EXHIBIT 10.1
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT is made and entered into on October 12, 2004
(the "Agreement") but effective on the "Effective Date" (as defined below) among
GREENBRIAR CORPORATION, a Nevada corporation ("GBR" or the "Company"), RONALD
FINLEY, an individual ("R.Finley"), JEFFERY A. FINLEY, an individual
("J.Finley"), BRADFORD A. PHILLIPS, an individual ("B.Phillips") and GENE E.
PHILLIPS, an individual ("G.Phillips").
WITNESSETH:
WHEREAS, R.Finley and J.Finley are the collective owners of 100 shares
of Common stock, par value $1.00 per share, of Finley Equities, Inc., a Texas
corporation converted from a Texas limited liability company, organized by
Articles of Organization filed June 9, 2004 with the Secretary of State of Texas
("FEINC");
WHEREAS, B.Phillips and G.Phillips are the collective owners and
holders of 1,000 shares of Common stock of American Realty Management, Inc., a
Nevada corporation ("ARM"), which was incorporated by Articles of Incorporation
filed with the Secretary of State of Nevada on May 2, 2002.
WHEREAS, each of FEINC and ARM own an undivided one-half of the equity
interest in Tacaruna Holdings B.V., a Netherlands company ("Tacaruna"), same
consisting of 200 ordinary shares having a value of 100 Euros per share, of
which 100 ordinary shares are owned and held by FEINC and 100 ordinary shares
are owned and held by ARM (all collectively, the "TBV Stock");
WHEREAS, Tacaruna is the owner and holder of (among other assets)
36,762 ordinary shares (approximately 30%), having a value of 1.00 Euro per
share (the "CB Stock") of Cabletel AD, formerly known as Cable Bulgaria AD, a
company incorporated in the Republic of Bulgaria ("Cabletel"), which is engaged
in the telecommunications and information services industry and Tacaruna,
through its ownership of equity interests in one other entity indirectly owns an
additional 44.8% of Cabletel, and Tacaruna has the right to acquire the
remainder of the equity interests in such other entity to the end that Tacaruna
may ultimately own all of the outstanding ordinary shares of Cabletel;
WHEREAS, the Company desires to ultimately own and control all of the
CB Stock, and in order to do so, is willing to acquire all of the issued and
outstanding capital stock of FEINC from R.Finley and J.Finley and is willing to
acquire all of the issued and outstanding capital stock of ARM from B.Phillips
and G.Phillips (for convenience of reference, all of R.Finley, J.Finley,
B.Phillips and G.Phillips are sometimes collectively referred to as the
"Holders");
WHEREAS, the Company is authorized by its Articles of Incorporation, as
amended, to issue up to 10,000,000 shares of Preferred Stock, designateable in
series;
WHEREAS, the Company, subject to the preparation and filing of an
appropriate Certificate of Designation of Preferences, etc., with the Secretary
of State of Nevada, desires to designate a new series of Preferred Stock of the
Company described below;
WHEREAS, notwithstanding the actual date of this Agreement and its
consummation, the parties hereto desire that the transactions contemplated by
this Agreement shall be effective for tax and accounting purposes as at the
close of business on October 1, 2004.
ACCORDINGLY, for and in consideration of the foregoing premises, the
mutual promises, covenants, representations and warranties contained herein, and
on the terms and subject to the conditions set forth herein, and for other good
and valuable consideration, the receipt, sufficiency and adequacy of which is
hereby acknowledged by all of the parties hereto, the parties hereto do hereby
agree as follows:
1. Adoption of Recitals. All of the recitals set forth above are hereby
adopted, confirmed, ratified and approved in the same manner as if fully
recopied herein.
2. Designation of Preferred Stock. Contemporaneously with the execution
of this Agreement, the Company will designate a new series of its Preferred
Stock pursuant to that certain Certificate of Designations, Preferences and
Relative Participating or Optional or Other Special Rights and Qualifications,
Limitations or Restrictions Thereof, substantially in the form annexed hereto as
Exhibit "A" (the "Certificate of Designations"), pursuant to which the Company
shall designate a Series J 2% Cumulative Preferred Stock consisting of at least
31,500 shares, having a liquidation value of $1,000 per share (the "Preferred
Stock") to be issued by the Company pursuant to the terms and conditions hereof
and in conformity with the Certificate of Designations. The Preferred Stock will
have the right to cumulative cash dividends of $20 per share per annum, payable
quarterly, payment of $1,000 per share in the event of dissolution, liquidation
or winding up of the Company before any distribution is made by the Company to
its common stockholders, optional redemption at any time after September 30,
2006, at a price of $1,000 per share plus cumulative dividends, no initial right
of conversion into any other securities of the Company, and voting rights
consisting of five votes per share of Preferred Stock outstanding, voting
together with all other classes of stock, all as set forth in such Certificate
of Designations.
3. Closing and Closing Date. The sale and transfer referred to in
paragraph 4 below (the "Closing") shall take place at 1755 Wittington Place,
Dallas, Texas 75234, on October 12, 2004, or at such date at such other place as
shall be fixed by mutual agreement of the parties hereto. The time and date of
Closing is referred to herein as the "Closing Date."
