EXHIBIT C
MERGER AGREEMENT
AGREEMENT AND PLAN OF MERGER
by and
among
Advanced ID Corporation,
a South Dakota corporation,
AIDO Acquisition, Inc.,
a Hawaii corporation
and
UNIVERSAL PET CARE, INC.
a Hawaii corporation
LIST OF SCHEDULES AND EXHIBITS
TO
AGREEMENT AND PLAN OF MERGER
SCHEDULES
Company Disclosure Schedule
Schedule 4.2(d) UPCI Financial Statements
Schedule 4.2(i) UPCI Legal Proceedings
Schedule 4.2(g) UPCI Liabilities
Schedule 4.2(m) UPCI Absence of Certain Changes or
Events
Schedule 4.2(n) UPCI Compliance with Law
EXHIBITS
Exhibit 2.2(a) Escrow Agreement
Exhibit 6.1(a) Company Certified Resolutions
Exhibit 6.1(b) Opinion of Counsel to the Company
Exhibit 6.1(c) Opinion of Special Securities Counsel to
Company re Rule 504
Exhibit 6.1(d) Company's Instruction Letter to Transfer
Agent
Exhibit 6.1(e) Acquisition Certified Resolutions
Exhibit 6.1(f) Company Officer's Certificate
Exhibit 6.1(h) Acquisition Officer's Certificate
Exhibit 6.2(a) UPCI Certified Resolutions
Exhibit 6.2(b) Opinion of UPCI counsel
Exhibit 6.2(c) Opinion of Special Securities Counsel to
UPCI re Rule 504
Exhibit 6.2(e) UPCI Officer's Certificate
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
January 20, 2004, by and among Advanced ID Corporation, a South Dakota
corporation (the "Company"), AIDO Acquisition, Inc., a (Hawaii)
corporation ("Acquisition") and Universal Pet Care, Inc., a Hawaii
corporation ("UPCI").
RECITALS
WHEREAS, the Company and UPCI desire to merge Acquisition with and
into UPCI whereby UPCI shall be the surviving entity pursuant to the
terms and conditions set forth herein and whereby the transaction is
intended to qualify as a tax free reorganization pursuant to Section
368(a) of the Internal Revenue Code of 1986, as amended (the "IRC"), to
the extent permitted by applicable law;
WHEREAS, in furtherance of such combination, the Boards of
Directors of the Company, Acquisition and UPCI have each approved the
merger of Acquisition with and into UPCI (the "Merger"), upon the terms
and subject to the conditions set forth herein, in accordance with the
applicable provisions of the Hawaii Revised Statutes (the "HRS").
WHEREAS, the stockholder of UPCI desires to exchange all of its shares
of the capital stock of UPCI (the "UPCI Capital Stock") for shares of
the capital stock of the Company (the "Company Capital Stock") as a tax
free reorganization pursuant to Section 368(a) of the IRC, to the
extent permitted by applicable law;
WHERAS, just prior to the Merger, UPCI's 1 percent Convertible
Debentures Due January 20, 2009 in the aggregate principal amount of
Nine Hundred Ninety Five Thousand Five Hundred Dollars ($995,500) (the
"UPCI First Debenture") and UPCI's 1 percent Convertible Debenture Due
January 20, 2009 in the principal amount of Four Thousand Five Hundred
Dollars ($4,500) (the "UPCI Second Debenture" and, together with the
UPCI First Debenture, the "UPCI Debentures") are convertible into
shares of UPCI common stock, par value $1.00 (the "UPCI Common Stock")
pursuant to the terms of the UPCI Debentures and the Purchase Agreement
(as defined below) and upon the consummation of the Merger will be
convertible into an equivalent number of shares of the Company's common
stock, par value $0.01 per share (the "Company Common Stock") (the
"Company Underlying Shares");
WHEREAS, upon the effectiveness of the Merger and pursuant to the
terms of this Agreement and the Purchase Agreement, the Company
Underlying Shares will be substituted for the UPCI Underlying Shares,
the Company will assume the obligations, jointly and severally, with
UPCI under the UPCI Debentures and the Company will assume the
obligations of UPCI under that certain Convertible Debenture Purchase
Agreement dated even date herewith between UPCI and HEM Mutual
Assurance LLC ("HEM") (the "Purchase Agreement") and UPCI will be
released from certain of such obligations; and
WHEREAS, all defined terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Purchase
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally
bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as hereinafter defined)
and subject to and upon the terms and conditions of this Agreement and
the HRS, Acquisition shall be merged with and into UPCI pursuant to the
Merger. Following the Merger, UPCI shall continue as the surviving
corporation (the "Surviving Corporation") and the separate corporate
existence of Acquisition shall cease. As part of the Merger and as
more fully described in Section 2.1, (i) the (One Thousand (1,000))
issued and outstanding shares of the UPCI Common Stock shall be
exchanged for Company Common Stock at the Exchange Ratio (as defined
below) and (ii) each share of Acquisition's issued and outstanding
shares of common stock, par value ($.01) per share (the "Acquisition
Common Stock"), shall be converted into one validly issued, fully paid
and non-assessable share of common stock, (par value $.01,) of the
Surviving Corporation (the "Surviving Corporation Common Stock").
1.2 Effective Time. The Merger shall be consummated as promptly
as practicable after satisfaction of all conditions to the Merger set
forth herein, by filing with the Secretary of State of the State of
(Hawaii) a certificate of merger or similar document (the "Certificate
of Merger"), and all other appropriate documents, executed in
accordance with the relevant provisions of the HRS. The Merger shall
become effective upon the filing of the Certificate of Merger with the
Secretary of State of (Hawaii). The time of such filing shall be
referred to herein as the "Effective Time."
1.3 Effects of the Merger. At the Effective Time, all the
rights, privileges, immunities, powers and franchises of Acquisition
and UPCI and all property, real, personal and mixed, and every other
interest of, or belonging to or due to each of Acquisition and UPCI
shall vest in the Surviving Corporation, and all debts, liabilities,
obligations and duties of Acquisition and UPCI, including, without
limitation, the performance of all obligations and duties of UPCI
pursuant to the Purchase Agreement, the UPCI Debentures and the
exhibits, schedules and all documents executed in connection therewith
or any other Transaction Document (as defined in the Purchase
Agreement), shall become the debts, liabilities, obligations and duties
of the Surviving Corporation (except as assumed by the Company) without
further act or deed, all in the manner and to the full extent provided
by the HRS. Whenever a conveyance, assignment, transfer, deed or other
instrument or act is necessary to vest any property or right in the
Surviving Corporation, the directors and officers of the respective
constituent corporations shall execute, acknowledge and deliver such
instruments and perform such acts, for which purpose the separate
existence of the constituent corporations and the authority of their
respective directors and officers shall continue, notwithstanding the
Merger.
1.4 Certificate of Incorporation. The Certificate of
Incorporation of UPCI, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving
Corporation and thereafter may be amended or repealed in accordance
with its terms and applicable law.
1.5 By-Laws. At the Effective Time and without any further
action on the part of Acquisition and UPCI, the By-laws of UPCI shall
be the By-laws of the Surviving Corporation and thereafter may be
amended or repealed in accordance with their terms or the Certificate
of Incorporation of the Surviving Corporation and as provided by law.
1.6 Directors. The directors of Acquisition at the Effective
Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
1.7 Officers. The officers of Acquisition at the Effective Time
shall be the officers of the Surviving Corporation, until the earlier
of their resignation or removal or until their respective successors
are duly appointed and qualified, as the case may be.
1.8 Tax-Free Reorganization. The parties intend that the Merger
shall be treated as a tax-free reorganization pursuant to Section
368(a) of the IRC, to the extent permitted by applicable law.
ARTICLE II
CONVERSION OF UPCI SHARES AND ASSUMPTION OF UPCI DEBENTURES
2.1 Conversion and Cancellation of UPCI Common Stock. As of the
Effective Time, by virtue of the Merger and without any action on the
part of the Company, Acquisition or UPCI or the holders of any shares
of the capital stock of Acquisition or UPCI:
(a) Subject to the provisions of Sections 2.4 and 2.5, each
share of UPCI Common Stock (the "UPCI Common Stock Shares") issued and
outstanding immediately prior to the Effective Time (other than shares
canceled in accordance with Section 2.1(b) and other than with respect
to the escrow shares deposited by UPCI with the Escrow Agent (as
defined below) in accordance with the Purchase Agreement (the "UPCI
Escrow Shares") which shall be automatically cancelled and replaced
with an equal number of Company Escrow Shares in accordance with
Section 2.2, shall be converted into (0.10) (the "Exchange Ratio") of a
validly issued, fully paid and nonassessable share of Company Common
Stock (the "Company Common Stock Shares"). As of the Effective Time,
each UPCI Common Stock Share shall no longer be outstanding and shall
automatically be canceled and cease to exist, and each holder of a
certificate representing any UPCI Common Stock Share shall cease to
have any rights with respect thereto other than the right to receive
Company Common Stock Shares to be issued in consideration therefore
upon the surrender of such certificate, properly endorsed to the
Company.
(b) Each share of UPCI Capital Stock held in the treasury of
the UPCI and each share of UPCI Capital Stock owned by Acquisition or
Company shall be canceled without any conversion thereof and no
payment, distribution or other consideration shall be made with respect
thereto.
(c) Each issued and outstanding share of Acquisition Common
Stock shall be converted into one validly issued, fully paid and
nonassessable share of Surviving Corporation Common Stock.
2.2 Escrow Materials. (a) At the Post-Closing, the Company
shall deposit into escrow with Gottbetter & Partners, LLP, as escrow
agent (the "Escrow Agent") the following, which are hereinafter
collectively referred to as the "Escrow Materials," (i) the escrow
agreement annexed hereto and made a part hereof as Exhibit 2.2(a) (the
"Escrow Agreement"), (ii) certificates representing Fifty Million
(50,000,000) shares of duly issued Company Common Stock, without
restriction and freely tradable pursuant to Rule 504 of Regulation D of
the Securities Act (the "Company Escrow Shares"), in share
denominations specified by the Purchaser, registered in the name of the
Purchaser and/or its assigns; and (iii) a power of attorney with
respect to the Company Underlying Shares and the Company Escrow Shares,
in the form annexed to the Escrow Agreement as Appendix I. At the
Post-Closing, upon the Company fulfilling its obligations under this
Section 2.2, Escrow Agent shall release to the Company the UPCI Escrow
Shares cancelled in accordance with Section 2.1. The Escrow Materials
shall be held in escrow in accordance with the Escrow Agreement. The
Escrow Materials shall be released from escrow only in accordance with
this Section 2.2, the Purchase Agreement the UPCI Debentures and the
Escrow Agreement.
(b)Upon the effectiveness of the Merger and in accordance with
Section 2.7 hereof, the Company shall substitute the Company Underlying
Shares and the Company Escrow Shares for the UPCI Underlying Shares and
the UPCI Escrow Shares with regard to all of the rights and
obligations, specifically including the conversion rights, under the
UPCI Debentures, and the UPCI Escrow Shares shall be cancelled.
(Intentionally left blank).
2.4 Adjustment of the Exchange Ratio. In the event that, prior to
the Effective Time, any stock split, combination, reclassification or
stock dividend with respect to the Company Common Stock or UPCI Common
Stock, any change or conversion of Company Common Stock or UPCI Common
Stock or into other securities or any other dividend or distribution
with respect to the Company Common Stock or UPCI Common Stock (other
than regular quarterly dividends) should occur or, if a record date
with respect to any of the foregoing should occur, appropriate and
proportionate adjustments shall be made to the Exchange Ratio, and
thereafter all references to an Exchange Ratio shall be deemed to be to
such Exchange Ratio as so adjusted.
2.5 No Fractional Shares. No certificates or scrip representing
fractional shares of Company Common Stock shall be issued upon the
surrender for exchange of certificates and such fractional share shall
not entitle the record or beneficial owner thereof to vote or to any
other rights as a stockholder of the Company. The number of shares of
Company Common Stock to be issued shall be rounded up to the nearest
whole share.
2.6 Further Assurances. If at any time after the Effective Time
the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things
are necessary, desirable or proper (a) to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation, its right, title or
interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of either UPCI or Acquisition or (b)
otherwise to carry out the purposes of this Agreement, the Surviving
Corporation and its proper officers and directors or their designees
shall be authorized (to the fullest extent allowed under applicable
law) to execute and deliver, in the name and on behalf of either UPCI
or Acquisition , all such deeds, bills of sale, assignments and
assurances and do, in the name and on behalf of UPCI or Acquisition,
all such other acts and things necessary, desirable or proper to vest,
perfect or confirm its right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of
UPCI or Acquisition, as applicable, and otherwise to carry out the
purposes of this Agreement.
UPCI Debentures. (a) As of the Effective Time, the Company assumes,
jointly and severally with UPCI, all of the obligations and
responsibilities under the UPCI Debentures to the holder or holders of
the UPCI Debentures. With respect to the UPCI Debentures, at the
Effective Time, the Company shall (i) replace the UPCI Underlying
Shares, with the Company Underlying Shares and (ii) replace the Escrow
Shares deposited by UPCI with the Escrow Agent with the Company Escrow
Shares.
At the Effective Time, (i) all references in the UPCI Debentures to
Company Common Stock (as defined in the UPCI Debentures) shall be
references to Company Common Stock (as defined herein) and (ii) all
references to the Company (as defined in the UPCI Debentures) in the
UPCI Debentures shall be read as references to the Company (as defined
herein) as if the UPCI Debentures were issued on the date the UPCI
Debentures were issued, by the Company (as defined herein),
specifically including all calculations in the UPCI Debentures such as
the determination of the conversion price, the Conversion Price, the
Fixed Conversion Price and the Floating Conversion Price. The Exchange
Ratio (as defined herein) shall have no effect on the UPCI Debentures
or the assumption thereof by the Company (as defined herein).
At the Effective Time, UPCI shall assign and the Company shall assume
all of UPCI's obligations and covenants under the Purchase Agreement as
if the Company executed the Purchase Agreement instead of UPCI on the
date thereof. At the Effective Time, all references to the Company (as
defined in the Purchase Agreement) in the Purchase Agreement shall mean
the Company (as defined herein) and all references to dates or tolling
of periods shall be read as if the Company (as defined herein) executed
the Purchase Agreement instead of the Company (as defined in the
Purchase Agreement). At the Effective Time, all of the remedies
available to the current and future holders of the UPCI Debentures
under the Purchase Agreement against the Company (as defined in the
Purchase Agreement) shall be available against the Company (as defined
herein).
The provisions described in this Section 2.7 shall not be amended and
shall be in effect until the earlier of (i) the date all of the UPCI
Convertible Debentures have been converted into Company Common Stock
Shares and (ii) five (5) years from the date the UPCI Debentures were
issued.
The current and future holders of the UPCI Debentures shall be third
party beneficiaries of this Agreement. There shall be no other third
party beneficiaries to this Agreement or any part hereof.
