U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: December 2, 1998
USA SERVICE SYSTEMS, INC.
-------------------------
(Exact name of registrant as specified in its charter)
COLORADO
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(State or other jurisdiction of incorporation)
0-22095 84-1039267
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(Commission File No.) (IRS Employer
Identification No.)
10770 Wiles Road
Coral Springs, FL 33076
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (954) 752-4289
PRINCETON MANAGEMENT CORPORATION
5650 Greenwood Plaza Blvd., Suite 216
Englewood, Colorado 80111
-------------------------
(Former name or former address, if changed since last report)
Item 1. Changes in Control of Registrant.
Effective November 17, 1998, pursuant to a definitive
agreement (attached hereto and incorporated herein as Exhibit 2.0)
(the "Agreement") Princeton Management Corporation (the "Company")
acquired all of the issued and outstanding securities of USA
Service Systems, Inc. ("USA"), a Florida corporation. The terms of
the transaction provided that the Company undertook a forward split
of its issued and outstanding common stock, whereby 4.33 shares of
common stock were issued in exchange for each share of common stock
then issued and outstanding in order to establish the number of
issued and outstanding common shares at closing to be 1,250,000
shares. The Company and USA entered into a share exchange
agreement wherein the Company issued an aggregate of 3,750,000
"restricted" shares of the Company's Common Stock to the USA
shareholders in exchange for all of the issued and outstanding
shares of USA. USA became a wholly owned subsidiary of the
Company. The Company also changed its name to "USA Service
Systems, Inc."
Pursuant to the terms of the Agreement, Gregory Simonds and
Gilberta Gara resigned their positions as officers and directors of
the Company. The following persons were appointed as new officers
and/or directors of the Company:
NAME OFFICE
George D. Pursglove Chairman, President and
Chief Executive Officer
Chester E. Howard Senior Vice President-
Finance, Chief Financial
Officer and Director
Douglas C. MacLellan Director
The percentage of voting securities of the Company now
beneficially owned directly or indirectly by the entity who
acquired control and the identity of the entities who acquired
control are as follows:
Shares of Common Stock to
be owned upon consummation Approximate
Name and Address of the Transaction Percent of Class
George D. Pursglove(1) 1,691,500 33.8%
10770 Wiles Road
Coral Springs, FL 33076
2
Shares of Common Stock to
be owned upon consummation Approximate
Name and Address of the Transaction Percent of Class
Chester E. Howard(1) 1,691,500 33.8%
1808 Apricot Glen Dr.
Austin, TX 78746
Douglas C. MacLellan(1) -0- -
10770 Wiles Road
Coral Springs, FL 33076
All Directors and 3,383,000 67.7%
Executive Officers as a
Group (3 persons)
__________________________
(1) Officer and/or Director of the Company.
Item 2. Acquisition or Disposition of Assets.
Effective November 17, 1998, the Company acquired all of the
issued and outstanding securities of USA. The nature and amount of
consideration given in connection with the agreement was the
issuance of 3,750,000 shares of "restricted" common stock of the
Company (post forward split) to the former USA shareholders. The
consideration given and received was determined by arms-length
negotiations between the principals of the Company and principals
of USA. No material relationship existed or presently exists
between management of the companies.
USA is a supplier of regularly scheduled, routed merchandising
services in the United States. USA provides in-store merchandising,
assemblies and sales services primarily on behalf of branded
product manufacturers and retail companies. Additional services
performed include assemblies of products for sale and display, as
well as sales demonstrations. As of the date of this report, USA
has reached agreement with four other companies engaged in the same
genre of business wherein USA intends to acquire these other
entities in the near future in exchange for a combination of stock,
cash and notes. Upon closing of these acquisitions, USA will
employ approximately 700 persons and the combined entity is
expected to have approximately $16 million in annual revenues, on
a pro forma basis.
Item 4. Changes in Registrant's Certifying Accountant.
On December 2, 1998, Kish, Leake & Associates, P.C., the
Registrant's independent accountant for the Registrant's two most
recent fiscal years, resigned. The Registrant's financial
statements for the last two years prepared by Kish, Leake &
Associates, P.C., contained no adverse opinion or disclaimer of
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opinion, or was qualified as to uncertainty, audit scope, or
accounting principles.
Also on December 2, 1998, the Registrant engaged the
accounting firm of Kaufman Rossin & Co., independent public
accountants, to audit the Registrant's fiscal year ended December
31, 1998, as well as future financial statements, to replace the
firm of Kish, Leake & Associates, P.C., which was the principal
independent public accountant as reported in the Registrant's Form
10-KSB for the fiscal year ended December 31, 1997, as filed with
the Securities & Exchange Commission. This change in independent
accountants was approved by the Board of Directors of the
Registrant.
There were no disagreements within the last two fiscal years
and subsequent periods with Kish, Leake & Associates, P.C., on any
matter of accounting principles or practices, financial statement
disclosure, or auditing scope of procedure, which disagreement(s),
if not resolved to the satisfaction of Kish, Leake & Associates,
P.C., would have caused that firm to make reference in connection
with its reports to the subject matter of the disagreement(s) or
any reportable events.
The Registrant has requested that Kish, Leake & Associates,
P.C., furnish it with a letter addressed to the Commission stating
whether it agrees with the above statements. A copy of such
letter, dated December 2, 1998, is filed as Exhibit 16 to this Form
8-K.
Item 7(a) and 7(b). Financial Statements and Pro Forma Financial
Statements
The Registrant hereby undertakes to file with the Commission
an amendment to this Form 8-K wherein the Registrant shall provide
the audited financial statements of USA and the Company's pro forma
financial statements within sixty (60) days after the filing of
this Form 8-K.
Item 7(c). Exhibits.
Number Exhibit
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2.1 Agreement between the Company and USA Service
Systems, Inc.
16.0 Letter of Resignation of Registrant's
independent certified accountant, Kish, Leake
& Associates, P.C.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934 the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
USA SERVICE SYSTEMS, INC.
(Registrant)
By:/s/ George Pursglove
---------------------------
George Pursglove,
President
Dated: December 2, 1998
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USA SERVICE SYSTEMS, INC.
___________________________
EXHIBIT 2.1 TO FORM 8-K
___________________________
SHARE EXCHANGE AGREEMENT AND
PLAN OF REORGANIZATION
BETWEEN THE COMPANY AND
USA SERVICE SYSTEMS, INC.
___________________________
SHARE EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
by and among
PRINCETON MANAGEMENT CORPORATION
a Colorado corporation
and
USA SERVICE SYSTEMS, INC.
a Florida corporation
effective as of November 17, 1998
SHARE EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
THIS SHARE EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION, made
and entered into this 17th day of November 1998, by and between
PRINCETON MANAGEMENT CORPORATION, a Colorado corporation with its
principal place of business located at 5650 Greenwood Plaza Blvd.,
Suite 216, Englewood, Colorado 80111 ("PMC") and USA SERVICE
SYSTEMS, INC., a Florida corporation with its principal place of
business located at 10770 Wiles Road, Coral Springs, FL 33076
("USA"), who hereby agree as follows:
Premises
A. This Agreement provides for the reorganization of USA
with and into PMC, with USA becoming a wholly-owned subsidiary of
PMC, and in connection therewith, the conversion of the outstanding
common stock of USA into shares of common voting stock of PMC, all
for the purpose of effecting a tax-free reorganization pursuant to
sections 354 and 368(a) of the Internal Revenue Code of 1986, as
amended.
B. The boards of directors of USA and PMC have determined,
subject to the terms and conditions set forth in this Agreement,
that the exchange contemplated hereby, as a result of which USA
would become a wholly owned subsidiary of PMC is desirable and in
the best interests of their stockholders. This Agreement is being
entered into for the purpose of setting forth the terms and
conditions of the proposed exchange.