4. Transfer and Exchange of Equity Interests. Under the terms and
subject to the other conditions herein, and upon the performance of the parties
hereto of their respective obligations hereunder, on the Closing Date, the
Holders will collectively transfer to the Company all of each Holder's
respective right, title and interest in and to all shares of stock, whether
common or preferred, of FEINC (as to and from R.Finley and J.Finley) and all
shares of stock, whether common or preferred, of ARM (as to B.Phillips and
G.Phillips) in exchange for the consideration described below, all of such stock
of FEINC and stock of ARM to be free and clear of all liens, pledges,
encumbrances, claims, charges, agreements, rights, options, warrants or
restrictions of any kind, nature or description such that the Company will
become the sole stockholder of FEINC by owning
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all the issued and outstanding capital stock (whether common or preferred)
outstanding and issued by FEINC, and that the Company shall become the sole
stockholder of ARM by owning all of the issued and outstanding capital stock
(whether common or preferred) outstanding and issued by ARM.
5. Consideration. For and in total consideration for the transfer from
the Holders to the Company of all of the issued and outstanding capital stock
(whether common or preferred) of each of FEINC and ARM, the Company shall
exchange to the Holders as the sole consideration for this exchange the value of
$31,500,000 payable by the issuance and delivery to the Holders of an aggregate
of 31,500 shares of Preferred Stock, having a liquidation value of $1,000 per
share, which Preferred Stock shall be delivered at the Closing to the following
individuals in the number of share amounts set forth opposite their respective
names below:
<Table>
<Caption>
NO. OF SHARES OF
NAME PREFERRED STOCK
---- ----------------
J.Finley 1,575
R.Finley 14,175
B.Phillips 3,150
G.Phillips 12,600
------
TOTAL: 31,500
======
</Table>
It is the intention of all of the parties to this exchange that such exchange
shall qualify as a "tax free" reorganization for United States federal income
tax purposes.
6. Effective Date of Transaction for Tax and Accounting Purposes.
Notwithstanding the date of execution of this Agreement or the Closing Date or
the date of actual transfer of certificates representing the stock of FEINC and
the certificates representing the stock of ARM or the certificates representing
the Preferred Stock, the parties hereto agree that for tax and accounting
purposes, the transactions covered by this Agreement shall be effective as at
the close of business in Dallas, Texas, on October 1, 2004 (the "Effective
Date").
7. Representations of R.Finley and J.Finley as to FEINC. R.Finley and
J.Finley hereby represent and warrant, jointly and severally, to the Company and
agree with the Company that the following representations are true, complete and
correct on the date of this Agreement, shall be true and correct on the Closing
Date and shall survive the date of this Agreement as provided herein.
(a) FEINC Capitalization. FEINC is a Texas corporation
converted on August 20, 2004 from a Texas limited liability company
originally organized by Articles of Organization filed with the
Secretary of State of Texas on June 9, 2004, the authorized number of
shares of capital stock of which consists of shares of Common stock,
having a par value of $1.00 per share, of which 100 shares are issued
and outstanding and owned by J.Finley as to 10 shares, and R.Finley as
to 90 shares, in each instance free and clear of all liens, pledges,
encumbrances, claims, charges, agreements, rights, options, warrants or
restrictions of any kind, nature or description. All of the outstanding
shares of Common stock of FEINC have been duly-authorized, fully-paid
and are non-assessable.
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(b) Capacity and Binding Obligations. Each of J.Finley and
R.Finley have all requisite capacity, power and authority to execute,
deliver and perform their respective obligations under this Agreement
and each of the documents contemplated hereby to be executed by
J.Finley or R.Finley. This Agreement has been duly-executed and
delivered by J.Finley and R.Finley and constitutes a legal, valid and
binding obligation of each of R.Finley and J.Finley enforceable in
accordance with its terms.
8. Representations of B.Phillips and G.Phillips as to ARM. B.Phillips
and G.Phillips represent and warrant, jointly and severally, to the Company and
agree with the Company that the following representations are true, complete and
correct on the date of this Agreement, shall be true and correct on the Closing
Date and shall survive the date of this Agreement as provided herein.
(a) ARM Capitalization. ARM is a Nevada corporation,
incorporated by Articles of Incorporation filed with the Secretary of
State of Nevada on May 2, 2002, the authorized number of shares of
capital stock which consist of 1,000 shares of common stock, par value
$1.00 per share, of which 1,000 shares of common stock are issued and
outstanding and owned by B.Phillips as to 200 shares and G.Phillips as
to 800 shares, in each instance free and clear of all liens, pledges,
encumbrances, claims, charges, agreements, rights, options, warrants or
restrictions of any kind, nature or description. All of the issued and
outstanding shares of common stock of ARM have been duly-authorized,
fully-paid and are non-assessable.
(b) Capacity and Binding Obligations. Each of B.Phillips and
G.Phillips have all requisite capacity, power and authority to execute,
deliver and perform their respective obligations under this Agreement
and each of the documents contemplated hereby to be executed by
B.Phillips or G.Phillips. This Agreement has been duly-executed and
delivered by B.Phillips and G.Phillips and constitutes a legal, valid
and binding obligation of each of B.Phillips and G.Phillips enforceable
in accordance with its terms.
