SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE
SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Definitive Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
SOLAR SATELLITE COMMUNICATION, INC
AND
ADVANCED GAMING TECHNOLOGY, INC.
(Name of Registrants as Specified In Their Charters)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
SOLAR SATELLITE COMMUNICATION, INC.
NOTICE OF
2003 SPECIAL MEETING OF SHAREHOLDERS
CONDUCTED JUNE 24, 2003
To the Shareholders:
Notice is hereby given that the 2003 Special Meeting of Shareholders of
SOLAR SATELLITE COMMUNICATION, INC., a Colorado corporation ("SSCI"), was held
at its offices, on June 24, 2003 at 10:00 a.m. for the following purpose:
1. To approve the sale of its assets to Advanced Capital LLC as more fully
described in this Information Statement; and
2. To transact any and all other business that may properly have come before
the Meeting.
All shareholders of record at the close of business on June 20, 2003 are
entitled to notice of this meeting.
The Company's internally generated financial statements for the year ended
December 31, 2002 are attached.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
By order of the Board of Directors,
LINDA A. BROENNIMAN
President and Secretary
June 24, 2003
2
ADVANCED GAMING TECHNOLOGY, INC.
NOTICE OF
2003 SPECIAL MEETING OF SHAREHOLDERS
CONDUCTED JUNE 24, 2003
To the Shareholders:
Notice is hereby given that the 2003 Special Meeting of Shareholders of
ADVANCED GAMING TECHNOLOGY, Inc., a Wyoming corporation ("ADVI"), was held at
its offices, on June 24, 2003 at 10:30 a.m. for the following purposes:
1. Approve a 100 to 1 reverse stock split;
2. Approve the subsequent merger of Advanced Capital LLC into ADVI's
wholly owned subsidiary, MediaWorx Acquisition Company LLC, to carry
on the business activities of Solar Satellite Communication, Inc.
whose assets were recently acquired by Advanced as more fully
described in this Information Statement; and
3. To transact any and all other business that may properly have come
before the Meeting.
All shareholders of record at the close of business on June 20, 2003 are
entitled to notice of this meeting.
ADVI's audited financial statements for the year ended December 31, 2002,
together with certain other information concerning the Company, are included in
the Company's Annual Report on Form 10-KSB which is enclosed herewith.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
By order of the Board of Directors,
GARY L. CAIN
Chairman and Chief Executive Officer
June 24, 2003
3
TABLE OF CONTENTS
PAGE
I. INTRODUCTION 4
II. SSCI SUPPLEMENTAL DISCLOSURES AND RIGHTS OF ITS
SHAREHOLDERS 7
DIRECTORS AND EXECUTIVE OFFICERS OF SSCI 7
SUMMARY EXECUTIVE COMPENSATION 8
SECURITY OWNERSHIP OF CERTAIN SSCI BENEFICIAL
OWNERS AND MANAGEMENT 9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 9
REPORT OF THE BOARD OF DIRECTORS REGARDING AUDIT
ISSUES 10
OUTLINE OF YOUR RIGHTS AS AN SSCI SHAREHOLDER 10
DISSENTERS' RIGHTS OF APPRAISAL 10
PROCEDURE TO EXERCISE DISSENTERS' RIGHTS 11
III. ADVI SUPPLEMENTAL DISCLOSURES 13
DIRECTORS AND EXECUTIVE OFFICERS 13
SUMMARY EXECUTIVE COMPENSATION 14
SECURITY OWNERSHIP OF CERTAIN ADVI BENEFICIAL
OWNERS AND MANAGEMENT 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 15
REPORT OF THE BOARD OF DIRECTORS REGARDING AUDIT
ISSUES 16
AUDIT FEES 16
APPENDIX I SSCI DISSENTERS' CODE PROVISIONS 17
APPENDIX II AGREEMENT AND PLAN OF MERGER 19
I. INTRODUCTION
This Information Statement, dated July 1, 2003 (the "Statement"), is
furnished in connection with the 2003 Special Meeting of shareholders of SOLAR
SATELLITE COMMUNICATION, INC. (the "SSCI"), held at its offices on June 24, 2003
at 10:00 a.m. (the "SSCI Special Meeting"), for the purpose set forth in this
Statement. This Statement is also furnished in connection with the 2003 Special
Meeting of the shareholders of ADVANCED GAMING TECHNOLOGY, INC. ("ADVI") held at
its offices on June 24, 2003 at 10:30 a.m. (the "ADVI Special Meeting") for the
purposes set forth in this Statement.
ESPECIALLY SINCE SUCH SPECIAL MEETINGS HAVE ALREADY BEEN CONDUCTED
AND THE INDICATED ACTIONS APPROVED BY THE RESPECTIVE REQUISITE MAJORITY OF
SHARES IN EACH, WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT
TO SEND US A PROXY.
This Statement was mailed respectively to SSCI and ADVI shareholders on
or about July 1, 2003. This Statement is intended to provide full and complete
disclosure to a multi-step transaction involving two currently reporting public
companies, Solar Satellite Communication, Inc. ("SSCI") and Advanced Gaming
Technology, Inc. ("ADVI"), following which a subsidiary of ADVI (The MediaWorx
Acquisition Company LLC) is the surviving entity and will develop the commercial
printing assets formerly of SSCI.
4
Because the information is reciprocal to the other company's
shareholders and ADVI is the surviving entity, this Statement is provided on a
consolidated basis and includes the following financial information: ADVI's Form
10-K, including its audit for the period ended December 31,2002, and SSCI's
internally generated financial statements for the period ended December 31,
2002. Disclosure appropriate for the shareholders is set forth respectively in
Part II ("SSCI Supplemental Disclosures and Rights of Its Shareholders") and
Part III ("ADVI Supplemental Disclosures").
Over the prior 18 months, SSCI has been unsuccessful in seeking to
obtain sufficient funding of its commercial printing operations. Accordingly,
when approached recently with the following transaction, after appropriate due
diligence, SSCI's Board of Directors agreed in a June 17, 2003 meeting to sell
assets of its subsidiary, MediaWorx, to Advanced Capital LLC ("Advanced") for
3,000,000 Advanced shares valued at $5.8MM and convertible into 250,000 ADVI
shares. In turn, negotiations are underway which, if successful as expected,
would result in SSCI exchanging its 250,000 ADVI shares with SSCI note holders
to release SSCI from its associated $645,262 in debt.
On May 30, 2003, Advanced, a Nevada limited liability company which is
owned by Diamond Capital LLC and Quest Capital Resources LLC, purchased a
convertible promissory note (the "Note") held by Private Investor Equity, LLC.
(See "Certain Relationships and Related Transactions with SSCI Directors and
Executive Officers"). The Note was originated in September 2002, when SSCI
received $500,000 from Private Investors Equity LLC, and was due on March 15,
2003. Advanced purchased the Note (and in lieu of exercising the default
provisions and taking the assets of SSCI which would have stripped its
shareholders of all equity in SSCI), in an agreement with the SSCI Board of
Directors, converted the Note and accrued interest into 27,216,650 SSCI common
shares, based on SSCI's current bid price of $0.02. Furthermore, Advanced
exchanged the 250,000 Preferred C Shares having conversion and voting rights of
1 to 40 into Preferred C Shares having conversion and voting rights of 1 to 360.
As a result, Advanced now has 95% voting control of SSCI.
ADVI, prior to the foregoing actions, had 22,430,587 shares
outstanding, 11,909,750 of which were owned (53.1%) by PowerHouse Management
Group ("PH"). As of June 25, 2003, ADVI effected a 100 to 1 reverse split of its
shares, thereby reducing ADVI's post-reverse shares to 224,305, of which PH
continued to own 53.1%, or 119,097, shares. The intent of the reverse was, and
is, to facilitate the merger and capital raise as described below. As a result
of the reverse ADVI's trading symbol in the post reverse split shares was
changed to AGMG.
On July 1, 2003, Advanced was merged pursuant to Nevada law into
MediaWorx Acquisition Company, a wholly owned ADVI subsidiary organized in
Nevada ("MWAC"). As a consequence of this merger, MWAC became the surviving
entity and continues to be a wholly owned subsidiary of ADVI. A copy of the
associated Plan of Merger is attached as Appendix II.
In the exchange, as described above, the shareholders of Advanced
received 4,000,000 ADVI common shares and 3,500,000 preferred shares convertible
1 to 5 into ADVI common shares with voting rights as if converted, i.e.,
17,500,000 common shares, and SSCI received 250,000 ADVI shares. As a
consequence of these actions, SSCI has exchanged its assets for the ADVI shares,
and SSCI shareholders' interests in their shares are currently correlated to
ADVI's success in prosecuting its business plan, namely productively employing
SSCI's former commercial printing assets.
To that end, post-merger, on July 1, 2003, ADVI engaged an offshore
licensed brokerage firm to raise on a best efforts basis from $1,500,000 to
$3,000,000, depending on market price, for 11,000,000 ADVI shares. Assuming that
capital raise is successful, ADVI will then have 15,724,305 common shares
outstanding and 3,500,000 shares of preferred convertible 1 to 5, of which both
Diamond Capital LLC and Quest Capital Resources LLC will each own 2 million
common shares, 1.75 million preferred shares (or 10,750,000 each on a fully
converted basis). The Shares owned by Diamond Capital LLC, Quest Capital
Resources LLC and
5
PH are restricted and cannot be sold for at least one year. Furthermore, the
shares issued as a result of the capital raised by the brokerage firm will be
pursuant to pertinent securities requirements, including Regulation S, and will
also be restricted for 1 year. The number of shares in the public float before
the Regulation S Offering is approximately 105,200 and is expected to remain at
that level for one year after the Regulation S Offering.
The complete mailing address of SSCI's principal executive office is 1895
Preston White Drive, Suite 250, Reston, Virginia 20191 (Telephone: (703)
860-6580). The complete mailing address of ADVI's principal executive offices is
24165 IH 10 West, Suite 217125, San Antonio, Texas 78257 (Telephone: (210)
497-8550).
Only SSCI and ADVI shareholders of record at the close of business on
June 20, 2003 are entitled to notice:
1. At that record date, the following voting shares of SSCI were outstanding:
CLASS SHARES OUTSTANDING VOTING
------------------------------- ---------------------- ------------
Common Shares 33,653,047 33,653,047
Convertible B Preferred Shares* 582,973 1,165,946
Convertible C Preferred Shares** 250,000 90,000,000
*Preferred B shares are convertible into 2 common shares for each 1
Preferred B share. Each convertible share has full voting rights equal to their
converted number of shares.
** Preferred C shares are convertible into 360 common shares for each 1
Preferred C share. Each convertible share has full voting rights equal to their
converted number of shares.
2. At that record date, the following voting shares of ADVI were outstanding
CLASS SHARES OUTSTANDING VOTING
-------------------- ---------------------- ------------
Common Shares 22,430,587 22,430,587
Preferred Shares 0 0
Appraisal rights may be available to SSCI shareholders with respect to
the sale of assets acted upon at the SSCI Special Meeting and described in this
Statement. Appraisal rights are not available to ADVI shareholders with respect
to the several matters acted upon at the ADVI Special Meeting and described in
this Statement.
SSCI internally generated financial statements for the year ended
December 31, 2002 are being mailed with this Statement. SSCI did not have the
funds to pay an auditor and to file its Form 10-KSB. It is thus in default of
its filings but has provided internally generated December 31, 2002 unaudited
financial statements.
The ADVI Annual Report on Form 10-KSB for the year ended December 31,
2002 (the "Annual Report"), including its audited consolidated financial
statements for the year ended December 31, 2002, is being mailed with this
Statement to both ADVI and SSCI shareholders. The Annual Report is not regarded
as proxy soliciting material or as a communication by means of which a
solicitation of proxies is to be made.
At the date hereof, management of neither SSCI nor ADVI has no
knowledge of any business conducted at such Special Meetings other than that
described in this Statement.