Agreement
NOW, THEREFORE, on the stated premises and for and in
consideration of the mutual covenants and agreements hereinafter
set forth and the mutual benefits to the parties to be derived
herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF
USA
As an inducement to and to obtain the reliance of PMC, USA
represents and warrants as follows:
Section 1.1 Organization. USA is a corporation duly
organized, validly existing, and in good standing under the laws of
the state of Florida and has the corporate power and is duly
authorized, qualified, franchised and licensed under all applicable
laws, regulations, ordinances and orders of public authorities to
own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, including
qualification to do business as a foreign corporation in the
jurisdiction in which the character and location of the assets
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owned by it or the nature of the business transacted by it requires
qualification. Included in the USA Schedules (as hereinafter
defined) are complete and correct copies of the articles of
incorporation, bylaws and amendments thereto of USA as in effect on
the date hereof. The execution and delivery of this Agreement does
not and the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not violate any
provision of USA's articles of incorporation or bylaws. USA has
full power, authority and legal right and has taken all action
required by law, its articles of incorporation, its bylaws or
otherwise to authorize the execution and delivery of this
Agreement.
Section 1.2 Capitalization. The authorized capitalization of
USA consists of 30,000,000 Common Shares, $.001 par value per
share. As of the Closing Date, there will be 3,500,000 shares of
USA's Common Stock issued and outstanding (the "USA Common
Shares"). All issued and outstanding shares are legally issued,
fully paid and nonassessable and are not issued in violation of the
preemptive or other rights of any person. USA has no other
securities, warrants or options authorized or issued.
Section 1.3 Subsidiaries and Predecessor Corporations. Except
as otherwise set forth in the USA Schedules, USA does not have any
other subsidiaries and does not own, beneficially or of record, any
shares of any other corporation.
Section 1.4 Financial Statements. Included in the USA
Schedules is an audited financial statement, including a balance
sheet, statement of operations, shareholder equity and cash flows
and notes thereto, dated as of August 31, 1998. Relevant thereto:
(a) the USA balance sheet presents fairly as of its
date the financial condition of USA. USA does not have,
as of the date of such balance sheet, except as noted and
to the extent reflected or reserved against therein, any
liabilities or obligations (absolute or contingent) which
should be reflected in a balance sheet or the notes
thereto and all assets reflected therein are properly
reported and present fairly the value of the assets of
USA, in accordance with generally accepted accounting
principles;
(b) USA has no liabilities with respect to the
payment of any federal, state, county, local or other
taxes (including any deficiencies, interest or
penalties), except for taxes accrued but not yet due and
payable;
(c) USA has filed all state, federal and local
income tax returns required to be filed by it from
inception to the date hereof, if any;
(d) The books and records, financial and others, of
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USA are in all material respects complete and correct and
have been maintained in accordance with good business
accounting practices; and
(e) except as and to the extent disclosed in the
most recent USA balance sheet and the USA Schedules, USA
has no material contingent liabilities, direct or
indirect, matured or unmatured.
Section 1.5 Information. The information concerning USA set
forth in this Agreement and in the USA Schedules is complete and
accurate in all material respects and does not contain any untrue
statement of a material fact or knowingly omit to state a material
fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
Section 1.6 Options and Warrants. There are no existing
options, warrants, calls or commitments of any character to which
USA is a party and by which it is bound.
Section 1.7 Absence of Certain Changes or Events. Except as
set forth in this Agreement, the USA Schedules, or as otherwise
disclosed to PMC, since August 31, 1998:
(a) there has not been: (i) any material adverse
change in the business, operations, properties, assets or
condition of USA; or (ii) any damage, destruction or loss
to USA (whether or not covered by insurance) materially
and adversely affecting the business, operations,
properties, assets or condition of USA;
(b) USA has not: (i) amended its articles of
incorporation or bylaws; (ii) declared or made, or agreed
to declare or make, any payment of dividends or
distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed or agreed to
purchase or redeem any of its capital stock; (iii) waived
any rights of value which in the aggregate are
extraordinary or material considering the business of
USA; (iv) made any material change in its method of
management, operation or accounting; (v) entered into any
other material transaction; (vi) made any accrual or
arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination
pay to any present or former officer or employee; (vii)
increased the rate of compensation payable or to become
payable by it to any of its officers or directors or any
of its employees whose monthly compensation exceeds
$10,000; or (viii) made any increase in any profit
sharing, bonus, deferred compensation, insurance,
pension, retirement or other employee benefit plan,
payment or arrangement made to, for, or with its
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officers, directors or employees.
(c) USA has not: (i) granted or agreed to grant any
options, warrants or other rights for its stocks, bonds
or other corporate securities calling for the issuance
thereof; (ii) borrowed or agreed to borrow any funds or
incurred or become subject to, any material obligation or
liability (absolute or contingent) except liabilities
incurred in the ordinary course of business; (iii) paid
any material obligation or liability (absolute or
contingent) other than current liabilities reflected in
or shown on the most recent USA balance sheet and current
liabilities incurred since that date in the ordinary
course of business; (iv) sold or transferred, or agreed
to sell or transfer, any of its assets, properties or
rights (except assets, properties or rights not used or
useful in its business which, in the aggregate have a
value of less than $10,000); (v) made or permitted any
amendment or termination of any contract, agreement or
license to which it is a party if such amendment or
termination is material, considering the business of USA;
or (vi) issued, delivered or agreed to issue or deliver
any stock, bonds or other corporate securities, including
debentures (whether authorized and unissued or held as
treasury stock); and
(d) to the best knowledge of USA, it has not become
subject to any law or regulation which materially and
adversely affects, or in the future may adversely affect,
the business, operations, properties, assets or condition
of USA.
Section 1.8 Title and Related Matters. USA has good and
marketable title to and is the sole and exclusive owner of all of
its properties, inventory, interests in properties and assets, real
and personal (collectively, the "Assets") which are reflected in
the most recent USA unaudited balance sheet and the USA Schedules
or acquired after that date (except properties, interests in
properties and assets sold or otherwise disposed of since such date
in the ordinary course of business), free and clear of all liens,
pledges, charges or encumbrances except: (a) statutory liens or
claims not yet delinquent; (b) such imperfections of title and
easements as do not and will not, materially detract from or
interfere with the present or proposed use of the properties
subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and (c) as
described in the USA Schedules. Except as set forth in the USA
Schedules, USA owns free and clear of any liens, claims,
encumbrances, royalty interests or other restrictions or
limitations of any nature whatsoever and all procedures,
techniques, marketing plans, business plans, methods of management
or other information utilized in connection with USA's business.
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Except as set forth in the USA Schedules, no third party has any
right to, and USA has not received any notice of infringement of or
conflict with asserted rights of others with respect to any
product, technology, data, trade secrets, know-how, proprietary
techniques, trademarks, service marks, trade names or copyrights
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a materially adverse affect
on the business, operations, financial conditions or income of USA
or any material portion of its properties, assets or rights.
Section 1.9 Litigation and Proceedings. To the best of USA's
knowledge and belief, there are no actions, suits, proceedings or
investigations pending or threatened by or against USA or affecting
USA or its properties, at law or in equity, before any court or
other governmental agency or instrumentality, domestic or foreign
or before any arbitrator of any kind that would have a material
adverse affect on the business, operations, financial condition or
income of USA. USA does not have any knowledge of any default on
its part with respect to any judgment, order, writ, injunction,
decree, award, rule or regulation of any court, arbitrator or
governmental agency or instrumentality or of any circumstances
which, after reasonable investigation, would result in the
discovery of such a default.
Section 1.10 Contracts.