9. Representations of the Holders. Each of the Holders, jointly and
severally represent and warrant to the Company and agree with the Company that
the following representations and warranties and true, complete and correct on
the date of this Agreement, shall be true and correct on the Closing Date and
shall survive the date of this Agreement as provided herein.
(a) Capitalization of Tacaruna. Tacaruna is a Netherlands
private limited liability company organized on December 11, 2000, is
authorized to issue 1,000 ordinary shares, having a value of 100 Euros
per share, of which 200 ordinary shares have been issued and
outstanding, of which 100 ordinary shares are owned of record and
beneficially by FEINC and 100 ordinary shares are owned of record and
beneficially by ARM. All of the ordinary shares constituting the TBV
Stock are duly-authorized, fully-paid and non-assessable, and all
applicable documentary stamps, both original and transfer required to
be purchased and affixed have been purchased and affixed with respect
to the original issuance and transfer of the outstanding ordinary
shares constituting the TBV Stock.
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(b) Capitalization of Cabletel. Cabletel is a company
incorporated in, duly-organized, validly-existing and in good standing
under the laws of the Republic of Bulgaria, having been organized on
June 4, 1999. Cabletel is qualified to do business and in good standing
in all jurisdictions in which qualification is necessary because of the
character of the properties owned by it or the nature of its
activities. The authorized capital stock of Cabletel consists of
122,542 ordinary shares, having a nominal value of 100 BGN per ordinary
share, of which 36,762 ordinary shares are outstanding and owned by
Tacaruna, which, except for an assumed pledge as collateral for a bank
loan, are free and clear of all liens, pledges, encumbrances, claims,
charges, agreements, rights, options, warrants or restrictions of any
kind, nature or description, and of which 85,780 ordinary shares are
owned by another entity which is approximately 64% owned by Tacaruna.
Tacaruna also holds an option or right (but has no obligation) to
acquire the balance of 36% of such other entity which, if exercised,
would cause Tacaruna to indirectly own the balance of the 85,780
ordinary shares of Cabletel. All of the outstanding ordinary shares
constituting the CB Stock are duly-authorized, fully-paid and
non-assessable, and all applicable documentary stamps, both original
and transfer, required to be purchased and affixed have been purchased
and affixed with respect to the original issuance and transfer of the
outstanding ordinary shares comprising the CB Stock. Cabletel has the
full power and authority, corporate and otherwise, to carry on its
businesses now conducted and to own or lease and to operate its
properties and assets now owned or leased and operated by it.
(c) Approvals. The Holders individually have all requisite
authority to execute and deliver this Agreement.
(d) Financial Statements. Schedule 1 annexed hereto consists
of copies of the Annual Report and Annual Financial Report as of
December 31, 2003, 2002 and 2001 of Cabletel, prepared in accordance
with the National Accounting Standards ("NAS") and the audit financial
report of each has been certified by PricewaterhouseCoopers Audit OOD
and present the financial condition of Cabletel as at the ending dates
of the periods indicated in each and the results of operations for the
year then ended and have been prepared in accordance with the NAS,
consistently applied.
(e) Title to Properties. Cabletel has such title to all of its
material properties and assets as is necessary for the conduct of its
business as such business is presently conducted, except (i) to the
extent stated or specifically reserved against in the December 31, 2003
balance sheet and for changes occurring in the ordinary course of
business after the date of that balance sheet, none of which changes
are materially adverse or (ii) as set forth in Schedule 2 annexed
hereto.
(f) Contracts and Commitments. To the knowledge of the
Holders, Cabletel is not a party to, or has any material contract or
commitment of any kind or nature whatsoever, including without
limitation, and lease, license, franchise, employment, consultant or
commission agreement, or pension, profit sharing, bonus, stock
purchase, retirement, hospitalization insurance or other plan or
arrangement
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involving employee benefits, contract with any labor union or contract
for services, materials, supplies or equipment or for the sale or
purchase of any of its products or assets except (i) for the contracts
set forth in Schedule 3 annexed hereto, true copies of which have been
delivered by or on behalf of The Holders to the Company; (ii)
employment contract terminable on not more than 30 days' notice; and
(iii) purchase orders from customers accepted in the ordinary course of
business. To the best knowledge of The Holders, no party to any
contract set forth on Schedule 3 is in default and no claim of default
by any party has been made or is now pending.
(g) Insurance. Schedule 4 annexed hereto is a true and
complete list of all policies of fire, liability and other forms of
insurance owned or held by Cabletel. All of such policies are valid and
binding and in full force and effect as of the date hereof and cover
all of the assets and properties of Cabletel in such amounts and
against such losses and risks as are set forth in such policies.
(h) Litigation. Except as listed and briefly described on
Schedule 5 annexed hereto, there are no actions, suits or proceedings
or investigations pending or to the knowledge of The Holders threatened
against or affecting Cabletel at law or equity in any court or before
any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality. Cabletel is not
in default with respect to any judgment, order, writ, injunction,
decree or permit or similar instrument in any court or federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality.
