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 (Date of earliest event reported): May 7, 1999
DRIVINGAMERICA.COM, INC.
------------------------
(Exact name of registrant as specified in its charter)
MATHY CORPORATION
-----------------
(Former Name of Registrant)
COLORADO
--------
(Current state of incorporation)
0-24447 84-1463449
------- ----------
(Commission File No.) (IRS Employer
Identification No.)
18004 Skypark Circle, Suite 170
Irvine, CA 92614
---------- -----
(Address of principal executive offices) (Zip code)
2851 S. Parker Road
Suite 720
Aurora, Colorado 80014
----------------------
(Former principal address)
Registrant's telephone number, including area code: (949) 263-8890
ITEM 1(A). CHANGE IN CONTROL OF REGISTRANT.
Effective May 7, 1999, pursuant to a definitive agreement
(attached hereto and incorporated herein as Exhibit 2.4) (the "Agreement"),
Mathy Corporation (the "Company") acquired all of the issued and outstanding
securities of the Cooper Memphis Group, Inc. ("Cooper"), a California
corporation. The terms of the transaction involved the Company undertaking a
forward split of its issued and outstanding common stock whereby 2.5 shares of
common stock were issued in exchange for every share of common stock outstanding
immediately prior to the closing of the transaction in order to establish the
number of issued and outstanding common shares of the Company at closing to be
1,250,000. Thereafter, the Company issued an aggregate of 11,250,000 shares of
its "restricted" common stock to the former shareholders of Cooper in exchange
for all of their stock in Cooper. Cooper did not survive the transaction. The
Company also changed its name to "DrivingAmerica.com, Inc."
Pursuant to the terms of the Agreement the Company's officers
and directors, Andrew I. Telsey and Darlene D. Kell, resigned their respective
positions in the Company and the following persons were appointed as the new
officers and/or directors of the Company:
NAME OFFICE
---- ------
Charles M. Davis Chief Executive Officer,
President, Director
Joseph A. Spano Vice President, Secretary,
Treasurer, Director
Daryl L. Travis Director
John M. Davis Director
John B. Rock Chairman of the Board of Directors
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:
Percent
Name and Address of Amount and Nature of of
Beneficial Owner Beneficial Ownership Class
- ---------------- -------------------- -----
Charles M. Davis 8,000,000 64%
192 Stonecliff Aisle
Irvine, CA 92614
Daryl L. Travis 2,500,000 20%
910 Lake Shore Dr.
Chicago, IL 60611
2
Percent
Name and Address of Amount and Nature of of
Beneficial Owner Beneficial Ownership Class
- ---------------- -------------------- -----
John M. Davis 375,000 3%
315 Union Ave.
Steubenville, OH 43952
All Directors 10,875,000 87%
and Officers as a
Group (5 persons)
Mr. Charles Davis and John Davis are brothers. No other family relationship
exists between the prospective officers and directors of the Company.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Effective May 7, 1999, the Company acquired all of the issued
and outstanding securities of Cooper, consisting of 2,000,000 shares of common
stock. The nature and amount of consideration given in connection with the
agreement was the issuance of 11,250,000 shares of "restricted" common stock of
the Company to the former Cooper shareholders. The consideration given and
received was determined by arms-length negotiations between the principals of
the Company and principals of Cooper. No material relationship existed or
presently exists between management of the companies.
As part of the material terms of the Agreement, the Company
changed its name to "DrivingAmerica.com, Inc." ("DAI") and changed its
jurisdiction of incorporation from Colorado to Delaware. DAI's principal
business is as a marketer of database information related to automotive
marketing under the name "Automotive Consumer Services." The initial database is
comprised of new vehicle information, including specifications and dealer
vehicle costs, which are sold to consumers in the form of printed vehicle
reports. In turn, the consumers who purchase the reports, along with their
behavioral characteristics, become the source of a secondary, marketed database
of consumer information to several manufacturers of automobiles, local dealer
referral programs and affinity groups. DAI is based in Irvine, California.
DAI intends to expand operations into other logically related and
lucrative services related to the acquisition of an automobile. At the same
time, it expects to develop Internet technology to facilitate the expansion of
the list of services to include other auto-related financial services.
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
On May 24, 1999, 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 a going concern opinion.