ARTICLE III
CLOSING
Subject to satisfaction of the conditions to closing set forth in
this Agreement and unless this Agreement is otherwise terminated in
accordance with the provisions contained herein, the closing of the
Merger and the Contemplated Transactions (the "Post-Closing") shall
take place at the offices of Gottbetter & Partners, LLP, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx as promptly as practicable after
satisfaction of the conditions set forth in this Agreement, which in no
event shall be more than ten days after the Closing Date under the
Purchase Agreement (except if such 10th day is not a Business Day, then
the next Business Day) (the "Post-Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company and
Acquisition. Except as disclosed in the Reports (as defined below) or
in a document of even date herewith referring to the representations
and warranties in this Agreement and delivered by Company to UPCI prior
to the execution and delivery of this Agreement (the "Company
Disclosure Schedule"), Acquisition and the Company hereby make the
following representations and warranties to UPCI, all of which shall
survive the Post-Closing, subject to the limitations set forth in
Section 8.1 hereof:
Organization and Good Standing. Acquisition is a corporation
duly organized, validly existing and in good standing under the laws of
the State of (Hawaii), with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the
properties and assets that it owns or uses, and to perform all its
obligations under this Agreement. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of South Dakota, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the
properties and assets that it owns or uses, and to perform all its
obligations under this Agreement and, upon the Post-Closing the UPCI
Debentures. Company has no subsidiaries other than Acquisition and
other than as set forth on the Company Disclosure Schedule
(individually, a "Subsidiary" and collectively, the "Subsidiaries").
Acquisition has no subsidiaries. Each of the Company and Acquisition
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which either the ownership or use
of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except for such failures
to be so qualified or in good standing would not have a Material
Adverse Effect.
(b) Authority; No Conflict.
i. This Agreement and any agreement executed in connection
herewith by Company or Acquisition constitute the legal, valid and
binding obligations of the Company and Acquisition, as the case may be,
enforceable against the Company and Acquisition, as the case may be, in
accordance with their respective terms, except as such enforceability
is limited by bankruptcy, insolvency and other laws affecting the
rights of creditors and by general equitable principles. The Company
has the absolute and unrestricted right, power, authority and capacity
to execute and deliver this Agreement and any agreement executed by it
in connection herewith and to perform its obligations hereunder and
thereunder.
ii. Neither the execution and delivery of this Agreement by
each of the Company and Acquisition, nor the consummation or
performance by each of any of its respective obligations contained in
this Agreement or in connection with the Contemplated Transactions
will, directly or indirectly (with or without notice or lapse of time):
a. contravene, conflict with or result in a violation
of (x) any provision of the Organizational Documents of the Company or
Acquisition, as the case may be, or (y) any resolution adopted by the
board of directors or the stockholders of the Company or Acquisition,
as the case may be;
b. contravene, conflict with or result in a violation
of, or give any governmental body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any
remedy or obtain any relief under, any Legal Requirement or any Order
to which the Company or Acquisition or any of the assets owned or used
by the Company or Acquisition may be subject;
c. contravene, conflict with or result in a violation
or breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate or modify, this Agreement,
the UPCI Debentures (once assumed by Company) or any Applicable
Contract;
d. result in the imposition or creation of any material
encumbrance upon or with respect to any of the material assets owned or
used by the Company or Acquisition;
e. cause the Company or Acquisition to become subject
to, or to become liable for the payment of, any tax; or
f. cause any of the assets owned by the Company or
Acquisition to be reassessed or revalued by any taxing authority or
other governmental body, except in connection with the transfer of real
estate pursuant to this Agreement or the Contemplated Transactions, if
any.
(c) Capitalization. The capitalization of the Company as of
September 30, 2003 is as set forth in the Form 10-Q for the period
ended September 30, 2003, increased as set forth in the next sentence.
The Company has not issued any capital stock since that date other than
pursuant to (i) employee benefit plans disclosed in the Reports (as
defined in Section 4.1(d)) or (ii) outstanding warrants, options or
other securities disclosed in the Reports. All of the issued and
outstanding shares of the Company Capital Stock have been duly
authorized and validly issued and are fully paid and non-assessable.
Except for this Agreement and as disclosed in the Reports, there are no
outstanding options, warrants, script, rights to subscribe to,
registration rights, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or
acquire, any shares of the Company Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of the
Company Common Stock, or securities or rights convertible or
exchangeable into shares of the Company Common Stock. None of the
outstanding Company Capital Stock was issued in violation of the
Securities Act or any other legal requirement.
(d) Financial Statements. The Company has delivered or made
available to UPCI copies of its Form 10-K Annual Report for the fiscal
year ended December 31, 2002 and copies of its quarterly reports on
Form 10-Q for the quarters ended March 31, 2003, June 30, 2003 and
September 30, 2003, each as filed with the SEC and including, in each
case, any amendments thereto (collectively, the "Reports"). The
financial statements contained in the Reports are in all material
respects in accordance with the books and records of the Company and
have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods indicated, all as more particularly set
forth in the notes to such statements. The consolidated balance sheets
contained in such Reports (the "Company Balance Sheets") present fairly
in all material respects as of their dates the consolidated financial
condition of the Company and its subsidiaries. Except as and to the
extent reflected or reserved against in the Company Balance Sheets
(including the notes thereto), the Company did not have, as of the date
of any such Company Balance Sheet, any material liabilities or
obligations (absolute or contingent) of a nature customarily reflected
in a balance sheet or the notes thereto. The consolidated statements
of operations, consolidated statements of stockholders' equity and
changes in consolidated statements of cash flows present fairly in all
material respects the results of operations and changes in financial
position of the Company and its subsidiaries for the periods indicated.
(e) SEC Filings. The Company has filed all reports required to
be filed with the SEC under the rules and regulations of the SEC and
all such reports have complied in all material respects, as of their
respective filing dates and effective dates, as the case may be, with
all the applicable requirements of the Securities Exchange Act of 1934,
as amended. As of the respective filing and effective dates, none of
such reports (including without limitation, the Reports) contained any
untrue statement of a material fact or omitted to state a 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.
(f) Absence of Material Adverse Change. Since the date of the
latest Company Balance Sheets, there have been no events, changes or
occurrences which have had or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect.
(g) Issuance of Company Securities. The Company Common Stock
Shares, and when issued in accordance with this Agreement, the Purchase
Agreement, the UPCI Debentures and the Escrow Agreement, the Company
Underlying Shares and the Company Escrow Shares, shall be duly
authorized, validly issued, fully-paid and nonassessable. The Company
currently has, and at all times while the UPCI Debentures are
outstanding will maintain, an adequate reserve of shares of the Company
Common Stock to enable it to perform its obligations under this
Agreement and UPCI Debentures. Except as set forth in the Reports,
there is no equity line of credit or convertible security or instrument
outstanding of the Company.
(h) Undisclosed Liabilities. Except as disclosed in any
Schedule to this Agreement, none of the Company, Acquisition or the
Subsidiaries has any material obligations and liabilities (contingent
or otherwise) except those liabilities (i) that are reflected in the
Company Balance Sheets or in the notes thereto, or disclosed in the
notes therein in accordance with GAAP or, in accordance with GAAP, are
not required to be so reflected or disclosed, or (ii) that were
incurred after the date of the Company Balance Sheets in the Ordinary
Course of Business, none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement, or violation of law or could
reasonably be expected to have a Material Adverse Effect.
(i) Taxes.
i. The Company has filed or caused to be filed on a timely
basis all tax returns that are or were required to be filed by it
pursuant to applicable Legal Requirements. The Company has paid, or
made provision for the payment of, all taxes that have or may have
become due pursuant to those tax returns or otherwise, or pursuant to
any assessment received by the Company, except such taxes, if any, as
are listed in the Company Disclosure Schedule and are being contested
in good faith as to which adequate reserves have been provided in the
Company Balance Sheets.
ii. All tax returns filed by the Company are true, correct
and complete in all material respects.
(j) Employee Benefits. Except as disclosed in the Reports, the
Company does not sponsor or otherwise maintain a "pension plan" within
the meaning of Section 3(2) of ERISA or any other retirement plan other
than the Company Profit Sharing and 401(k) Plan and Trust that is
intended to qualify under Section 401 of the Code, nor do any unfunded
liabilities exist with respect to any employee benefit plan, past or
present. No employee benefit plan, any trust created thereunder or any
trustee or administrator thereof has engaged in a "prohibited
transaction," as defined in Section 4975 of the Code, which may have a
Material Adverse Effect.
(k)Governmental Authorizations. The Company, Acquisition and
the Subsidiaries have all permits that are legally required to enable
them to conduct their business in all material respects as now
conducted.
(l) Legal Proceedings; Orders.
i. Except as set forth in the Reports, there is no material
pending Proceeding:
a. that has been commenced by or against the Company,
Acquisition or the Subsidiaries, or any of the assets owned or used by,
the Company, Acquisition or the Subsidiaries; or
b. that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with,
any Contemplated Transaction.
ii. Except as set forth in the Reports:
a. there is no material Order to which the Company or
the Subsidiaries, or any of the assets owned or used by the Company,
Acquisition or the Subsidiaries, is subject; and
b. no officer, director, agent, or employee of the
Company or Acquisition is subject to any material Order that prohibits
such offer, director, agent or employee from engaging in or continuing
any conduct, activity or practice relating to the business of the
Company or Acquisition, as the case may be.
(m) Absence of Certain Changes and Events. Except as set forth
in the Reports, since the date of the most recent Company Balance
Sheets, the Company and the Subsidiaries and Acquisition, since the
date of its inception, have conducted their business only in the
Ordinary Course of Business, and other than as contemplated by this
Agreement or the Contemplated Transactions there has not been any:
i. change in the authorized or issued Company Capital Stock
or the authorized or issued capital stock of Acquisition and the
Subsidiaries; grant of any stock option or right to purchase shares of
capital stock of the Company; issuance of any equity lines of credit,
security convertible into such capital stock; grant of any registration
rights; purchase, redemption, retirement, or other acquisition or
payment of any dividend or other distribution or payment in respect of
shares of capital stock;
ii. amendment to the Organizational Documents of the
Company, Acquisition or the Subsidiaries;
iii. damage to or destruction or loss of any material asset
or property of the Company, Acquisition or the Subsidiaries, whether or
not covered by insurance, causing a Material Adverse Effect;
iv. receipt of notice that any of their substantial
customers have terminated or intends to terminate their relationship,
which termination would have a Material Adverse Effect;
v. entry into any transaction other than in the Ordinary
Course of Business;
vi. entry into, termination of, or receipt of written
notice of termination of any material (i) license, distributorship,
dealer, sales representative, joint venture, credit, or similar
agreement, or (ii) contract or transaction;
vii. sale (other than sales of inventory in the Ordinary
Course of Business), lease, or other disposition of any asset or
property of the Company, Acquisition or the Subsidiaries or mortgage,
pledge, or imposition of any lien or other encumbrance on any material
asset or property of the Company, Acquisition or the Subsidiaries;
viii. cancellation or waiver of any claims or rights with a
value to the Company in excess of $10,000;
ix. material change in the accounting methods used by the
Company, Acquisition or the Subsidiaries; or
x. agreement, whether oral or written, by the Company,
Acquisition or the Subsidiaries to do any of the foregoing.
(n) No Default or Violation. The Company, Acquisition and the
Subsidiaries (i) are in material compliance with all applicable
material terms and requirements of each material contract under which
they have or had any obligation or liability or by which they or any of
the assets owned or used by them is or was bound and (ii) is not in
material violation of any Legal Requirement.
(o) Certain Payments. Since the most recent date of the
Company Balance Sheets, neither the Company, Acquisition or the
Subsidiaries, nor any director, officer, agent or employee of the
Company or the Subsidiaries has directly or indirectly (a)made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback
or other payment to any Person, private or public, regardless of form,
whether in money, property or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for
business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of the Company,
Acquisition or the Subsidiaries or (iv) in violation of any Legal
Requirement, or (b) established or maintained any fund or asset that
has not been recorded in the books and records of the Company,
Acquisition or the Subsidiaries.
(p) Brokers or Finders. The Company and Acquisition have not
incurred any obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar
payment in connection with this Agreement.
4.2 Representations and Warranties of UPCI. UPCI hereby makes
the following representations and warranties to the Company, all of
which shall survive the Post-Closing, subject to the limitations set
forth in Section 8.2 hereof:
(a) Organization, Good Standing and Purpose. UPCI is a
corporation duly organized, validly existing and in good standing under
the laws of the State of (Hawaii) with full power and authority to
conduct its businesses as it is now being conducted, to own or use the
properties and assets that it owns or uses, and to perform all of its
obligations under this Agreement. UPCI has no subsidiaries. UPCI is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which either the ownership or use
of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except for such failures
to be so qualified or in good standing would not have a Material
Adverse Effect. UPCI was formed to assist small communications
companies with their growth strategies.
(b) Authority; No Conflict.
i. This Agreement and any agreement executed in connection
herewith have been duly authorized by all required action of UPCI and
constitute the legal, valid and binding obligations of UPCI,
enforceable against UPCI in accordance with their respective terms.
UPCI has the absolute and unrestricted right, power and authority to
execute and deliver this Agreement and any agreements executed in
connection herewith and to perform its obligations hereunder and
thereunder.
ii Neither the execution and delivery of this Agreement by
UPCI, nor the consummation or performance by it of any of its
obligations contained in this Agreement or in connection with the
Contemplated Transactions by the Company will, directly or indirectly
(with or without notice or lapse of time):
a. contravene, conflict with or result in a violation
of (x) any provision of the Organizational Documents of UPCI or (y) any
resolution adopted by the board of directors or the stockholders of
UPCI;
b. contravene, conflict with or result in a violation
of, or give any governmental body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any
remedy or obtain any relief under, any Legal Requirement or any Order
to which UPCI or any of the assets owned or used by UPCI may be
subject;
c. contravene, conflict with or result in a violation
or breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate or modify, this Agreement,
the Purchase Agreement, the UPCI Debentures or any Applicable Contract;
d. result in the imposition or creation of any material
encumbrance upon or with respect to any of the material assets owned or
used by UPCI;
e. cause UPCI to become subject to, or to become liable
for the payment of, any tax; or
f. cause any of the assets owned by UPCI to be
reassessed or revalued by any taxing authority or other governmental
body, except in connection with the transfer of real estate pursuant to
this Agreement or the Contemplated Transactions.
iii. UPCI is not required to obtain any consent from any
Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the Contemplated
Transactions, other than the requisite approval of (its sole
stockholder), ( ) (the "UPCI Stockholder"), which
approval has been obtained.