6
II. SSCI SUPPLEMENTAL DISCLOSURES AND RIGHTS OF ITS SHAREHOLDERS
DIRECTORS AND EXECUTIVE OFFICERS OF SSCI
NAME AGE DIRECTOR SINCE
---- --- --------------
Linda A. Broenniman* 46 December 2001
Andrew S. Prince 59 December 2001
Vincent Mallardi 61 December 2001
Edward G. Broenniman 66 December 2001
* Ms. Broenniman (see biography below) is the sole officer of SSCI.
Ms. Linda A. Broenniman, President, Chief Financial Officer, Secretary,
Treasurer and Director, has served as a Director, Chief Financial Officer,
Treasurer and Secretary of SSCI since December 7, 2001. She became President on
April 10, 2002. Ms. Broenniman has over twenty five years of successful
management experience. Ms. Broenniman spent the previous 15 years building
successful entrepreneurial companies, as President/CEO and CFO, including a
medical technology company, a health care information systems company and a
retail food service company. She formerly served as CFO for a NASDAQ
telecommunications equipment manufacturer. As Director of Strategic Planning and
Corporate Development at the corporate headquarters of a Fortune 50 company, she
gained extensive experience in corporate finance and mergers and acquisitions.
Ms. Broenniman is currently Managing Director of HFS Capital LLC and HFS Private
Equity Partners LLC.
Andrew S. Prince, Director, has served as a director of SSCI since
December 7, 2001. On April 10, Mr. Prince resigned as President/CEO and
continued as a director. Mr. Prince has over 30 years providing senior executive
leadership and vision to large and small organizations. He has focused on
corporate expansions and been involved with numerous mergers & acquisitions,
strategic relationships and joint ventures, including their financial and
strategic structuring. Mr. Prince is and has been a manager of venture capital
funds and investment banking and consulting firms. Mr. Prince has also served as
Deputy Assistant Secretary of the Navy. He was responsible for the worldwide
Defense Department's sea-lift logistics operations and the other operations of
the Military Sealift Command. Currently Mr. Prince is President and Chief
Executive Officer of BretKen Enterprises, LC.
Vincent Mallardi, Director, has served as a Director of SSCI since
December 7, 2001. Mr. Mallardi is a leading authority on global print media. He
has over 30 years of experience as an executive and consultant in print
manufacturing and marketing. His career includes management positions at: G.
Riccordi, in Milan, Italy and New York; Canada Graphic Arts Information Network,
Ottawa; and Schawk Graphics, Inc., Chicago. Mr. Mallardi founded his own
consulting and publishing practices in 1984 and, in such continuing capacity, he
works with many major printing buyers and producers. He is also Chairman of the
Printing Brokerage/Buyers Association.
Edward G. Broenniman, Director, has served as a director of SSCI since
December 7, 2001. Mr. Broenniman is the Managing Director of the Piedmont Group,
a venture development firm, and has over 25 years as an operating executive with
Fortune 100 firms and privately held high-technology companies. He has
extensive knowledge of the printing industry having worked for International
Paper, Weyerhauser, Ideal Roller & Graphics, and Printing Plate Supply Company.
A successful entrepreneur, Mr. Broenniman has built and sold three venture
funded high-technology firms to public companies. As a venture advisor, he works
with emerging firms to build their operating results and to increase their
shareholder value. Mr. Broenniman is married to Ms. Broenniman.
Each SSCI corporate officer was elected to hold office until he resigns
or is removed by the Board of Directors. Lawrence J. Hoffman, previously Chief
Executive Officer and Director, resigned his position on June 11, 2003.
7
SUMMARY EXECUTIVE COMPENSATION
There was no Executive Compensation paid in the last 3 years. SSCI
entered into an agreement with Lawrence J. Hoffman to serve as Chief Executive
Officer for April 2002-April 2003, for which he received 240,000 registered,
albeit control, shares. SSCI entered into an agreement with Linda A. Broenniman
to serve as President and Chief Financial Officer for April 2002-April 2003, for
which she received 210,000 registered, albeit control, shares.
Option/SAR Grants in Last Fiscal Year
The following table sets forth certain information with respect to
stock options granted to directors, and officers during the fiscal year ended
December 31, 2001. No stock options were granted during the fiscal year ended
December 31, 2002.
Individual Grants
-----------------
Number of % of Total
Securities Options Granted Exercise
Underlying Employees in Price Expiration
Name Options Granted Fiscal Year per Share Date
- -------- --------------- --------------- --------- ----------
Edward G. Broenniman 20,000 .018% $1.29 2011
Vincent Mallardi 20,000 .018% $1.29 2011
(1) These options are exercisable for ten years.
Aggregated Option/SAR Exercises and Fiscal Year-End Options/SAR Value Table
No stock options and/or free standing SAR were exercised during the
last fiscal year.
Pension Arrangements
SSCI does not have a pension plan nor a profit sharing plan.
Directors' Compensation and Consulting Agreements
SSCI directors were not compensated for their services as such.
Employment Agreement with Officers
SSCI currently has no employment agreements with any officers.
Compensation Committee Interlocks and Insider Participation
Edward G. Broenniman is Chairman of the Compensation Committee and
Vincent Mallardi is its other member. Mr. Broenniman is married to Ms.
Broenniman, the Company's President and Chief Financial Officer. In 2001,
deliberations concerning Ms. Broenniman's compensation were carried out by Mr.
Mallardi and Mr. Hoffman, who served on the Board of Directors until his
resignation on June 11, 2003.
8
SECURITY OWNERSHIP OF CERTAIN SSCI BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 20, 2003, the shareholder
record date, information with regard to ownership of SSCI's common stock by (1)
each beneficial owner of 5% or more of our common stock, based on filings with
the SEC; (2) each executive officer named in our "Summary Executive
Compensation"; (3) each of our directors; and (4) all of our executive officers
and directors as a group:
------------------------------- ------------ ---------------- --------------------- ------------ --------------
NAME POSITION COMMON SHARES PREFERRED SHARES * STOCK WARRANTS
(AS CONVERTED) OPTIONS
------------------------------- ------------ ---------------- --------------------- ------------ --------------
Vince Franckowiak for Diamond 13,608,325 45,000,000
Capital LLC / For Advanced
Capital LLC
------------------------------- ------------ ---------------- --------------------- ------------ --------------
Vince Franckowiak for Quest 13,608,325 45,000,000
Capital Resources LLC / For
Advanced Capital LLC
------------------------------- ------------ ---------------- --------------------- ------------ --------------
Lawrence J. Hoffman for HFS 1,308,000 1,165,946 0 0
Venture Fund I LLLP**
------------------------------- ------------ ---------------- --------------------- ------------ --------------
Lawrence J. Hoffman 347,609 0 20,000 660,240
(Individual)**
------------------------------- ------------ ---------------- --------------------- ------------ --------------
Linda A. Broenniman Officer & 210,000 0 0 70,000
Director
------------------------------- ------------ ---------------- --------------------- ------------ --------------
Vince Mallardi Director 0 0 20,000 20,000
------------------------------- ------------ ---------------- --------------------- ------------ --------------
Andrew S. Prince Director 0 0 0 84,000
------------------------------- ------------ ---------------- --------------------- ------------ --------------
Edward G. Broenniman Director 0 0 20,000 0
------------------------------- ------------ ---------------- --------------------- ------------ --------------
The Officers and Directors as 210,000 40,000 174,000
A Group
------------------------------- ------------ ---------------- --------------------- ------------ --------------
* The Company's preferred B stock (582,973 shares) is convertible into 2
common shares for each convertible share and has full voting rights
equal to their converted number of shares. The equivalent number of
common shares is 1,165,946.
* The Company's preferred C stock (250,000 shares) is convertible into
360 common shares for each convertible share and has full voting
rights equal to their converted number of shares. The equivalent
number of common shares is 90,000,000.
** Lawrence J. Hoffman, previously Chief Executive Officer and Director,
resigned his position on June 11, 2003.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS WITH SSCI DIRECTORS AND EXECUTIVE
OFFICERS
In September 2002, SSCI received $500,000 from Private Investors
Equity , LLC in exchange for a Secured Convertible Promissory Note (the "Note").
The $500,000 Note carried a 12% interest and was due upon the earlier of March
15, 2003 or the occurrence of a financing event in which the Company received
debt or equity capital in an amount in excess of $2 million. This note was
convertible at $0.65 per share and had detachable warrants for 969,231 shares of
common stock with an exercise price of $0.65 per share. This note had senior
security interest in all the Company's assets, subordinate only to receivables
financing. The note was also secured by 250,000 Preferred C shares, the
certificate of which was held in escrow, that have voting rights of 40 to 1.
Solar Satellite is currently in default on the note provisions.
9
On May 30, 2003, Advanced Capital, LLC, a Nevada limited liability
company ("Advanced"), purchased the Note from Private Investors Equity LLC.
Advanced is owned jointly by Diamond Capital, LLC, a subsidiary of the Lyn
Family Trust, for which Vince Franckowiak has the right to exercise voting
control, and Quest Capital Resources, LLC, a subsidiary of the IBEX Trust, for
which Vince Franckowiak also has the right to exercise voting control.
As previously described, Advanced converted the Note and accrued
interest into 27,216,650 SSCI common shares. As a result, Advanced herein has
95% voting control of SSCI. (See "Outline of Your Rights As An SSCI
Shareholder".)
Advanced agreed to purchase assets of SSCI's subsidiary, MediaWorx, in
exchange for 3,000,000 Advanced shares. The Advanced shares are convertible into
250,000 ADVI shares. In addition, ADVI has issued 250,000 common stock to
various note holders of SSCI in consideration of $645,242 in debt held by such
note holders.
REPORT OF THE BOARD OF DIRECTORS REGARDING AUDIT ISSUES; FORM 10-KSB
SSCI did not have the funds for to complete the 2002 audit and was
therefore delinquent in its filings. Included in this report are internally
generated SSCI financial statements for the period ended December 31, 2002.
OUTLINE OF YOUR RIGHTS AS AN SSCI SHAREHOLDER
Following consummation of the merger described in this Statement, the
ADVI common stock is expected to continue to be listed for trading on the OTC
Bulletin Board (the market on which the ADVI common currently is also listed for
trading). UNLESS YOU EXERCISE DISSENTERS RIGHTS OUTLINED BELOW, YOUR INTEREST IN
SSCI IS TIED DIRECTLY, AT LEAST INTITALLY, TO SSCI'S OWNERSHIP OF THE 250,000
ADVI SHARES RECEIVED AS CONSIDERATION FOR SSCI'S ASSETS.
Stockholders' Rights in Certain Transactions. Colorado Law provides
generally, with certain exceptions hereinafter described, that a stockholder of
a Colorado corporation has the right to demand and receive payment of the fair
value of the stockholder's stock if the corporation engages in any of the
following transactions and stockholder approval of the transaction is required:
(1) a merger of the corporation with another corporation; (2) an exchange of the
stockholder's stock for stock in another corporation; or (3) a sale or exchange
of substantially all of the corporation's assets.
In order for a stockholder to perfect his dissenters rights, such
stockholder must file with SSCI within 20 days of the date of this Stateement
notice of his intent to demand payment demand in writing for the fair cash value
of his SSCI shares. Colorado Law provides that the right to fair value does not
apply, with certain exceptions, if (1) the stock is listed on a national
securities exchange or the Nasdaq Stock Market or (2) the stock is held by at
least 2,000 record stockholders. Dissenters' rights may be available to SSCI
stockholders in connection with the sale of SSCI's assets. Such treatment is not
free from doubt since the requisite majority vote of shareholders was received
and the ADVI shares and SSCI assets sold were both valued, in good faith.
To the extent applicable, see "-Dissenters' Rights of Appraisal" and
"Procedure to Exercise Dissenters Rights."