(a) Except as included or described in the USA
Schedules, there are no material contracts, agreements,
franchises, license agreements or other commitments to
which USA is a party or by which it or any of its assets,
products, technology or properties are bound;
(b) Except as included or described in the USA
Schedules or reflected in the most recent USA balance
sheet, USA is not a party to any oral or written: (i)
contract for the employment of any officer or employee
which is not terminable on thirty (30) days or less
notice; (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension
benefit or retirement plan, agreement or arrangement
covered by Title IV of the Employee Retirement Income
Security Act, as amended; (iii) agreement, contract or
indenture relating to the borrowing of money; (iv)
guaranty of any obligation, other than one on which USA
is a primary obligor, for collection and other guaranties
of obligations, which, in the aggregate do not exceed
more than one year or providing for payments in excess of
$10,000 in the aggregate; (v) consulting or other similar
contracts with an unexpired term of more than one year or
providing for payments in excess of $10,000 in the
aggregate; (vi) collective bargaining agreements; (vii)
agreement with any present or former officer or director
5
of USA; or (viii) contract, agreement or other commitment
involving payments by it of more than $10,000 in the
aggregate; and
(c) To USA's knowledge, all contracts, agreements,
franchises, license agreements and other commitments to
which USA is a party or by which its properties are bound
and which are material to the operations of USA taken as
a whole, are valid and enforceable by USA in all
respects, except as limited by bankruptcy and insolvency
laws and by other laws affecting the rights of creditors
generally.
Section 1.11 Material Contract Defaults. Except as set forth
in the USA Schedules, to the best of USA's knowledge and belief,
USA is not in default in any material respect under the terms of
any outstanding contract, agreement, lease or other commitment
which is material to the business, operations, properties, assets
or condition of USA, and there is no event of default in any
material respect under any such contract, agreement, lease or other
commitment in respect of which USA has not taken adequate steps to
prevent such a default from occurring.
Section 1.12 No Conflict With Other Instruments. The
execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in the
breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust or
other material contract, agreement or instrument to which USA is a
party or to which any of its properties or operations are subject.
Section 1.13 Governmental Authorizations. To the best of
USA's knowledge, USA has all licenses, franchises, permits or other
governmental authorizations legally required to enable USA to
conduct its business in all material respects as conducted on the
date hereof. Except for compliance with federal and state
securities and corporation laws, as hereinafter provided, no
authorization, approval, consent or order of, or registration,
declaration or filing with, any court or other governmental body is
required in connection with the execution and delivery by USA of
this Agreement and the consummation by USA of the transactions
contemplated hereby.
Section 1.14 Compliance With Laws and Regulations. To the
best of USA's knowledge, except as disclosed in the USA Schedules,
USA has complied with all applicable statutes and regulations of
any federal, state or other governmental entity or agency thereof,
except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or
condition of USA or would not result in USA's incurring any
material liability.
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Section 1.15 Insurance. All of the insurable properties of
USA are insured for USA's benefit in accordance with the insurance
policies disclosed in the USA Schedules under valid and enforceable
policies issued by insurers of recognized responsibility. Such
policy or policies containing substantially equivalent coverage
will be outstanding and in full force at the Closing Date.
Section 1.16 Approval of Agreement. The board of directors
of USA has authorized the execution and delivery of this Agreement
by USA, has approved the transactions contemplated hereby and
approved the submission of this Agreement and the transactions
contemplated hereby to the stockholders of USA for their unanimous
approval with the recommendation that the reorganization be
accepted.
Section 1.17 Material Transactions or Affiliations. Except
as disclosed herein and in the USA Schedules, there exists no
material contract, agreement or arrangement between USA and any
predecessor and any person who was at the time of such contract,
agreement or arrangement an officer, director or person owning of
record, or known by USA to own beneficially, ten percent (10%) or
more of the issued and outstanding USA Common Shares and which is
to be performed in whole or in part after the date hereof. In all
of such transactions, the amount paid or received, whether in cash,
in services or in kind, has been during the full term thereof, and
is required to be during the unexpired portion of the term thereof,
no less favorable to USA than terms available from otherwise
unrelated parties in arms length transactions. There are no
commitments by USA, whether written or oral, to lend any funds to,
borrow any money from or enter into any other material transactions
with, any such affiliated person.
Section 1.18 Labor Relations. USA has never had a work
stoppage resulting from labor problems. To the best knowledge of
USA, no union or other collective bargaining organization is
organizing or attempting to organize any employee of USA.
Section 1.19 Previous Sales of Securities. Since inception,
USA has sold USA Common Shares to investors in reliance upon
applicable exemptions from the registration requirements under the
laws of the United States, as well as such state in which such
sales have occurred.
Section 1.20 USA Schedules. Upon execution hereof, USA will
deliver to PMC the following schedules, which are collectively
referred to as the "USA Schedules" and which consist of separate
schedules dated as of the date of this Agreement and instruments
and data as of such date, all certified by the chief executive
officer of USA as complete, true and correct in all material
respects:
(a) copies of the articles of incorporation,
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amendments thereto and bylaws as in effect as of the date
of this Agreement;
(b) the financial statements of USA referenced
hereinabove in Section 1.4;
(c) a list indicating the name and address of the
stockholders of USA, together with the number of shares
owned by them;
(d) copies of all licenses, permits and other
governmental authorizations, requests or applications
therefor, pursuant to which USA carries on or proposes to
carry on its business (except those which in the
aggregate, are immaterial to the present or proposed
business of USA);
(e) a list of every debt, mortgage, security
interest, pledge, lien, encumbrance or claim of any
nature whatsoever in excess of $10,000 as may affect USA,
its properties or assets;
(f) a list of all executive employees of USA,
including current compensation, with notation as to job
description and whether or not such employee is subject
to a written contract;
(g) a description of all real and personal property
owned by USA, together with a description of every
mortgage, deed of trust, pledge, lien, agreement,
encumbrance, claim or equity interest of any nature
whatsoever in such real and personal property;
(h) copies of all material contracts, leases,
agreements or other instruments to which USA is a party
or by which it or its properties are bound;
(i) the name and location of each bank or other
institution with which USA has an account or safety
deposit box and the names of all persons authorized to
draw thereon or having access thereto;
(j) a list of all patent applications, copyrights,
trademarks, service marks and trade names that are
pertinent in any manner whatsoever to the development,
testing, registration, assembly, manufacture, use or sale
of any products or services used in the business of USA
and in which either USA or USA's stockholders has or
previously had any direct or indirect, equitable or legal
right or interest;
(k) a copy of all material documentation relating
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to the sale of USA Common Shares by USA to its present
stockholders;
(l) a list of insurance policies referred to in
Section 1.15;
(m) a description of any material adverse change in
the business operations, property, inventory, assets or
condition of USA since the most recent USA balance sheet
required to be provided pursuant to Section 1.7;
(n) any other information, together with any
required copies of documents required to be disclosed in
the USA Schedules by Sections 1.1 through 1.19.
USA shall cause the USA Schedules and the instruments and data
delivered to PMC hereunder to be updated after the date hereof up
to and including the Closing Date, as hereinafter defined.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
OF PMC
As an inducement to, and to obtain the reliance of USA, PMC
represents and warrants as follows:
Section 2.1 Organization. PMC is a corporation duly
organized, validly existing and in good standing under the laws of
the state of Colorado and has the corporate power and is duly
authorized, qualified, franchised and licensed under all applicable
laws, regulations, ordinances and orders of public authorities to
own all of its properties and assets and to carry on its business
in all material respects as it are now being conducted, including
qualification to do business as a foreign corporation in the states
in which the character and location of the assets owned by it or
the nature of the business transacted by it requires qualification.
Included in the PMC Schedules (as hereinafter defined) are complete
and correct copies of the articles of incorporation, amended
articles of incorporation (collectively, hereinafter referred to as
the "articles of incorporation") and bylaws of PMC as in effect on
the date hereof. The execution and delivery of this Agreement does
not and the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not, violate any
provision of PMC's articles of incorporation or bylaws. PMC has
taken all action required by law, its articles of incorporation,
its bylaws or otherwise to authorize the execution and delivery of
this Agreement. PMC has full power, authority and legal right and
has taken all action required by law, its articles of
incorporation, bylaws or otherwise to consummate the transactions
herein contemplate.
Section 2.2 Capitalization. The authorized capitalization of
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PMC consists of 20,000,000 shares of Preferred Shares, par value
$0.01 per share, none of which has been issued or is outstanding
and 100,000,000 shares of Common Shares, par value $0.0001 per
share, of which 288,600 shares are issued and outstanding as of the
date hereof (the "PMC Common Shares"). All issued and outstanding
PMC Common Shares have been legally issued, fully paid and are
nonassessable and have been issued in compliance with all
applicable securities laws.