Also on May 24, 1999, the Registrant engaged the accounting
firm of Hollander, Lumer & Co., independent public accountants, to audit the
Registrant's fiscal year ended December 31, 1999, 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 March 31, 1999, 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 May 24, 1999, is
filed as Exhibit 16.1 to this Form 8-K.
ITEM 7(A) AND 7(B). FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL
STATEMENTS
The Registrant hereby undertakes to file an amendment to this Form 8-K
within sixty (60) days from the date of this filing, to include the audited
financial statements of the Cooper Memphis Group, Inc. for the fiscal years
ended December 31, 1998 and 1997.
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ITEM 7(C). EXHIBITS.
Number Exhibit
------ -------
2.4 Agreement and Plan of Reorganization between
the Company and the Cooper Memphis Group, Inc.
16.1 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.
DRIVINGAMERICA.COM, INC.
By:/s/ Charles M. Davis
--------------------------
Charles M. Davis,
President
Dated: May 24, 1999
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DRIVINGAMERICA.COM, INC.
EXHIBIT 2.4 TO FORM 8-K
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN THE COMPANY AND THE
COOPER MEMPHIS GROUP, INC.
AGREEMENT AND PLAN OF REORGANIZATION
by and between
MATHY CORPORATION,
a Colorado corporation
and
THE COOPER MEMPHIS GROUP, INC.
a California corporation
effective as of May 7, 1999
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, made and entered into this 7th
day of May 1999, by and between Mathy Corporation, a Colorado corporation
("Mathy") with its principal place of business located at 2851 S. Parker Road,
Suite 720, Aurora, Colorado 80014 and The Cooper Memphis Group, Inc., a
California corporation ("CMG"), with its principal place of business located at
18004 Skypark Circle, Suite 170, Irvine, CA 92614 ("CMG").
PREMISES
WHEREAS, this Agreement provides for the merger of CMG into Mathy, and in
connection therewith, the conversion of the outstanding common stock of CMG into
shares of common voting stock of Mathy, 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; and
WHEREAS, the boards of directors and shareholders of CMG and Mathy have
determined, subject to the terms and conditions set forth in this Agreement,
that the merger contemplated hereby is desirable and in the best interests of
their respective corporations. This Agreement is being entered into for the
purpose of setting forth the terms and conditions of the proposed merger.
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
CMG
As an inducement to and to obtain the reliance of Mathy, CMG represents and
warrants as follows:
SECTION 1.1 ORGANIZATION. CMG is a corporation duly organized, validly
existing, and in good standing under the laws of the State of California 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 owned by it or the nature of the business
transacted by it requires qualification. Included in the CMG Schedules (as
hereinafter
1
defined) are complete and correct copies of the articles of incorporation,
bylaws and amendments thereto of CMG 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 CMG's articles of incorporation or bylaws. CMG
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. CMG's total authorized capital consists of
2,000,000 Common Shares, no par value per share. As of the date of Closing, as
defined hereinbelow, there will be 2,000,000 Common Shares issued and
outstanding. 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. CMG has no other securities, warrants or options
authorized or issued.
SECTION 1.3 SUBSIDIARIES AND PREDECESSOR CORPORATIONS. Except as otherwise
set forth in the CMG Schedules, CMG does not have any subsidiaries and does not
own, beneficially or of record, any shares of any other corporation.
SECTION 1.4 FINANCIAL STATEMENTS. Included in the CMG Schedules is an
audited financial statement, including a balance sheet, statement of operations,
shareholder equity and cash flows and notes thereto, dated as of December 31,
1998. Relevant thereto:
(a) the CMG balance sheets present fairly as of their
date the financial condition of CMG. CMG does not have, as of
the date of such balance sheets, 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 CMG, in accordance with
generally accepted accounting principles;
(b) CMG 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) CMG has filed all state, federal and local income
tax returns required to be filed by it from inception to the
date hereof, if any;
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(d) The books and records, financial and others, of
CMG 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 CMG balance sheet and the CMG Schedules, CMG has no
material contingent liabilities, direct or indirect, matured
or unmatured.