DISSENTERS' RIGHTS OF APPRAISAL
The following discussion is not a complete statement of the law
pertaining to dissenters' rights under Colorado Law and is qualified in its
10
entirety by the full text of the pertinent sections of the Colorado Law. The
Dissenters' Code Provisions in its entirety as Appendix I to this Statement. Any
stockholder of SSCI who desires to exercise his dissenters' rights should review
carefully The Dissenters' Code Provisions and is urged to consult a legal
advisor before electing or attempting to exercise his rights. All references in
The Dissenters' Code Provisions to a "stockholder" and in this summary to a
"Company stockholder" or a "holder of Company Common Stock" are to the record
holder of SSCI shares as to which, if applicable, dissenters' rights are
asserted.
Only compliance with the The Dissenters' Code Provisions will
constitute a demand for appraisal within the meaning of The Dissenters' Code
Provisions. SSCI stockholders electing to exercise dissenters' rights under The
Dissenters' Code Provisions must not have voted for approval of the sale of SSCI
assets.
WHAT ARE DISSENTERS' RIGHTS? To qualify, SSCI stockholders must follow
the procedures of The Dissenters' Code Provisions. If applicable, the procedures
followed and there is a valuation substantively different than the $5.8
valuation model associated with this restructuring, SSCI shareholders would then
be entitled to receive from SSCI the fair value of their shares, plus accrued
interest from the Effective Date, as determined immediately before the
completion of the sale of SSCI's assets. Fair value takes into account all
relevant factors but excludes any appreciation or depreciation in anticipation
of the sale of SSCI assets unless exclusion would be inequitable. (That is an
unlikely scenario since both SSCI and ADVI believe fair value was given, i.e.,
the 250,000 ADVI shares in exchange for SSCI's assets and, accordingly, a
dissenters' right would require a third party appraisal process outlined below
in "Resort to Court Action." SSCI stockholders who elect to exercise their
dissenters' rights must comply with all of the procedures to preserve those
rights.
SHARES ELIGIBLE FOR DISSENTERS' RIGHTS. Generally, if you choose to
assert your dissenters' rights, you must dissent as to all of the shares you
own. The Dissenters' Code Provisions distinguishes between record holders and
beneficial owners. You may assert dissenters' rights as to fewer than all the
shares registered in your name only if you are not the beneficial owner of all
of the shares and you (1) dissent with respect to all of the shares beneficially
owned by any one person and (2) notify SSCI in writing of the name and address
of each person on whose person you assert dissenters' rights.
RECORD HOLDER WHO IS NOT THE BENEFICIAL OWNER. A record holder may
assert dissenters' rights on behalf of the beneficial owner. If you are a
registered owner and you wish to exercise dissenters' rights on behalf of the
beneficial owner, you must disclose the name and address of the person or
persons on whose behalf you dissent. In that event, your rights shall be
determined as if the dissenting shares and the other shares were registered in
the names of the beneficial holders.
BENEFICIAL OWNER WHO IS NOT THE RECORD HOLDER. A beneficial owner of
SSCI common stock who is not also the record holder may assert dissenters'
rights. If you are a beneficial owner who is not the record holder and you wish
to assert your dissenters' rights, then you must submit a written consent of the
record holder to the Secretary of SSCI no later than the time you assert your
dissenters' rights. You may not dissent with respect to some but less than all
of the shares you own.
PROCEDURE TO EXERCISE DISSENTERS' RIGHTS
NOTICE OF INTENTION TO DISSENT. If you wish to exercise your
dissenters' rights, you must follow the procedures set forth in Appendix I. You
must file a written notice of intention to demand the fair value of your shares
with the Secretary of SSCI within 20 days of this Statement.
NOTICE TO US. SSCI will mail a notice to all dissenters who filed a
notice of intention to dissent and who refrained from voting for the sale of
SSCI's assets. If there are dissenters, SSCI expects to mail the notice within
11
21 days after the date of this Statement. The notice will state where and when a
demand for payment must be sent and where the certificates for eligible shares
must be deposited in order to obtain payment. The notice of approval will also
supply a form for demanding payment which includes a request for certification
of the date on which the holder, or the person on whose behalf the holder
dissents, acquired beneficial ownership of the shares. The demand form again
will be accompanied by a copy of The Dissenters' Code Provisions.
If you assert your dissenters' rights, you must ensure that SSCI
receives your demand form and your certificates on or before the demand
deadline, which will be between 30 and 60 days after the above notice from SSCI
is delivered. All mailings to SSCI are at your risk. Accordingly, we recommend
that your notice of intention to dissent, demand form and stock certificates be
sent only by certified mail, overnight courier or hand delivery.
If you fail to file a notice of intention to dissent, fail to complete
and return the demand form or fail to deposit stock certificates with the
Company, each within the specified time period, you will lose your dissenters'
rights under The Dissenters' Code Provisions.
PAYMENT OF FAIR VALUE BY ADVI. Upon timely receipt of the completed
demand form, The Dissenters' Code Provisions requires us to pay to dissenters
who complied with the above procedures the amount we estimate to be the fair
value for such dissenting shares, plus accrued interest, if the dissenter
beneficially owned the shares on or before the Company's first public
announcement of the proposed reincorporation. If the dissenter acquired
beneficial ownership after that date, then SSCI may elect to withhold payment
and instead offer to pay to the dissenter SSCI's estimate of the fair value of
the shares, plus accrued interest. ADVI's remittance or offer will be
accompanied by:
|| SSCI's balance sheet as of December 31, 2002, the statements of income and
changes in stockholders' equity of SSCI for the fiscal year ended December
31, 2002, and the latest available interim financial statements;
|| a statement of how SSCI estimated the fair value of the shares and how the
interest was calculated; and
|| notice of the right of the dissenter to demand payment or supplemental
payment, as the case may be, accompanied by a copy of The Dissenters' Code
Provisions.
DISSENTING STOCKHOLDERS ESTIMATE OF FAIR VALUE OR INTEREST. If you
disagree with our estimate of the fair value of your shares or how the interest
was calculated, you may send to us your own estimate of the fair value of the
shares and the amount of interest due. Such estimate shall be deemed a demand
for payment of the amount of the deficiency. If you do not file your estimate
within 30 days after SSCI made or offered payment for your SSCI shares, then you
will only be entitled to the amount stated in the notice or remittance to you by
SSCI.
RESORT TO COURT ACTION. If your demand for additional payment remains
unsettled, then SSCI will commence a proceeding within 60 days after receiving
the payment demand, requesting the court to determine the fair value of the
shares and accrued interest. Since management believes SSCI and ADVI
shareholders have been given and received fair value, court action will likely
be the only mechanism for SSCI dissenter's to receive consideration other than
their pro rata interest in the 250,000 ADVI shares received in the SSCI sale of
assets. In the court proceeding, all dissenters, wherever residing, whose
demands have not been settled will be made parties to any such appraisal
proceeding. The court may appoint an appraiser to receive evidence and recommend
a decision on the issue of fair value. Each dissenter made a party will be
entitled to recover an amount equal to the fair value of the dissenter's shares,
plus interest, or if SSCI previously remitted any amount to the dissenter, any
amount by which the fair value of the dissenter's shares is found to exceed the
amount previously remitted, plus interest.
12
If we fail to commence a proceeding, any dissenter who made a demand
and who has not already settled his claim against us within the 60-day period
after the reincorporation shall be paid the amount demanded.
COSTS AND EXPENSES OF COURT PROCEEDINGS. The costs and expenses of the
court proceedings, including the reasonable compensation and expenses of any
appraisers appointed by the court, will be determined by the court and assessed
against SSCI. The court may, however, assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters did not act in good faith in making their payment demand. If we
fail to comply substantially with the requirements of Article 15, the court may
assess fees and expenses of experts, excluding counsel, for the parties as it
deems appropriate against us and in favor of any or all dissenters. The court
may assess fees and expenses of experts, excluding counsel, against either SSCI
or a dissenter, if the court finds that a party acted in bad faith. If the court
finds that the services of counsel for any dissenter substantially benefited
other dissenters similarly situated, it may award counsel reasonable fees to be
paid out of the amounts awarded to the dissenters who benefited.
Pursuant to Colorado Law, the affirmative vote of the holders of a
majority of the outstanding shares of SSCI's common stock was required for
approval of the sale of SSCI's assets. Such approval was obtained at an ADVI
Special Meeting conducted June 24, 2003. As a result of such action, unless
dissenters' rights are exercised as described above, your rights are limited
henceforth to the ADVI shares acquired by SSCI as described in this Statement.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE SALE OF ASSETS AND THE
REQUISITE MAJORITY OF SHAREHOLDERS HAS VOTED IN FAVOR OF SUCH SALE. NO PROXY IS
REQUIRED OR REQUESTED.
III. ADVI SUPPLEMENTAL DISCLOSURES
DIRECTORS AND EXECUTIVE OFFICERS OF ADVI
The current executive officers of ADVI are as follows:
NAME AGE POSITION
---- --- --------
Gary L. Cain* 46 Chairman, Chief Executive Officer,
Secretary and Director
Bruce M. Arinaga* 41 President, Secretary, Treasurer and
Director
William H. Burton 44 Vice President and Director
*Messrs. Cain and Arinaga have been ADVI Directors since June 2002.
Each corporate officer was elected to hold office until he resigns or
is removed by the Board of Directors.
Mr. Gary L. Cain, Chairman and Chief Executive Officer, currently
serves as CEO and Director of PowerHouse Management Group, Inc. as well as
several publicly traded companies. He is an executive officer with over 25 years
of management, leadership and business experience including business startups,
reorganizations, mergers and acquisitions. Since 1976, Mr. Cain has been
involved in the design, development and management of over one hundred thousand
acres of residential and commercial property, over one million square feet of
commercial developments, including office buildings, shopping centers,
apartments, condominiums, hotels and motels. His responsibilities have included
executive responsibility of public companies, business and marketing plan
development, strategic planning, finance, budgeting, sales development and
13
selection and placement of key management personnel. He has assisted companies
from start up to expansion, including mergers and acquisitions, capital
structure and finance.
Bruce M. Arinaga, President, Secretary and Treasurer, currently serves
as President of PowerHouse Management Group Inc. Prior to PowerHouse, Mr.
Arinaga was Managing Director of Zero-G Capital Fund, LLC, a private equity firm
where he remains a minority shareholder and where he was involved in a number of
early stage technology and healthcare companies. From 1997-2000, Mr. Arinaga was
President of CrossWater Capital LLC and CrossWater Properties Corporation, which
were involved in investments and corporate finance transactions in excess of
$300 million in technology, healthcare and service companies, as well as real
estate. From 1993-1996, he was President and Chief Operating Officer of an
international private investment company based in Vancouver, B.C. where he
expanded the company's activities in Vancouver, Toronto, the United States and
Asia. He was responsible for overseeing over 30 employees and was involved in
corporate private and public equity and real estate investments and developments
with a value exceeding over $800 million. He was the second largest shareholder
of the company. Prior to that, Mr. Arinaga founded Pacific Alliance Group, which
was involved in over $500 million of real estate and corporate investments, and
where he was involved in the IPO of two companies. Prior to Pacific Alliance
Group, Mr. Arinaga was Vice President at Venture Capital Hawaii Ltd., where he
was responsible for industrial corporate acquisitions and venture investments
for Japanese investors. Prior to that, Mr. Arinaga held senior positions at
Prudential Insurance Company of America and NHP, Inc., where he was involved in
investments and acquisitions exceeding $1.5billion. Mr. Arinaga was a certified
public accountant with Arthur Young & Company in their Woodland Hills,
California office. Mr. Arinaga holds a Bachelor of Science in Business from the
University of Southern California and a Masters in Business Administration and
Finance from New York University.
William H. Burton, Vice President, currently serves as Vice President
of PowerHouse and heads the company's division of technology services. Mr.