Prior to Closing, as defined herein, the Board of Directors of
PMC shall undertake a forward split of the PMC issued and
outstanding common stock, whereby 4.33 shares of common stock shall
be issued in exchange for each share of common stock issued and
outstanding, in order to establish the number of issued and
outstanding common shares of PMC at Closing to be 1,250,000 shares.
Section 2.3 Subsidiaries. PMC has no subsidiary companies.
Section 2.4 Financial Statements.
(a) Included in the PMC Schedules are the audited
balance sheet of PMC for the years ended December 31,
1998 and 1997 and the related statements of operations,
stockholders' equity and cash flows for the year then
ended, as well as PMC's unaudited financial statements
for the nine month period ended September 30, 1998, which
are included in the Schedules identified in Section
2.18(c),
(b) All such financial statements have been
prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods
involved. The PMC balance sheets presents fairly as of
their respective dates the financial condition of PMC.
PMC did not have as of the date of any of such PMC
balance sheets, any liabilities or obligations (absolute
or contingent) which should be reflected in a balance
sheet or the notes thereto prepared in accordance with
generally accepted accounting principles, and all assets
reflected therein are properly reported and present
fairly the value of the assets of PMC, in accordance with
generally accepted accounting principles. The statements
of operations, stockholders' equity and changes in
financial position reflect fairly the information
required to be set forth therein by generally accepted
accounting principles;
(c) The books and records, financial and others, of
PMC are in all material respects complete and correct and
have been maintained in accordance with good business
accounting practices;
(d) PMC has no liabilities with respect to the
10
payment of any federal, state, county, local or other
taxes (including any deficiencies, interest or
penalties), except for taxes accrued but not yet due and
payable.
Section 2.5 Information. The information concerning PMC as
set forth in this Agreement and in the PMC Schedules is complete
and accurate in all material respects and does not contain any
untrue statement of a material fact or omit to state a material
fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
Section 2.6 Absence of Certain Changes or Events. Except as
described herein or in the PMC Schedules, since September 30, 1998:
(a) PMC has not: (i) amended its articles of
incorporation or bylaws; (ii) waived any rights of value
which in the aggregate are extraordinary or material
considering the business of PMC; (iii) made any material
change in its method of management, operation or
accounting; or (iv) made any accrual or arrangement for
or payment of bonuses or special compensation of any kind
or any severance or termination pay to any present or
former officer or employee;
(b) PMC has not: (i) granted or agreed to grant any
options, warrants or other rights for its stocks, bonds
or other corporate securities calling for the issuance
thereof, which option, warrant or other right has not
been cancelled as of the Closing Date; (ii) borrowed or
agreed to borrow any funds or incurred or become subject
to, any material obligation or liability (absolute or
contingent) except liabilities incurred in the ordinary
course of business; and
(c) to the best knowledge of PMC, it has not become
subject to any law or regulation which materially and
adversely affects, or in the future may adversely affect,
the business, operations, properties, assets or condition
of PMC.
Section 2.7 Title and Related Matters. Except as included in
PMC's Financial Statements and Notes thereto referenced in Section
2.4 above, or otherwise included in the PMC's Schedules (as
hereinafter defined), as of the Closing Date, PMC will own no other
real, personal or intangible property.
Section 2.8 Litigation and Proceedings. There are no
actions, suits or proceedings pending or, to the best of PMC's
knowledge and belief, threatened by or against or affecting PMC, at
law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of
11
any kind that would have a material adverse effect on the business,
operations, financial condition, income or business prospects of
PMC. PMC does not have any knowledge of any default on its part
with respect to any judgment, order, writ, injunction, decree,
award, rule or regulation of any court, arbitrator or governmental
agency or instrumentality.
Section 2.9 Contracts. Other than as previously disclosed to
USA or otherwise stated in PMC's Schedules or Financial Statements,
on the Closing Date:
(a) There are no material contracts, agreements,
franchises, license agreements, or other commitments to
which PMC is a party or by which it or any of its
properties are bound;
(b) PMC is not a party to any contract, agreement,
commitment or instrument or subject to any charter or
other corporate restriction or any judgment, order, writ,
injunction, decree or award which materially and
adversely affects, or in the future may (as far as PMC
can now foresee) materially and adversely affect, the
business, operations, properties, assets or conditions of
PMC; and
(c) PMC is not a party to any material oral or
written: (i) contract for the employment of any officer
or employee; (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension,
benefit or retirement plan, agreement or arrangement
covered by Title IV of the Employee Retirement Income
Security Act, as amended; (iii) agreement, contract or
indenture relating to the borrowing of money; (iv)
guaranty of any obligation for the borrowing of money or
otherwise, excluding endorsements made for collection and
other guaranties of obligations, which, in the aggregate
exceeds $1,000; (v) consulting or other similar contract
with an unexpired term of more than one year or providing
for payments in excess of $10,000 in the aggregate; (vi)
collective bargaining agreement; (vii) agreement with any
present or former officer or director of PMC; or (viii)
contract, agreement, or other commitment involving
payments by it of more than $10,000 in the aggregate.
Section 2.10 No Conflict With Other Instruments. The
execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in the
breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust or
other material contract, agreement or instrument to which PMC is a
party or to which any of its properties or operations are subject.
12
Section 2.11 Material Contract Defaults. To the best of PMC's
knowledge and belief, PMC is not in default in any material respect
under the terms of any outstanding contract, agreement, lease or
other commitment which is material to the business, operations,
properties, assets or condition of PMC, and there is no event of
default in any material respect under any such contract, agreement,
lease or other commitment in respect of which PMC has not taken
adequate steps to prevent such a default from occurring.
Section 2.12 Governmental Authorizations. PMC has all
licenses, franchises, permits and other governmental authorizations
that are legally required to enable it to conduct its business
operations in all material respects as conducted on the date
hereof. Except for compliance with federal and state securities or
corporation laws, no authorization, approval, consent or order of,
or registration, declaration or filing with, any court or other
governmental body is required in connection with the execution and
delivery by PMC of the transactions contemplated hereby. PMC is
current in all required SEC filings pursuant to the Securities
Exchange Act of 1934, as amended.
Section 2.13 Compliance With Laws and Regulations. To the
best of PMC's knowledge and belief, PMC has complied with all
applicable statutes and regulations of any federal, state or other
governmental entity or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the
business, operations, properties, assets or condition of PMC or
would not result in PMC's incurring any material liability.
Section 2.14 Insurance. Except as provided in the PMC
Schedules included herewith, PMC has no other insurable properties
and no other insurance policies will be in effect at the Closing
Date, as hereinafter defined.
Section 2.15 Approval of Agreement. The board of directors
of PMC has authorized the execution and delivery of this Agreement
by PMC and has approved the transactions contemplated hereby. The
approval of this Agreement by PMC's shareholders is not required.
Section 2.16 Material Transactions or Affiliations. Except
as provided in the PMC Schedules, as of the Closing Date there will
exist no material contract, agreement or arrangement between PMC
and any person who was at the time of such contract, agreement or
arrangement an officer, director or person owning of record, or
known by PMC to own beneficially, ten percent (10%) or more of the
issued and outstanding common stock of PMC and which is to be
performed in whole or in part after the date hereof. PMC has no
commitment, whether written or oral, to lend any funds to, borrow
any money from or enter into any other material transactions with,
any such affiliated person.
Section 2.17 Labor Relations. PMC has never had a work
13
stoppage resulting from labor problems. PMC has no employees other
than its officers and directors.
Section 2.18 PMC Schedules. Upon execution hereof, PMC shall
deliver to USA the following schedules, which are collectively
referred to as the "PMC Schedules" which are dated the date of this
Agreement, all certified by an officer of PMC to be complete, true
and accurate:
(a) complete and correct copies of the articles of
incorporation, amendments thereto and bylaws of PMC as in
effect as of the date of this Agreement;
(b) copies of all financial statements of PMC
identified in Section 2.4(a);
(c) the description of any material adverse change
in the business, operations, property, assets, or
condition of PMC since September 30, 1998 required to be
provided pursuant to Section 2.6; and
(d) any other information, together with any
required copies of documents, required to be disclosed in
the PMC Schedules by Sections 2.1 through 2.17.