SECTION 1.5 INFORMATION. The information concerning CMG set forth in this
Agreement and in the CMG 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 1.6 OPTIONS AND WARRANTS/SHARES RESERVED FOR ISSUANCE. There are no
existing options, warrants, calls or commitments of any character to which CMG
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 CMG Schedules, or as otherwise disclosed to Mathy, since
December 31, 1998:
(a) there has not been: (i) any material adverse
change in the business, operations, properties, assets or
condition of CMG; or (ii) any damage, destruction or loss to
CMG (whether or not covered by insurance) materially and
adversely affecting the business, operations, properties,
assets or condition of CMG;
(b) CMG 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 CMG;
(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
$5,000; or (viii) made any increase in any profit sharing,
bonus, deferred compensation, insurance,
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pension, retirement or other employee benefit plan, payment or
arrangement made to, for, or with its officers, directors or
employees;
(c) CMG 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
CMG 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 CMG; 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 CMG, 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 CMG.
SECTION 1.8 TITLE AND RELATED MATTERS. CMG 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 CMG audited balance sheet and
the CMG 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 CMG Schedules. Except
as set forth in the CMG Schedules, CMG owns free and clear of any liens, claims,
encumbrances, royalty interests or other restrictions or limitations of any
nature whatsoever and all procedures,
4
techniques, marketing plans, business plans, methods of management or other
information utilized in connection with CMG's business. Except as set forth in
the CMG Schedules, no third party has any right to, and CMG 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 CMG or any material portion of its properties,
assets or rights.
SECTION 1.9 LITIGATION AND PROCEEDINGS. To the best of CMG's knowledge and
belief, there are no actions, suits, proceedings or investigations pending or
threatened by or against CMG or affecting CMG 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 CMG. CMG 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 CMG
Schedules, there are no material contracts, agreements,
franchises, license agreements or other commitments to which
CMG 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 CMG
Schedules or reflected in the most recent CMG balance sheet,
CMG 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 CMG 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
5
aggregate; (vi) collective bargaining agreements; (vii)
agreement with any present or former officer or director of
CMG; or (viii) contract, agreement or other commitment
involving payments by it of more than $10,000 in the
aggregate; and
(c) To CMG's knowledge, all contracts, agreements,
franchises, license agreements and other commitments to which
CMG is a party or by which its properties are bound and which
are material to the operations of CMG taken as a whole, are
valid and enforceable by CMG 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 CMG
Schedules, to the best of CMG's knowledge and belief, CMG 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 CMG, and there is no event of default in any
material respect under any such contract, agreement, lease or other commitment
in respect of which CMG 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 CMG is a
party or to which any of its properties or operations are subject.
SECTION 1.13 GOVERNMENTAL AUTHORIZATIONS. To the best of CMG's knowledge,
CMG has all licenses, franchises, permits or other governmental authorizations
legally required to enable CMG 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 CMG of this Agreement and the consummation by CMG of the
transactions contemplated hereby.
SECTION 1.14 COMPLIANCE WITH LAWS AND REGULATIONS. To the best of CMG's
knowledge, except as disclosed in the CMG Schedules, CMG 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 CMG or would not result in CMG's incurring any
6
material liability.
SECTION 1.15 INSURANCE. All of the insurable properties of CMG are insured
for CMG's benefit in accordance with the insurance policies disclosed in the CMG
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 and shareholders
of CMG have authorized the execution and delivery of this Agreement by CMG and
have approved the transactions contemplated hereby.
SECTION 1.17 MATERIAL TRANSACTIONS OR AFFILIATIONS. Except as disclosed
herein and in the CMG Schedules, there exists no material contract, agreement or
arrangement between CMG 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 CMG to own beneficially, ten percent (10%) or more of the
issued and outstanding CMG 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 CMG than terms available from otherwise unrelated
parties in arms length transactions. There are no commitments by CMG, 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. CMG has never had a work stoppage resulting
from labor problems. To the best knowledge of CMG, no union or other collective
bargaining organization is organizing or attempting to organize any employee of
CMG.
SECTION 1.19 PREVIOUS SALES OF SECURITIES. Since inception, CMG has sold
CMG Common Shares to investors in reliance upon applicable exemptions from the
registration requirements under the laws of the United States, the state of
California and such other states in the United States where such sales have
occurred. All such sales were made in accordance with the laws of the United
States and those states where such securities were sold.