(i) Employee Status. There are no controversies pending or to
the knowledge of the Holders threatened between Cabletel and any of its
employees, and within the last three years, Cabletel has not suffered
or sustained any labor dispute resulting in any work stoppage.
(j) Intangible Property. Schedule 6 annexed hereto contains a
true and complete list of all patents, patent applications, trademarks,
tradenames, copyrights and licenses (whether owned as licensor or held
as licensee) owned or held by Cabletel or in which Cabletel has an
interest. All of such patents, patent applications, trademarks,
tradenames and copyrights are owned by Cabletel free of any license or
encumbrances. The business now operated by Cabletel, the products sold
or installed by it and the trademarks and tradenames used by it, have,
to the best knowledge of the Holders, have not infringed and do not
infringe upon any patents, trademarks, tradenames, copyrights or other
rights of any Person.
(k) Restrictive Nature of Securities. The Holders have each
been advised by counsel that the shares of Preferred Stock being issued
to the Holders pursuant to this Agreement have not been, and will not
be, registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities laws. Accordingly, each of the Holders
hereby acknowledges that such securities may not be fully-transferable,
and that each of the Holders may have to bear the economic risk of
investment in such securities for an indefinite period of time. Each of
the Holders hereby represents and warrants that he is acquiring all of
such securities for his own account,
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for investment, and not with a view toward distribution thereof to any
other Person except in compliance with the provisions of the Act and
any applicable state securities laws.
(l) Experience; Suitability. Each of the Holders is
experienced in the business of the Company and is an "Accredited
Investor" within the meaning of Rule 501(a) under the Act, or, if not
an Accredited Investor, together with its purchaser representative
within the meaning of Rule 501(h) under the Act, has such knowledge and
experience in financial and business matters that it is capable of
evaluating the risks and merits of the investment in the Preferred
Stock and has the capacity to protect its own interest. Each of the
Holders has determined that the investment in the Preferred Stock is
suitable in light of his own circumstances, and each of the Holders
acknowledges that the Company has only made those representations set
out in this Agreement as to the Preferred Stock and that he has
performed such due diligence as he believes necessary. Each of the
Holders also acknowledges that there are substantial restrictions on
the transferability of the shares of Preferred Stock, and that such
shares of Preferred Stock may be required to be held indefinitely
unless subsequently registered under the Act or an exemption from such
registration is available. Accordingly, Each of the Holders
acknowledges that it may not be possible for him to liquidate its
investment in the shares of Preferred Stock without registration
pursuant to the Act.
10. Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Holders and agrees with the Holders that
the following representations and warranties are true, complete and correct on
the date of this Agreement and shall survive the date of this Agreement as
provided herein.
(a) Organization. The Company is a corporation duly-organized,
validly-existing and in good standing under the laws of the State of
Nevada. This Agreement is a valid and binding obligation of the Company
enforceable in accordance with its terms, and the Company has the full
power and authority (corporate and other) to perform its obligations
under this Agreement.
(b) Authority Relative to this Agreement. Subject to any
requisite approval by the Secretary of State of Nevada to the filing of
the Certificate of Designations, the Company has the requisite power
and authority to enter into, execute and deliver this Agreement, and to
consummate and perform all of the transactions contemplated hereby. The
execution and delivery of this Agreement by the Company, and upon
receipt of any necessary approvals, consummation and performance of the
transactions contemplated hereby, will have been duly and
validly-authorized by all necessary corporate or other proceedings, and
this Agreement will constitute the valid and legally binding obligation
of the Company enforceable in accordance with its terms. Subject to the
receipt of any approval from the Secretary of State of Nevada with
respect to the Certificate of Designations, the execution, delivery,
consummation and performance of this Agreement by the Company will not
conflict with, result in a breach or violation of any term or provision
of, or constitute a default under, the Articles of Incorporation or
Bylaws
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of the Company nor conflict with, result in any breach or violation of
any material term or provision of, or constitute a material default
under, any statute, indenture, mortgage, deed of trust, note agreement
or other agreement or other instrument to which the Company is a party
or by which it is bound.
(c) Availability of Public Documents. The Company has made
available to The Holders copies of its public filings pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Company is subject to the informational filing requirements of the
Exchange Act, and in accordance therewith, is required to file reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission").
11. Certain Covenants. The parties hereto each hereby covenant to the
other and agree with the other as follows:
(a) Continuation of Business of Cabletel. Between the date
hereof and the Closing Date, each of the Holders will use his
respective best lawful efforts to cause Cabletel to continue to carry
on its business in the manner hereto carried on, to keep its business
organization intact, to make available the service of present employees
of Cabletel and to preserve the relationships with customers,
suppliers, and others having business relationships with Cabletel.