(e) a list of every debt, mortgage, security
interest, pledge, lien, encumbrance or claim of any
nature whatsoever in excess of $10,000 as may affect PMC,
its properties or assets;
(f) a list of all executive employees of PMC,
including current compensation, with notation as to job
description and whether or not such employee is subject
to a written contract;
(g) a description of all real and personal property
owned by PMC, together with a description of every
mortgage, deed of trust, pledge, lien, agreement,
encumbrance, claim or equity interest of any nature
whatsoever in such real and personal property;
(h) copies of all material contracts, leases,
agreements or other instruments to which PMC is a party
or by which it or its properties are bound;
(i) the name and location of each bank or other
institution with which PMC has an account or safety
deposit box and the names of all persons authorized to
draw thereon or having access thereto;
(j) a copy of all material documentation relating
to the sale of PMC Common Shares by PMC to its present
14
stockholders;
(k) a list of insurance policies referred to in
Section 2.14;
(l) a description of any material adverse change in
the business operations, property, inventory, assets or
condition of PMC since the most recent PMC balance sheet
required to be provided pursuant to Section 2.4;
PMC shall cause the PMC Schedules and the instruments to
be delivered to USA hereunder to be updated after the date hereof
up to and including the Closing Date.
ARTICLE III
EXCHANGE PROCEDURE
Section 3.1 Delivery of USA Securities. On the Closing Date,
the holders of the USA Common Shares shall deliver to PMC (i)
certificates or other documents evidencing all of the issued and
outstanding USA Common Shares, duly endorsed in blank or with
executed stock power attached thereto in transferrable form and
(ii) investment letters, the form of which is attached hereto as
Exhibit "A".
Section 3.2 Issuance of PMC Common Shares. (a) In exchange
for all of the USA Common Share tendered pursuant to Section 3.1,
PMC shall issue an aggregate of 3,750,000 "restricted" PMC Common
Shares to the USA shareholders on a pro rata basis.
(b) No fractional PMC Common Shares shall be issued pursuant
to this Section 3.2. In lieu of such fractional shares, all shares
to be issued shall be rounded up or down to the nearest whole
share.
Section 3.3 Events Prior to Closing. Upon execution hereof
or as soon thereafter as practical, management of PMC and USA shall
execute, acknowledge and deliver (or shall cause to be executed,
acknowledged and delivered) any and all certificates, opinions,
financial statements, schedules, agreements, resolutions, rulings
or other instruments required by this Agreement to be so delivered,
together with such other items as may be reasonably requested by
the parties hereto and their respective legal counsel in order to
effectuate or evidence the transactions contemplated hereby,
subject only to the conditions to Closing referenced hereinbelow.
Section 3.4 Closing. The closing ("Closing") of the
transactions contemplated by this Agreement shall be as of the date
in which all of the shareholders of USA have approved the terms of
this Agreement ("Closing Date"), all conditions to Closing
referenced hereinbelow have been satisfied or waived by the
applicable party hereto and all documentation referenced herein is
15
delivered to the respective party herein, unless a different date
is mutually agreed to in writing by the parties hereto.
Section 3.5 Termination.
(a) This Agreement may be terminated by the board of
directors of either PMC or USA at any time prior to the
Closing Date if:
(i) there shall be any action or proceeding before
any court or any governmental body which shall seek to
restrain, prohibit or invalidate the transactions
contemplated by this Agreement and which, in the judgment
of such board of directors, made in good faith and based
on the advice of its legal counsel, makes it inadvisable
to proceed with the exchange contemplated by this
Agreement; or
(ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions; or
(iii) the conditions described in Article VI below
have not been satisfied in full.
In the event of termination pursuant to this paragraph (a) of
this Section 3.5, no obligation, right, or liability shall
arise hereunder and each party shall bear all of the expenses
incurred by it in connection with the negotiation, drafting
and execution of this Agreement and the transactions herein
contemplated;
(b) This Agreement may be terminated at any time prior
to the Closing Date by action of the board of directors of PMC
if USA shall fail to comply in any material respect with any
of its covenants or agreements contained in this Agreement or
if any of the representations or warranties of USA contained
herein shall be inaccurate in any material respect, which
noncompliance or inaccuracy is not cured after 20 days'
written notice thereof is given to USA. If this Agreement is
terminated pursuant to this paragraph (b) of this Section 3.5,
this Agreement shall be of no further force or effect and no
obligation, right or liability shall arise hereunder; and
(c) This Agreement may be terminated at any time prior
to the Closing Date by action of the board of directors of USA
if PMC shall fail to comply in any material respect with any
of its covenants or agreements contained in this Agreement or
if any of the representations or warranties of PMC contained
herein shall be inaccurate in any material respect, which
noncompliance or inaccuracy is not cured after 20 days written
notice thereof is given to PMC. If this Agreement is
16
terminated pursuant to this paragraph (c) of Section 3.5, this
Agreement shall be of no further force or effect and no
obligation, right or liability shall arise hereunder.
Section 3.6 Directors of PMC. Upon the Closing, the present
members of PMC's Board of Directors shall tender their resignations
seriatim so that the following persons are appointed directors of
PMC in accordance with procedures set forth in the PMC bylaws:
George Pursglove (who shall be appointed Chairman of the Board of
Directors) Chester Howard and Douglas C. MacLellan. Each director
shall hold office until his successor shall have been duly elected
and shall have qualified or until his earlier death, resignation or
removal.
Section 3.7 Officers of PMC. Upon the Closing, the present
officers of PMC shall tender their resignations and simultaneous
therewith, the following persons shall be elected as officers of
PMC in accordance with procedures set forth in the PMC bylaws:
NAME OFFICE
---- ------
George D. Pursglove President and Chief Executive
Officer
Chester E. Howard Senior Vice President-Finance
and Chief Financial Officer
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Access to Properties and Records. PMC and USA
will each afford to the officers and authorized representatives of
the other full access to the properties, books and records of PMC
and USA, as the case may be, in order that each may have full
opportunity to make such reasonable investigation as it shall
desire to make of the affairs of the other and each will furnish
the other with such additional financial and operating data and
other information as to the business and properties of PMC and USA,
as the case may be, as the other shall from time to time reasonably
request.
Section 4.2 Availability of Rule 144. Each of the parties
acknowledge that the stock of PMC to be issued pursuant to this
Agreement will be "restricted securities," as that term is defined
in Rule 144 promulgated pursuant to the Securities Act. PMC is
under no obligation to register such shares under the Securities
Act, or otherwise. Notwithstanding the foregoing, however,
following the Closing Date, new management of PMC will use its
commercially reasonably best efforts to: (a) make publicly
available on a regular basis not less than semi-annually, business
and financial information regarding PMC so as to make available to
the shareholders of PMC the provisions of Rule 144 pursuant to
subparagraph (c)(2) thereof; and (b) within ten (10) days of any
17
written request of any stockholder of PMC, PMC will provide to such
stockholder written confirmation of compliance with such of the
foregoing subparagraph as may then be applicable. The stockholders
of PMC holding restricted securities of PMC as of the date of this
Agreement and their respective heirs, administrators, personal
representatives, successors and assigns, are intended third party
beneficiaries of the provisions set forth herein. The covenants
set forth in this Section 4.2 shall survive the Closing and the
consummation of the transactions herein contemplated.
Section 4.3 Information for PMC Public Reports. USA will
furnish PMC with all information concerning USA, including all
financial statements, required for inclusion in any registration
statement or public report intended to be filed by PMC pursuant to
the Securities Act, the Exchange Act, or any other applicable
federal or state law. USA covenants that all information so
furnished for either such registration statement or other public
release by PMC, including the financial statements described in
Section 1.4, shall be true and correct in all material respects
without omission of any material fact required to make the
information stated not misleading.