Burton is a technology specialist with over 20 years of experience. From 1997 to
2002, he was an Operations Manager and Project Manager for Bank of America's
Global, Corporate and Investment Bank, and has experience in managing people as
well as supporting trading and clearing systems. He was also responsible for the
consolidation and relocation of BankAmerica GCIB and NationsBank Capital Markets
clearance systems from San Francisco, California to Charlotte, North Carolina.
From 1995 to 1997, Mr. Burton was responsible for relocating the NationsBank
Capital Markets Back Office technology infrastructure from Atlanta to Charlotte.
From 1993 to 1995, Mr. Burton was part of a technical team that designed,
prototyped and implemented a complex workstation solution that met the
Commercial Bank's business requirements of both Banking Centers and the
NationsBank WAN. From 1992 to 1993, Mr. Burton was an Information Analyst with
Duke Power. From 1982 to 1992, Mr. Burton held various Marketing, Programming
and Systems Analysis positions for International Business Machines. Mr. Burton
received his Bachelor of Science in Computer Science in 1982 from Virginia Tech.
His certifications include Microsoft Certified Product Specialist, 1996; Novell
Master CNE (MCNE), 1995; Novell Enterprise CNE (ECNE), 1992; and Novell
Certified Netware Engineer (CNE), 1991.
SUMMARY EXECUTIVE COMPENSATION
Mr. Cain, Mr. Arinaga and Mr. Burton have received no compensation from
ADVI. The following table summarizes total compensation paid its previous
officers:
NAME AND POSITION YEAR SALARY
----------------- ---- -------
Daniel H. Scott, Chairman and Chief Executive
Officer(1) 2002 $98,125
2001 $225,000
14
(1) Mr. Scott elected to defer payment of $98,125 of the 2002
compensation and $225,000 of the 2001 compensation. These amounts
were consolidated into a secured note payable to Mr. Scott in
June, 2001. The actual amount of salary paid during 2002 and 2001
was $0.
There are no arrangements pursuant to which Directors are compensated for any
services provided as a Director.
Option/SAR Grants in Last Fiscal Year
No options were granted during the years ended December 31, 2002 or
2001.
Aggregated Option/SAR Exercises and Fiscal Year-End Options/SAR Value Table
No stock options and/or free standing SAR were exercised during the
last fiscal year.
Pension Arrangements
ADVI does not have a pension plan nor a profit sharing plan.
Directors' Compensation and Consulting Agreements
The ADVI directors were not compensated for their services as such.
Employment Agreement with Officers
ADVI currently has no employment agreements with any officers.
SECURITY OWNERSHIP OF CERTAIN ADVI BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 20, 2003, the shareholder
record date, information with regard to ownership of ADVI's common stock by (1)
each beneficial owner of 5% or more of our common stock, based on filings with
the SEC; (2) each executive officer named in our "Summary Executive
Compensation"; (3) each of our directors; and (4) all of our executive officers
and directors as a group:
NAME AND ADDRESS OFFICER OR COMMON STOCK PERCENT OF
DIRECTOR BENEFICIALLY OWNED CLASS
- -------------------------- ------------------ ------------------ ----------
Gary L. Cain for
PowerHouse Management
Group, LLC Officer & Director 11,909,750 53.1%
24165 IH 10 West
Suite 217125
San Antonio, Texas 78257
All Officers and Directors 11,909,750 53.1%
As a Group
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS WITH DIRECTORS AND EXECUTIVE
OFFICERS
See the description in Part II, SSCI Supplemental Disclosures, "Certain
Relationships and Related Transactions with SSCI Directors and Executive
Officers."
15
REPORT OF THE BOARD OF DIRECTORS REGARDING AUDIT ISSUES
Robison, Hill & Company was been selected as the Company's independent
public accountants and auditors for 2002.
The Board of Directors has reviewed and discussed with management the
Company's audited consolidated financial statements as of and for the year ended
December 31, 2002. The Board of Directors has also discussed with Robison, Hill
& Co. the matters described in the Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended, as promulgated by the Auditing
Standards Board of the American Institute of Certified Public Accountants. The
Board of Directors has received and reviewed the written disclosures and the
letter from Robison, Hill & Co described in Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees, as amended, and
has discussed with Robison, Hill & Co. their independence. Based on the reviews
and discussions described herein, the Board of Directors has included the
audited consolidated financial statements referred to above in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 2002 filed with the
Securities and Exchange Commission.
AUDIT FEES
The aggregate fees billed in 2002 for professional services rendered
for the audit of (1) our annual financial statements for the year ending
December 31, 2002 and the reviews of our financial statements included in all
Forms 10-Q for 2002, were $3,216.
APPENDIX I
SSCI DISSENTERS' CODE PROVISIONS
7-113-201 - Notice of Dissenters' Rights.
- -----------------------------------------
(1) If a proposed corporate action creating dissenters' rights under section
7-118-102 is submitted to a vote at a shareholders' meeting, the notice of
the meeting shall be given to all shareholders, whether or not entitled to
vote. The notice shall state that shareholders are or may be entitled to
assert dissenters' rights under this article and shall be accompanied by a
coy of this article and the materials, if any, that, under articles 101 t0
117 of this title, are required to be given to shareholders entitled to
vote on the proposed action at the meeting. Failure to give notice as
provided by this subsection (1) shall not affect any action taken at the
shareholders' meeting for which the notice was to have been given, but any
shareholder who was entitled to dissent but who was not given such notice
shall not be precluded from demanding payment for the shareholder's shares
under this article by reason of the shareholder's failure to comply with
the provisions of section 7-113-202 (1).
(2) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104, any written or oral solicitation of a shareholder to
execute a writing consenting to such action contemplated in section
7-107-104 shall be accompanied or preceded by a written notice stating that
shareholders are or may be entitled to asset dissenters' rights under this
article, by a copy of this article, and by the materials, if any, that,
under articles 101 to 117 of this title, would have been required to be
given to shareholders entitled to vote on the proposed action if the
proposed action were submitted to a vote at a shareholder' meeting. Failure
to give notice as provided by this subsection (2) shall not affect any
action taken pursuant to section 7-107-104 for which the notice was to have
been given, but any shareholder who was entitled to dissent but who was not
given such notice shall not be precluded from demanding payment for the
shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-2-2(2).
7-113-102 - Rights to Dissent.
- ------------------------------
(1) A shareholder, whether or not entitled to vote, is entitled to dissent and
obtain payment of the fair value of the shareholders' shares in the event
of any of the following corporate action:
(a) Consummation of a plan of merger to which the corporation is a party
if:
(i) Approval by the shareholders of that corporation is required for
the merger by section 7-111-103 or 7-111-104 or by the articles
of incorporation; or
(ii) The corporation is a subsidiary that is merged with its parent
corporation under section 7-111-104;
(b) Consummation of a sale, lease, exchange, or other disposition of all,
or substantially al, of the property of the corporation for which a
shareholder vote is required under section 7-112-1-2 (1); and
(c) Consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of an entity controlled by the
corporation if the shareholders of the corporation were entitled to
vote upon the consent of the corporation to the disposition pursuant
to section 7-112-102(2)
(1.3)A shareholder is not entitled to dissent and obtain payment, under
subsection (1) of this section, of the fair value of the shares of any
class or series of shares which either were listed on a national securities
exchange registered under the federal "Securities Exchange Act of 1934", as
amended, of on the national market system of the national association of
securities dealers automated quotation system, or were held of record by
more than two thousand shareholders, at the time of:
(a) the record date fixed under section 7-1-7-107 to determine the
shareholders entitled to receive notice of the shareholders' meeting
at which the corporate action is submitted to a vote;
(b) The record date fixed under section 7-107-104 to determine
shareholders entitled to sign writings consenting to the corporate
action; or
(c) The effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
17
(1.8)The limitation set forth in subsection (1.3) of this section shall not
apply if the shareholder will receive for the shareholder's shares,
pursuant to the corporate action, anything except:
(a) Shares of the corporation surviving the consummation for the plan of
merger or share exchange;
(b) Shares of any other corporation which at the effective date of the
plan of merger or share exchange either will be listed on a national
securities exchange registered under the federal "Securities Exchange
Act of 1934", as amended, or on the national market system of the
national association of securities dealers automated quotation system,
or will be held of record by more than two thousand shareholders;
(c) Cash in lieu of fractional share; or
(d) Any combination of the foregoing described shares or cash in lieu of
fractional shares.
(2) (Deleted by amendment, L. 96, p. 1321, ss.30, effective June 1, 1996.)
(2.5)A shareholder, whether or not entitled to vote, is entitled to dissent and
obtain payment of the fair value of the shareholders' shares in the event
of a reverse split that reduces the number of shares owned by the
shareholder to a fraction of a share or to scrip if the fractional share or
scrip so created is to be acquired for cash or the scrip is to be voided
under section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the fair value
of the shareholders' shares in the event of any corporate action to the
extent provided by the bylaws or a resolution of the Board of Directors.
(4) A shareholder entitled to dissent and obtain payment for the shareholder's
shares under this article may not challenge the corporate action creating
such entitlement unless the action is unlawful or fraudulent with respect
to the shareholder or the corporation.
7-113-2-2 - Notice of Intent to Demand Payment.
- -----------------------------------------------
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is submitted to a vote at a shareholders' meeting and if notice
of dissenters' rights has been given to such shareholder in connection with
the action pursuant to section 7-113-201 (I), a shareholder who wishes to
assert dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is take, written
notice of the shareholder's intention to demand payment for the
shareholder's shares if the proposed corporation action is
effectuated; and
(b) Not vote the share sin favor of the proposed corporate action.
(2) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104 and if notice of dissenters' rights has been given to
such shareholder in connection with the action pursuant to section
7-113-201 (2), a shareholder who wishes to assert dissenters' rights shall
not execute a writing consenting to the proposed corporate action.
(3) A shareholder who does not satisfy the requirement of subsection (1) or (2)
of this section is not entitled to demand payment for the shareholder's
shares under this article.