Between the date hereof and the Closing Date, the Holders will not
permit, and FEINC, ARM, Tacaruna and Cabletel will not, without the
prior written consent of the Company or except as otherwise provided in
this Agreement:
(i) issue or sell any stock, notes, bonds or other
corporate securities, or options to purchase the same, or
enter into any agreements in respect thereof;
(ii) declare, set aside or make (or become obligated
for) any payment or distribution in respect of its ordinary
shares or other securities, directly or indirectly redeem,
purchase or acquire any shares of such stock or make (or
become obligated to make) any loans or advances to any
employee or shareholder;
(iii) amend its governing instruments;
(iv) incur any obligation or liability (absolute or
contingent) except current liabilities and obligations
incurred in the ordinary course of business, or pay any
liability or obligation (absolute or contingent) other than
current liabilities and obligations incurred in the ordinary
course of business,
(v) sell, assign or transfer any of its tangible
assets or any patent, tradename, copyright, license, franchise
or other intangible asset or property except in the ordinary
course of business;
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(vi) mortgage, pledge or grant or suffer to exist any
lien or other encumbrance or charge on any of its assets or
properties, tangible or intangible;
(vii) make any changes in compensation payable to
officers, directors or any material increase in compensation
payable to any other employees.
(b) Access to Information and Records. Each of the Holders
will cause FEINC, ARM, Tacaruna and Cabletel to permit the Company, its
counsel and accountants and others designated by the Company, upon
reasonable notice to Cabletel, to have full access during normal
business hours in the period between the date hereof and the Closing
Date to the properties, books, contracts and records of Cabletel and
Tacaruna and to observe and consult with respect to the operations of
Cabletel and Tacaruna during such period and will furnish the Company
with any and all information concerning said property and the business
and affairs of Cabletel as Tacaruna may reasonably request.
(c) Continuing Business. From and after the date hereof and
the Closing Date, except as an employee of the company or one of its
subsidiaries or as a stockholder of the Company, none of the Holders
will conduct any business or enter into any transaction relating to
telecommunications and information services business in the Republic of
Bulgaria, unless the events described in paragraph 16(c) result in the
Holders acquiring, directly or indirectly, Cabletel.
(d) No Brokers. All negotiations relative to this Agreement,
and the transactions contemplated hereby have been carried on by each
of the Holders and the Company directly without the intervention of any
other Person as the result of any act of any of the Holders or the
Company which might give rise to any valid claim against any of the
parties hereto for a brokerage commission or like payment. Each of the
parties hereto hereby agrees to indemnify, save and hold harmless all
other parties from and against any such claim of any such Person.
(e) Confidentiality. Each of the parties hereto agree that
pursuant to this Agreement each has received and gained access to
financial, operating or other proprietary information with respect to
the Company, FEINC, ARM, Tacaruna, Cabletel and each other concerning
the operation of their respective businesses. Each of the parties
hereto agree to keep all such information confidential, to restrict its
circulation to those of its employees, counsel, financial advisors and
lenders necessary for the accomplishment of the transactions
contemplated by this Agreement. Without prior consultation and
agreement, none of the parties hereto shall make any public disclosure
of the fact of this transaction, the parties hereto, the terms hereof
or any other matter related hereto, and the parties hereto shall each
use their respective best lawful efforts to avoid such publicity in any
meeting; provided, however, that the Company may unilaterally release
such information to the general public as it, or its counsel, may deem
appropriate to fulfill the Company's obligations
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under applicable federal and state securities laws, including filings
required under the Exchange Act and disclosure to the American Stock
Exchange, Inc. ("AMEX").
12. Special Covenants. The parties to this Agreement and each
certificate representing shares of Preferred Stock initially issued to the
Holders pursuant to this Agreement shall be subject to the following provisions
of this Agreement for the reasons and as set forth below:
(a) Transfer Restriction. The Preferred Stock shall only be
transferable in transactions which shall be exempt from the
registration requirements of the Act. Each of the Holders of such
Preferred Stock, by acceptance thereof agrees, that an appropriate
legend shall remain on the certificates representing such shares to
give notice to any potential purchaser that no transfer of such shares
shall be valid or effective until certain conditions have been
fulfilled. Each of the Holders of such shares of Preferred Stock, by
acceptance thereof, agrees, prior to any proposed transfer, to give
written notice to the Company expressing such holder's intention to
effect such transfer and describing briefly the manner of the proposed
transfer. Promptly upon receiving such notice, the Company shall
present copies thereof to its counsel and if such proposed transfer is
an exempt transaction under the Act, the Company shall permit such
transfer subject to the transferee agreeing to be bound by the terms
and provisions of this Agreement.
(b) Requisite Stockholder Approval of Transaction and any
Subsequent Exchange; Voting Agreement. Notwithstanding any other
provision of this Agreement, as soon as reasonably practicable and in
no event later than September 30, 2005, the Company shall have
presented the transaction represented by this Agreement, together with
the proposed mandatory exchange of Preferred Stock for Common Stock
described below to its current stockholders in accordance with
applicable requirements of the Commission and the AMEX for a vote (or
written consent by the requisite number) of such stockholders to
approve the transaction evidenced by this Agreement and a mandatory
exchange of all shares of Preferred Stock for shares of the Company's
Common Stock on the basis of 279 shares of Common Stock for each share
of Preferred Stock, to result in an aggregate of 8,788,500 shares of
Common Stock to be issued to the Holders (or their respective
transferees) which shall then constitute at least 89% of the total
issued and outstanding shares of Common Stock of the Company, all of
which shall be subject to the listing requirements with the AMEX, but
may not be required to be registered pursuant to the Act.