(c) Capitalization. The entire authorized UPCI Capital Stock
consists of (50,001,000) shares UPCI Common Stock, of which (1,000)
shares are issued and outstanding and held by the UPCI Stockholder and
(50,000,000) of which are held in escrow pursuant to the UPCI Escrow
Agreement (as defined below). With the exception of the UPCI Common
Stock Shares and the UPCI Debentures, there are no other outstanding
equity or debt securities of the Company. No legend or other reference
to any purported encumbrance appears upon any certificate representing
the UPCI Common Stock Shares, other than applicable Securities Act
legends. The UPCI Common Stock Shares have been duly authorized and
validly issued and are fully paid and non-assessable. Except for the
UPCI Debentures and the agreements relating thereto set forth in the
Purchase Agreement, there are no outstanding options, voting agreements
or arrangements, warrants, script, rights to subscribe to, registration
rights, calls or commitments of any character whatsoever relating to,
or, securities, rights or obligations convertible into or exchangeable
for, or giving any Person any right to subscribe for or acquire, any
shares of UPCI Capital Stock or other securities, or contracts,
commitments, understandings, or arrangements by which UPCI is or may
become bound to issue additional shares of UPCI Capital Stock or other
securities, or securities or rights convertible or exchangeable into
shares of UPCI Capital Stock or other securities. Except as set forth
in this Section 4.2(c), UPCI has no outstanding equity, debt, debt or
equity equivalent security, or debt or equity lines of credit. None of
the outstanding UPCI Common Stock Shares were issued in violation of
the Securities Act or any other legal requirement. UPCI does not own,
and has no contract to acquire, any equity securities or other
securities of any Person or any direct or indirect equity or ownership
interest in any other business. The UPCI Escrow Shares have been duly
authorized, validly issued, fully paid and are nonassessable pursuant
to the escrow agreement between UPCI, HEM, and the Escrow Agent (the
"UPCI Escrow Agreement"). The UPCI Underlying Shares have been duly
authorized, and when and if issued pursuant to the terms of the
Purchase Agreement, will be fully paid and nonassessable.
(d) Financial Statements. UPCI has delivered to the Company a
balance sheet of UPCI as at (December 31), 2003 (the "UPCI Balance
Sheet"), and a statement of operations for the period from inception to
(December 31), 2003. Such financial statements were prepared in
accordance with GAAP, are set forth in Schedule 4.2(d) hereto and
fairly present the financial condition and the results of operations of
UPCI as at (December 31), 2003 of and for the period then ended.
(e) Absence of Material Adverse Change. Since the date of the
most recent UPCI Balance Sheet provided under Section 4.2(d) hereof,
there have been no events, changes or occurrences which have had or are
reasonably likely to have, individually or in the aggregate, a material
adverse effect on UPCI.
(f) Books and Records. The books of account, minute books,
stock record books, and other records of UPCI, all of which have been
made available to the Company and original copies of which will be
delivered to the Company at the Post-Closing, are complete and correct
and have been maintained in accordance with sound business practices,
including the maintenance of an adequate system of internal controls.
The minute books of UPCI contain accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders, the
Board of Directors, and any committees of the Board of Directors of
UPCI.
(g) No Undisclosed Liabilities. There are no material
liabilities of UPCI, whether absolute, accrued, contingent, or
otherwise, other than the UPCI Debentures and as set forth in Schedule
4.2(g).
(h) Title to Properties; Encumbrances. UPCI has good and
marketable title to all the properties, interest in such properties and
assets, real and personal, reflected in the UPCI Balance Sheet or
acquired after the date of such balance sheet, free and clear of all
mortgages, liens, pledges, charges or encumbrances except (i) mortgages
and other encumbrances referred to in the notes to the UPCI Balance
Sheet. UPCI neither owns nor leases any real property.
(i) Legal Proceedings; Orders.
i. Except as set forth in Schedule 4.2(i) hereto, there is
no pending Proceeding:
a. that has been commenced or threatened by or against
UPCI or any of its officers, directors, agents or employees as such or
that otherwise relates to or may affect the business of, or any of the
assets owned or used by, UPCI; or
b. that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with,
any Contemplated Transaction.
ii. Except as set forth in Schedule 4.2(i) hereto:
a. there is no Order to which UPCI, or any of the
assets owned or used by UPCI, is subject; and
b. no officer, director, agent, or employee of UPCI is
subject to any Order that prohibits such offer, director, agent or
employee from engaging in or continuing any conduct, activity or
practice relating to the business of UPCI.
(j) Brokers or Finders. UPCI has incurred no liability,
contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
(k) No Default or Violation. Schedule 4.2(k) hereto lists each
contract, agreement and commitment to which UPCI is a party or
otherwise bound (each, an "UPCI Contract") or has any obligation or
liability pursuant thereto. UPCI (i) is in compliance with all terms
and requirements of each UPCI Contract and (ii) is not in violation of
any Legal Requirement.
(l) Taxes.
i. UPCI has filed or caused to be filed on a timely basis
all tax returns that are or were required to be filed by it pursuant to
applicable Legal Requirements. UPCI has paid, or made provision for
the payment of, all taxes that have or may have become due pursuant to
those tax returns or otherwise, or pursuant to any assessment received
by UPCI, except such taxes, if any, as are listed in Schedule 4.2(l)
hereto and are being contested in good faith as to which adequate
reserves have been provided in the UPCI Balance Sheets.
ii. All tax returns filed by UPCI are true, correct and
complete in all material respects and no taxes are currently owed or
tax returns due by or on behalf of UPCI.
(m) Absence of Certain Changes and Events. Except as set forth
in Schedule 4.2(m) hereto, since the date of the UPCI Balance Sheet,
UPCI has conducted its business only in the Ordinary Course of
Business, there has not been any material adverse effect on UPCI's
business or operations, and there has not been any:
i. change in the authorized or issued capital stock of
UPCI; grant of any stock option or right to purchase shares of capital
stock of UPCI; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption,
retirement, or other acquisition or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
ii. amendment to the Organizational Documents of UPCI;
iii. damage to or destruction or loss of any asset or
property of UPCI, whether or not covered by insurance or any other
event or circumstance, materially and adversely affecting the
properties, assets, business, financial condition, or prospects of
UPCI;
iv. receipt of notice that any of its substantial customers
have terminated or intends to terminate their relationship, which
termination would have a material adverse effect on its financial
condition, results or operations, business assets or properties of
UPCI;
v. entry into any transaction other than in the Ordinary
Course of Business;
vi. entry into, termination of, or receipt of written
notice of termination of any (i) license, distributorship, dealer,
sales representative, joint venture, credit, or similar agreement, or
(ii) contract or transaction;
vii. sale, lease, or other disposition of any asset or
property of UPCI or mortgage, pledge, or imposition of any lien or
other encumbrance on any asset or property of UPCI;
viii. cancellation or waiver of any claims or rights with a
value to UPCI in excess of $10,000;
ix. material change in the accounting methods used by UPCI;
x. accrual or payment of any salaries or other
compensation, increase in salaries, compensation or bonuses or
retention or hiring of, any consultant or employee;
xi. debt or other liability incurred, other than the UPCI
Debentures; or
xii. agreement, whether oral or written, by UPCI to do any
of the foregoing, other than the Purchase Agreement.
(n) Compliance with Law. Except as set forth in Schedule
4.2(n) hereto:
i. UPCI has complied in all material respects with, and is
not in violation of, in any material respect, any Law to which it or
its business is subject; and
ii. UPCI has obtained all licenses, permits, certificates
or other governmental authorizations (collectively "Authorizations")
necessary for the ownership or use of its assets and properties or the
conduct of its business; and
iii UPCI has not received written notice of violation of,
or knows of any material violation of, any Laws to which it or its
business is subject or any Authorization necessary for the ownership or
use of its assets and properties or the conduct of its business.
(o) Environmental Laws. UPCI has not received any notice or
claim (and is not aware of any facts that would form a reasonable basis
for any claim), or entered into any negotiations or agreements with any
other Person, and, to the best knowledge of UPCI, UPCI is not the
subject of any investigation by any governmental or regulatory
authority, domestic or foreign, relating to any material or potentially
material liability or remedial action under any Environmental Laws.
There are no pending or, to the knowledge of UPCI, threatened, actions,
suits or proceedings against UPCI or any of its properties, assets or
operations asserting any such material liability or seeking any
material remedial action in connection with any Environmental Laws.
(p) Intellectual Property. (i) UPCI owns, or is validly
licensed or otherwise has the right to use, all patents, and patent
rights ("Patents") and all trademarks, trade secrets, trademark rights,
trade names, trade name rights, service marks, service xxxx rights,
copyrights and other proprietary intellectual property rights and
computer programs (the "Intellectual Property Rights"), in each case,
which are material to the conduct of the business of UPCI.
(ii) To the best knowledge of UPCI, UPCI has not interfered
with, infringed upon (without license to infringe), misappropriated or
otherwise come into conflict with any Patent of any other Person. UPCI
has not interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property Rights of any other
Person. UPCI has not received any written charge, complaint, claim,
demand or notice alleging any such interference, infringement, is
appropriation or violation (including any claim that UPCI must license
or refrain from using any Patents or Intellectual Property Rights of
any other Person) which has not been settled or otherwise fully
resolved. To the best knowledge of UPCI, no other Person has interfered
with, infringed upon (without license to infringe), misappropriated or
otherwise come into conflict with any Patents or Intellectual Property
Rights of UPCI.
(q) Employees. (a) UPCI has no employees other than Jehu Hand,
who is the President and Chief Executive Officer of UPCI; (b) Jehu Hand
has been fully paid for all services rendered by her to UPCI in her
capacity as President of UPCI and is owed no further salary or
compensation in connection therewith; (c) UPCI has complied in all
respects with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, wages and hours, and
UPCI is not liable for any arrears of wages or any taxes or penalties
for failure to comply with any such Laws; (d) UPCI believes that UPCI's
relations with its employees is satisfactory; (e) there are no
controversies pending or, to the best knowledge of UPCI, threatened
between UPCI and any of its employees or former employees; (f) UPCI is
not a party to any collective bargaining agreement or other labor union
contract applicable to persons employed by UPCI, nor, to the best
knowledge of UPCI, are there any activities or proceedings of any labor
union to organize any such employees; (g) there are no unfair labor
practice complaints pending against UPCI before the National Labor
Relations Board or any current union representation questions involving
employees of UPCI; (h) there is no strike, slowdown, work stoppage or
lockout existing, or, to the best knowledge of UPCI, threatened, by or
with respect to any employees of UPCI; (i) no charges are pending
before the Equal Employment Opportunity Commission or any state, local
or foreign agency responsible for the prevention of unlawful employment
practices with respect to UPCI; (j) there are no claims pending against
UPCI before any workers' compensation board; (k) UPCI has not received
notice that any Federal, state, local or foreign agency responsible for
the enforcement of labor or employment laws intends to conduct an
investigation of or relating to UPCI and, to the best knowledge of
UPCI, no such investigation is in progress; and (l) UPCI has no
consultants or independent contractors.
(r) Employee Benefit Plans. There no "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) or "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) maintained, or
contributed to, by UPCI for the benefit of any current or any former
employees, officers or directors of UPCI.
(s) Rule 504 Securities. The UPCI Debentures (which include
the Escrow Shares for the UPCI Underlying Shares) were sold in
accordance with Rule 504 of Regulation D of the Securities Act of 1933,
as amended (the "Securities Act"), and Section 00-00-000 of the
Colorado Securities Act of the Colorado Revised Statutes (the "Colorado
Act") and regulation 51-3.13B promulgated thereunder, to an accredited
investor residing in the State of Colorado. Accordingly, at the
Effective Time and pursuant to Rule 504, the Colorado Act, and Section
3(a)(9) of the Securities Act, the UPCI Debentures (which include the
Company Escrow Shares for the Company Underlying Shares) shall continue
to be without restriction and shall be freely tradable in accordance
with Rule 504.
ARTICLE V
COVENANTS
5.1 Covenants of the Company and Acquisition.
(a) Conduct of Business. Between the date hereof and up to and
including the Post-Closing Date, each of the Company and Acquisition
shall:
i. conduct its business only in the Ordinary Course of
Business;
ii. use its commercially reasonable efforts to preserve
intact the current business organization of the Company and
Acquisition, as the case may be, keep available the services of the
current officers, employees and agents of the Company and Acquisition,
as the case may be, and maintain the relations and good will with
suppliers, customers, landlords, creditors, employees, agents and
others having business relationships with the Company and Acquisition,
as the case may be;
iii. not pay, incur or declare any dividends or
distributions with respect to its stockholders or amend its Certificate
of Incorporation or By-Laws, without the prior written consent of the
UPCI Debenture Holder;
iv. not authorize, issue, sell, purchase or redeem any
shares of its capital stock or any options or other rights to acquire
ownerships interests without the prior written consent of the UPCI
Debenture Holder except as may be required by pre-existing commitments
disclosed herein or in the Reports or upon the exercise of options or
warrants outstanding as of the date hereof;
v. not incur any indebtedness for money borrowed or issue
any debt securities, or incur or suffer to be incurred any liability or
obligation of any nature whatsoever, except those incurred in the
Ordinary Course of Business, or cause or permit any material lien,
encumbrance or security interest to be created or arise on or in
respect of any material portion of its properties or assets, except for
promissory notes issued by the Company to raise funds intended to cover
operating expenses, repayable in cash only and not to exceed $100,000;
vi. not make any investment of a capital nature either by
purchased stock or securities, contribution to capital, property
transfer or otherwise, or by the purchase of any property or assets of
any other Person;
vii. not do any other act which would cause any
representation or warranty of the Company in this Agreement to be or
become untrue in any material respect or that is not in the Ordinary
Course of Business;
viii. report periodically to the UPCI Debenture Holder
concerning the status of the business and operations of the Company
upon the reasonable request of the UPCI Debenture Holder, provided,
however, that the Company shall not be required to disclose anything of
a confidential or proprietary manner unless pursuant to a
confidentiality agreement reasonably acceptable to the Company; and
ix. confer with the UPCI Debenture Holder concerning
operational matters of a material nature upon the reasonable request of
the UPCI Debenture Holder, provided, however, that the Company shall
not be required to disclose anything of a confidential or proprietary
manner unless pursuant to a confidentiality agreement reasonably
acceptable to the Company.
(b) Proposals; Other Offers. Commencing on the date of
execution of this Agreement up to and including the Post-Closing Date,
each of the Company and Acquisition shall not, directly or indirectly
(whether through an employee, a representative, an agent or otherwise),
solicit or encourage any inquiries or proposals, engage in negotiations
for or consent to or enter into any agreement providing for the
acquisition of its business. Each of the Company and Acquisition shall
not, directly or indirectly (whether through an employee, a
representative, an agent or otherwise) disclose any nonpublic
information relating to the Company and Acquisition or afford access to
any of the books, records or other properties of the Company and
Acquisition to any person or entity that is considering, has considered
or is making any such acquisition inquiry or proposal relating to the
Company's and Acquisition's business.