APPENDIX II
AGREEMENT AND PLAN OF MERGER
DATED AS OF
JULY 1, 2003
AMONG
ADVANCED GAMING TECHNOLOGY, INC.,
MEDIA WORX ACQUISITION COMPANY LLC,
AND
ADVANCED CAPITAL LLC
TABLE OF CONTENTS
PAGE
RECITALS 1
ARTICLE I THE MERGER............................................................................1
Section 1.1. The Merger.............................................................1
Section 1.2. Closing................................................................1
Section 1.3. Effective Time.........................................................2
Section 1.4. Effects of the Merger..................................................2
Section 1.5. Articles of Incorporation..............................................2
Section 1.6. Bylaws.................................................................2
Section 1.7. Directors of Surviving Corporation.....................................2
Section 1.8. Officers of Surviving Corporation......................................2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES...................................2
Section 2.1. Conversion of ACLLC Interests..........................................2
Section 2.2. Exchange of Certificates; Further Assurances...........................3
(a) Exchange...............................................................3
(b) No Further Ownership Rights in ACLLC Capital Interests.................3
(c) Further Assurances.....................................................3
ARTICLE III REPRESENTATIONS AND WARRANTIES......................................................3
Section 3.1. Representations and Warranties of ACLLC................................3
(a) Organization and Standing of ACLLC.....................................3
(b) Authority; No Conflicts................................................4
(c) Capitalization of ACLLC and Indebtedness for Borrowed Moneys...........4
(d) ACLLC Financial Statements.............................................5
(e) Present Status.........................................................5
(f) Litigation.............................................................5
(g) Compliance With the Law and Other Instruments..........................5
(h) Title to Properties and Assets.........................................5
(i) Records................................................................5
(j) Absence of Certain Changes or Events...................................5
(k) Taxes..................................................................5
(l) ACLLC Benefit Plans....................................................5
(m) Finders and Advisors...................................................5
(n) Vote Required..........................................................6
(o) Full Disclosure........................................................6
Section 3.2. Representations and Warranties by ADVI.................................6
(a) Organization and Standing of ADVI......................................6
(b) Authority; No Conflicts................................................6
(c) Capitalization of ADVI and Indebtedness for Borrowed Moneys............7
(d) ADVI SEC Reports and Financial Statements..............................7
(e) Present Status.........................................................8
(f) Litigation.............................................................8
i
(g) Compliance With the Law and Other Instruments..........................8
(h) Records................................................................8
(i) Absence of Certain Changes or Events...................................8
(j) Taxes..................................................................8
(k) ADVI Benefit Plans.....................................................8
(l) Finders and Advisors...................................................8
(m) Vote Required..........................................................9
(n) Full Disclosure........................................................9
Section 3.3. Representations and Warranties of ADVI and Merger Sub..................9
(a) Organization and Standing of Merger Sub................................9
(b) Authority..............................................................9
(c) Non-Contravention......................................................9
(d) No Business Activities by Merger Sub...................................9
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS...........................................10
Section 4.1. Covenants of ACLLC....................................................10
Section 4.2. Covenants of ADVI and Merger Sub......................................11
Section 4.3. Advice of Changes; Governmental Filings...............................12
ARTICLE V ADDITIONAL AGREEMENTS................................................................12
Section 5.1. Due Diligence.........................................................12
Section 5.2. Commercially Reasonable Efforts.......................................12
Section 5.3. Restrictions on Transfer of ADVI Stock................................12
Section 5.4. Expenses..............................................................12
Section 5.5. Reorganization........................................................13
Section 5.6. Continuity of Business................................................13
Section 5.7. Nasdaq Listing........................................................13
Section 5.8. 144 Opinions..........................................................13
Section 5.9. ADVI Board of Directors...............................................14
Section 5.10. ACLLC Options and Warrants............................................14
ARTICLE VI INDEMNIFICATION.....................................................................14
Section 6.1. Indemnification.......................................................14
Section 6.2. Notice and Defense of Third-Party Claims..............................14
Section 6.3. Exclusivity...........................................................14
Section 6.4. Waiver of Consequential Damages.......................................14
ARTICLE VII CONDITIONS TO CLOSING..............................................................15
Section 7.1. Conditions to Each Party's Obligation to Effect the Merger............15
(a) Shareholder Approval..................................................15
(b) No Injunctions, Restraints or Illegality..............................15
Section 7.2. Additional Conditions to Obligations of ADVI..........................15
(a) Representations and Warranties........................................15
(b) Performance of Obligations of ACLLC...................................15
(c) No ACLLC Shareholder Litigation.......................................15
(d) Certificate of Officer................................................15
Section 7.3. Additional Conditions to Obligations of ACLLC.........................15
ii
(a) Representations and Warranties........................................16
(b) Performance of Obligations of ADVI....................................16
(c) Certificate of Officer................................................16
ARTICLE VIII TERMINATION AND AMENDMENT.........................................................16
Section 8.1. Termination...........................................................16
Section 8.2. Effect of Termination.................................................17
Section 8.3. Amendment.............................................................17
Section 8.4. Extension; Waiver.....................................................18
ARTICLE IX MISCELLANEOUS.......................................................................18
Section 9.1. Nature of Representations and Warranties; Survival....................18
Section 9.2. Counterparts and Facsimile Signatures.................................18
Section 9.3. Assignment............................................................18
Section 9.4. Entire Agreement......................................................18
Section 9.5. Governing Law.........................................................18
Section 9.6. Severability..........................................................18
Section 9.7. Notices...............................................................18
Section 9.8. Attorney Fees.........................................................19
Section 9.9. Certain Definitions...................................................20
iii
SCHEDULES/EXHIBITS
2.1 ACLLC Shareholder List
3.1 ACLLC Disclosure Schedule - None
3.2 ADVI Disclosure Schedule - None
iv
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered into
this day of July 1, 2003 by and among Advanced Gaming Technology, Inc., a
Wyoming corporation ("ADVI"), MediaWorx Acquisition Company LLC, a Nevada
limited liability company and newly formed wholly owned subsidiary of ADVI
("Merger Sub") and Advanced Capital LLC, a Nevada limited liability company
("ACLLC").
RECITALS
WHEREAS, the respective Boards of Directors of ADVI, Merger Sub and
ACLLC have each determined that the merger of ACLLC with and into Merger Sub
(the "Merger") is advisable and is in their best interests and in the best
interests of their respective shareholders, and such Boards of Directors have
approved such Merger, upon the terms and subject to the conditions set forth in
this Agreement;
WHEREAS, ADVI, Merger Sub and ACLLC desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated hereby and also to set forth various conditions to the
transactions contemplated hereby; and
WHEREAS, for federal income tax purposes it is intended that the Merger
qualify as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated
thereunder and ADVI, Merger Sub and ACLLC intend by approving resolutions
authorizing this Agreement to adopt this Agreement as a plan of reorganization
within the meaning of Section 368(a) of the Code and the regulations promulgated
thereunder.
AGREEMENT
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the laws of Nevada, ACLLC
shall be merged with and into Merger Sub at the Effective Time (as defined in
Section 1.3). Following the Merger, the separate corporate existence of ACLLC
shall cease and Merger Sub shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all rights and
obligations of ACLLC in accordance with the corporate laws of Nevada.
Section 1.2 CLOSING. The closing of the Merger (the "Closing") will
take place at 10:00 a.m., Virginia time on the first business day after the
satisfaction or waiver (subject to applicable law) of the conditions set forth
in Article VII of this Agreement (the "Closing Date"), at the offices of The
MediaWorx, Inc., 1895 Preston White Drive, Suite 250, Reston, Virginia unless
1
another date or place is agreed to in writing by the parties. The parties agree
to use all reasonable efforts to close the Merger as soon as practicable,
subject to Article VII hereof.
Section 1.3 EFFECTIVE TIME. Immediately following the Closing, the
parties shall execute and file articles of merger or other appropriate documents
(in any such case, the "Articles of Merger") in accordance with the relevant
provisions of the corporate laws of Nevada and shall make all other filings or
recordings required under the corporate laws of Nevada . The Merger shall become
effective at such time as the Articles of Merger are duly filed with the Nevada
Secretary of State, or at such subsequent time as the parties shall agree, which
subsequent time shall be specified in the Articles of Merger (the time the
Merger becomes effective referred to as the "Effective Time").
Section 1.4 EFFECTS OF THE MERGER. At and after the Effective Time, the
Merger shall have the effects set forth in the corporate laws of Nevada. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time all the property, rights, privileges, powers and franchises of ACLLC and
Merger Sub shall be vested in the Surviving Company and all debts, liabilities
and duties of ACLLC and Merger Sub shall become the debts, liabilities and
duties of the Surviving Company.
Section 1.5 ARTICLES OF INCORPORATION. The articles of incorporation of
Merger Sub as in effect at the Effective Time shall be the articles of
incorporation of the Surviving Company until thereafter changed or amended as
provided therein or by applicable law.
Section 1.6 BYLAWS. The bylaws of Merger Sub as in effect at the
Effective Time shall be the bylaws of the Surviving Company until thereafter
changed or amended as provided therein or by applicable law.
Section 1.7 DIRECTORS OF SURVIVING COMPANY. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Company until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
Section 1.8 OFFICERS OF SURVIVING COMPANY. The officers of Merger Sub
immediately prior to the Effective Time shall be the officers of the Surviving
Company until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
COMPANIES; EXCHANGE OF CERTIFICATES
Section 2.1 CONVERSION OF ACLLC STOCK. At the Effective Time, by virtue
of the Merger, the total number of membership interests of ACLLC issued and
outstanding immediately prior to the Effective Time shall be automatically
converted into a total of (i) 4,000,000 shares of ADVI common stock, $.005 par
value per share ("ADVI Common Stock") and (ii) 3,500,000 shares of ADVI Series A
preferred stock, $0.10 par value per share ("ADVI Preferred Stock").
Certificates representing the shares of ADVI Common Stock and ADVI Preferred
2
Stock to be issued shall be delivered to the shareholders of ACLLC as listed on
Schedule 2.1 in exchange for the surrender to ADVI of certificates representing
all of the ACLLC common and preferred stock issued and outstanding. At the
Effective Time, all such shares of ACLLC common and preferred stock shall cease
to be outstanding and shall automatically be canceled and retired and shall
cease to exist.
Section 2.2 EXCHANGE OF CERTIFICATES; FURTHER ASSURANCES.
(a) EXCHANGE. ADVI shall deliver to the shareholders of ACLLC in accordance
with Schedule 2.1 certificates aggregating the number of shares of ADVI Common
Stock and ADVI Preferred Stock set forth in Section 2.1 and the shareholders of
ACLLC shall surrender to ADVI all certificates previously representing all
issued and outstanding shares of ACLLC common and preferred stock.
(b) NO FURTHER OWNERSHIP RIGHTS IN ACLLC CAPITAL STOCK. All shares of ADVI
Common Stock and ADVI Preferred Stock issued upon the surrender of ACLLC common
and preferred stock certificates in accordance with the terms of this Article II
shall be deemed to have been issued and paid in full satisfaction of all rights
pertaining to the shares of ACLLC stock theretofore represented by such
certificates.
(c) FURTHER ASSURANCES. If at any time after the Effective Time, any
further assignments or assurances in law or any other things are necessary or
desirable to vest or to perfect or confirm of record in the Surviving Company
the title to any property or rights of either ACLLC or Merger Sub, or otherwise
to carry out the purposes and provisions of this Agreement, the officers and
directors of the Surviving Company are hereby authorized and empowered, in the
name of and on behalf of ACLLC and Merger Sub, to execute and deliver any and
all things necessary or proper to vest or perfect or confirm title to such
property or rights in the Surviving Company, and otherwise to carry out the
purposes and provisions of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 REPRESENTATIONS AND WARRANTIES OF ACLLC. ACLLC represents
and warrants to ADVI as follows:
(a) ORGANIZATION AND STANDING OF ACLLC. ACLLC is a limited liability
duly organized and validly existing and in good standing under the laws of the
state of Nevada. ACLLC has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
is duly qualified to do business and in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its properties
makes such qualification necessary other than in such jurisdictions where the
failure to so qualify would not, either individually or in the aggregate, have a
material adverse effect on ACLLC. ACLLC has all requisite power and authority to
enter into this Agreement and to carry out and perform the terms and provisions
of this Agreement. ACLLC has no direct or indirect interest, either by way of
stock ownership or otherwise, in any other firm, corporation, association or
business. The copies of the certificate of incorporation and bylaws of ACLLC
which were
3
previously furnished to ADVI are true, complete and correct copies of such
documents as in effect on the date of this Agreement.
(b) AUTHORITY; NO CONFLICTS.
(i) The execution, delivery and performance of this Agreement
have been duly authorized by all requisite corporate action on the
part of ACLLC. This Agreement has been executed and delivered by ACLLC
and constitutes valid and binding obligations of ACLLC enforceable in
accordance with its terms (except as limited by bankruptcy,
insolvency, or other laws affecting the enforcement of creditors'
rights).
(ii) The execution and delivery of this Agreement by ACLLC does
not, and the consummation of the Merger pursuant to this Agreement and
the other transactions contemplated hereby will not, conflict with or
result in any violation of, or constitute a default (with or without
notice or lapse of time, or both) under, any provision of (A) the
certificate of incorporation or bylaws of ACLLC or (B) any loan or
credit agreement, note, mortgage, bond, indenture, lease, benefit plan
or other agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to ACLLC or any of its properties or
assets, except as would not have a material adverse effect on ACLLC,
subject to obtaining the Required Consents (defined below).
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental entity is
required by or is necessary with respect to ACLLC in connection with
its execution and delivery of this Agreement or the consummation of
the Merger and the other transactions contemplated thereby, except for
those required under or in relation to the corporate laws of Nevada
with respect to the filing of the Articles of Merger with the Nevada
Secretary of State, and such consents, approvals, and filings the
failure of which to make or obtain would not have a material adverse
effect on any party hereto. Consents, approvals, and filings required
under or in relation to any of the foregoing are referred to as the
"Required Consents."
