand the speculative nature
and risks of investments associated with the Company, and confirm that
the shares of Common Stock would be suitable and consistent with their
investment program; that their financial position enable them to bear the
risks of this investment; and, that there is an extremely limited public
market for the shares of Common Stock acquired herein;
(d) The shares of Common Stock acquired herein may not be
transferred, encumbered, sold, hypothecated, or otherwise disposed of, if
such disposition will violate any federal and/or state securities acts;
provided, however, such shares may be distributed
14
to employees of ISNI. Disposition shall include, but is not limited to
acts of selling, assigning, transferring, pledging, encumbering,
hypothecating, giving, and any form of conveying, whether voluntary or
not for a period of one (1) year from the date of issuance;
(e) To the extent that any federal, and/or state securities laws
shall require, the Stockholders hereby agree that any shares of Common
Stock acquired pursuant to this Agreement shall be without preference as
to assets;
(f) The Company is under no obligation to register or seek an
exemption under any federal securities act, state securities act, or any
foreign securities act for any shares of Common Stock of the Company or
to cause or permit such shares of Common Stock to be transferred in the
absence of any such registration or exemption;
(g) The Stockholders have had the opportunity to ask questions of
the Company and have received additional information from the Company to
the extent that the Company possessed such information, necessary to
evaluate the merits and risks of any investment in the Company. Further,
the Stockholders have been given: (1) All material books, records and
financial statements of the Company; (2) all material contracts and
documents relating to the proposed transaction; (3) an opportunity to
question the appropriate executive officers of the Company; and, (4)
copies of all reports filed with the Securities and Exchange Commission.
(h) The Stockholders have satisfied the suitability standards
imposed by their respective state laws and have a preexisting personal
and business relationship with the Company;
(i) The Stockholders have adequate means of providing for their
current needs and personal contingencies and have no need to sell the
shares of Common Stock in the foreseeable future (that is at the time of
the investment, Stockholders can afford to hold the investment for an
indefinite period of time);
(j) The Stockholders have sufficient knowledge and experience in
financial matters to evaluate the merits and risks of this investment and
further, the Stockholders are capable of reading and interpreting
financial statements; and
(k) The Stockholders acknowledge that if they are residents of the
State of California, they have the privilege of declaring this
transaction null and void provide each objecting Stockholder communicates
such intention to the Company in writing within three (3) days of the
tender of his/her/its consideration.
13.2 Status of Hawkeye. Hawkeye hereby represents it files reports with
the United States Securities and Exchange Commission and has filed all required
reports with the Commission.
14. GENERAL.
14.1 Cooperation. The Stockholders, ISNI and Hawkeye shall each deliver
or cause to be delivered to the other on the Closing Date, and at such other
times and places as shall be
15
reasonably agreed to, such additional instruments as the other may reasonably
request for the purpose of carrying out this Agreement. The Stockholders will
cooperate and use its best efforts to have the present officers, directors and
employees of ISNI cooperate with Hawkeye on and after the Closing Date in
furnishing information, evidence, testimony and other assistance in connection
with any actions, proceedings, arrangements or disputes of any nature with
respect to matters pertaining to all periods prior to the Closing Date.
14.2 Successors and Assigns. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
Hawkeye and ISNI.
14.3 Entire Agreement. This Agreement (including the schedules and
Exhibits attached hereto) and the documents delivered pursuant hereto constitute
the entire agreement and understanding between the Stockholders, ISNI, and
Hawkeye and supersede any prior agreement and understanding relating to the
subject matter of this Agreement. This Agreement, upon execution, constitutes a
valid and binding agreement on the parties thereto enforceable in accordance
with its terms and may be modified or amended only by a written instrument
executed by the Stockholders, ISNI, and Hawkeye acting through their respective
officers, duly authorized by their respective Boards of Directors.
14.4 Counterparts. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
14.5 Brokers and Agents. Each party represents and warrants that no
broker, finder or agent was involved in connection with this transaction.
14.6 Expenses. Each party will be responsible for their own expenses in
connection with this Agreement.
14.7 Notices. All notices of communication required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, overnight courier
addressed to the party to be notified, postage prepaid, or by delivering the
same in person to an officer or agent of such party.
(a) If to Hawkeye, addressed to it at:
Hawkeye Corp.
Gilbert H. Davis, President
1000 Abernathy Rd.
400 Northpark Towne Center
Suite 310
Atlanta, GA 30328
Tel. No. 770-481-7205
Fax No. 770-481-7210
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(b) If to ISNI, addressed to it at:
Internet Services Network, Inc.
Werner K. Ebner, President
204 East McKenzie Street
Unit D
Punta Gorda, Fl. 33950
TEL: 941-575-7878
FAX: 941-575-8787
14.8 Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Georgia and any action brought hereunder shall be
exclusively in the state or federal courts of the State of Georgia.
14.9 Survival of Representations and Warranties. The representations,
warranties, covenants and agreements of the parties made herein and at the time
of the Closing or in writing delivered pursuant to the provisions of this
Agreement shall survive the consummation of the transactions contemplated hereby
and any examination on behalf of the parties.
14.10 Exercise of Rights and Remedies. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
14.11 Time. Time is of the essence of this Agreement.
14.12 Reformation and Severability. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either
17
case the validity, legality and enforceability of the remaining provisions of
this Agreement shall not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
HAWKEYE:
HAWKEYE CORP.
ATTEST:
BY: /s/ Gilbert H. Davis
--------------------
Title: President
---------
/s/ Gilbert H. Davis
- --------------------
Secretary
ISNI:
INTERNET SERVICES NETWORK, INC.
ATTEST:
BY: /s/ Werner K. Ebner
-------------------
Title: President
---------
/s/ Werner K. Ebner
- -------------------
Secretary