SECTION 1.20 CMG SCHEDULES. Upon execution hereof, CMG will deliver to
Mathy the following schedules, which are collectively referred to as the "CMG
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 CMG as complete, true and correct in all material respects:
7
(a) copies of the articles of incorporation, bylaws
and all minutes of shareholders' and directors' meetings
of CMG;
(b) the financial statements of CMG referenced
hereinabove in Section 1.4;
(c) a list indicating the name and address of the
stockholders of CMG, 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 CMG carries on or proposes to
carry on its business (except those which in the aggregate,
are immaterial to the present or proposed business of CMG);
(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 CMG, its
properties or assets;
(f) a list of all executive employees of CMG,
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 CMG, 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 CMG 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 CMG 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 CMG and in which
either CMG or CMG's stockholders has or previously had any
direct or indirect, equitable or legal right or interest;
8
(k) a copy of all material documentation relating to
the sale of CMG Common Shares by CMG 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 CMG since the most recent CMG 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 CMG
Schedules by Sections 1.1 through 1.19.
CMG shall cause the CMG Schedules and the instruments and data delivered to
Mathy 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 MATHY
As an inducement to, and to obtain the reliance of CMG, Mathy represents
and warrants as follows:
SECTION 2.1 ORGANIZATION. Mathy 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 Mathy Schedules (as hereinafter
defined) are complete and correct copies of the articles of incorporation, and
bylaws of Mathy 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 Mathy's articles of incorporation or bylaws. Mathy has taken all
action required by law, its articles of incorporation, its bylaws or otherwise
to authorize the execution and delivery of this Agreement. Mathy 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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Mathy consists of 25,000,000 shares of Preferred Stock, par value $0.001 per
share, and 100,000,000 Common Shares, par value $.001 per share. As of the date
hereof there are 500,000 common shares of Mathy issued and outstanding.
Simultaneous with the Closing Date, as defined hereinbelow, the Board of
Directors of Mathy shall undertake a forward split of the Mathy issued and
outstanding Common Stock, whereby 2.5 shares of Common Stock shall be issued in
exchange for every 1 share of Common Stock presently issued and outstanding, in
order to establish the number of issued and outstanding common shares to be
1,250,000. As of the Closing Date, as defined herein, there will be no more than
1,250,000 common shares issued and outstanding and reserved for issuance (the
"Mathy Common Shares") held by the then existing securities holders of Mathy.
All issued and outstanding Mathy Common Shares have been legally issued, fully
paid and are nonassessable. There are no preferred shares issued or outstanding.
All issued and outstanding Mathy Common Shares have been legally issued, fully
paid and are nonassessable.
SECTION 2.3 SUBSIDIARIES. Mathy has no subsidiary companies.
SECTION 2.4 FINANCIAL STATEMENTS.
(a) Included in the Mathy Schedules are the audited
financial statements of Mathy for the years ended March 31,
1999 and 1998 and the related statements of operations,
stockholders' equity and cash flows for the periods then
ended, 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
Mathy balance sheets presents fairly as of their respective
dates the financial condition of Mathy. Mathy did not have as
of the date of any of such Mathy 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 Mathy,
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
Mathy are in all material respects complete and correct and
have been maintained in accordance with good business
accounting practices.
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(d) Mathy has no liabilities with respect to the
payment of any federal, state, county, local or other taxes
(including any deficiencies, interest or penalties).
(e) As of the Closing Date, as defined herein the
Mathy balance sheet and the notes thereto, shall reflect that
Mathy has: (i) no receivables; (ii) no accounts payable; and
(iii) no contingent liabilities, direct or indirect, matured
or unmatured.
SECTION 2.5 INFORMATION. The information concerning Mathy as set forth in
this Agreement and in the Mathy 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 Mathy Schedules, since March 31, 1999:
(a) Mathy 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 Mathy; (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) Mathy 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; or (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 Mathy, 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
Mathy.
SECTION 2.7 TITLE AND RELATED MATTERS. As of the Closing Date, Mathy will
own no real, personal or intangible property.
SECTION 2.8 LITIGATION AND PROCEEDINGS. There are no actions, suits or
proceedings pending or, to the best of Mathy's
11
knowledge and belief, threatened by or against or affecting Mathy, 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 effect on the business, operations, financial condition, income
or business prospects of Mathy. Mathy 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. On the Closing Date:
(a) There are no material contracts, agreements,
franchises, license agreements, or other commitments to which
Mathy is a party or by which it or any of its properties are
bound;
(b) Mathy 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 Mathy can now
foresee) materially and adversely affect, the business,
operations, properties, assets or conditions of Mathy; and
(c) Mathy 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 Mathy; 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 Mathy is a
party or to which any of its properties or operations are
12
subject.