(c) Further Assurances. Prior to the Post-Closing Date, with
the cooperation of UPCI where appropriate, each of the Company and
Acquisition shall use commercially reasonable efforts to:
i. promptly comply with all filing requirements which
federal, state or local law may impose on the Company or Acquisition,
as the case may be, with respect to the Contemplated Transactions by
this Agreement; and
ii. take all actions necessary to be taken, make any filing
and obtain any consent, authorization or approval of or exemption by
any governmental authority, regulatory agency or any other third party
(including without limitation, any landlord or lessor of the Company
and any party to whom notification is required to be delivered or from
whom any form of consent is required) which is required to be filed or
obtained by the Company or Acquisition in connection with the
Contemplated Transactions by this Agreement.
(d) Access to Additional Agreements and Information. Prior to
the Post-Closing Date, the Company and Acquisition shall make available
to the UPCI Debenture Holder (as well as its counsel, accountants and
other representatives) any and all agreements, contracts, documents,
other instruments and personnel material to the Company's business,
including without limitation, those contracts to which the Company or
Acquisition is a party and those by which each of its business or any
of the Company's or Acquisition's assets are bound pursuant and subject
to a confidentiality agreement reasonably acceptable to the Company and
Holder.
5.2 Covenants of UPCI.
(a) Conduct of Business. Between the date hereof and up to and
including the Post-Closing Date, UPCI shall:
i. conduct its business only in the Ordinary Course of
Business;
ii. use its commercially reasonable efforts to preserve
intact the current business organization of UPCI, keep available the
services of the current officers, employees and agents of UPCI, and
maintain the relations and good will with suppliers, customers,
landlords, creditors, employees, agents and others having business
relationships with UPCI;
iii. not pay, incur or declare any dividends or
distributions with respect to its stockholders or amend its Certificate
of Incorporation or By-Laws, without the prior written consent of the
Company and UPCI Debenture Holder;
iv. not authorize, issue, sell, purchase or redeem any
shares of its capital stock or any options or other rights to acquire
ownerships interests without the prior written consent of the Company
and UPCI Debenture Holder;
v. not incur any indebtedness for money borrowed or issue
and debt securities, or incur or suffer to be incurred any liability or
obligation of any nature whatsoever, or cause or permit any material
lien, encumbrance or security interest to be created or arise on or in
respect of any material portion of its properties or assets;
vi. not make any investment of a capital nature either by
purchased stock or securities, contribution to capital, property
transfer or otherwise, or by the purchase of any property or assets of
any other Person;
vii. not do any other act which would cause representation
or warranty of UPCI in this Agreement to be or become untrue in any
material respect or that is not in the Ordinary Course of Business
consistent with past practice;
viii. report periodically to the Company and the UPCI
Debenture Holder concerning the status of the business and operations
of UPCI; and
ix. confer with the Company and the UPCI Debenture Holder
concerning operational matters of a material nature.
(b)Proposals; Other Offers. Commencing on the date of execution
of this Agreement through the Post-Closing Date, UPCI shall not,
directly or indirectly (whether through an employee, a representative,
an agent or otherwise), solicit or encourage any inquiries or
proposals, engage in negotiations for or consent to or enter into any
agreement providing for the acquisition of its business. UPCI shall
not, directly or indirectly (whether through an employee, a
representative, an agent or otherwise) disclose any nonpublic
information relating to UPCI or afford access to any of the books,
records or other properties of UPCI to any person or entity that is
considering, has considered or is making any such acquisition inquiry
or proposal relating to the UPCI's business.
(c) Further Assurances. Prior to the Post-Closing Date, with
the cooperation of the Company where appropriate, UPCI shall:
i. promptly comply with all filing requirements which
federal, state or local law may impose on UPCI with respect to the
Contemplated Transactions by this Agreement and cooperate with the
Company regarding the same; and
ii. take all actions necessary to be taken, make any filing
and obtain any consent, authorization or approval of or exemption by
any governmental authority, regulatory agency or any other third party
(including without limitation, any landlord or lessor of UPCI and any
party to whom notification is required to be delivered or from whom any
form of consent is required) which is required to be filed or obtained
by UPCI in connection with the Contemplated Transactions by this
Agreement.
(d) Actions by UPCI. UPCI shall take no action or enter into
any agreements or arrangements except as may be required by this
Agreement.
(e) No Change in Capital Stock. Prior to the Effective Time,
no change will be made in the authorized, issued or outstanding capital
stock of UPCI, and no subscriptions, options, rights, warrants, calls,
commitments or agreements relating to the authorized, issued or
outstanding capital stock of UPCI will be entered into, issued, granted
or created.
(f) Access to Additional Agreements and Information. Prior to
the Post-Closing Date, UPCI shall make available to the Company and
UPCI Debenture Holder (as well as its counsel, accountants and other
representatives) any and all agreements, contracts, documents, other
instruments and personnel material of UPCI's business, including
without limitation, those contracts to which UPCI is a party and those
by which its business or any of UPCI's assets are bound.
(g) Further Assurances. Prior to the Post-Closing Date, with
the cooperation of the Company where appropriate, UPCI shall use
commercially reasonable efforts to:
i. promptly comply with all filing requirements which
federal, state or local law may impose on UPCI with respect to the
Contemplated Transactions by this Agreement; and
take all actions necessary to be taken, make any filing and obtain any
consent, authorization or approval of or exemption by any governmental
authority, regulatory agency or any other third party (including
without limitation, any landlord or lessor of UPCI and any party to
whom notification is required to be delivered or from whom any form of
consent is required) which is required to be filed or obtained by UPCI
in connection with the Contemplated Transactions by this Agreement.
5.3 Governmental Filings and Consents. The Company, Acquisition
and UPCI shall cooperate with one another in filing any necessary
applications, reports or other documents with any federal or state
agencies, authorities or bodies having jurisdiction with respect to the
business of the Company, Acquisition or UPCI and in seeking any
necessary approval, consultation or prompt favorable action of, with or
by any of such agencies, authorities or bodies.
5.4 Publicity. Any public announcement or press release relating
to this Agreement or the Contemplated Transactions must be approved by
the UPCI Debenture Holder and the Company in writing before being made
or released. The Company shall have the right to issue a press release
or make other disclosure without the UPCI Debenture Holder's written
approval if in the opinion of the Company's counsel such a release is
necessary to comply with SEC Rules and Regulations or other Law;
provided that, the UPCI Debenture Holder receives a copy of such
prepared press release or other disclosures for purposes of review at
least 24 hours before it is issued. This 24 hour period may be
shortened if in the opinion of the Company's counsel it is required by
Law; provided that, the UPCI Debenture Holder and the Company receives
a copy of such release as long as reasonably practical before it is
issued.
5.5 Tax Returns. The current officers of the Company shall have
the right to prepare any tax returns of the Company with respect to any
period that ends on or before the Post-Closing Date. Such tax returns
shall be timely filed by the Company. UPCI shall cooperate with said
officers in the preparation of such tax returns.
ARTICLE VI
CONDITIONS
6.1 Conditions to Obligations of UPCI. The obligation of UPCI to
consummate the Contemplated Transactions is subject to the fulfillment
of each of the following conditions, any of which may be waived by UPCI
in its sole discretion:
(a) Copies of Resolutions. At the Post-Closing (i) the Company
shall have furnished UPCI with a certificate of its CEO or President,
as the case may be, in the form of Exhibit 6.1(a) annexed hereto,
certifying that attached thereto are copies of resolutions duly adopted
by the board of directors of the Company authorizing the execution,
delivery and performance of this Agreement and all other necessary or
proper corporate action to enable the Company to comply with the terms
of this Agreement and (ii) Acquisition shall have furnished UPCI with a
certificate of its CEO or President, as the case may be, in the form of
Exhibit 6.1(e) annexed hereto, certifying that attached thereto are
copies of resolutions duly adopted by the board of directors of
Acquisition authorizing the execution, delivery and performance of this
Agreement and all other necessary or proper corporate action to enable
Acquisition to comply with the terms of this Agreement.
(b) Opinion of Company's Counsel. The Company shall have
furnished to UPCI, at the Post-Closing, an opinion of its legal
counsel, dated as of the Post-Closing Date, substantially in the form
of Exhibit 6.1(b) annexed hereto.
(c) Opinion of Company's Special Securities Counsel. The
Company shall have furnished to UPCI, at the Post-Closing, with an
opinion of the special securities counsel to the Company, dated as of
the Post-Closing Date, substantially in the form of Exhibit 6.1(c)
annexed hereto.
(d) Instruction Letter to Transfer Agent. The Company shall
have furnished UPCI, at the Post-Closing, with a letter to its transfer
agent, to accept the legal opinion set forth in Section 6.1(c), dated
as of the Post-Closing Date, substantially in the form of Exhibit
6.1(d) annexed hereto.
(e) Accuracy of Representations and Warranties; Performance of
Covenants. Each of the representations and warranties of the Company
and Acquisition set forth in this Agreement was true, correct and
complete in all material respects when made (except for representations
and warranties that speak as of a specific date, which representations
and warranties shall be true, correct and complete in all material
respects as of such date) and shall also be true, correct and complete
in all material respects at and as of the Post-Closing Date (except for
representations and warranties that speak as of a specific date, which
representations and warranties shall be true, correct and complete in
all material respects as of such date), with the same force and effect
as if made at and as of the Post-Closing Date. The Company shall have
performed and complied in all material respects with all agreements and
covenants required by this Agreement to be performed by the Company and
Acquisition at or prior to the Post-Closing Date.
(f) Delivery of Certificate. (A) The Company shall have
delivered to UPCI a certificate, in the form of Exhibit 6.1(f) annexed
hereto, dated the Post-Closing Date, and signed by the CEO or President
of the Company affirming that the representations and warranties as set
forth in Section 4.1 were and are true, correct and complete as
required by Section 6.1(e) and (B) Acquisition shall have delivered to
UPCI a certificate, in the form of Exhibit 6.1(h) annexed hereto, dated
the Post-Closing Date, and signed by the CEO or President of
Acquisition affirming that the representations and warranties as set
forth in Section 4.1 were and are true, correct and complete as
required by Section 6.1(e).
(g) Consents and Waivers. At the Post-Closing, any and all
necessary consents, authorizations, orders or approvals shall have been
obtained, except as the same shall have been waived by the UPCI
Debenture Holder.
(h) Litigation. On the Post-Closing Date, there shall be no
effective injunction, writ or preliminary restraining order or any
order of any kind whatsoever with respect to the Company issued by a
court or governmental agency (or other governmental or regulatory
authority) of competent jurisdiction restraining or prohibiting the
consummation of the Contemplated Transactions or making consummation
thereof unduly burdensome to UPCI. On the Post-Closing Date and
immediately prior to consummation of the Contemplated Transactions, no
proceeding or lawsuit shall have been commenced, be pending or have
been threatened by any governmental or regulatory agency or authority
or any other Person restraining or prohibiting the consummation of the
Contemplated Transactions.
Delivery of Documents and Other Information. Prior to the Post-Closing
Date, the Company and Acquisition shall have made available or
delivered to UPCI all of the agreements, contracts, documents and other
instruments requested by UPCI.
6.2 Conditions to Obligations of the Company and Acquisition.
The obligations of the Company and Acquisition to consummate the
Contemplated Transactions are subject to the fulfillment of each of the
following conditions, any of which may be waived by the Company and
Acquisition, in their sole discretion:
(a) Copies of Resolutions. At the Post-Closing, UPCI shall
have furnished the Company with a certificate of its President, in the
form of Exhibit 6.2(a) annexed hereto, certifying that attached thereto
are copies of resolutions duly adopted by the board of directors of
UPCI authorizing the execution, delivery and performance of the terms
of this Agreement and all other necessary or proper corporate action to
enable UPCI to comply with the terms of this Agreement.
(b) Opinion of UPCI's Counsel. UPCI shall have furnished to
the Company, at the Post-Closing, with an opinion of counsel to UPCI,
dated as of the Post-Closing Date, substantially in the form of Exhibit
6.2(b) annexed hereto.
(c) Opinion of UPCI's Special Securities Counsel. UPCI shall
have furnished to the Company, at the Closing, with an opinion of the
special securities counsel to UPCI dated as of the Post-Closing Date,
substantially in the form of Exhibit 6.2(c) annexed hereto.
(d) Accuracy of Representations and Warranties; Performance of
Covenants. Each of the representations and warranties of UPCI was
true, correct and complete in all material respects when made (except
for representations and warranties that speak as of a specific date,
which representations and warranties shall be true, correct and
complete in all material respects as of such date) and shall also be
true, correct and complete in all material respects at and as of the
Post-Closing Date (except for representations and warranties that speak
as of a specific date, which representations and warranties shall be
true, correct and complete in all material respects as of such date),
with the same force and effect as if made at and as of the Post-Closing
Date. UPCI shall have performed and complied in all material respects
with all agreements and covenants required by this Agreement to be
performed by UPCI at or prior to the Post-Closing Date.
(e) Delivery of Certificate. UPCI shall have delivered to the
Company a certificate, in the form of Exhibit 6.2(e) annexed hereto,
dated the Post-Closing Date and signed by the CEO or President of UPCI,
affirming that the representations and warranties of UPCI as set forth
in Section 4.2 were and are true, correct and complete and UPCI's
agreements and covenants have been performed as required by Section
6.2(d).
(f) Compliance with Rule 504. In connection with the issuance
of the Securities by UPCI under the Purchase Agreement, on or prior to
the Post-Closing Date UPCI shall be in full compliance with Rule 504 of
Regulation D of the Securities Act of 1933, as amended, and UPCI shall
have delivered to the Company at the Post-Closing a filed copy of the
Form D required to be filed with the SEC in connection therewith.
(g) Consents and Waivers. On or prior to the Post-Closing
Date, any and all necessary consents, authorizations, orders or
approvals shall have been obtained, except as the same shall have been
waived by the Company.
(h) Litigation. On the Post-Closing Date, there shall be no
effective injunction, writ or preliminary restraining order or any
order of any kind whatsoever with respect to UPCI issued by a court or
governmental agency (or other governmental or regulatory authority) of
competent jurisdiction restraining or prohibiting the consummation of
the Contemplated Transactions or making the consummation thereof unduly
burdensome to the Company or UPCI. On the Post-Closing Date, no
proceeding or lawsuit shall have been commenced, threatened or be
pending or by any governmental or regulatory agency or authority or any
other person with respect to the Contemplated Transactions.
(i) Delivery of Documents and Other Information. Prior to the
Post-Closing Date, UPCI shall have made available or delivered to the
Company all of the agreements, contracts, documents and other
instruments required to be delivered pursuant to the provisions of this
Agreement.
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Agreement. This Agreement may be
terminated at any time by mutual consent of the parties hereto,
provided that such consent to terminate is in writing and is signed by
each of the parties hereto.
7.2 Termination for Failure to Close. This Agreement shall be
automatically terminated if the Closing shall not have occurred within
ten (10) days of the date hereof (except if such 10th day is not a
Business Day, then the next Business Day).