(iv) Except as set forth in the ACLLC Disclosure Schedule, all
material contracts of ACLLC shall remain in full force and effect
following, and notwithstanding the consummation of, the Merger.
(c) CAPITALIZATION OF ACLLC AND INDEBTEDNESS FOR BORROWED MONEYS. ACLLC
members are duly and lawfully authorized by its articles of incorporation and
bylaws to issue membership interests and have the right to direct a class of
common membership and preferred membership interests. As of the date hereof
there are issued and outstanding 4 million units of common membership interests
and 3.5 million units of preferred membership interest. The issued and
outstanding membership interests are held by the ACLLC members identified in
Schedule 2.1. All the outstanding membership interests of ACLLC have been duly
4
authorized and validly issued and are fully paid and nonassessable and free of
preemptive rights. ACLLC has no treasury stock and no other authorized series or
class of stock or membership interests.
(d) ACLLC FINANCIAL STATEMENTS. ACLLC was organized solely for the
purpose of acquiring the assets of The MediaWorx, Inc., a subsidiary of Solar
Satellite Communication, Inc.(the "Purchase Transaction"). ACLLC has no other
activity. Therefore, ACLLC has no historical financial statement. A financial
statement will be created upon the completion of the purchase of such assets and
will be reflective of such transaction.
(e) PRESENT STATUS. As previously described, ACLLC has not incurred any
liabilities as it was organized solely for the Purchase Transaction..
(f) LITIGATION. As previously described, ACLLC has had no business
activity and has been organized solely for the Purchase Transaction. Therefore
it has conducted no buiness that would lead to legal action, suits, arbitration,
or other proceedings. .
(g) COMPLIANCE WITH THE LAW AND OTHER INSTRUMENTS. The business
operations of ACLLC have been and are being conducted in all material respects
in compliance with all applicable laws, rules, and regulations. ACLLC is not in
violation of, or in default under, any term or provision of its certificate of
incorporation or its bylaws or in any material respect of any lien, mortgage,
lease, agreement, instrument, order, judgment or decree.
(h) TITLE TO PROPERTIES AND ASSETS. ACLLC's assets will be those of the
assets of The MediaWorx, Inc. which it is acquiring in the Purchase
Transaction..
(i) RECORDS. To the best of ACLLC's knowledge, the books of account and
other records of ACLLC are complete and correct in all material respects, and
there have been no material transactions involving the business of ACLLC which
properly should have been set forth in such records, other than those set forth
therein.
(j) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since ACLLC has recently been
organized for the purpose of the Purchase Transaction there have been no
material adverse changes in its condition, financial or otherwise.
(k) TAXES. ACLLC has recently been organized for the purpose of the
Purchase Transaction and has not yet been required to fileany federal, state,
county, local and foreign income, franchise, excise, real and personal property
and other tax returns and reports (including, but not limited to, those relating
to social security, withholding, unemployment insurance and occupation (sales)
and use taxes) ACLLC has no liability for any amount of taxes, interest or
penalties of any nature whatsoever, except for those taxes which may have arisen
up to the Closing Date in the ordinary course of business and are properly
accrued on the books of ACLLC as of the Closing Date.
(l) ACLLC BENEFIT PLANS. ACLLC has no employee Benefit Plans subject to
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(m) FINDERS AND ADVISORS. There are no investment bankers, brokers,
finders or other intermediaries which have been retained by or are authorized to
act on
5
behalf of ACLLC who might be entitled to any fee or commission in connection
with the transactions contemplated by this Agreement.
(n) VOTE REQUIRED. The affirmative vote of the holders of 51% of the
outstanding membership interests of ACLLC (the "Required ACLLC Vote") is the
only vote of the members of ACLLC required to approve the Merger. ACLLC has
already obtained the Required ACLLC Vote as of the date of this Agreement.
(o) FULL DISCLOSURE. This Agreement and any schedules and certificates
delivered by ACLLC in connection herewith or with the transactions contemplated
hereby, taken as a whole, neither contain any untrue statement of a material
fact nor omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. To the best of ACLLC's knowledge,
there are no facts which (individually or in the aggregate) materially adversely
affect the business, prospects, assets, liabilities, financial condition or
operations of ACLLC that have not been set forth in this Agreement, the
schedules hereto or in other documents delivered by ACLLC in connection herewith
which ACLLC should reasonably recognize (i) are not known to ADVI, and (ii)
would if known be material to ADVI with respect to this Agreement and the
transactions provided for herein.
Section 3.2. REPRESENTATIONS AND WARRANTIES BY ADVI. Except as set
forth in the ADVI Disclosure Schedule attached to this Agreement as Schedule 3.2
(the "ADVI Disclosure Schedule") (each section of which qualifies the
correspondingly numbered representation and warranty or covenant to the extent
specified therein), ADVI hereby represents and warrants to ACLLC as follows:
(a) Organization and Standing of ADVI. ADVI is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Wyoming, has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, and is duly
qualified to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties make
such qualification necessary other than in jurisdictions where the failure to so
qualify would not, either individually or in the aggregate, be materially
adverse to ADVI. ADVI has all requisite power and authority to enter into this
Agreement and to carry out and perform the terms and provisions of this
Agreement. Any and all subsidiaries, other than Merger Sub, are deemed of no
value. To the extent that the Company may have ownership in such entities, it
will dissolve such ownership interest. The copies of the articles of
incorporation and bylaws of ADVI which were previously furnished to ACLLC are
true, complete and correct copies of such documents as in effect on the date of
this Agreement.
(b) Authority; No Conflicts.
(i) The execution, delivery and performance of this Agreement
have been duly authorized by all requisite corporate action on the
part of ADVI. This Agreement has been executed and delivered by ADVI
and constitutes a valid and binding obligation of ADVI enforceable in
accordance with its terms (except as limited by bankruptcy,
6
insolvency, or other laws affecting the enforcement of creditors'
rights).
(ii) The execution and delivery of this Agreement by ADVI does
not, and the consummation by ADVI of the Merger and the other
transactions contemplated hereby will not, conflict with or result in
a violation or constitute a default (with or without notice or lapse
of time, or both) under, any provision of (A) any provision of the
articles of incorporation or bylaws of ADVI, (B) any loan or credit
agreement, note, mortgage, bond, indenture, lease, benefit plan or
other agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to ADVI or any of its properties or
assets, except as would not be materially adverse to ADVI.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, a governmental entity is
required by or with respect to ADVI in connection with the execution
and delivery of this Agreement by ADVI or the consummation of the
Merger and the other transactions contemplated hereby, except for such
consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain would
not be materially adverse to ADVI.
(iv) Except as set forth in the ADVI Disclosure Schedule, all
material contracts of ADVI, if any, shall remain in full force and
effect following, and notwithstanding the consummation of, the Merger.
(c) CAPITALIZATION OF ADVI AND INDEBTEDNESS FOR BORROWED MONEYS. ADVI
is duly and lawfully authorized by its articles of incorporation to issue
150,000,000 shares of ADVI Common Stock, of which as of the date hereof there
are 224,305 shares issued and outstanding. All the outstanding shares of ADVI
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable and free of preemptive rights. ADVI is authorized by its articles
of incorporation to issue 4,000,000 shares of ADVI Preferred Stock, of which as
of the date hereof, there are no shares outstanding. ADVI has no other
authorized class of stock. Except with respect to this Agreement, ADVI is not
obligated to issue any additional capital stock or voting securities as a result
of any options, warrants, rights, conversion rights, obligations upon default,
subscription agreement or other obligation of any kind. ADVI is not presently
liable on account of any indebtedness for borrowed moneys.
(d) ADVI SEC REPORTS AND FINANCIAL STATEMENTS. ADVI is current with
all reports, schedules, forms, statements and other documents required to be
filed with the SEC (collectively, including all exhibits thereto, the "ADVI SEC
Reports") other than filings the failure of which to make would not be
materially adverse to ADVI. None of the ADVI SEC Reports, as of their respective
dates (and, if amended or superseded by filings prior to the date of this
Agreement or the Closing Date, then on the date of such filing), contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of the
financial statements (including the related notes) included in the ADVI SEC
7
Reports presents fairly, in all material respects, the financial position of
ADVI as of the respective dates or for the respective periods set forth therein,
all in accordance with GAAP consistently applied during the periods involved
except as otherwise noted therein. All of such ADVI SEC Reports, as of their
respective dates (and as of the date of any amendment to the respective ADVI SEC
Report), complied as to form in all material respects with the applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act")
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations promulgated thereunder.
(e) Present Status. From March 31, 2003 to the date of this Agreement,
ADVI has not incurred any liabilities that are of a nature that would be
required to be disclosed on a balance sheet of ADVI or the notes thereto
prepared in accordance with GAAP, other than liabilities incurred in the
ordinary course of business of ADVI and which do not have a material adverse
effect on ADVI.
(f) LITIGATION. There are no legal actions, suits, arbitrations, or
other legal or administrative proceedings pending or, to the knowledge of ADVI,
threatened against ADVI which are material to ADVI. ADVI is not in default of
any judgment, order or decree of any court or, in any material respect of, any
requirements of a government agency or instrumentality.
(g) COMPLIANCE WITH THE LAW AND OTHER INSTRUMENTS. The business
operations of ADVI have been and are being conducted in compliance in all
material respects with all applicable laws, rules, and regulations of all
authorities. ADVI is not in violation of, or in default under, any term or
provision of its articles of incorporation or its bylaws or in any material
respect of any lien, mortgage, lease, agreement, instrument, order, judgment or
decree.
(h) RECORDS. To the best of ADVI's knowledge, the books and other
records of ADVI are complete and correct in all material respects, and there
have been no material transactions involving the business of ADVI which properly
should have been set forth in such records, other than those set forth therein.
(i) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 2003
(i) there has not been any material adverse change in the condition (financial
or otherwise), properties, assets, liabilities or, to the best of ADVI's
knowledge, the present or prospective status of the business of ADVI, and (ii)
ADVI has not declared or paid any dividend or made any other distribution in
respect of any of its capital stock.
(j) TAXES. ADVI has duly filed all federal, state, county, local and
foreign income, franchise, excise, real and personal property and other tax
returns and reports (including, but not limited to, those relating to social
security, withholding, unemployment insurance, and occupation (sales) and use
taxes) required to have been filed by ADVI up to the date hereof.
(k) ADVI Benefit Plans. ADVI has no employee Benefit Plans subject to
ERISA.
(l) FINDERS AND ADVISORS. There are no investment bankers, brokers,
finders or other intermediaries which have been retained by or are authorized to
act on behalf of ADVI who might be entitled to any fee or commission in
connection with the transactions contemplated by this Agreement.
8
(m) VOTE REQUIRED. The affirmative vote of the holders of the
majority of the outstanding shares of Merger Sub common stock (the "Required
Merger Sub Vote") is the only vote of the shareholders of Merger Sub required to
approve the Merger. Merger Sub has already obtained the Required Merger Sub Vote
as of the date of this Agreement.
(n) FULL DISCLOSURE. To the best of ADVI's knowledge, this Agreement,
and any Schedules and certificates delivered by ADVI in connection herewith or
with the transactions contemplated hereby, taken as a whole, neither contain any
untrue statement of a material fact nor omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. To the
best of ADVI's knowledge, there are no facts which (individually or in the
aggregate) materially adversely affect the business, prospects, assets,
liabilities, financial condition or operations of ADVI that have not been set
forth in this Agreement, the Schedules hereto, the ADVI SEC Reports or in other
documents delivered by ADVI in connection herewith which ADVI should reasonably
recognize (i) are not known to ACLLC, and (ii) would if known be material to
ACLLC with respect to this Agreement and the transactions provided for herein.
Section 3.3. REPRESENTATIONS AND WARRANTIES OF ADVI AND MERGER SUB.