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(c) Potential Recission. In the event that the stockholders of
the Company do not approve by the requisite number of votes either the
transaction covered by this Agreement or the mandatory exchange of
shares of Common Stock for shares of Preferred Stock described in (b)
above, the Holder(s) of the Preferred Stock shall have the option,
exercisable by all, but not less than all Holders, at any time after
September 30, 2005 until 12:00 noon, local Dallas, Texas time on
September 30, 2006 (herein called the "Put Option"), to either (i)
rescind in full and revoke the transaction covered by this Agreement by
returning all 31,500 shares of Preferred Stock to the Company upon
which the Company shall, within two Business Days, deliver back to such
Holder(s) all equity securities of any entity owning all of the
ordinary shares and other securities of Tacaruna or of Cabletel, or
(ii) deliver to the Company all 31,500 shares of Preferred Stock of the
Company and receive in exchange therefor all of the ordinary shares and
other securities of Tacaruna outstanding and owned by the Company such
that such Holder(s) shall become the owner and holder of all of the
issued and outstanding securities of Tacaruna which in turn continues
to own Cabletel.
(d) Reimbursement for Governmental Compliance. In the event
that the business or properties which FEINC or ARM or Tacaruna or
Cabletel will own or use at Closing are not as of that date in
compliance with all rules and regulations of any governmental body or
agency with jurisdiction over it, and in the event that substantial
efforts are required to secure such compliance, the Holders shall
reimburse the Company for all reasonable and necessary monies expended
by the Company alone in order to secure such compliance.
(e) Tax Indemnification. Upon written notice by the Company,
the Holders shall pay to the Company or Tacaruna, as appropriate, and
shall otherwise indemnify, save and hold the Company and Tacaruna
harmless from and against the amount of any assessment against,
asserted or paid by or on behalf of Cabletel relating to or arising out
of the years in which Cabletel was not owned by Tacaruna or was a
member of an affiliated group (for which consolidated income tax
returns were filed by an entity other than the Company or Tacaruna)
under the Internal Revenue Code of 1986, as amended (the "Code"), as
applicable, or any other taxing authority with respect to any
deficiency asserted by the Internal Revenue Service or such other
taxing authority based upon any income tax returns filed under the Code
or other taxing authority by Cabletel for any period up to and
including the Closing Date hereof or for any tax liability arising
against Cabletel prior to the Closing Date which is not reflected in
the Financial Statements included on Schedule 1. The Holders shall also
be obligated under this paragraph 10(e) for any such assessment caused
by any act or failure to act on the part of the Holders after the date
hereof.
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(f) Transferee Liability Indemnification. Upon written notice
by the Company or Tacaruna, as the case may be, the Holders shall pay
to the Company or Tacaruna, as the case may be, the amount of, and
shall otherwise indemnify, save and hold the Company and Tacaruna
harmless from and against any and all tax liability of any nature of
Cabletel for any period (including the period from the date of
organization to the Closing Date) prior to the Closing Date, and the
Holders shall also pay to the Company or Tacaruna, as the case may be,
the amount of any tax refund received by the Holders attributable to
tax payments by Cabletel after the Closing Date which refund is
attributable to tax payments by Cabletel for periods prior to the
Closing Date.
(g) Indemnity. The Holders hereby agree to indemnify the
Company and Tacaruna and to hold the Company and Tacaruna harmless from
and against any and all liabilities and obligations, including without
limitation, any and all damages, losses, claims, actions, proceedings,
liens, judgments, agreements and undertakings (hereinafter collectively
referred to as "Losses") arising out of or related to (i) any breach or
failure of observance or performance by the Holders for any one or more
of the representations, warranties, covenants, agreements or
commitments made by the Holders hereunder or under any other agreement
among the Holders, Cabletel, Tacaruna, FEINC, ARM and/or the Company,
(ii) any of the threatened or pending litigation described on Schedule
5, or (iii) any adjustments or payments required to be made by the
Holders in favor of Tacaruna or the Company hereunder.
13. Conditions Precedent to the Obligations of the Company. All
obligations of the Company hereunder are subject to the fulfillment, prior to or
at the Closing, of each of the following conditions, any or all of which may be
waived in writing by Tacaruna or the Company, as the case may be:
(a) Representations and Warranties. The representations and
warranties of the Holders contained in paragraph 9 hereof shall have
been accurate in all material respects as of the date hereof, shall be
deemed to be made at the Closing Date and, except to the extent
necessary to reflect the consummation of the transactions provided for
herein or approved in writing by the Company, shall be then true and
accurate in all material respects.