7.3 Termination by Operation of Law. This Agreement may be
terminated by any party hereto if there shall be any statute, rule or
regulation that renders consummation of the Contemplated Transactions
illegal or otherwise prohibited, or a court of competent jurisdiction
or any government (or governmental authority) shall have issued an
order, decree or ruling, or has taken any other action restraining,
enjoining or otherwise prohibiting the consummation of such
transactions and such order, decree, ruling or other action shall have
become final and nonappealable.
7.4 Termination for Failure to Perform Covenants or Conditions.
This Agreement may be terminated prior to the Post-Closing Date:
(a) by UPCI if: (i) any of the representations and warranties
made in this Agreement by the Company or Acquisition shall not be
materially true and correct, when made or at any time prior to
consummation of the Contemplated Transactions as if made at and as of
such time; (ii) any of the conditions set forth in Section 6.1 hereof
have not been fulfilled in all material respects by the Post-Closing
Date; (iii) the Company or Acquisition shall have failed to observe or
perform any of its material obligations under this Agreement; or (iv)
as otherwise set forth herein; or
(b) by the Company or Acquisition if: (i) any of the
representations and warranties of UPCI or the UPCI Stockholder shall
not be materially true and correct when made or at any time prior to
consummation of the Contemplated Transactions as if made at and as of
such time; (ii) any of the conditions set forth in Section 6.2 hereof
have not been fulfilled in all material respects by the Post-Closing
Date; (iii) UPCI or the UPCI Stockholder shall have failed to observe
or perform any of their material respective obligations under this
Agreement; or (iv) as otherwise set forth herein.
7.5 Effect of Termination or Default; Remedies. In the event of
termination of this Agreement as set forth above, this Agreement shall
forthwith become void and there shall be no liability on the part of
any party hereto, provided that such party is a Non-Defaulting Party
(as defined below). The foregoing shall not relieve any party from
liability for damages actually incurred as a result of such party's
breach of any term or provision of this Agreement.
7.6 Remedies; Specific Performance. In the event that any party
shall fail or refuse to consummate the Contemplated Transactions or if
any default under or beach of any representation, warranty, covenant or
condition of this Agreement on the part of any party (the "Defaulting
Party") shall have occurred that results in the failure to consummate
the Contemplated Transactions, then in addition to the other remedies
provided herein, the non-defaulting party (the "Non-Defaulting Party")
shall be entitled to seek and obtain money damages from the Defaulting
Party, or may seek to obtain an order of specific performance thereof
against the Defaulting Party from a court of competent jurisdiction,
provided that the Non-Defaulting Party seeking such protection must
file its request with such court within forty-five (45) days after it
becomes aware of the Defaulting Party's failure, refusal, default or
breach. In addition, the Non-Defaulting Party shall be entitled to
obtain from the Defaulting Party court costs and reasonable attorneys'
fees incurred in connection with or in pursuit of enforcing the rights
and remedies provided hereunder.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.1 Survival of Representations and Warranties of the Company.
All representations and warranties of the Company shall survive the
execution and delivery of this Agreement and the Post-Closing hereunder
and shall thereafter survive until the earlier of (i) the fifth
anniversary of the Post-Closing Date and (ii) the date of the UPCI
Debentures have been fully converted or otherwise cease to be
outstanding (the "Conversion Date") and shall then terminate except to
the extent that notice of the Company's or Acquisition liability in
respect of any inaccuracy in or breach of any representation or
warranty shall have been given on or prior to such second anniversary
or Conversion Date.
8.2 Survival of Representations and Warranties of UPCI. All
representations and warranties of UPCI shall terminate upon the Closing
except to the extent that notice of UPCI's liability in respect of any
inaccuracy in or breach of any representation or warranty shall have
been given on or prior to Closing.
8.3 Obligation of the Company to Indemnify. The Company agrees
to indemnify, defend and hold harmless UPCI (and its directors,
officers, employees, affiliates, stockholders, debenture holders,
agents, attorneys, successors and assigns) from and against all losses,
liabilities, damages, deficiencies, costs or expenses (including
interest, penalties and reasonable attorneys' and consultants' fees and
disbursements) (collectively, "Losses") based upon, arising out of or
otherwise in respect of any (i) inaccuracy in any representation or
warranty of the Company contained in this Agreement or in the Schedules
and Exhibits hereto or (ii) breach by the Company of any covenant or
agreement contained in this Agreement.
8.4 Obligation of and UPCI to Indemnify. UPCI agrees to
indemnify, defend and hold harmless the Company (and its directors,
officers, employees, affiliates, stockholders, agents, attorneys,
successors and assigns) from and against any Losses based upon, arising
out of or otherwise in respect of any (i) inaccuracy in any
representation or warranty of UPCI contained in this Agreement or (ii)
breach by UPCI of any covenant or agreement contained in this
Agreement.
8.5 Notice and Opportunity to Defend. (a) Promptly after
receipt by any Person entitled to indemnity under this Agreement (an
"Indemnitee") of notice of any demand, claim or circumstances which,
with the lapse of time, would or might give rise to a claim or the
commencement (or threatened commencement) of any action, proceeding or
investigation (an "Asserted Liability") that may result in a Loss, the
Indemnitee shall give notice thereof (the "Claims Notice") to any other
party (or parties) who is or may be obligated to provide
indemnification pursuant to Section 8.3 or 8.4 (the "Indemnifying
Party"). The Claims Notice shall describe the Asserted Liability in
reasonable detail and shall indicate the amount (estimated, if
necessary and to the extent feasible) of the Loss that has been or may
be suffered by the Indemnitee.
(b) The Indemnifying Party may elect to compromise or defend,
at its own expense and by its own counsel, any Asserted Liability. If
the Indemnifying Party elects to compromise or defend such Asserted
Liability, it shall within 30 days after the date the Claims Notice is
given (or sooner, if the nature of the Asserted Liability so requires)
notify the Indemnitee of its intent to do so, and the Indemnitee shall
cooperate, at the expense of the Indemnifying Party, in the compromise
of, or defense against, such Asserted Liability. If the Indemnifying
Party elects not to compromise or defend the Asserted Liability, fails
to notify the Indemnitee of its election as herein provided or contests
its obligation to indemnify under this Agreement, the Indemnitee may
pay, compromise or defend such Asserted Liability and all reasonable
expenses incurred by the Indemnitee in defending or compromising such
Asserted Liability, all amounts required to be paid in connection with
any such Asserted Liability pursuant to the determination of any court,
governmental or regulatory body or arbitrator, and amounts required to
be paid in connection with any compromise or settlement consented to by
the Indemnitee, shall be borne by the Indemnifying Party. Except as
otherwise provided in the immediately preceding sentence, the
Indemnitee may not settle or compromise any claim over the objection of
the Indemnifying Party. In any event, the Indemnitee and the
Indemnifying Party may participate, at their own expense, in (but the
Indemnitee may not control) the defense of such Asserted Liability. If
the Indemnifying Party chooses to defend any claim, the Indemnitee
shall make available to the Indemnifying Party any books, records or
other documents within its control that are necessary or appropriate
for such defense.
ARTICLE IX
DEFINITIONS
The following terms, which are capitalized in this Agreement,
shall have the meanings set forth below for the purpose of this
Agreement.
"Applicable Contract" means any Contract (a) to which the Company is a
party and under which the Company has or may acquire any material
rights, (b) under which the Company or UPCI, as the case may be, is a
party and has or may become subject to any material obligation or
material liability or (c) by which the Company or UPCI, as the case may
be, or any of the material assets owned or used by it is or may become
bound.
"Contemplated Transactions" means all of the transactions contemplated
by this Agreement, including, without limitation:
(1) the Merger; and
the performance by the parties of their respective covenants and
obligations under this Agreement.
"Environmental Laws" means all applicable federal, state, local or
foreign laws, rules and regulations, orders, decrees, judgments,
permits, filings and licenses relating (i) to protection and clean-up
of the environment and activities or conditions related thereto,
including those relating to the generation, handling, disposal,
transportation or release of hazardous substances and (ii) the health
or safety of employees in the workplace environment, all as amended
from time to time, and shall also include any common law theory based
on nuisance, trespass, negligence or other tortious conduct.
"ERISA" means the Employee Retirement Income Security Act of 1974 or
any successor law, and regulations and rules issued pursuant to such
law or any successor law.
"GAAP" means generally accepted accounting principles in the United
States, applied on a consistent basis.
"Law" means all applicable laws, statutes, ordinances, rules,
regulations, orders, writs, injunctions, judgments or decrees entered,
enacted, promulgated, enforced or issued by any court or other
governmental or regulatory authority, domestic or foreign.
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational or other administrative law,
ordinance, principle of common law, regulation, statute, treaty, court
or arbitrator.
"Material Adverse Effect" means a material adverse effect upon the
business or financial condition of the Company (when used in Section
4.1) or UPCI (when used in Section 4.2), taken as a whole with any
subsidiaries.
"Order" means any award, decision, injunction, judgment, order, ruling,
subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other governmental body or by any arbitrator.
"Ordinary Course of Business" means an action taken by a Person where:
(1) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day
operations of such Person;
(2) such action is not required to be authorized by the board
of directors of such Person (or by any Person or group of Persons
exercising similar authority); and
(3) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors
(or by any Person or group of Persons exercising similar authority), in
the ordinary course of the normal day-to-day operations of other
Persons that are in the same line of business as such Person.
"Organizational Documents" means the articles or certificate of
incorporation and the by-laws of a corporation and any amendment
thereto.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor
union or other entity or governmental body.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal,
administrative, investigative or informal) commenced, brought,
conducted or heard by or before, or otherwise involving, any
governmental body or arbitrator.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
ARTICLE X
MISCELLANEOUS
10.1 Fees and Expenses. Except as otherwise provided in this
Agreement, each party hereto will bear its own legal, accounting and
other fees and expenses incident to the Contemplated Transactions
herein. Any fees and expenses required to be paid by any party
hereunder shall be limited to reasonable and necessary fees and
expenses
10.2 Modification, Amendments and Waiver. The parties hereto may
amend, modify or otherwise waive any provision of this Agreement by
mutual consent, provided that such consent and any amendment,
modification or waiver is in writing and is signed by each of the
parties hereto.
10.3 Assignment. Neither the Company nor UPCI shall have the
authority to assign its respective rights or obligations under this
Agreement without the prior written consent of the UPCI Debenture
Holder.
10.4 Successors. This Agreement shall be binding upon and, to
the extent permitted in this Agreement, shall inure to the benefit of
the parties and their respective successors and permitted assigns.
10.5 Entire Agreement. This Agreement and the exhibits,
schedules and other documents referred to herein contain the entire
agreement among the parties hereto with respect to the Contemplated
Transactions and supersede all prior agreements with respect thereto,
whether written or oral.
10.6 Governing Law. This Agreement and the exhibits hereto shall
be governed by and construed in accordance with the laws of the State
of New York, without giving effect to principles of conflicts or choice
of laws thereof. Any action to enforce the terms of this Agreement or
any of its exhibits shall be brought exclusively in the state and/or
federal courts situated in the County and State of New York. Service
of process in any action by either party to enforce the terms of this
Agreement may be made by serving a copy of the summons and complaint,
in addition to any other relevant documents, by commercial overnight
courier to the other party at its principal address set forth in this
Agreement.
10.7 Notices. Any notice, request, demand, waiver, consent,
approval, or other communication which is required or permitted to be
given to any party hereunder shall be in writing and shall be deemed
given only if delivered to the party personally or sent to the party by
facsimile upon electronic confirmation of receipt (promptly followed by
a hard-copy delivered in accordance with this Section 10.7) or three
days after being mailed by registered or certified mail (return receipt
requested), with postage and registration or certification fees thereon
prepaid, or if sent by nationally recognized overnight courier, one day
after being mailed, addressed to the party at its address set forth
below:
If to UPCI prior to
Post-Closing: Universal Pet Care, Inc.
00000 Xxxxx Xxxx, Xxxxx X
Xxxx Xxxxx, XX 00000
Attn: Jehu Hand, President
Tel: (000) 000-0000
Fax: (000) 000-0000
If to UPCI after Universal Pet Care, Inc.
Post-Closing: c/o Advanced ID Corporation
0000 - 0 Xxxxxx XX, Xxxxx 00
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attn: President
Tel: (000) 000-0000
Fax: (000) 000-0000
with copies to: Xxxx Xxxxxx, Esq.
0000 Xxxxx Xxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Acquisition: AIDO Acquisition, Inc.
c/o Advanced ID Corporation
0000 - 0 Xxxxxx XX, Xxxxx 00
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attn: President
Tel: (000) 000-0000
Fax: (000) 000-0000
with copies to: Xxxx Xxxxxx, Esq.
0000 Xxxxx Xxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Company: Advanced ID Corporation
0000 - 0 Xxxxxx XX, Xxxxx 00
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attn: President
Tel: (000) 000-0000
Fax: (000) 000-0000
with copies to: Xxxx Xxxxxx, Esq.
0000 Xxxxx Xxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
or to such other persons or addresses as may be designated in writing
by the party to receive such notice. If mailed as aforesaid, the day
of mailing or transmission shall be the date any such notice shall be
deemed to have been delivered.
10.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which
shall constitute but one agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as
if such facsimile signature page were an original thereof.
10.9 Rights Cumulative. All rights, powers and privileges
conferred hereunder upon the parties, unless otherwise provided, shall
be cumulative and shall not be restricted to those given by law.
Failure to exercise any power given any party hereunder or to insist
upon strict compliance by any other party shall not constitute a waiver
of any party's right to demand exact compliance with any of the terms
or provisions hereof.
10.10 Severability of Provisions. The provisions of this
Agreement shall be considered severable in the event that any of such
provisions are held by a court of competent jurisdiction to be invalid,
void or otherwise unenforceable. Such invalid, void or otherwise
unenforceable provisions shall be automatically replaced by other
provisions which are valid and enforceable and which are as similar as
possible in term and intent to those provisions deemed to be invalid,
void or otherwise unenforceable and the remaining provisions hereof
shall remain enforceable to the fullest extent permitted by law.
10.11 Headings. The headings set forth in the articles and
sections of this Agreement and in the exhibits and the schedules to
this Agreement are inserted for convenience of reference only and shall
not be deemed to constitute a part hereof.
10.12 Confidential Information. UPCI, UPCI Stockholder and the
UPCI Debenture Holder each represents to the Company that, at all
times, they have maintained in confidence all non-public information
regarding the Company (including existence of the transactions
contemplated herein) received by them from the Company or its agents,
and covenants that it they will continue to maintain in confidence such
information until such information (a) becomes generally publicly
available other than through a violation of this provision by UPCI,
UPCI Stockholder, the UPCI Debenture Holder, or any of their respective
agents or (b) is required to be disclosed in legal proceedings (such as
by deposition, interrogatory, request for documents, subpoena, civil
investigation demand, filing with any governmental authority or similar
process), provided, however, that before making any use or disclosure
in reliance on this subparagraph (b) UPCI, UPCI Stockholder or the UPCI
Debenture Holder, as applicable, shall give the Company at least
fifteen (15) days prior written notice (or such shorter period as
required by law) specifying the circumstances giving rise thereto and
will furnish only that portion of the non-public information which is
legally required and will exercise its best efforts to obtain reliable
assurance that confidential treatment will be accorded any non-public
information so furnished.