ADVI and Merger Sub represent and warrant to ACLLC as follows:
(a) ORGANIZATION AND STANDING OF MERGER SUB. Merger Sub is a limited
liability company duly incorporated, validly existing and in good standing under
the laws of the State of Nevada. Merger Sub is a wholly owned subsidiary of
ADVI.
(b) AUTHORITY. Merger Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Merger Sub of
this Agreement and the consummation by Merger Sub of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Merger Sub. This Agreement has been duly executed and delivered
by Merger Sub and constitutes a valid and binding agreement of Merger Sub,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors generally.
(c) NON-CONTRAVENTION. The execution, delivery and performance by
Merger Sub of this Agreement and the consummation by Merger Sub of transactions
contemplated hereby do not and will not contravene or conflict with the articles
of incorporation or bylaws of Merger Sub.
(d) NO BUSINESS ACTIVITIES BY MERGER SUB. Merger Sub has not
conducted any activities other than in connection with the organization of
Merger Sub, the negotiation and execution of this Agreement and the consummation
of the transactions contemplated hereby.
9
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1. COVENANTS OF ACLLC. During the period from the date of
this Agreement and continuing until the Effective Time, ACLLC or as otherwise
indicated on the ACLLC Disclosure Schedule or as required by a governmental
entity of competent jurisdiction or to the extent that ADVI shall otherwise
consent in writing) will:
(a) Conduct its affairs and business only in the ordinary course of
business;
(b) Not create or incur any material liabilities other than current
liabilities incurred in the ordinary course of business;
(c) Not create or incur, or suffer to exist, any mortgage, lien,
pledge, hypothecation, charge, encumbrance, or restriction of any kind which is
not otherwise disclosed in this Agreement;
(d) Not make any capital expenditures, or capital additions or
betterment, except as many be involved in ordinary repairs, maintenance, and
replacement;
(e) Not enter into any contract or commitment, except in the ordinary
course of business;
(f) Maintain its assets and properties in good condition and repair,
and not sell, or otherwise dispose of, any of its material assets or properties,
except sales in the ordinary course of business;
(g) Not declare or pay any dividend on, or make any other distribution
upon, or purchase, retire, or redeem, any shares of its common stock, or set
aside any funds for any such purpose;
(h) Not issue or sell, or obligate itself to issue or sell any
additional shares of its common or preferred stock, whether or not such shares
have been previously authorized or issued, or issue or sell any warrants,
rights, or options to acquire any such shares, or acquire any stock of any
corporation or any interest in any business enterprise;
(i) Not amend its certificate of incorporation or bylaws;
(j) Not discharge or satisfy any material lien, charge, or encumbrance,
nor pay any obligation or liability, absolute or contingent, except (i) current
liabilities shown on ACLLC's Financial Statements or current liabilities
incurred since the date of ACLLC's Financial Statements in the ordinary course
of business, and (ii) expenses incurred in connection with the transactions
contemplated by this Agreement (including, without limitation, reasonable
attorneys' fees, accounting fees, and costs);
(k) Use reasonable commercial efforts to preserve its business
organization intact;
10
(l) Use reasonable commercial efforts to preserve the goodwill of its
suppliers, customers, and those having business relations with it;
(m) Except with respect to this transaction, not merge or consolidate,
or obligate itself to do so, with, or into any other entity;
(n) Not enter into any transactions, or take any acts which if effected
or performed prior to the date of this Agreement, would constitute a breach of
the representations, warranties, and agreements contained herein; and
(o) Not institute, settle, or agree to settle any action or proceeding
before any court or governmental body.
Section 4.2. COVENANTS OF ADVI AND MERGER SUB. During the period from
the date of this Agreement and continuing until the Effective Time, ADVI and
Merger Sub (except as expressly contemplated or permitted by this Agreement or
as otherwise indicated on the ADVI Disclosure Schedule or as required by a
governmental entity of competent jurisdiction or to the extent that ACLLC shall
otherwise consent in writing) will each:
(a) Conduct its affairs and business only in the ordinary course of
business;
(b) Not create or incur any liabilities other than current liabilities
incurred in the ordinary course of business;
(c) Not create or incur, or suffer to exist, any mortgage, lien,
pledge, hypothecation, charge, encumbrance, or restriction of any kind;
(d) Not make any capital expenditures or capital additions or
betterment except as many be involved in ordinary repairs, maintenance, and
replacement;
(e) Not enter into any contract or commitment, except in the ordinary
course of business;
(f) Not declare or pay any dividend on or make any other distribution
upon, or purchase, retire or redeem, any shares of ADVI Common Stock or ADVI
Preferred Stock, or set aside any funds for any such purpose other than for
purposes of consummation of this Agreement or with the express written consent
of ACLLC;
(g) Except as necessary to accomplish the transactions contemplated
herein, not amend its articles of incorporation or bylaws;
(h) Not issue or sell, or obligate itself to issue or sell any
additional shares of its common or preferred stock, whether or not such shares
have been previously authorized or issued, or issue or sell any warrants,
rights, or options to acquire any such shares, or acquire any stock of any
corporation or any interest in any business enterprise;
(i) Not pay, or agree to pay, conditionally or otherwise, any bonus,
extra compensation, pension, or severance pay to any director, stockholder,
officer, consultant, agent, or employee under any pension plan or otherwise, or
11
increase the compensation paid by it to any officer, director, agent,
consultant, or employee other than the expenses in connection with the Merger
and the transactions contemplated herein. Not enter into any transactions, or
take any acts which if effected or performed prior to the date of this
Agreement, would constitute a breach of the representations, warranties, and
agreements contained herein
(j) Not institute, settle, or agree to settle any action or proceeding
before any court or governmental body.
Section 4.3. ADVICE OF CHANGES; GOVERNMENTAL FILINGS. Each party shall
keep the other parties apprised of any material adverse change with respect to
the operation and conduct of its business prior to the Closing Date. ADVI shall
file all reports required to be filed with the SEC and any other governmental
entities between the date of this Agreement and the Effective Time and shall
deliver to ACLLC copies of all such reports promptly after the same are filed.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1. DUE DILIGENCE. Each party shall provide the others with
adequate opportunity to conduct such reviews and examinations of the business,
properties and conditions (financial and otherwise) of the others as each party
shall deem prudent, provided that such investigations shall not interfere
unreasonably with the normal operations of the party being reviewed.
Section 5.2. COMMERCIALLY REASONABLE EFFORTS.
(a) Subject to the terms and conditions of this Agreement, each party
will use its commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the Merger and the
other transactions contemplated by this Agreement as soon as practicable after
the date hereof.
(b) In furtherance and not in limitation of the covenants of the
parties contained in Section 5.3(a), if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement, each of the parties shall cooperate in all respects with each other
and use its respective commercially reasonable efforts to contest and resist any
such action or proceeding and to have vacated, lifted, reversed or overturned
any decree, judgment, injunction or other order, whether temporary, preliminary
or permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement.
Section 5.3. RESTRICTIONS ON TRANSFER OF ADVI STOCK. The ADVI Common
Stock and the ADVI Preferred Stock to be issued to the shareholders of ACLLC
listed on Schedule 2.1 are not registered under the Securities Act and are being
issued pursuant to an exemption from registration. The certificates representing
the shares of ADVI Common Stock and ADVI Preferred Stock to be issued to the
12
shareholders of ACLLC pursuant to this Agreement shall be stamped or otherwise
imprinted with a legend substantially similar to the following:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND
ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE
144 OF THE ACT. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD
OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
Section 5.4. EXPENSES. Each party shall be responsible for its own
expenses including, but not limited to, legal and accounting fees, incurred with
respect to this Agreement and the transactions provided for herein.
Section 5.5. REORGANIZATION. Each party shall each use commercially
reasonable efforts to cause the Merger to be treated as a reorganization within
the meaning of Section 368(a) of the Code. From and after the date of this
Agreement and after the Effective Time, each party shall use its commercially
reasonable efforts to cause the Merger to qualify as such and shall not
knowingly take any actions or cause any actions to be taken which could prevent
the Merger from qualifying as a reorganization under the provisions of Section
368(a) of the Code.
Section 5.6. CONTINUITY OF BUSINESS. Following the Merger, ADVI intends
to cause the Surviving Corporation to continue to a significant extent the
historic business of ACLLC or to use a significant portion of the historic
business assets of ACLLC in the business substantially the same as the business
conducted by ACLLC prior to the Closing.
Section 5.7. NASDAQ LISTING. ADVI shall make appropriate notice to the
SEC regarding the Merger.
Section 5.8. 144 OPINIONS. Any time after the Effective Date, ADVI
shall promptly, upon request of any shareholder holding ADVI stock
certificate(s) containing a Rule 144 legend, issue or have issued necessary
opinions and instructions to the transfer agent to permit removal of such legend
from the stock certificate(s) as may be requested in accordance with Rule 144.
The requesting shareholder shall be required to pay any reasonable expenses of
such removal including attorney's fees for the necessary opinions.
Notwithstanding anything to the contrary herein, for purposes of this Section
5.10, shareholders requesting 144 legend removal shall be deemed to be third
party beneficiaries under this Agreement and the provisions of this Section 5.10
shall survive any termination of this Agreement.
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Section 5.9. ADVI BOARD OF DIRECTORS. At the Effective Time, ADVI shall
cause the Board of Directors of ADVI to consist of Gary L. Cain, Bruce M.
Arinaga, Linda Broenniman, and Edward Broenniman.
Section 5.10. ACLLC OPTIONS AND WARRANTS. At the Effective Time, ADVI
shall cause the Board of Directors to take all actions necessary and proper to
convert the ACLLC Options and Warrants to rights in ADVI Common Stock pursuant
to any of the agreements, contracts or plans governing the ACLLC Options and
Warrants.
ARTICLE VI
INDEMNIFICATION
Section 6.1. INDEMNIFICATION. Each party agrees to and shall defend,
indemnify and hold harmless each of the other parties and each of the other
parties' stockholders, officers, directors, employees, counsel, agents,
successors, assigns and legal representatives (each of the other parties and
such other persons collectively referred to as the "Indemnified Persons") from
and against, and shall reimburse the Indemnified Persons for, each and every
Loss (defined in Section 9.9(c)) paid, imposed on or incurred by the Indemnified
Persons, or any claim by a third party against an Indemnified Person, resulting
from or arising out of any inaccuracy in any representation or warranty of the
Indemnifying Party (defined below) under this Agreement, the Disclosure or other
schedules hereto, or any certificate delivered or to be delivered by the
Indemnifying Party pursuant hereto.
Section 6.2. NOTICE AND DEFENSE OF THIRD-PARTY CLAIMS. If any
proceeding shall be brought or asserted under this Article against an
Indemnified Person in respect of which indemnity may be sought under this
Article from another party or any successor thereto (the "Indemnifying Party"),
the Indemnified Person shall give prompt written notice of such proceeding to
the Indemnifying Party who shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Person and the
payment of all expenses; provided, that any delay or failure to so notify the
Indemnifying Party shall relieve the Indemnifying Party of its obligations
hereunder only to the extent, if at all, that the Indemnifying Party is
prejudiced by reason of such delay or failure. In no event shall any Indemnified
Person be required to make any expenditure or bring any cause of action to
enforce the Indemnifying Party's obligations and liability under and pursuant to
the indemnifications set forth in this Article. Actual or threatened action is
not a condition or prerequisite to the Indemnifying Party's obligations under
this Article.
Section 6.3. EXCLUSIVITY. After the Effective Time, the provisions of
this Article shall be the exclusive basis for the assertion of claims by or
imposition of liability on the parties hereto arising under or as a result of
this Agreement; provided, however, nothing herein shall preclude a party from
asserting a claim for equitable non-monetary remedies.