SECTION 2.11 MATERIAL CONTRACT DEFAULTS. To the best of Mathy's knowledge
and belief, Mathy 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 Mathy, and there
is no event of default in any material respect under any such contract,
agreement, lease or other commitment in respect of which Mathy has not taken
adequate steps to prevent such a default from occurring.
SECTION 2.12 GOVERNMENTAL AUTHORIZATIONS. To the best of Mathy's knowledge,
Mathy 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 Mathy of the transactions contemplated hereby.
SECTION 2.13 COMPLIANCE WITH LAWS AND REGULATIONS. To the best of Mathy's
knowledge and belief, Mathy 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
Mathy or would not result in Mathy's incurring any material liability.
SECTION 2.14 INSURANCE. Mathy has no insurable properties and no insurance
policies will be in effect at the Closing Date, as hereinafter defined.
SECTION 2.15 APPROVAL OF AGREEMENT. The board of directors and shareholders
of Mathy has authorized the execution and delivery of this Agreement by Mathy
and have approved the transactions contemplated hereby.
SECTION 2.16 MATERIAL TRANSACTIONS OR AFFILIATIONS. As of the Closing Date
there will exist no material contract, agreement or arrangement between Mathy
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 Mathy to own
beneficially, ten percent (10%) or more of the issued and outstanding common
stock of Mathy and which is to be performed in whole or in part after the date
hereof. Mathy 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. Mathy has never had a work
13
stoppage resulting from labor problems. Mathy has no employees other than its
officers and directors.
SECTION 2.18. 34 ACT FILINGS. As of the Closing Date, Mathy 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. Said filings contain all of the information
required pursuant to the Securities Exchange Act of 1934, as amended and, to the
best knowledge of Mathy, do not fail to state any material facts which were
required to be so stated.
SECTION 2.19 MATHY SCHEDULES. Upon execution hereof, Mathy shall deliver to
CMG the following schedules, which are collectively referred to as the "Mathy
Schedules" which are dated the date of this Agreement, all certified by an
officer of Mathy to be complete, true and accurate:
(a) complete and correct copies of the articles of
incorporation and bylaws of Mathy as in effect as of the
date of this Agreement;
(b) copies of all financial statements of Mathy
identified in Section 2.4(a);
(c) the description of any material adverse change in
the business, operations, property, assets, or condition of
Mathy since March 31, 1999 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 Mathy
Schedules by Sections 2.1 through 2.17.
Mathy shall cause the Mathy Schedules and the instruments to be delivered
to CMG hereunder to be updated after the date hereof up to and including the
Closing Date.
ARTICLE III
MERGER
SECTION 3.1 DELIVERY OF CMG SECURITIES. On the Closing Date, the holders of
the CMG Common Shares shall deliver to Mathy (i) certificates or other documents
evidencing all of the issued and outstanding CMG 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 MATHY COMMON SHARES. (a) In exchange for all of the
CMG Common Shares tendered pursuant to Section 3.1,
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Mathy shall issue an aggregate of 11,250,000 "restricted" Mathy Common Shares to
the CMG shareholders on a pro rata basis, so that the CMG shareholders will own
90% of the surviving company's issued and outstanding common stock.
(b) No fractional Mathy 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 Mathy and CMG 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" or the "Closing Date") of the
transaction contemplated by this Agreement shall be as of the date in which all
of the conditions included in Sections 3.1 and 3.2 hereinabove and those
additional conditions contained in Article V hereinbelow have been satisfied by
the respective party and all documentation referenced herein is 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 Mathy or CMG 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 merger
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 Section 6.6 below
have not been satisfied in full.
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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 Mathy if CMG 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 CMG 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 CMG. 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.
(c) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of CMG if Mathy 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 Mathy 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 Mathy. If this Agreement is
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 MATHY. Upon the Closing, the present members of
Mathy's Board of Directors shall tender their resignations seriatim so that the
following persons are appointed directors of Mathy in accordance with procedures
set forth in the Mathy bylaws: Charles M. Davis, Joseph A. Spano, Daryl L.