(Signature Page Follows)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
have caused this Agreement to be executed and delivered on the date and
year first above written.
ADVANCED ID CORPORATION
By:
-----------------------------
Xxxxx Xxxxxxx, President
UNIVERSAL PET CARE, INC.
By:
------------------------------
Jehu Hand, President
AIDO ACQUISITION, INC.
By:
------------------------------
Xxxx Xxxxx, President
COMPANY DISCLOSURE SCHEDULE
The following are exceptions to the representations and warranties made
by Advanced ID Corporation ("Company") and AIDO Acquisition, Inc.
("Acquisition") in Section 4.1 of the Agreement and Plan of Merger
dated as of January 20, 2004 ( the "Agreement") by and among the
Company, Acquisition and Universal Pet Care, Inc., which exceptions
along with any disclosure in the Reports (as defined in the Agreement)
shall be deemed to be representations and warranties as if made under
the Agreement. To the extent any exception is disclosed pursuant to
any specific section of the Agreement designated below, it shall be
deemed to be disclosed for any and all purposes under any other
sections of the Agreement where such disclosure on its face would be
deemed reasonably to apply. Where the terms of a lease, contract,
agreement or other disclosure item have been summarized or described in
this Company Disclosure Schedule, such summary or description does not
purport to be a complete statement of the material terms of such lease,
contract, agreement or other item. Terms defined in the Agreement
shall have the same meanings when used herein unless otherwise defined.
The inclusion of any item hereunder shall not be deemed an admission by
the Company that such item is material to the business, assets, results
of operations, prospectus or affairs of the Company, nor shall it be
deemed an admission of any obligation or liability to any third party.
Section 4.1(a):
1. AIDO Acquisition, Inc. has no subsidiaries.
2. Advanced ID Corporation wholly owns AVID Canada Corporation,
an Alberta corporation.
Section 4.1(c):
1. 710,000 shares issued to the Directors of the Company related
to the exercise of options, warrants and due to a contractual
agreement.
2. 99,017 shares issued to a Director of the Company as payment
in lieu of cash.
3. 10,000 shares issued to Gottbetter for partial payment of
services.
4. 650,000 options issued to the Directors of the Company.
5. 250,000 warrants issued to a Director of the Company.
6. $25,000 to be converted into shares at the average closing
value of the Company's common stock over the previous 20 trading days
immediately prior to the date the Company ships a minimum of 500,000
tags to a customer.
Section 4.1(g):
1. $100,000 convertible debenture agreement issued to a Director
of the Company.
Section 4.1(h):
1. None.
Section 4.1(l)
1. None.
Section 4.1 (m)
1. None.
Section 4.1 (p)
1. None.
Schedule 4.2(d)
UPCI Financial Statements
BALANCE SHEET
UPCI Financial Statements
STATEMENTS OF OPERATIONS
Schedule 4.2(i)
UPCI Legal Proceeding
Schedule 4.2(g)
UPCI Liabilities
Schedule 4.2(m)
UPCI Absence of Certain Changes or Events
Schedule 4.2(n)
UPCI Compliance with Law
EXHIBIT 2.2(a)
ESCROW AGREEMENT
ESCROW AGREEMENT (this "Agreement"), dated as of January 20, 2004,
by and among Advanced ID Corporation, a South Dakota corporation with
its principal place of business at 0000 - 0 Xxxxxx XX, Xxxxx 00,
Xxxxxxx, Xxxxxxx X0X 0X0 Xxxxxx (the "Company"); Gottbetter & Partners,
LLP, with its principal place of business at 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000 (the "Escrow Agent"); and HEM Mutual Assurance LLC, a
Colorado limited liability company with offices at One Xxxxx Center,
0000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000 (the "Purchaser").
Recitals
A. Immediately preceding the execution of this Agreement, the
Purchaser and Universal Pet Care, Inc., a Hawaii corporation ("UPCI")
entered into a Convertible Debenture Purchase Agreement (the "Purchase
Agreement"), dated as of the date hereof and incorporated herein by
reference, pursuant to which UPCI issued and sold and the Purchaser
purchased the Debentures for cash.
B. Simultaneous with the execution of this Agreement, the
Company has entered into an Agreement and Plan of Merger (the "Merger
Agreement"), incorporated herein by reference, with UPCI and AIDO
Acquisition, Inc., a (Hawaii) corporation ("Acquisition"), pursuant to
which Acquisition will be merged with and into UPCI (the "Merger")
making UPCI the surviving corporation in the Merger and a wholly-owned
subsidiary of the Company.
C. Pursuant to the Merger, the Company has agreed to assume all
of UPCI's obligations to the Purchaser under the Purchase Agreement and
the UPCI Debentures, to issue the Company Escrow Shares (as defined in
the Merger Agreement) into escrow with the Escrow Agent in order to
replace the Escrow Shares (as defined in the Purchase Agreement) and
for purposes of conversions of the UPCI Debentures, the Company
acknowledges its assigned rights under the Note and Purchaser has
agreed to such assumption and related transactions.
D. In connection with the foregoing, the Escrow Agent has
agreed to continue to act as Escrow Agent for the UPCI Debentures (both
the First Debenture and the Second Debenture and the Company Escrow
Shares) in the same manner and to the same extent that it previously
agreed to act as Escrow Agent for the UPCI Debentures and the Escrow
Shares.
E. The Company has granted the Escrow Agent a limited power of
attorney (the "Power of Attorney") with respect to the UPCI Debentures
and the Company Escrow Shares (collectively the "Securities"), in the
form attached hereto as Appendix I.
F. The Escrow Agent is willing to act as escrow agent pursuant
to the terms of this Agreement with respect to the Securities.
G. All capitalized terms used but not defined herein shall have
the meanings ascribed thereto in the Merger Agreement.
NOW, THEREFORE, IT IS AGREED:
Procedure for Escrow. The procedures of the escrow shall be
governed by the provisions of Article 2 of the Purchase Agreement and
Exhibit E thereto, Section 2.2 of the Merger Agreement and Sections 2,
3, 4 and 5 of the UPCI Debentures, all of which are incorporated
herein.
Terms of Escrow. The terms of the escrow shall be governed by
Article 4 of the Purchase Agreement, Article 2 of the Merger Agreement
and Sections 2, 3, 4 and 5 of the UPCI Debentures, all of which are
incorporated herein.
Duties and Obligations of the Escrow Agent. The parties hereto
agree that the duties and obligations of the Escrow Agent shall be only
those obligations herein specifically provided and no other. The
Escrow Agent's duties are those of a depositary only, and the Escrow
Agent shall incur no liability whatsoever, except as a direct result of
its willful misconduct or gross negligence in the performance of its
duties hereunder;
The Escrow Agent may consult with counsel of its choice, and shall
not be liable for any action taken, suffered or omitted to be taken by
it in good faith in accordance with the advice of such counsel;
The Escrow Agent shall not be bound in any way by the terms of any
other agreement to which the Purchaser and the Company are parties,
whether or not the Escrow Agent has knowledge thereof, and the Escrow
Agent shall not in any way be required to determine whether or not any
other agreement has been complied with by the Purchaser and the
Company, or any other party thereto. The Escrow Agent shall not be
bound by any modification, amendment, termination, cancellation,
rescission or supersession of this Agreement unless the same shall be
in writing and signed by the Purchaser and the Company and agreed to in
writing by the Escrow Agent;
If the Escrow Agent shall be uncertain as to its duties or rights
hereunder or shall receive instructions, claims or demands which, in
its opinion, are in conflict with any of the provisions of this
Agreement, the Escrow Agent shall be entitled to refrain from taking
any action other than keeping safely the Consideration (as defined
below) or take action it deems until the Escrow Agent is directed
otherwise in writing jointly by the Purchaser and the Company or by a
final judgment of a court of competent jurisdiction;
The Escrow Agent shall be fully protected in relying upon any
written notice, demand, certificate or document which the Escrow Agent,
in good faith, believes to be genuine. The Escrow Agent shall not be
responsible for the sufficiency or accuracy of the form, execution,
validity or genuineness of documents or securities now or hereafter
deposited hereunder or of any endorsement thereon, or for any lack of
endorsement thereon, or for any description therein; nor shall the
Escrow Agent be responsible or liable in any respect on account of the
identity, authority or rights of the persons executing or delivering or
purporting to execute or deliver any such document, security or
endorsement;
The Escrow Agent shall not be required to institute legal
proceedings of any kind and shall not be required to defend any legal
proceedings which may be instituted against it or in respect of the
Consideration;
If the Escrow Agent at any time, in its sole discretion, deems it
necessary or advisable to relinquish custody of any of the Securities
(to the extent delivered to the Escrow Agent pursuant hereto, the
"Consideration"), it may do so by delivering the same to another Person
that agrees to act as escrow agent hereunder and whose substitution for
the Escrow Agent is agreed upon in writing by the Purchaser and the
Company. If no such escrow agent is selected within ten (10) days
after the Escrow Agent gives notice to the Purchaser and the Company of
the Escrow Agent's desire to so relinquish custody of the Consideration
and resign as Escrow Agent, then the Escrow Agent may do so by
delivering the Consideration to the clerk or other proper officer of a
state or federal court of competent jurisdiction situate in the state
and county of New York. The fee of any court officer shall be borne by
the Company. Upon such delivery, the Escrow Agent shall be discharged
from any and all responsibility or liability with respect to the
Consideration and this Agreement and each of the Company and the
Purchaser shall promptly pay all monies it may owe to the Escrow Agent
for its services hereunder, including, but not limited to,
reimbursement of its out-of-pocket expenses;
This Agreement shall not create any fiduciary duty on the Escrow
Agent's part to the Purchaser or the Company, nor disqualify the Escrow
Agent from representing either party hereto in any dispute with the
other, including any dispute with respect to the Consideration;
provided, however, that in the event of such dispute, the Escrow Agent
shall have the right to commence an interpleader action in any court of
competent jurisdiction of the State of New York or of the United States
located in the county and State of New York and deposit the
Consideration with such court;
The parties acknowledge and agree that the Escrow Agent is counsel
to the Purchaser. The parties agree to, and agree not to object to,
the Escrow Agent's engagement as Escrow Agent hereunder;
Upon the performance of this Agreement, the Escrow Agent shall be
deemed released and discharged of any further obligations hereunder.
The Escrow Agent agrees to perform its obligations hereunder in
accordance with the provisions of Sections 1 and 2 hereof.
Indemnification.
The Purchaser hereby indemnifies and holds free and harmless the
Escrow Agent from any and all losses, expenses, liabilities and damages
(including but not limited to reasonable attorney's fees, and amounts
paid in settlement) resulting from claims asserted by the Company
against the Escrow Agent with respect to the performance of any of the
provisions of this Agreement;
The Company hereby indemnifies and holds free and harmless the
Escrow Agent from any and all losses, expenses, liabilities and damages
(including but not limited to reasonable attorney's fees, and amount
paid in settlement) resulting from claims asserted by the Purchaser
against the Escrow Agent with respect to the performance of any of the
provisions of this Agreement;
The Purchaser and the Company, jointly and severally, hereby
indemnify and hold the Escrow Agent harmless from and against any and
all losses, damages, taxes, (other than taxes related to the fee of the
Escrow Agent), liabilities and expenses that may be incurred by the
Escrow Agent, arising out of or in connection with its acceptance of
appointment as the Escrow Agent hereunder and/or the performance of its
duties pursuant to this Agreement, the Purchase Agreement, the
Securities and the Power of Attorney, including, but not limited to,
all reasonable legal costs and expenses of the Escrow Agent incurred
defending itself against any claim or liability in connection with its
performance hereunder, provided that the Escrow Agent shall not be
entitled to any indemnity for any losses, damages, taxes, liabilities
or expenses that directly result from its willful misconduct or gross
negligence in its performance as Escrow Agent hereunder.
In the event of any legal action or proceeding involving any of
the parties to this Agreement which is brought to enforce or otherwise
adjudicate any of the rights or obligations of the parties hereunder,
the non-prevailing party or parties shall pay the reasonable legal fees
of the prevailing party or parties and the reasonable legal fees, if
any, of the Escrow Agent.
Miscellaneous.
Any notice, request, demand, waiver, consent, approval, or other
communication which is required or permitted to be given to any party
hereunder shall be in writing and shall be deemed given only if
delivered to the party personally or via courier or sent to the party
by facsimile upon electronic confirmation and receipt (promptly
followed by a hard-copy delivered in accordance with this Section 5(a))
or three days after being mailed by registered or certified mail
(return receipt requested), or if sent by nationally recognized
overnight courier, one day after being mailed, in each case with
postage and registration or certification fees thereon prepaid,
addressed to the party at its address set forth below:
(i) If to the Company: Advanced ID Corporation
0000 - 0 Xxxxxx XX, Xxxxx 00
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attn: President
Tel: (000) 000-0000
Fax: (000) 000-0000
with copies to: Xxxx Xxxxxx, Esq.
0000 Xxxxx Xxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
(ii) If to the Purchaser: See Schedule 1 to the Purchase
Agreement.
with copies to Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Escrow Agent: Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the state of New York applicable to
contracts entered into and performed entirely within New York, without
giving effect to the principles of New York law relating to the
conflict of laws.
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event
that any signature is delivered by facsimile transmission, such
signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature page were an
original thereof.
This Agreement shall be binding upon and inure to the benefit of
the parties and their successors and permitted assigns. The assignment
by a party of this Agreement or any rights hereunder shall not affect
the obligations of such party under this Agreement.
Any fees and expenses required to be paid by any party hereunder
shall be limited to reasonable and necessary fees and expenses
This Agreement and the other agreements and documents referenced
herein contain the entire agreement among the parties hereto with
respect to the transactions described herein and supercedes all prior
agreements with respect thereto, whether written or oral.
Termination of Escrow. The term of this Escrow Agreement shall
begin upon the date hereof and shall continue until the earlier to
occur of (i) full conversion of the UPCI Debentures (ii) the Maturity
Date, and (iii) the written agreement of the parties to terminate this
Agreement. Upon the termination of this Escrow Agreement, the Escrow
Agent shall return any of the Consideration then held by it to the
Company or the Purchaser, as applicable pursuant to the Merger
Agreement and all other documents executed in connection therewith, the
Purchase Agreement and the other Transaction Documents.
(Signature Page Follows)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed the day and year first above written.