Section 4.4 Special Covenants and Representations Regarding
the PMC Common Shares to be Issued in the Exchange. The
consummation of this Agreement, including the issuance of the PMC
Common Shares to the stockholders of USA as contemplated hereby,
constitutes the offer and sale of securities under the Securities
Act, and applicable state statutes. Such transaction shall be
consummated in reliance on exemptions from the registration and
prospectus delivery requirements of such statutes which depend,
inter alia, upon the circumstances under which the USA stockholders
acquire such securities. In connection with reliance upon
exemptions from the registration and prospectus delivery
requirements for such transactions, at the Closing, USA shall cause
to be delivered, and the USA stockholders shall deliver to PMC, the
investment letter referenced in Section 3.1 and included herein as
Exhibit "A".
Section 4.5 Third Party Consents. PMC and USA agree to
cooperate with each other in order to obtain any required third
party consents to this Agreement and the transactions herein
contemplated.
Section 4.6 Actions Prior to Closing.
(a) From and after the date of this Agreement until
the Closing Date and except as set forth in the PMC or
USA Schedules or as permitted or contemplated by this
Agreement, USA will each use its best efforts to:
(i) carry on its business in substantially
the same manner as it has heretofore;
18
(ii) maintain and keep its properties in
states of good repair and condition as at present, except
for depreciation due to ordinary wear and tear and damage
due to casualty;
(iii) maintain in full force and effect
insurance comparable in amount and in scope of coverage
to that now maintained by it;
(iv) perform in all material respects all of
its obligations under material contracts, leases and
instruments relating to or affecting its assets,
properties and business;
(v) maintain and preserve its business
organization intact, to retain its key employees and to
maintain its relationship with its material suppliers and
customers; and
(vi) fully comply with and perform in all
material respects all obligations and duties imposed on
it by all federal and state laws and all rules,
regulations and orders imposed by federal or state
governmental authorities.
(b) From and after the date of this Agreement until
the Closing Date, neither PMC nor USA will, without
the prior consent of the other party:
(i) except as otherwise specifically set forth
herein, make any change in their respective certificates
or articles of incorporation or bylaws;
(ii) declare or pay any dividend on its
outstanding shares of capital stock, except as may
otherwise be required by law, or effect any stock split
or otherwise change its capitalization, except as
provided herein;
(iii) enter into or amend any employment,
severance or similar agreements or arrangements with any
directors or officers;
(iv) issue any shares of its capital stock;
(v) grant, confer or award any options,
warrants, conversion rights or other rights not existing
on the date hereof to acquire any shares of its capital
stock; or
(vi) purchase or redeem any shares of its
19
capital stock, except as disclosed herein.
Section 4.7 Indemnification.
(a) USA hereby agrees to indemnify PMC and each of
the officers, agents and directors of PMC as of the date
of execution of this Agreement against any loss,
liability, claim, damage or expense (including, but not
limited to, any and all expense whatsoever reasonably
incurred in investigating, preparing or defending against
any litigation, commenced or threatened or any claim
whatsoever), to which it or they may become subject
arising out of or based on any inaccuracy appearing in or
misrepresentation made in this Agreement. The
indemnification provided for in this paragraph shall
survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement for
a period of 18 months; and
(b) PMC and its officers and directors hereby
agrees to indemnify USA and each of the officers, agents,
directors and current shareholders of USA as of the
Closing Date against any loss, liability, claim, damage
or expense (including, but not limited to, any and all
expense whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced
or threatened or any claim whatsoever), to which it or
they may become subject arising out of or based on any
inaccuracy appearing in or misrepresentation made in this
Agreement and particularly the representation regarding
no liabilities referred to in Section 2.4(b). The
indemnification provided for in this Section shall
survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement for
a period of 18 months.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF PMC
The obligations of PMC under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following
conditions:
Section 5.1 Accuracy of Representations. The representations
and warranties made by USA in this Agreement were true when made
and shall be true at the Closing Date with the same force and
effect as if such representations and warranties were made at the
Closing Date (except for changes therein permitted by this
Agreement), and USA shall have performed or complied with all
covenants and conditions required by this Agreement to be performed
or complied with by USA prior to or at the Closing. PMC shall be
20
furnished with a certificate, signed by a duly authorized officer
of USA and dated the Closing Date, to the foregoing effect.
Section 5.2 Stockholder Approval. The stockholders of USA
shall have unanimously approved this Agreement and the transactions
contemplated thereby.
Section 5.3 Officer's Certificate. PMC shall have been
furnished with a certificate dated the Closing Date and signed by
a duly authorized officer of USA to the effect that, other than as
disclosed in the USA Schedules, no material litigation, proceeding,
investigation or inquiry is pending or, to the best knowledge of
USA, threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this
Agreement or, to the extent not disclosed in the USA Schedules, by
or against USA which might result in any material adverse change in
any of the assets, properties, business or operations of USA.
Section 5.4 No Material Adverse Change. Prior to the Closing
Date, there shall not have occurred any material adverse change in
the financial condition, business or operations of nor shall any
event have occurred which, with the lapse of time or the giving of
notice, may cause or create any material adverse change in the
financial condition, business or operations of USA.
Section 5.5 Opinion of Counsel to USA. PMC shall receive an
opinion dated the Closing Date of Atlas, Pearlman, Trop & Borkson,
P.A., counsel to USA, in substantially the following form:
(a) USA is a corporation duly organized, validly
existing, and in good standing under the laws of the
state of Florida and has the corporate power and is duly
authorized, qualified, franchised and licensed under all
material applicable laws, regulations, ordinances and
orders of public authorities to own all of its properties
and assets and to conduct its business as now conducted,
including qualification to do business as a foreign
corporation in the states in which the character and
location of the assets owned by it or the nature of the
business transacted by it requires qualification;
(b) To the best knowledge of such legal counsel,
the execution and delivery by USA of this Agreement and
the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not
conflict with or result in the breach of any term or
provision of USA's articles of incorporation or bylaws or
violate any court order, writ, injunction or decree
applicable to USA, or its properties or assets;
21
(c) The authorized capitalization of USA consists
of 30,000,000 Common Shares, par value $0.001 per share.
As of the Closing Date, 3,500,000 of the authorized
common shares will be issued and outstanding. All issued
and outstanding shares are legally issued, fully paid and
nonassessable and not issued in violation of the preemp-
tive rights of any person. Except as set forth in the
USA Schedules, to the best knowledge of such legal
counsel, there are no outstanding subscriptions, options,
rights, warrants, convertible securities or other
agreements or commitments obligating USA to issue any
additional shares of any class of its capital stock.
(d) This Agreement has been duly and validly
authorized, executed and delivered by USA;
(e) To the best knowledge of such legal counsel,
except as set forth in the USA Schedules, there are no
material actions, suits or proceedings pending or
threatened by or against or affecting USA or its
properties, at law or in equity, before any court or
other governmental agency or instrumentality, domestic or
foreign or before any arbitrator of any kind;
(f) USA has taken all actions required by the
applicable laws of Florida, or such other jurisdiction
applicable to the proposed actions of USA herein, to
permit the transfer of the USA Common Shares to PMC.
Section 5.6 Other Items. PMC shall have received such
further documents, certificates or instruments relating to the
transactions contemplated hereby as PMC may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF USA
The obligations of USA under this Agreement are subject
to the satisfaction, at or before the Closing Date (unless
otherwise indicated herein), of the following conditions:
Section 6.1 Accuracy of Representations. The representations
and warranties made by PMC in this Agreement were true when made
and shall be true as of the Closing Date (except for changes
therein permitted by this Agreement) with the same force and effect
as if such representations and warranties were made at and as of
the Closing Date, and PMC shall have performed and complied with
all covenants and conditions required by this Agreement to be
performed or complied with by PMC prior to or at the Closing. USA
shall have been furnished with a certificate, signed by a duly
authorized executive officer of PMC and dated the Closing Date, to
the foregoing effect.