Section 6.4. WAIVER OF CONSEQUENTIAL DAMAGES. With respect to any and
all Losses for which indemnification may be available, each party hereby
expressly waives any consequential and punitive damages with respect to a claim
against the Indemnifying Party; provided, however, that this waiver shall not
14
apply to the extent such consequential or punitive damages are awarded in a
proceeding brought or asserted by a third party against an Indemnified Person.
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. Except as may be waived in writing by the parties, all of the
obligations of the parties under this Agreement are subject to the fulfillment,
prior to or at the Closing, of each of the following conditions:
(a) SHAREHOLDER APPROVAL. ACLLC shall have obtained the Required ACLLC
Vote and Merger Sub shall have obtained the Required Merger Sub Vote in
connection with the approval of the Merger.
(b) NO INJUNCTIONS, RESTRAINTS OR ILLEGALITY. No laws shall have been
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other governmental
entity of competent jurisdiction shall be in effect, having the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger,
provided, however, that the provisions of this Section 7.1(b) shall not be
available to any party whose failure to fulfill its obligations pursuant to
Section 5.3 shall have been the cause of, or shall have resulted in, such order
or injunction.
Section 7.2 ADDITIONAL CONDITIONS OF OBLIGATIONS TO ADVI. The
obligations of ADVI to effect the Merger are subject to the satisfaction of, or
waiver by ADVI, or or prior to the Closing Date of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of ACLLC set forth in Sections 3.1 shall be true and correct in all material
respects as of the Closing Date as if made on the Closing Date subject to any
changes contemplated by this Agreement.
(b) PERFORMANCE OF OBLIGATIONS OF ACLLC. ACLLC shall have performed or
complied in all material respects with all agreements and covenants required to
be performed by it under this Agreement at or prior to the Closing Date.
( c) NO ACLLC SHAREHOLDER LITIGATION. There shall be no legal actions,
suits, arbitrations or other proceedings brought by one or more shareholder of
ACLLC pending or threatened by which the Merger could be materially delayed or
prevented.
(d) CERTIFICATE OF OFFICER. ACLLC shall have delivered to ADVI
certificates dated as of the Closing Date, and verified by the oath of its
president, certifying to the fulfillment of the conditions specified in
subsections (a), (b) and (c) of this Section 7.2.
Section 7.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF ACLLC. The
obligations of ACLLC to effect the Merger are subject to the satisfaction of, or
waiver by ACLLC, on or prior to the Closing Date of the following conditions:
15
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of ADVI set forth in Section 3.2 and the representations and warranties of ADVI
and Merger Sub set forth in Section 3.3 shall be true and correct in all
respects as of the Closing Date as if made on the Closing Date, subject to any
changes contemplated by this Agreement.
(b) PERFORMANCE OF OBLIGATIONS OF ADVI. ADVI shall have performed or
complied in all material respects with all agreements and covenants required to
be performed by it under this Agreement at or prior to the Closing Date.
( c) CERTIFICATE OF OFFICER. ADVI shall have delivered to ACLLC a
certificate dated as of the Closing Date and verified by the oath of its
president certifying to the fulfillment of the conditions specified in
subsections (a) and (b) of this Section 7.3.
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.1. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time whether before or after approval of the Merger by
the shareholders of ACLLC, as follows:
(a) by mutual written consent of ADVI, Merger Sub and ACLLC, by action
of their respective Boards of Directors;
(b) by ACLLC or by ADVI if the Effective Time shall not have occurred
on or before June 30, 2003 (the "Termination Date"); provided, however, that the
right to terminate this Agreement under this Section 8.1(b) shall not be
available to a party whose failure to fulfill any obligation under this
Agreement (including without limitation Section 5.3) has to any extent been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before the Termination Date;
(c) By ADVI if there has been a material breach of a representation,
warranty, covenant or agreement contained in this Agreement on the part of
ACLLC, and as a result of such breach the conditions precedent set forth in
Section 7.1 or Section 7.2, as the case may be, would not then be satisfied;
provided, however, that if such breach is curable by ACLLC through the exercise
of commercially reasonable efforts within the earlier of (i) thirty days from
the receipt of notice of breach by ACLLC from ADVI or (ii) July 31, 2003, then
for so long as ACLLC continues to exercise such commercially reasonable efforts,
ADVI may not terminate this Agreement under this Section 8.1(c) unless the
breach is not cured in full within such time period; and
(d) By ACLLC if there has been a material breach of a representation,
warranty, covenant or agreement contained in this Agreement on the part of ADVI,
and as a result of such breach the conditions precedent set forth in Section 7.1
or Section 7.3, as the case may be, would not then be satisfied; provided,
however, that if such breach is curable by ADVI through the exercise of
commercially reasonable efforts within the earlier of (i) thirty days from
receipt of notice of breach by ADVI from ACLLC or (ii) July 31, 2003, then for
so long as ADVI continues to exercise such commercially reasonable efforts,
16
ACLLC may not terminate this Agreement under this Section 8.1(d) unless the
breach is not cured in full within such time period.
Section 8.2. EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by ACLLC or by ADVI
as provided in Section 8.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of ADVI or ACLLC or their
respective employees, officers, directors or counsel, except with respect to
this Section 8.2.
(b) If ADVI shall terminate this Agreement pursuant to Section 8.1(c)
and prior to such termination ACLLC shall have breached (and not cured as
provided therein) any of its representations, warranties, covenants, or
agreements set forth in this Agreement, ADVI may elect to require ACLLC to pay
to it the sum of $50,000 (the "Termination Fee") or it may elect (i) in lieu of
the Termination Fee, to exercise its legal right to assert a claim for damages
against ACLLC with respect to such breach, or (ii) to complete the Closing, if
all other conditions thereto have been met in accordance with Article VII, and
rely upon the indemnification provisions of Article VI with respect to such
breach. ACLLC acknowledges that ADVI will have incurred significant costs and
will have invested significant amounts of time and resources investigating and
negotiating the Merger, and agrees that the Termination Fee constitutes, if
applicable, reasonable liquidated damages in light of the anticipated or actual
harm to ADVI that would be caused by a termination subject to this Section
8.2(b).
(c) If ACLLC shall terminate this Agreement pursuant to Section 8.1(d)
and prior to such termination ADVI shall have breached (and not cured as
provided therein) any of its representations, warranties, covenants, or
agreements set forth in this Agreement, ACLLC may elect to require ADVI to pay
to it the Termination Fee or it may elect (i) in lieu of the Termination Fee, to
exercise its legal right to assert a claim for damages against ADVI with respect
to such breach, or (ii) to complete the Closing, if all other conditions thereto
have been met in accordance with Article VII, and rely upon the indemnification
provisions of Article VI with respect to such breach. ADVI acknowledges that
ACLLC will have incurred significant costs and will have invested significant
amounts of time and resources investigating and negotiating the Merger, and
agrees that the Termination Fee, if applicable, constitutes reasonable
liquidated damages in light of the anticipated or actual harm to ACLLC that
would be caused by a termination subject to this Section 8.2(c).
(d) Any payment required to be made pursuant to Sections 8.2(b) or (c)
shall be made by wire transfer not later than ten business days after first due.
Notwithstanding anything to the contrary in this Agreement, the provisions of
this Section 8.2 shall survive any termination of this Agreement.
Section 8.3. AMENDMENT. This Agreement may be amended by the parties,
by action taken or authorized by their respective Boards of Directors, at any
time but no amendment shall be made which by law requires approval by
shareholders of ACLLC or ADVI. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties.
17
Section 8.4. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties, (ii)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto and (iii) waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in a
written instrument signed by that party. The failure of a party to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
ARTICLE IX
MISCELLANEOUS
Section 9.1. NATURE OF REPRESENTATIONS AND WARRANTIES; SURVIVAL. The
representations and warranties of the parties under this Agreement shall survive
for a period of one year from the Closing Date.
Section 9.2. COUNTERPARTS AND FACSIMILE SIGNATURES. In order to
facilitate the execution of this Agreement, the same may be executed in any
number of counterparts and signature pages may be delivered by telefax, with
original executed signature pages to be furnished promptly thereafter.
Section 9.3. ASSIGNMENT. Neither this Agreement nor any right created
hereby shall be assignable by any party without the prior written consent of the
other parties. Other than as provided in Section 5.10, nothing in this
Agreement, express or implied, is intended to confer upon any person, other than
the parties hereto and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
Section 9.4. ENTIRE AGREEMENT. This Agreement, the schedules and
exhibits hereto, and the other documents delivered hereunder constitute the full
and entire understanding and agreement among the parties with regard to the
subject hereof and no party shall be liable or bound to any other in any manner
by any representations, warranties, covenants or agreements except as
specifically set forth herein. All prior agreements and understandings are
superseded by this Agreement and the schedules and exhibits hereto.
Section 9.5. GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Nevada.
Section 9.6. SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 9.7. NOTICES. Any notice, communication, request, reply or
advice, hereinafter severally and collectively called "notice," in this
Agreement provided or permitted to be given, made or accepted by a party to
another must be in writing and may be given by personal delivery or U.S. mail or
confirmed telefax. If given by mail, such notice must be sent by registered or
certified mail, postage prepaid, mailed to the party at the respective address
18
set forth below, and shall be effective only if and when received by the party
to be notified. For purposes of notice, the addresses of the parties shall,
until changed as hereinafter provided, be as follows:
If to ADVI and/or Merger Sub:
Gary L. Cain
24165 IH 10 West, Suite 217125
San Antonio, Texas 78217
Telefax: (210) 697-8899
With a copy to:
Carl Duncan Esquire
5718 Tanglewood Drive
Bethesda, MD 20817
If to ACLLC:
Power House Management Group, Inc.
Gary L. Cain
24165 IH 10 West, Suite 217125
San Antonio, Texas 78217
Telefax: (210) 697-8899
With copies to:
Linda Broenniman
The MediaWorx, Inc.
1895 Preston White Drive
Suite 250
Reston, Virginia 20191
Telefax: (703)860-4450
or at such other address or telefax number as any party may have advised the
others in writing.
Section 9.8. ATTORNEY FEES. In the event any party hereto institutes a
proceeding against any other party hereto for a claim arising out of or to
enforce this Agreement, the parties agree that the judge in any such proceeding
shall be entitled to determine the extent to which any party shall pay the
reasonable attorneys' fees incurred by the other party in connection with such
proceeding, which determination shall take into consideration the outcome of
such proceeding and such other factors as the judge may determine to be
equitable in the circumstances.
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Section 9.9. CERTAIN DEFINITIONS.
(a) "Person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(b) "Knowledge" means (i) with respect to ACLLC, the actual conscious
knowledge of the officers of ACLLC, and (ii) with respect to ADVI, the actual
conscious knowledge of Gary L. Cain.
(c) "Loss" means any loss, damage, injury, diminution in value,
liability, claim, demand, proceeding, judgment, punitive damage, fine, penalty,
tax, cost or expense (including reasonable costs of investigation and the fees,
disbursements and expenses of attorneys, accountants and other professionals
incurred in proceedings, investigations or disputes involving third parties,
including governmental agencies).
[SPACE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, this Agreement is hereby duly executed by each
party hereto as of the date first written above.
ADVI MERGER SUB
ADVANCED GAMING TECHNOLOGY, INC. MEDIA WORX ACQUISITION COMPANY LLC
By: _________________________ By: __________________________
Bruce M. Arinaga Gary L. Cain,
Its President Its President
ACLLC
ADVANCED CAPITAL LLC
By: __________________________
Gary L. Cain
Its President
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SCHEDULE 2.1
ACLLC MEMBERS
NAME UNITS OF MEMBERSHIP INTERESTS
---- -----------------------------
Diamond Capital LLC 2,000,000
Quest Capital Resources LLC 2,000,000
TOTAL COMMON MEMBERSHIP INTERESTS 4,000,000
Diamond Capital LLC 1,750,000
Quest Capital Resources LLC 1,750,000
TOTAL PREFERRED MEMBERSHIP INTERSTS 3,500,000