Escrow Agent: The Company:
Gottbetter & Partners, LLP ADVANCED ID CORPORATION
By: By:
-------------------------- ------------------------
Xxxx Xxxxxxxxxx, Managing Partner Xxxxx Xxxxxxx, President
Purchaser:
HEM MUTUAL ASSURANCE LLC
By:
------------------------
Name: Xxxxxx Xxxxxxxx
Title: Manager
APPENDIX I
FORM 26/33-DPOA/S-97
Power of Attorney; Statutory Short Form, Revised 1/1/97(with Affidavit
of Effectiveness
CONSULT YOUR LAWYER BEFORE SIGNING THIS INSTRUMENT - THIS INSTRUMENT
SHOULD BE USED BY LAWYERS ONLY
DURABLE GENERAL POWER OF ATTORNEY
NEW YORK STATUTORY SHORT FORM
THE POWERS YOU GRANT BELOW CONTINUE TO BE EFFECTIVE
SHOULD YOU BECOME DISABLED OR INCOMPETENT
CAUTION: THIS IS AN IMPORTANT DOCUMENT IT GIVES THE PERSON WHOM YOU
DESIGNATE (YOUR "AGENT") BROAD POWERS TO HANDLE YOUR PROPERTY DURING
YOUR LIFETIME WHICH MAY INGCLUDE POWERS TO MORTGAGE, SELL, OR OTHERWISE
DISPOSE OF ANY REAL OR PERSONAL PROPERTY WITHOUT ADVANCE NOTICE TO YOU
OR APPROVAL BY YOU. THESE POWERS WILL CONTINUE TO EXIST EVEN AFTER YOU
BECOME DISABLED OR INCOMPETENT. THESE POWERS ARE EXPLAINED MORE FULLY
IN NEW YORK GENERAL OBLIGATIONS LAW, ARTICLE 5, TITLE 15, SECTION 5-
1502A THROUGH 5-1503 WHICH EXPRESSLY PERMIT THE USE OF ANY OTHER OR
DIFFERENT FORM OF POWER OF ATTORNEY.
THIS DOCUMENT DOES NOT AUTHORIZE ANYONE TO MAKE MEDICAL OR OTHER HEALTH
CARE DECISIONS. YOU MAY EXECUTE A HEALTH CARE PROXY TO DO THIS.
(IF THERE IS ANYTHING ABOUT THIS FORM THAT YOU DO NOT UNDERSTAND, YOU
SHOULD ASK A LAWYER TO EXPLAIN IT TO YOU.)
THIS is intended to constitute a DURABLE GENERAL POWER OF ATTORNEY
pursuant to Article 5, Title 15 of the New York General Obligations
Law:
ADVANCED ID CORPORATION, with an address at 0000 - 0 Xxxxxx XX,
Xxxxx 00, Xxxxxxx, Xxxxxxx X0X 0X0, Xxxxxx
(insert your name and address)
does hereby appoint: Xxxx X. Xxxxxxxxxx with an address at c/o
Gottbetter & Partners, LLP, 000 Xxxxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, XX 00000
(If 1 person is to be appointed agent, insert the name and address of
your agent above)
(If 2 or more persons are to be appointed agents by you insert their
names and addresses above.)
my attorney(s)-in-fact TO ACT (If more than one agent is designated,
CHOOSE ONE of the following two choices by putting your initials in ONE
of the blank spaces to the left of your choice;)
( ) Each agent may SEPARATELY act.
( ) All agents must act TOGETHER.
(If neither blank space is initialed, the agents will be required to
act TOGETHER)
IN MY NAME, PLACE AND XXXXX in any way which I myself could do, if I
were personally present, with respect to the following matters as each
of them is defined in Title 15 of Article 5 of the New York General
Obligations Law to the extent that I am permitted by law to act through
an agent:
(DIRECTIONS: Initial in the blank space to the left of your choice any
one or more of the following lettered subdivisions as to which you WANT
to give your agent authority. If the blank space to the left of any
particular lettered subdivision is NOT initialed, NO AUTHORITY WILL BE
GRANTED for matters that are included in that subdivision.
Alternatively, the letter corresponding to each power you wish to grant
may be written or typed on the blank line in subdivision "(Q)", and you
may then put your initials in the blank space to the left of
subdivision "(Q)" in order to grant each of the powers so indicated)
( ) (A) real estate transactions;
( ) (B) chattel and goods transactions;
( X ) (C) bond, share and commodity transactions;
( ) (D) banking transactions;
( ) (E) business operating transactions;
( ) (F) insurance transactions;
( ) (G) estate transactions;
( ) (H) claims and litigation;
( ) (I) personal relationships and affairs;
( ) (J) benefits from military service;
( ) (K) records, reports and statements;
( ) (L) retirement benefit transactions;
( ) (M) making gifts to my spouse, children and more remote
descendants, and parents, not to exceed in the aggregate $10,000 to
each of such persons in any year;
( ) (N) tax matters;
( ) (O) all other matters;
( ) (P) full and unqualified authority to my attorney(s)-in-fact
to delegate any or all of the foregoing powers to any person or persons
whom my attorney(s)-in-fact shall select;
( ) (Q) each of the matters identified by the following letters:
(Special provisions and limitations may be included in the statutory
short form durable power of attorney only if they conform to the
requirements of Section 5-1503 of the New York General Obligations
Law.)
SEE ATTACHMENT A
Special Additional Provisions: The powers granted under (A) through
(C) above shall include the sale of a cooperative housing unit and are
enlarged so that all fixtures and articles of personal property which
at the time of such transaction are or which may thereafter be attached
to or used in connection with the real or personal property may be
included in the agreements or other instruments to be executed and
delivered in connection with any transactions and which may be
described in said instruments with more particularity. This Power of
Attorney is not subject to question because an instrument executed
hereunder fails to recite or recites only nominal consideration paid
therefore and any person dealing with the subject matter of such
instrument may do so as if full consideration had been expressed
therein.
This durable power of attorney shall not be affected by my subsequent
disability or incompetence.
If every agent named above is unable or unwilling to serve, I appoint
residing at
(insert name and address of successor)
to be my agent for all purposes hereunder. JUD 134
TO INDUCE ANY THIRD PARTY TO ACT HEREUNDER, I HEREBY AGREE THAT ANY
THIRD PARTY RECEIVING A DULY EXECUTED COPY OR FACSIMILE OF THIS
INSTRUMENT MAY ACT HEREUNDER, AND THAT REVOCATION OR TERMINATION HEREOF
SHALL BE INEFFECTIVE AS TO SUCH THIRD PARTY UNLESS AND UNTIL ACTUAL
NOTICE OR KNOWLEDGE OF SUCH REVOCATION OR TERMINATION SHALL HAVE BEEN
RECEIVED BY SUCH THIRD PARTY, AND I FOR MYSELF AND FOR MY HEIRS,
EXECUTORS, LEGAL REPRESENTATIVES AND ASSIGNS, HEREBY AGREE TO INDEMNIFY
AND HOLD HARMLESS ANY SUCH THIRD PARTY FROM AND AGAINST ANY AND ALL
CLAIMS THAT MAY ARISE AGAINST SUCH THIRD PARTY BY REASON OF SUCH THIRD
PARTY HAVING RELIED ON THE PROVISIONS OF THIS INSTRUMENT.
THIS DURABLE GENERAL POWER OF ATTORNEY MAY BE REVOKED BY ME AT ANY
TIME.
IN WITNESS WHEREOF I have hereunto signed my name this 20th day of
January, 2004.
ADVANCED ID CORPORATION
(YOU SIGN HERE:) ( )By: , Chief Executive Officer
---------------------
(Signature of principal)
The statute requires that this instrument be acknowledged by the
principal. No express provision is made for proof by subscribing
witness.
STATE OF COUNTY OF ) ss.:
On the day of , 2004 , before me
personally came
to me known to be the individual described in and who executed the
foregoing instrument and acknowledged that he executed same.
STATE OF COUNTY OF ) ss.:
On the day of , 20 , before me
personally came
to me known to be the individual described in and who executed the
foregoing instrument and acknowledged that he executed same.
AFFIDAVIT OF EFFECTIVENESS
STATE OF COUNTY OF ) ss.:
Xxxx X. Xxxxxxxxxx, residing at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, being duly sworn does depose and say that I am
the Attorney-in-Fact under the above Power of Attorney. That said
Power of Attorney is a valid and subsisting Power which has not been
revoked by the death of the principal(s) or otherwise; that I have no
actual knowledge of a revocation of the foregoing Power; and, I warrant
and represent that I have full and unqualified authority to execute the
documents relating to the release of common stock of Advanced ID
Corporation held in escrow knowing that Signature Stock Transfer, Inc.
as transfer agent and Gottbetter & Partners, LLP as escrow agent ,
will rely upon the representations made herein as inducement to accept
such instrument(s) and this Power of Attorney as evidence of my
authority to act.
Attorney in Fact
Sworn and Subscribed to Before Me This day of , 200
(Notary Affix Stamp at Right)
Durable General Power of Attorney DISTRICT
REVISED STATUTORY SHORT FORM SECTION
BLOCK
LOT
COUNTY OR TOWN
Recorded at the Request of
------------------------------------
Return by Mail To:
DURABLE POWER OF ATTORNEY
NEW YORK STATUTORY SHORT FORM
DATED JANUARY 20, 2004
BY ADVANCED ID CORPORATION (the "Company")
ATTACHMENT A
The attached power of attorney is limited by and subject to the terms
and conditions of the Convertible Debenture Purchase Agreement by and
between Universal Pet Care, Inc. ("UPCI") and HEM Mutual Assurance LLC
(the "Purchaser") dated January 20, 2004 (the "Purchase Agreement"),
the Escrow Agreement by and among Advanced ID Corporation (the
"Company"), Gottbetter & Partners, LLP and the Purchaser dated January
20, 2004 (the "Escrow Agreement"), and the Agreement and Plan of Merger
dated January 20, 2004 by and between the Company, AIDO Acquisition,
Inc. and UPCI (the "Merger Agreement") and, to be issued in accordance
with the Merger Agreement, the UPCI Debentures and the Company Escrow
Shares, and such power of attorney can only be acted upon to enforce
the rights of the Purchaser and its successors and assigns under the
Purchase Agreement, the Merger Agreement and the UPCI Debentures, and
to grant the appointed agent the power to deliver the opinions of
counsel in substantially the same form as the opinions contained in
Exhibits 6.1(b) and 6.1(c) to the Merger Agreement, in connection with
the issuance and delivery of shares of the Company Common Stock,
removing stop transfer orders and restrictions, and replenishing the
Company Escrow Shares under and in accordance with the aforementioned
documents.
All capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Merger Agreement.
This power of attorney shall expire upon the full and complete
satisfaction of all of the Company's obligations under the Escrow
Agreement and the UPCI Debentures.
IN WITNESS WHEREOF, I have hereunto signed my name this 20th day of
January, 2004.
ADVANCED ID CORPORATION
By:
Name:
Title:
Signed and sworn to before me on , 2004
Notary Public
EXHIBIT 6.1(a)
ADVANCED ID CORPORATION
OFFICER'S CERTIFICATE
I, Xxxxx Xxxxxxx, being the President of Advanced ID Corporation,
a South Dakota corporation (the "Company"), pursuant to Section 6.1(a)
of that certain Agreement and Plan of Merger (the "Merger Agreement"),
dated as of January 20, 2004, by and between the Company, AIDO
Acquisition, Inc. and Universal Pet Care, Inc., do hereby certify on
behalf of the Company that attached hereto is a copy of the resolutions
duly adopted by the Board of Directors of the Company authorizing the
execution, delivery and performance of the Merger Agreement and all
exhibits and documents related thereto by the Company and all other
necessary or proper corporate action to enable the Company to comply
with the terms thereunder.
IN WITNESS WHEREOF, I have executed this Officer's Certificate on
behalf of the Company this 20th day of January, 2004.
ADVANCED ID CORPORATION
By: _______________________________
EXHIBIT 6.1(b)
January 20, 2004
Confidential
Universal Pet Care, Inc.
00000 Xxxxx Xxxx, Xxxxx X
Xxxx Xxxxx, XX 00000
Attn: Jehu Hand, President
Re: Agreement and Plan of Merger by and among Advanced ID Corporation,
AIDO Acquisition, Inc., and Universal Pet Care, Inc.
Gentlemen:
This opinion is furnished to you pursuant to Section 6.1(b) of the
Agreement and Plan of Merger, dated January 20, 2004 (the "Merger
Agreement"), by and among (i) Advanced ID Corporation, a corporation
organized under the laws of South Dakota ("Parent"), (ii) AIDO
Acquisition, Inc., a (Hawaii) corporation and a wholly owned subsidiary
of Parent ("Acquisition"), and (iii) Universal Pet Care, Inc., a
corporation organized under the laws of Hawaii ("UPCI"). We have acted
as counsel to Parent and Acquisition in connection with the
preparation, execution and delivery of the Merger Agreement and the
Escrow Agreement, dated January 20, 2004, among Parent, Gottbetter &
Partners, LLP, as escrow agent, and HEM Mutual Assurance LLC (the
"Escrow Agreement") referred to in Section 2.2(a) of the Merger
Agreement. Capitalized terms used and not otherwise defined herein
have the meanings assigned to them in the Merger Agreement.
In connection with this opinion, we have examined original or
reproduced or certified copies of such records of Parent and
Acquisition, certificates of public officials, officers and
representatives of Parent and Acquisition and such other instruments
and documents as we have deemed necessary to form the basis for the
opinion hereinafter expressed.
As to various matters of fact relevant to our opinion, we have relied
upon representations and warranties of representatives of Parent and
Acquisition (including representations and warranties made in or
pursuant to the Merger Agreement) and certificates and statements of
public officials and officers and other representatives of Parent and
Acquisition.
Based upon the foregoing, and subject to the assumptions, exceptions
and qualifications set forth herein, we are of the opinion that:
1. Parent is a corporation validly existing in good standing under the
laws of the State of South Dakota. Acquisition is corporation validly
existing in good standing under the laws of the State of Hawaii.
Parent is qualified to transact business and in good standing in the
States of (California) and (other states).
2. Parent and Acquisition have all necessary corporate power and
authority to execute and deliver the Merger Agreement and Parent has
all necessary corporate power and authority to execute and deliver the
Escrow Agreement. The execution and delivery by Parent and Acquisition
of the Merger Agreement have been duly authorized by all necessary
corporate action required on the part of Parent and Acquisition. The
execution and delivery by Parent of the Escrow Agreement have been duly
authorized by all necessary corporate action required on the part of
Parent. The Merger Agreement has been duly executed and delivered by
Parent and Acquisition and constitutes a valid and binding obligation
of Parent and Acquisition, enforceable against Parent and Acquisition
in accordance with its terms. The Escrow Agreement has been duly
executed and delivered by Parent and constitutes a valid and binding
obligation of Parent, enforceable against Parent in accordance with its
terms.