Travis, John M. Davis and John B. Rock (who shall be appointed Chairman of the
Board of Directors). 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 MATHY. Upon the Closing, the present officers of
Mathy shall tender their resignations and simultaneous therewith, the following
person shall be elected as officer of Mathy in accordance with procedures set
forth in the Mathy bylaws:
NAME OFFICE
---- ------
Charles M. Davis CEO/President
Joseph A. Spano Vice President, Secretary,
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Treasurer
ARTICLE IV
SPECIAL COVENANTS
SECTION 4.1 ACCESS TO PROPERTIES AND RECORDS. Mathy and CMG will each
afford to the officers and authorized representatives of the other full access
to the properties, books and records of Mathy and CMG, 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 Mathy and CMG, 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 Mathy 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. Mathy is under no obligation to register such shares under the
Securities Act, or otherwise. Notwithstanding the foregoing, however, following
the Closing Date, Mathy will use its best efforts to: (a) make publicly
available on a regular basis not less than semi-annually, business and financial
information regarding Mathy so as to make available to the shareholders of Mathy
the provisions of Rule 144 pursuant to subparagraph (c)(2) thereof; and (b)
within ten (10) days of any written request of any stockholder of Mathy, Mathy
will provide to such stockholder written confirmation of compliance with such of
the foregoing subparagraph as may then be applicable. The stockholders of Mathy
holding restricted securities of Mathy 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 MATHY PUBLIC REPORTS. CMG will furnish Mathy
with all information concerning CMG and the CMG Stockholders, including all
financial statements, required for inclusion in any registration statement or
public report intended to be filed by Mathy pursuant to the Securities Act, the
Exchange Act, or any other applicable federal or state law. CMG covenants that
all information so furnished for either such registration statement or other
public release by Mathy, 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 therein not misleading.
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SECTION 4.4 SPECIAL COVENANTS AND REPRESENTATIONS REGARDING THE MATHY
COMMON SHARES TO BE ISSUED IN THE MERGER. The consummation of this Agreement,
including the issuance of the Mathy Common Shares to the stockholders of CMG 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 CMG stockholders acquire such securities. In
connection with reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing, CMG shall cause to
be delivered, and the CMG stockholders shall deliver to Mathy, the investment
letter referenced in Section 3.1.
SECTION 4.5 THIRD PARTY CONSENTS. Mathy and CMG 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 Mathy or CMG
Schedules or as permitted or contemplated by this Agreement,
Mathy and CMG will each use its best efforts to:
(i) carry on its business in substantially
the same manner as it has heretofore;
(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
18
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 Mathy nor CMG 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) 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
(v) purchase or redeem any shares of its
capital stock, except as disclosed herein.
SECTION 4.7 INDEMNIFICATION.
(a) CMG hereby agrees to indemnify Mathy and each of
the officers, agents and directors of Mathy 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 24 months.
(b) Mathy and its officers and directors hereby
agrees to indemnify CMG and each of the officers, agents,
directors and current shareholders of CMG as of the Closing
Date against any loss, liability, claim, damage
19
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 24 months.
SECTION 4.8 UNDERTAKINGS OF CMG. Management of CMG, who will assume the
management of Mathy upon Closing, hereby undertakes to Mathy and its
shareholders as follow:
(a) to exercise good faith in their efforts to file all
reports required to be filed by the surviving company herein
with the Securities and Exchange Commission or any other
governmental agency, in a timely manner; and
(b) to exercise all due diligence in causing the surviving
company to list its common stock for trading on any national
stock exchange for which the surviving company may then
qualify for such listing.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF MATHY
The obligations of Mathy 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 CMG 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 CMG shall have performed or complied with all covenants
and conditions required by this Agreement to be performed or complied with by
CMG prior to or at the Closing. Mathy shall be furnished with a certificate,
signed by a duly authorized officer of CMG and dated the Closing Date, to the
foregoing effect.
SECTION 5.2 STOCKHOLDER APPROVAL. The stockholders of CMG shall have
approved this Agreement and the transactions contemplated thereby in accordance
with the laws of the State of California.
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SECTION 5.3 OFFICER'S CERTIFICATE. Mathy shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
CMG to the effect that no litigation, proceeding, investigation or inquiry is
pending or, to the best knowledge of CMG, 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 CMG Schedules, by or
against CMG which might result in any material adverse change in any of the
assets, properties, business or operations of CMG.