(b) No Material Loss. As of the Closing, except as otherwise
provided or permitted in paragraph 9(e) all of the assets of Cabletel
shall be as reflected in the financial statements described in
paragraph 9(d) above as adjusted for the ordinary course of Cabletel's
business to the Closing Date, and Cabletel shall not have suffered a
material loss of, or damage to, any assets due to any cause whatsoever,
and no event or condition of any character shall have accrued or shall
exist or with notice or lapse of time or both would exist, materially
and adversely affecting the business, contracts, assets, financial
condition or results of operations of Cabletel.
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(c) Covenant Performance. The Holders and Cabletel shall have
performed and complied with all agreements and conditions required by
this Agreement to be performed or complied with by either of them prior
to the Closing Date.
(d) Officer's Certificate. The Holders shall have delivered to
the Company a certificate of an executive officer dated as of the
Closing Date, certifying to the fulfillment of the conditions specified
in subparts (a), (b) and (c) of this paragraph.
14. Conditions Precedent to the Holder's Obligations. All obligations
of the Holders hereunder are subject to the fulfillment, prior to or at the
Closing, of each of the following conditions, any or all of which may be waived
in writing by the Holders:
(a) Authorization. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated
hereby shall have been duly and effectively authorized by the Board of
Directors of the Company in accordance with its terms, and the Company
shall deliver to the Holders a copy of the resolutions so adopted by
the Board of Directors or governing body, certified by the Secretary or
an Assistant Secretary of the Company.
(b) Representations and Warranties. The representations and
warranties of the Company contained in paragraph 10 shall have been
accurate in all material respects as of the date hereof, shall be
deemed to be made at the Closing Date, and except to the extent
necessary to reflect the consummation of the transactions provided for
herein or approved by a majority of the Holders in writing, shall be
then true and accurate in all material respects.
(c) Covenant Performance. The Company shall have performed and
complied with all agreements and conditions required by this Agreement
to be performed or complied with by the Company prior to the Closing
Date, if any.
(d) Effectiveness of Certificate of Designations; Delivery of
Preferred Stock. The Certificate of Designations shall have been filed
with and approved by the Secretary of State of Nevada, and the Company
shall be prepared to issue the Preferred Stock to the Holders and shall
provide appropriate evidence of such filing and readiness to the
Holders.
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(e) Officer's Certificate. The Company shall have delivered to
the Holders a certificate of its President or one of its Vice
Presidents or an authorized executive officer dated as of the Closing
Date certifying (i) to the fulfillment of the conditions specified in
paragraphs (a), (b) and (c) of this paragraph, and (ii) that no suit,
action, arbitration or other proceeding is pending or has been
threatened against or relating to the Company which might affect the
transactions contemplated by this Agreement or the business and
properties of Cabletel after giving effect to the transfers hereunder.
15. Transactions and Delivery at Closing. At the Closing, the parties
hereto shall perform or deliver the following:
(a) Deliveries and Performance of the Holders. At the Closing,
the Holders, contemporaneously with the performance by the Company of
its obligations to be performed at the Closing, shall deliver to the
Company the following:
(i) certificates representing all of the shares of
stock, whether common or preferred, of FEINC and all of the
shares of stock, whether common or Preferred, of ARM,
duly-endorsed for transfer with all necessary documentary
transfer tax stamps affixed, if any;
(ii) the FEINC, ARM, Tacaruna and Cabletel governing
instruments, including articles of organization, bylaws,
minute books, stock certificate books, seals, books of
account, bank accounts and records and other existing
documents and records of FEINC, ARM, Tacaruna and Cabletel;
(iii) resignations of such officers, directors or
officials of Cabletel as shall be requested by the Company;
(iv) any other documents and agreements not
previously delivered pursuant to paragraph 14 above.
(b) Deliveries and Performance by the Company. At the Closing,
the Company, contemporaneously with the performance by the Holders of
each of their obligations to be performed at the Closing, shall deliver
to the Holders the following:
(i) one or more certificates representing the
Preferred Stock issued to and standing in the name of each of
the Holders as set forth in paragraph 5 above;
(ii) such other documents and instruments as shall
have not been previously delivered pursuant to paragraph 13
above.
16. Termination. This Agreement may be terminated at any time before,
but not later than, the Closing hereunder by:
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(a) the mutual consent of the parties hereto, with the Holders
acting by a majority in number;
(b) the Company if any of the conditions provided for in
paragraph 17 of this Agreement have not been met by the Closing Date,
if and as postponed, or have not been waived;
(c) by the Holders (acting by a majority in number) if any of
the conditions provided for in paragraph 14 of this Agreement have not
been met by the Closing Date, if and as postponed, or have not been
waived;
(d) by any party to this Agreement if the Closing has not
taken place by the close of business on November 19, 2004.
Any party may, at their election, waive any or all of its foregoing rights to
terminate this Agreement and shall be deemed to have waived those rights upon
the Closing of this Agreement to the extent such waiver is made with actual
knowledge of such termination right. If the Closing of the transactions under
this Agreement shall not have occurred by the date specified above because of
the inability of one of the parties by reason or cause beyond their respective
control to carry out performances contemplated by this Agreement, no party to
this Agreement shall be liable to any other party for any loss, damage or
expense, and the only remedy shall be to terminate this Agreement by notice to
the other parties as to the underperformed part of this Agreement.