22
Section 6.2 Officer's Certificate. USA shall be furnished
with a certificate dated the Closing Date and signed by a duly
authorized officer of PMC to the effect that no litigation,
proceeding, investigation or inquiry is pending or, to the best
knowledge of PMC, threatened, which might result in an action to
enjoin or prevent the consummation of the transactions contemplated
by this Agreement or, to the extent not disclosed in the PMC
Schedules, by or against PMC which might result in any material
adverse change in any of the assets, properties, business or
operations of PMC.
Section 6.3 No Material Adverse Change. Prior to the Closing
Date, there shall not have occurred any material adverse change in
the financial condition, business or operations of nor shall any
event have occurred which, with the lapse of time or the giving of
notice, may cause or create any material adverse change in the
financial condition, business or operations of PMC.
Section 6.4 Opinion of Counsel to PMC. USA shall receive an
opinion dated the Closing Date of Andrew I. Telsey, P.C., counsel
to PMC, in substantially the following form:
(a) PMC is a corporation duly organized, validly
existing, and in good standing under the laws of the
state of Colorado and has the corporate power and is duly
authorized, qualified, franchised, and licensed under all
applicable laws, regulations, ordinances and orders of
public authorities to own all of its properties and
assets and to carry on its business in all material
respects as it is now being conducted, including qualifi-
cation to do business as a foreign corporation in the
states in which the character and location of the assets
owned by it or the nature of the business transacted by
it requires qualification;
(b) To the best knowledge of such legal counsel,
the execution and delivery by PMC of this Agreement and
the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not
conflict with or result in the breach of any term or
provision of PMC's articles of incorporation or bylaws or
constitute a default or give rise to a right of termina-
tion, cancellation or acceleration under any material
mortgage, indenture, deed of trust, license agreement or
other obligation or violate any court order, writ,
injunction or decree applicable to PMC or its properties
or assets;
(c) The authorized capitalization of PMC consists
of 100,000,000 shares of Common Stock, par value $0.0001
per share and 20,000,000 shares of Preferred Stock, $.01
par value per share. As of the Closing Date, there will
23
be no more than 1,250,000 common shares issued and
outstanding and reserved for issuance held by the then
existing securities holders of PMC (post forward split).
All issued and outstanding shares are legally issued,
fully paid and nonassessable and not issued in violation
of the preemptive rights of any person.
(d) The PMC Common Shares to be issued to the USA
stockholders pursuant to the terms of this Agreement will
be, when issued in accordance with the terms hereof,
legally issued, fully paid and non-assessable;
(e) This Agreement has been duly and validly
authorized, executed, and delivered and constitutes the
legal and binding obligation of PMC, except as limited by
bankruptcy and insolvency laws and by other laws
affecting the rights of creditors generally;
(f) To the best knowledge of such counsel, except
as set forth in the PMC Schedules, there are no actions,
suits or proceedings pending or threatened by or against
PMC or affecting PMC's properties, at law or in equity,
before any court or other governmental agency or
instrumentality, domestic or foreign or before any
arbitrator of any kind; and
(g) PMC has taken all actions required by the
applicable laws of the state of Colorado to permit the
issuance of the PMC Common Shares to the USA
stockholders.
Section 6.5 Compliance with Reporting Requirements. As of
the Closing Date, PMC shall be current in, and in compliance with
all requirements of, all filings required to be tendered to the
Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended.
Section 6.6 Other Items. USA shall have received such
further documents, certificates, or instruments relating to the
transactions contemplated hereby as USA may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Brokers and Finders. Except as set forth in
Schedule 7.1, each party hereto hereby represents and warrants that
it is under no obligation, express or implied, to pay certain
finders in connection with the bringing of the parties together in
the negotiation, execution, or consummation of this Agreement. The
parties each agree to indemnify the other against any claim by any
third person not listed in Schedule 7.1 for any commission,
brokerage or finder's fee or other payment with respect to this
24
Agreement or the transactions contemplated hereby based on any
alleged agreement or understanding between the indemnifying party
and such third person, whether express or implied from the actions
of the indemnifying party.
Section 7.2 Law. Forum and Jurisdiction. This Agreement
shall be construed and interpreted in accordance with the laws of
the State of Colorado, except as US federal law may be applicable.
Section 7.3 Notices. Any notices or other communications
required or permitted hereunder shall be sufficiently given if
personally delivered to it or sent by registered mail or certified
mail, postage prepaid, or by prepaid telegram addressed as follows:
If to PMC: Mr. Gregory Simonds, President
Princeton Management Corporation
5650 Greenwood Plaza Blvd.
Suite 216
Englewood, Colorado 80111
with a copy to: Andrew I. Telsey, Esq.
2851 S. Parker Rd., Su. 720
Aurora, CO 80014
If to USA: George D. Pursglove, President
USA Service Systems, Inc.
10770 Wiles Road
Coral Springs, FL 33076
with a copy to: Joel D. Mayersohn, Esq.
Atlas, Pearlman, Trop & Borkson P.A.
New River Center, Suite 1900
200 East Las Olas Blvd.
Ft. Lauderdale, FL 33301
or such other addresses as shall be furnished in writing by any
party in the manner for giving notices hereunder, and any such
notice or communication shall be deemed to have been given as of
the date so delivered, mailed, or telegraphed.
Section 7.4 Attorneys' Fees. In the event that any party
institutes any action or suit to enforce this Agreement or to
secure relief from any default hereunder or breach hereof, the
breaching party or parties shall reimburse the non-breaching party
or parties for all costs, including reasonable attorneys' fees,
incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
Section 7.5 Confidentiality. Each party hereto agrees with
the other parties that, unless and until the reorganization contem-
plated by this Agreement has been consummated, they and their
representatives will hold in strict confidence all data and
25
information obtained with respect to another party or any
subsidiary thereof from any representative, officer, director or
employee, or from any books or records or from personal inspection,
of such other party, and shall not use such data or information or
disclose the same to others, except: (i) to the extent such data is
a matter of public knowledge or is required by law to be published;
and (ii) to the extent that such data or information must be used
or disclosed in order to consummate the transactions contemplated
by this Agreement.
Section 7.6 Schedules; Knowledge. Each party is presumed to
have full knowledge of all information set forth in the other
party's schedules delivered pursuant to this Agreement.
Section 7.7 Third Party Beneficiaries. This contract is
solely among PMC and USA and, except as specifically provided, no
director, officer, stockholder, employee, agent, independent
contractor or any other person or entity shall be deemed to be a
third party beneficiary of this Agreement.
Section 7.8 Entire Agreement. This Agreement represents the
entire agreement between the parties relating to the subject matter
hereof. This Agreement alone fully and completely expresses the
agreement of the parties relating to the subject matter hereof.
There are no other courses of dealing, understandings, agreements,
representations or warranties, written or oral, except as set forth
herein. This Agreement may not be amended or modified, except by
a written agreement signed by all parties hereto.
Section 7.9 Survival; Termination. The representations,
warranties and covenants of the respective parties shall survive
the Closing Date and the consummation of the transactions herein
contemplated for 18 months.
Section 7.10 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original
and all of which taken together shall be but a single instrument.
Section 7.11 Amendment or Waiver. Every right and remedy
provided herein shall be cumulative with every other right and
remedy, whether conferred herein, at law, or in equity, and may be
enforced concurrently herewith, and no waiver by any party of the
performance of any obligation by the other shall be construed as a
waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing
Date, this Agreement may be amended by a writing signed by all
parties hereto, with respect to any of the terms contained herein,
and any term or condition of this Agreement may be waived or the
time for performance hereof may be extended by a writing signed by
the party or parties for whose benefit the provision is intended.
Section 7.12 Incorporation of Recitals. All of the recitals
26
hereof are incorporated by this reference and are made a part
hereof as though set forth at length herein.
Section 7.13 Expenses. Each party herein shall bear all of
their respective costs and expenses incurred in connection with the
negotiation of this Agreement and in the consummation of the
transactions provided for herein and the preparation therefor.
Section 7.14 Headings; Context. The headings of the sections
and paragraphs contained in this Agreement are for convenience of
reference only and do not form a part hereof and in no way modify,
interpret or construe the meaning of this Agreement.