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 CMG.
SECTION 5.5 OPINION OF COUNSEL TO CMG. Mathy shall receive an opinion dated
the Closing Date of Horwitz & Beam, counsel to CMG, in substantially the
following form:
(a) CMG is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
California 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 CMG 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 CMG's articles of incorporation or bylaws or violate any
court order, writ, injunction or decree applicable to CMG, or
its properties or assets.
(c) The authorized capitalization of CMG consists of
2,000,000 Common Shares, no par value per share. As of the
date of Closing, as defined hereinbelow, there will be
2,000,000 Common Shares issued and outstanding. All issued and
outstanding shares are legally issued, fully paid and
nonassessable and not issued in violation of the preemptive
rights of any person. To the best knowledge of such legal
counsel, there are no outstanding subscriptions, options,
rights, warrants, convertible
21
securities or other agreements or commitments obligating CMG
to issue any additional shares of any class of its capital
stock prior to closing of the transactions contemplated
herein.
(d) This Agreement has been duly and validly
authorized, executed and delivered by CMG.
(e) To the best knowledge of such legal counsel,
except as set forth in the CMG Schedules, there are no
actions, suits or proceedings pending or threatened by or
against or affecting CMG 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) CMG has taken all actions required by the
applicable laws of the State of California to permit the
transfer of the CMG Common Shares to Mathy.
SECTION 5.6 OTHER ITEMS. Mathy shall have received such further documents,
certificates or instruments relating to the transactions contemplated hereby as
Mathy may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF CMG
The obligations of CMG 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 Mathy 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 Mathy shall have performed and complied with all
covenants and conditions required by this Agreement to be performed or complied
with by Mathy prior to or at the Closing. CMG shall have been furnished with a
certificate, signed by a duly authorized executive officer of Mathy and dated
the Closing Date, to the foregoing effect.
SECTION 6.2 OFFICER'S CERTIFICATE. CMG shall be furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
Mathy to the effect that no litigation, proceeding, investigation or inquiry is
pending or, to the best knowledge of Mathy, 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 Mathy Schedules, by or
against Mathy which might result in any material
22
adverse change in any of the assets, properties, business or operations of
Mathy.
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 Mathy.
SECTION 6.4 OPINION OF COUNSEL TO MATHY. CMG shall receive an opinion dated
the Closing Date of Andrew I. Telsey, P.C., counsel to Mathy, in substantially
the following form:
(a) Mathy 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 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 Mathy 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 Mathy's articles of incorporation or bylaws or constitute a
default or give rise to a right of termination, 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 Mathy or
its properties or assets.
(c) The authorized capitalization of Mathy consists
of 25,000,000 shares of Preferred Stock, par value $0.01 per
share, and 100,000,000 Common Shares, no par value per share.
As of the date hereof and as of the Closing of the transaction
proposed herein, there will be 1,250,000 common shares of
Mathy issued and outstanding (post forward split). There are
no preferred shares issued or outstanding. All issued and
outstanding shares are legally issued, fully paid and
nonassessable and not issued in violation of the preemptive
rights of any person.
23
(d) The Mathy Common Shares to be issued to the CMG
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 Mathy, 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 Mathy Schedules, there are no actions, suits
or proceedings pending or threatened by or against Mathy or
affecting Mathy'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.
(g) Mathy has taken all actions required by the
applicable laws of the state of Colorado to permit the
issuance of the Mathy Common Shares to the CMG stockholders.
SECTION 6.5 COMPLIANCE WITH REPORTING REQUIREMENTS. As of the Closing Date,
Mathy 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. Said filings
contain all of the information required pursuant to the Securities Exchange Act
of 1934, as amended and, to the best knowledge of Mathy, do not fail to state
any material facts which were required to be so stated.
SECTION 6.6 OTHER ITEMS. CMG shall have received such further documents,
certificates, or instruments relating to the transactions contemplated hereby as
CMG 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 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
24
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 Mathy: Mr. Andrew I. Telsey
2851 S. Parker Road
Suite 720
Aurora, Colorado 80014
If to CMG: The Cooper Memphis Group, Inc.
18004 Skypark Circle
Suite 170
Irvine, CA 92614
Attention: Mr. Charles M. Davis,
President
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 contemplated by this Agreement
has been consummated, they and their representatives will hold in strict
confidence all data and 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
25
party's schedules delivered pursuant to this Agreement.