17. Miscellaneous.
(a) Costs and Expenses. Except as otherwise provided in this
Agreement, each party hereto shall bear its own costs, expenses and
fees incurred or assumed by such party in the preparation or execution
of this Agreement and in complying with the covenants and conditions
herein, whether or not the transactions contemplated hereby shall be
consummated.
(b) Notices. Any notice or other communication required or
permitted to be given by this Agreement or any other document or
instrument referred to herein or executed in connection herewith must
be given in writing (which may be by telecopy followed by mail or
personal delivery), and must be personally delivered or mailed by
prepaid, certified or registered mail, to the party to whom such notice
or communication is directed, at the address of such party set forth
opposite his name on the signature pages to this Agreement. Subject to
the other provisions of this Agreement, any party may change its
address (or redesignate the Person to whom such notice shall be
delivered) for purposes of this Agreement by giving notice of such
change to the other party pursuant to this section. In each instance,
with respect to any such notice so given, it shall only be effective
upon receipt by the party intended to receive same.
(c) Further Cooperation. To the extent that any party's
further approval or other action is deemed necessary or desirable by
the other party in order to effectuate the terms and conditions of this
Agreement and the conveyances, the
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parties hereby agree to execute all reasonable documents and all
actions reasonably requested by the other party to effectuate the terms
and conditions of this Agreement.
(d) Contents of Agreement; Parties-in-Interest; Assignments.
This Agreement, together with the exhibits annexed hereto and other
documents executed in connection with the Closing, sets forth the
entire understanding of the parties with respect to the actions
contemplated hereby and any previous agreements or understandings
between the parties regarding the subject matter hereof is merged into
and superseded by this Agreement. All representations, warranties,
covenants, terms, conditions and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto. This Agreement
may not be assigned by either party hereto without the prior written
consent of the other party.
(e) Captions. The captions or titles of any paragraph or
provision of this Agreement or any exhibit annexed hereto are for
convenience of reference only, are not to be construed as a part of
this Agreement, and shall not operate or be construed as defining or
limiting in any way the scope of any provision hereof
(f) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but
all of which collectively shall constitute one and the same instrument
representing the agreement between the parties hereto, and it shall not
be necessary for the proof of this Agreement that any party produce or
account for more than one such counterpart.
(g) Modification or Waiver. This Agreement may be amended,
modified or superseded and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, but
only by a written instrument executed by the parties hereto. No waiver
of any nature, in any one or more instance, shall be deemed to be or be
construed as a as a further or continued waiver of any condition or any
breach of any other term, covenant, representation or warranty in this
Agreement. This Agreement and each revision hereof may not waived,
altered, amended or modified, except in writing, duly executed by both
parties.
(h) Governing Law and Enforcement. This Agreement shall be
construed and enforced in accordance with the laws of the State of
Texas, the state in which it was negotiated, executed and delivered.
Should any clause, sentence, section or paragraph of this Agreement be
judicially or administratively declared to be invalid, unenforceable or
void under the laws of the State of Texas or the United States of
America, or any agency or subdivision thereof, such decision shall not
have the effect of invalidating or voiding the remainder of this
Agreement and the parties hereto agree that the part or parts of this
Agreement so held to be valid, unenforceable or void shall be deemed to
have been deleted herefrom and the remainder shall have the same force
and effect as if such part or parts had never been included herein. In
the event any party hereto shall fail to perform any of its obligations
under this Agreement such party hereby agrees to pay all reasonable
16
expenses, including attorneys' fees, which may be incurred by any party
hereto which is successful in enforcing this Agreement.
(i) Facsimile. This Agreement may be transmitted by facsimile
transmission, and it is the intent of the Parties for the facsimile of
any autograph reproduced by a receiving facsimile machine to be an
original signature, and for the facsimile of any complete photocopy of
this Agreement to be deemed an original counterpart.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date and year first above written.
ADDRESSES, TELEPHONE NOS.,
FACSIMILE NOS., ETC., FOR NOTICES
GREENBRIAR CORPORATION, a
Nevada corporation
1755 Wittington Place, Suite 340 By: /s/ Gene S. Bertcher
Dallas, Texas 75234 --------------------------
972-407-8215 (Telephone) Name: Gene S. Bertcher
(Facsimile) -----------------------
- ------------ Title: President
-----------------------
- --------------------
Dallas, Texas 752 /s/ Ronald Finley
--- ------------------------------
(Telephone) Ronald Finley
- ------------
(Facsimile)
- ------------
- --------------------
Dallas, Texas 752 /s/ Jeffrey A. Finley
--- ------------------------------
(Telephone) Jeffrey A. Finley
- ------------
(Facsimile)
- ------------
1800 Valley View Lane, Suite 300
Dallas, Texas 75234 /s/ Bradford A. Phillips
(Telephone) ------------------------------
- ------------ Bradford A. Phillips
(Facsimile)
- ------------
1800 Valley View Lane, Suite 300
Dallas, Texas 75234 /s/ Gene E. Phillips
(Telephone) ------------------------------
- ------------ Gene E. Phillips
(Facsimile)
- ------------
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