Section 7.15 Benefit. This Agreement shall be binding upon
and shall insure only to the benefit of the parties hereto, and
their permitted assigns hereunder. This Agreement shall not be
assigned by any party without the prior written consent of the
other party.
Section 7.16 Public Announcements. Except as may be required
by law, neither party shall make any public announcement or filing
with respect to the transactions provided for herein without the
prior consent of the other party hereto.
Section 7.17 Severability. In the event that any particular
provision or provisions of this Agreement or the other agreements
contained herein shall for any reason hereafter be determined to be
unenforceable, or in violation of any law, governmental order or
regulation, such unenforceability or violation shall not affect the
remaining provisions of such agreements, which shall continue in
full force and effect and be binding upon the respective parties
hereto.
Section 7.18 Failure of Conditions; Termination. In the
event any of the conditions specified in this Agreement shall not
be fulfilled on or before the Closing Date, either of the parties
have the right either to proceed or, upon prompt written notice to
the other, to terminate and rescind this Agreement without
liability to any other party. The election to proceed shall not
affect the right of such electing party reasonably to require the
other party to continue to use its efforts to fulfill the unmet
conditions.
Section 7.19 No Strict Construction. The language of this
Agreement shall be construed as a whole, according to its fair
meaning and intendment, and not strictly for or against either
party hereto, regardless of who drafted or was principally
responsible for drafting the Agreement or terms or conditions
hereof.
Section 7.20 Execution Knowing and Voluntary. In executing
27
this Agreement, the parties severally acknowledge and represent
that each: (a) has fully and carefully read and considered this
Agreement; (b) has been or has had the opportunity to be fully
apprised of its attorneys of the legal effect and meaning of this
document and all terms and conditions hereof; and (c) is executing
this Agreement voluntarily, free from any influence, coercion or
duress of any kind.
IN WITNESS WHEREOF, the corporate parties hereto have caused
this Agreement to be executed by their respective officers,
hereunto duly authorized, and entered into as of the date first
above written.
PRINCETON MANAGEMENT CORPORATION
ATTEST:
/s/ Gilberta P. Gara By: /s/ Gregory Simonds
- --------------------- --------------------
Secretary or Gregory Simonds, President
Assistant Secretary
ATTEST: USA SERVICE SYSTEMS, INC.
/s/ George Pursglove By: /s/ George Pursglove
- -------------------- ---------------------
Secretary or George Pursglove, President
Assistant Secretary
28
EXHIBIT "A"
_____________________________
FORM OF INVESTMENT LETTER
_____________________________
29
INVESTMENT LETTER
November 17, 1998
Princeton Management Corporation
5650 Greenwood Plaza Blvd.
Suite 216
Englewood, CO 80111
Gentlemen:
The undersigned herewith deposits certificate(s) for shares of
common stock of USA Service Systems, Inc., a Florida corporation,
("USA"), as described below (endorsed, or having executed stock
powers attached) in acceptance of and subject to the terms and
conditions of that certain Share Exchange Agreement and Plan of
Reorganization (the "Agreement"), between Princeton Management
Corporation ("PMC" or the "Company") and USA Service Systems, Inc.,
dated November 12, 1998, receipt of which is hereby acknowledged,
in exchange for shares of Common Stock of PMC (the "Exchange
Shares"). If any condition precedent to the Agreement is not
satisfied within the relevant time parameters established in the
Agreement (or any extension thereof), the certificate(s) are to be
returned to the undersigned.
The undersigned hereby represents, warrants, covenants and
agrees with you that, in connection with the undersigned's
acceptance of the Exchange Shares and as of the date of this
letter:
1. The undersigned is aware that his, her or its acceptance
of the Exchange Shares is irrevocable, absent an extension of the
Expiration Date of any material change to any of the terms and
conditions of the Agreement.
2. The undersigned warrants full authority to deposit all
shares refereed to above and PMC will acquire a good and
unencumbered title thereto.
3. The undersigned has full power and authority to enter into
this Agreement and that this Agreement constitutes a valid and
legally binding obligation of the undersigned.
4. By execution hereof, the undersigned hereby confirms that
the PMC common stock to be received in exchange for USA common
stock (the "Securities"), will be acquired for investment for the
undersigned's own account, not as a nominee or agent, and not with
a view to the resale or distribution of any part thereof, and that
the undersigned has no present intention of selling, granting any
participation in, or otherwise distributing the same. By execution
hereof, the undersigned further represents the undersigned does not
Princeton Management Corporation
November 17, 1998
have any contract, undertaking, agreement or arrangement with any
third party, with respect to any of the Securities.
5. The undersigned understands that the Securities are being
issued pursuant to available exemption thereto and have not been
registered under the Securities Act of 1933, as amended (the "1933
Act"), or under any state securities laws. The undersigned
understands that no registration statement has been filed with the
United States Securities and Exchange Commission nor with any other
regulatory authority and that, as a result, any benefit which might
normally accrue to a holder by an impartial review of such a
registration statement by the Securities and Exchange Commission or
other regulatory authority will not be forthcoming. The
undersigned understands that he/she/it cannot sell the Securities
unless such sale is registered under the 1933 Act and applicable
state securities laws or exemptions from such registration become
available. In this connection the undersigned understands that the
Company has advised the Transfer Agent for the Common Shares that
the Securities are "restricted securities" under the 1933 Act and
that they may not be transferred by the undersigned to any person
without the prior consent of the Company, which consent of the
Company will require an opinion of counsel to the effect that, in
the event the Securities are not registered under the 1933 Act, any
transfer as may be proposed by the undersigned must be entitled to
an exemption from the registration provisions of the 1933 Act. To
this end, the undersigned acknowledges that a legend to the
following effect will be placed upon the certificate representing
the Securities and that the Transfer Agent has been advised of such
facts:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED PURSUANT TO
THE PROVISIONS OF THE ACT OR IF AN EXEMPTION FROM
REGISTRATION THEREUNDER IS AVAILABLE, THE AVAIL-
ABILITY OF WHICH MUST BE ESTABLISHED TO THE SATIS-
FACTION OF THE COMPANY.
The undersigned understands that the foregoing legend on
his/her/its certificate for the Common Shares limits their value,
including their value as collateral.
6. The undersigned represents that it is experienced in
evaluation and investing in securities and acknowledges that
he/she/it is able to fend for itself, can bear the economic risk of
31
Princeton Management Corporation
November 17, 1998
this investment and has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits
and risks of the investment in the Securities.
In Witness Whereof, the undersigned has duly executed this
Investment Letter as of the date indicated hereon.
Dated: November 17, 1998
Very truly yours,
____________________________
(signature)
____________________________
(print name in full)
____________________________
(street address)
____________________________
(city, state, zip)
____________________________
(social security number or
employer identification no.)
32
USA SERVICE SYSTEMS, INC.
___________________________
EXHIBIT 16.0 TO FORM 8-K
___________________________
LETTER OF RESIGNATION
OF REGISTRANT'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
____________________________
KISH, LEAKE & ASSOCIATES, P.C.
Certified Public Accountants
J.D. Kish, C.P.A., M.B.A. 7901 E. Belleview Ave., Suite 220
James D. Leake, C.P.A., M.T. Englewood, Colorado 80111
____________________________ Telephone (303) 779-5006
Arleen R. Brogan, C.P.A. Facsimile (303) 779-5724
December 2, 1998
Office of Chief Accountant
SECPS Letter File
Securities and Exchange Commission
Mail Stop 9-5
450 5th Street N.W.
Washington, D.C. 20549
We would like to inform you that we have read the disclosures
provided by USA Service Systems, Inc., f/k/a Princeton Management
Corporation (Comm. Number 0-22095) in its filing of form 8-K dated
December 2, 1998 and that there are no disagreements regarding the
statements made under Item 4-Changes in Registrant's Certifying
Accountant.
Sincerely,
s/Kish, Leake & Associates, P.C.
Kish, Leake & Associates, P.C.