SECTION 7.7 THIRD PARTY BENEFICIARIES. This contract is solely among Mathy
and CMG 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 FACSIMILE EXECUTION. For purposes of this
Agreement, a document (or signature page thereto) signed and transmitted by
facsimile machine or telecopier is to be treated as an original document. The
signature of any party thereon, for purposes hereof, is to be considered as an
original signature, and the document transmitted is to be considered to have the
same binding effect as an original signature on an original document. At the
request of any party, a facsimile or telecopy document is to be re-executed in
original form by the parties who executed the facsimile or telecopy document. No
party may raise the use of a facsimile machine or telecopier machine as a
defense to the enforcement of the Agreement or any amendment or other document
executed in compliance with this Section.
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 hereof are
incorporated by this reference and are made a part hereof as though set forth at
length herein.
26
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 inure
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 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
27
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.
MATHY CORPORATION
By: /s/ Andrew I. Telsey
------------------------
Andrew I. Telsey, President
THE COOPER MEMPHIS GROUP, INC.
By: /s/ Charles M. Davis
-----------------------------
Charles M. Davis, President
28
COUNTY OF ARAPAHOE }
} ss.
STATE OF COLORADO }
SUBSCRIBED AND SWORN TO BEFORE me by Andrew I. Telsey, this
7th day of May, 1999.
My Commission Expires: March 3, 2002 .
/s/ Darlene D. Kell
-------------------
Notary Public
Printed Name: Darelene D. Kell
COUNTY OF COOK }
} ss.
STATE OF ILLINOIS }
SUBSCRIBED AND SWORN TO BEFORE me by Charles M. Davis this 7th
day of May, 1999.
My Commission Expires: October 29, 2000
.
/s/ Joseph A. Spano
-------------------
Notary Public
Printed Name: Joseph A. Spano
29
EXHIBIT "A"
FORM OF INVESTMENT LETTER
30
INVESTMENT LETTER
May , 1999
MATHY CORPORATION
2851 S. Parker Road, Suite 720
Aurora, Colorado 80014
Gentlemen:
The undersigned herewith deposits certificate(s) for shares of common stock of
The Cooper Memphis Group, Inc., a California corporation, ("CMG"), as described
below (endorsed, or having executed stock powers attached) in acceptance of and
subject to the terms and conditions of that certain Agreement and Plan of
Reorganization (the "Agreement"), between Mathy Corporation (the "Company") and
CMG, dated May 7, 1999, receipt of which is hereby acknowledged, in exchange for
shares of Common Stock of CMG (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 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
referred to above and the Company will acquire 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
Company's common stock to be received in exchange for CMG 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 have any contract, undertaking, agreement or arrangement
with any third party, with respect to any of the
31
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. I understand 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 such as me by an impartial review of such a registration
statement by the Securities and Exchange Commission or other regulatory
authority will not be forthcoming. I understand that I 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 I understand 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 me to any person without the prior
consent of the Company, which consent of the Company will require an opinion of
my counsel to the effect that, in the event the Securities are not registered
under the 1933 Act, any transfer as may be proposed by me must be entitled to an
exemption from the registration provisions of the 1933 Act. To this end, I
acknowledge 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 AVAILABILITY OF WHICH MUST BE
ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
I understand that the foregoing legend on my certificate for the Common
Shares limits their value, including their value as collateral.
6. The undersigned represents that he is experienced in evaluation and
investing in securities of companies in the development stage and acknowledges
that it is able to fend for himself, can bear the economic risk of 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.
32
IN WITNESS WHEREOF, the undersigned has duly executed this Investment
Letter as of the date indicated hereon.
Dated: May 7, 1999
Very truly yours,
- ----------------------------
(signature)
- ----------------------------
(print name in full)
- ----------------------------
(street address)
- ----------------------------
(city, state, zip)
- ----------------------------
(social security number or
employer identification no.)
33
DRIVINGAMERICA.COM, INC.
EXHIBIT 16.1 TO FORM 8-K
LETTER OF RESIGNATION OF REGISTRANT'S
INDEPENDENT CERTIFIED 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
May 24, 1999
Office of the 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 Mathy
Corporation (Comm. Number 0-24447) in its filing of Form 8-K dated May 7, 1999
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.