3. As of the date hereof, immediately prior to the effective time of
the Merger, the Parent's authorized capital stock consists of (a)
100,000,000 shares of common stock, par value $0.01 per share (the
"Common Stock"), of which approximately 38,300,000 shares are issued
and outstanding, and (b) 500,000 shares of preferred stock, par value
$0.01 per share, of which no shares of Preferred Stock are issued and
outstanding. No shares of the Common Stock are entitled to statutory
preemptive rights. Except as specifically disclosed in Schedule 4.1(c)
to the Merger Agreement, to our knowledge, there are no outstanding
options, warrants, rights to subscribe to, registration rights, calls
or commitments relating to, or, except as a result of the purchase and
sale of the UPCI Debentures, securities, rights or obligations
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire, any shares of Common Stock, or contracts or
commitments by which Parent is bound to issue additional shares of the
Common Stock, or securities or rights convertible into or exchangeable
for shares of the Common Stock, except as otherwise provided in the
Merger Agreement.
4. Parent has duly authorized and reserved for issuance such number of
shares of the Common Stock as are issuable upon conversion of the UPCI
Debentures (the "Underlying Shares") and, to the extent that the number
of the Underlying Shares may exceed the aggregate number of the Escrow
Shares deposited in escrow pursuant to the Escrow Agreement (such
excess shares, if any, the "Excess Shares"), such number of Excess
Shares as are required pursuant to the UPCI Debentures and the Merger
Agreement. The Escrow Shares and the Excess Shares, when issued
pursuant to the terms of the UPCI Debentures, the Merger Agreement and
the Escrow Agreement, will be validly issued, fully paid and non-
assessable.
5. The execution and delivery of the Merger Agreement by Parent and
UPCI Acquisition, and the execution and delivery of the Escrow
Agreement by Parent, and the performance by them of the terms thereof,
do not conflict with or violate any judgment, decree, order, rule or
regulation known to us of any court or governmental body of the States
of (Hawaii or South Dakota) or the United States of America having
jurisdiction over Parent or Acquisition.
6. The execution and delivery of the Merger Agreement by Parent and
Acquisition, and the execution and delivery of the Escrow Agreement by
Parent, and the performance by them of the terms thereof, do not
violate, to our knowledge, any provision of any applicable law, rule or
regulation of the States of (Hawaii) or South Dakota or the United
States of America, which violation is reasonably expected to have a
Material Adverse Effect. To our knowledge, except as disclosed in
Schedule 4.1(b) to the Merger Agreement, neither the execution,
delivery and performance of the Merger Agreement by Parent or
Acquisition, nor the execution, delivery and performance of the Escrow
Agreement by Parent, have resulted in any violation of, or constituted
a default under (or an event which with the passage of time or the
giving of notice or both would constitute a default under) any
contract, agreement, instrument, judgment or decree binding upon Parent
or Acquisition known to us, which violation or default is reasonably
expected to have a Material Adverse Effect.
7. To our knowledge, no lawsuit, governmental investigation or legal,
administrative or arbitration action or proceeding is pending or
threatened against Parent or Acquisition which questions the validity
of the Merger Agreement or the Escrow Agreement or seeks to prohibit,
enjoin or otherwise challenge the consummation of the transactions
contemplated thereby.
8. No consent or approval of or filing with any governmental authority
of the States of (Hawaii) or South Dakota or the United States of
America is required (a) for Parent or Acquisition to execute and
deliver the Merger Agreement or to perform the terms thereof, or (b)
for Parent to execute and deliver the Escrow Agreement or perform the
terms thereof, except for the filing of registration statements and
periodic reports with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended.
The opinion set forth above is subject to the following further
qualifications and limitations:
In rendering the opinion in paragraph 1 above, we have relied solely on
certificates of good standing of the Secretaries of State of the States
of (South Dakota) and (other states);
The enforceability of the Merger Agreement and the Escrow Agreement may
be subject to or limited by bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance or other similar laws and court
decisions affecting or relating to the enforcement of creditors' rights
generally;
The enforceability of the Merger Agreement and the Escrow Agreement are
subject to the application of and may be limited by general principles
of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Such
principles of equity are of general application, and in applying such
principles a court, among other things, might decline to order Parent
or Acquisition to perform certain covenants.
The remedies of specific performance, injunction and other forms of
equitable relief are subject to certain limitations and defenses and
the discretion of the court before which any proceeding may be brought;
We express no opinion as to the validity, binding nature or
enforceability of any provision in any documents which (i) purports to
waive any procedural due process rights, (ii) relates to choice of
governing law as it may be interpreted by any court other than a court
of the State of ( ), (iii) waives any rights afforded to
any party under any statute or constitutional provision, or (iv) waives
broadly or vaguely stated rights or future rights, or waives certain
rights or defenses to obligations, in each case where such waivers are
against statutes, laws or public policy;
Rights to indemnity and/or contribution under the Merger Agreement or
any obligation of UPCI assumed thereby may be limited by federal or
state securities laws or the public policy underlying such laws;
We express no opinion with respect to (i) the securities laws of any
jurisdiction, including the securities laws of the United States of
America or of any state (ii) the anti-trust laws of the United States
of America or of any state, (iii) patent, copyright, trademark or other
intellectual property laws or regulations of the United States of
America or of any state;
In rendering the opinion in paragraph 3 above, we have relied solely on
the disclosures in Parent's Quarterly Report on Form 10-QSB for the
Quarterly Period ended September 30, 2003, as updated by a certificate
of the President and Chief Executive Officer of Parent; and
As used in this opinion letter, "our knowledge," "known to us" or like
phrases shall mean the current, actual knowledge (without independent
investigation or verification) of attorneys in our firm who have been
involved with the negotiation, execution and delivery of the Merger
Agreement and Escrow Agreement based upon our limited representation of
Parent and Acquisition. We do not purport to have made nor have we
made any review of court or other public records (other than the
certificates of good standing referred to in clause (i) above) or
proceedings, or any specific review or investigation of Parent or
Acquisition or any affiliate thereof or any special inquiry of Parent
or Acquisition, any affiliate thereof, or any other Person.
We do not express any opinion with respect to any law other than the
laws of the State of ( ) and the federal laws of
the United States of America that in our experience are generally
applicable to transactions of the type contemplated by the Merger
Agreement and the Escrow Agreement ("Applicable Law"), and we express
no opinion as to laws that are applicable as a result of the particular
business of any party to the Merger Agreement or the Escrow Agreement.
We note that Parent is organized under the laws of the State of South
Dakota and that Acquisition is organized under the State of Hawaii. We
are not members of the Bar of either the State of South Dakota, Hawaii
or ( ), and thus, with your consent, the opinion
expressed herein is understood to be rendered as if Parent and
Acquisition were each organized under the laws of the State of
(California).
This opinion is furnished by us solely for your benefit in connection
with the transactions referred to in and contemplated by the Merger
Agreement and may not be circulated to, or quoted or relied upon by,
any other person or for any other purpose.
Very truly yours,
EXHIBIT 6.1(c)
January 20, 2004
Universal Pet Care, Inc.
00000 Xxxxx Xxxx, Xxxxx X
Xxxx Xxxxx, XX 00000
Attn: Jehu Hand, President
Re: Supporting Legal Opinion for Request to Issue Free Trading
Securities Pursuant to Rule 504 for Advanced ID Corporation
Dear Sirs:
The undersigned has been retained as special securities and
acquisition counsel to Advanced ID Corporation, a South Dakota
corporation, ("AIDO") and Universal Pet Care, Inc., a Hawaii
corporation ("UPCI"). We can advise you that prior to the transactions
referred to herein, UPCI was not affiliated with AIDO.
The subject of this letter are securities to be issued by UPCI on
or about January 20, 2004, pursuant to a Convertible Debenture Purchase
Agreement ("Purchase Agreement") dated January 20, 2004 between UPCI
and the Investor (as defined below), to wit, the UPCI 1 percent
Convertible Debenture in the aggregate principal amount of Nine Hundred
Ninety Five Thousand Five Hundred Dollars ($995,500) (the "First
Debenture") and the UPCI 1 percent Convertible Debenture in the
aggregate principal amount of Four Thousand Five Hundred Dollars
($4,500) (the "Second Debenture"; and, together with the First
Debenture, the "UPCI Debentures"), together with the underlying shares
of the UPCI common stock, par value $1.00 (the "UPCI Common Stock"),
into which the UPCI Debentures are convertible, from time to time. The
Purchase Agreement also requires UPCI and/or its successor in interest,
to issue 50,000,000 shares of UPCI Common Stock as a "security stock"
(the "Escrow Shares") in support of the offer and sale of the UPCI
Debentures. The UPCI Debentures, the UPCI Common Stock and the Escrow
Shares may be referred to collectively herein as the "UPCI Securities."
The UPCI Debentures are to be issued to the accredited investor
listed on Exhibit A to this opinion, an accredited Colorado resident or
domiciliary (the "Investor"). Under and pursuant to the terms of the
UPCI Debentures and the Purchase Agreement, the Investor may elect to
convert all or some of the UPCI Debentures into the UPCI Common Stock.
Following the issuance of the UPCI Debentures on or about January
20, 2004, AIDO Acquisition, Inc., a (Hawaii) corporation
("Acquisition"), a wholly owned subsidiary of AIDO, will be merged with
and into UPCI (the "Merger") pursuant to the Agreement and Plan of
Merger dated as of January 20, 2004 by and among AIDO, Acquisition and
UPCI (the "Merger Agreement"). Pursuant to the Merger, the UPCI Common
Stock will be canceled and AIDO shall issue 50,000,000 shares of its
common stock, par value $1.00 per share (the "AIDO Common Stock") into
escrow pursuant to the terms of the Merger Agreement and the Purchase
Agreement as a "security stock" to replace the Escrow Shares (the
"Security Shares"). Up to all of the Security Shares and up to all of
any additional shares of AIDO Common Stock that may in the future be
issued and deposited into escrow by AIDO in accordance with the
Purchase Agreement (the "Additional Security Shares") may be released
from escrow from time to time to the Investor or its assigns to satisfy
AIDO's obligations upon conversion of the Debentures by the Investor or
its assigns in accordance with the terms of the Purchase Agreement and
the Debentures. This letter addresses the validity of the issuance of
the Security Shares and Additional Security Shares and the delivery of
the Security Shares and Additional Security Shares to the Investor or
its assigns from time-to-time in accordance with the Merger Agreement,
Purchase Agreement and UPCI Debentures. The UPCI Debentures, AIDO
Common Stock, Security Shares and Additional Security Shares, are
referred to collectively herein as the "AIDO Securities."
You have requested that we provide you with separate legal
opinions (i) covering the issuance of the Security Shares and any
Additional Security Shares to the effect that the UPCI Debentures and
the UPCI Common Stock, and the AIDO Securities, as the case may be, may
be issued without a restrictive legend and may be freely traded; and
(ii) covering the issuance of AIDO Common Stock as Security Shares and
Additional Security Shares pursuant to the terms of the Merger
Agreement, Purchase Agreement and the UPCI Debentures to the effect
that such shares (or any part thereof) may be issued and subsequently
delivered to the Investor or its assigns upon the receipt by AIDO of
any notices of conversion issued by the Investor or its assigns
pursuant to the terms of the Purchase Agreement and the UPCI Debentures
without a restrictive legend and may be freely traded. This opinion
covers any issuance of AIDO Securities and the delivery of the same to
the Investor or its assigns in accordance with the terms of the
Purchase Agreement, the Merger Agreement and the UPCI Debentures.
A. Basis for Supporting Legal Opinion. The following is the
basis for our supporting legal opinion for the requested issuance and
delivery of the UPCI Securities and the AIDO Securities free of any
restrictive legend.
1. Our review and analysis of Rule 504 of Regulation D of the
Securities Act of 1933 (the "Securities Act"), as revised, effective as
of April 7, 1999; the Colorado Securities Act of the Colorado Revised
Statutes as set forth in Article 51 (the "Colorado Act"); and the
Regulations contained therein (the "Colorado Regulations") which are
collectively referred to herein as the "Colorado Statutes", as they
apply to the proposed issuance of the UPCI Securities and the AIDO
Securities.
2. Our review and analysis of a resolution of the Board of
Directors of UPCI dated January 20, 2004.
3. Our review and analysis of a resolution of the Board of
Directors of AIDO dated January 20, 2004.
4. Our review of the Merger Agreement and the Certificate of
Merger to be filed pursuant to the Merger Agreement pursuant to which
Acquisition is to be merged with and into UPCI, pursuant to which UPCI
will survive as a wholly-owned subsidiary of AIDO , which review was
taken in connection with our analysis of Section 3(a)(9) of the
Securities Act.
5. Our review and analysis of the Purchase Agreement and the
Merger and discussions with representatives of UPCI and the Investor
that:
(a) the UPCI Securities are to be purchased by the Investor
from UPCI on or about January 20, 2004;
(b) at the time the UPCI Securities were purchased, and
within the contemplation of Regulation D of the Securities Act,
(i) UPCI was not a "reporting company";
(ii) UPCI was not an "investment company";
(iii) UPCI was not a development stage company that
either had no specific business plan or purpose or had indicated that
its business plan was to engage in a merger or acquisition with an
unidentified company or entity;
(iv) UPCI had not utilized Rule 504 within the last
twelve calendar months;
(v) the dollar amount of the offering of the UPCI
Securities (including the UPCI Securities) would not exceed
$1,000,000.00; and
(vi) the Investor of the UPCI Securities qualifies as an
"accredited investor", the Investor was a bona fide resident of the
State of Colorado, and was not, prior to, nor would be subsequent to,
the Merger, an "affiliate" of UPCI, Acquisition or AIDO.
B. New Rule 504. On April 7, 1999, revisions to Rule 504 went
into effect which prohibit general solicitation and general advertising
of the offering by the issuer and which provide that securities issued
under the Rule will be restricted, unless certain specified conditions
are met. These conditions are:
1. The transaction is registered under a state law requiring
public filing and delivery of a disclosure document prior to sale; or
2. The securities are issued under a state law exemption that
permits general solicitation and general advertising so long as sales
are made only to "accredited investors" as the term is defined in
Regulation D.
Thus, if the securities are issued under a state law exemption
that permits general solicitation and general advertising (so long as
sales are made only to accredited investors), the securities are not
restricted under Rule 504.
C. Application of Colorado Statutes. The UPCI Securities are to
be purchased by a resident of Colorado (i.e., the Investor), who is an
accredited investor. Colorado Regulation 51-3.13B specifically exempts
from the securities registration requirements of Colorado Regulation
00-00-000 pursuant to Colorado Regulation 11-51-308(1)(p), offers and
sales made in reliance on Rule 504 of Regulation D if the securities
are sold only to "accredited investors" as the term is defined in Rule
501 of Regulation D of the Securities Act. Still further, this same
Regulation specifically permits general solicitation and advertising if
the securities are sold only to accredited investors.
Since the UPCI Common Stock will be sold to an accredited investor
pursuant to Rule 504, the UPCI Common Stock may be freely traded if it
is issued "(e)xclusively according to (a) state law exemption() from
registration (i.e., the Colorado Statutes consisting of Sec. 00-00-000
of the Colorado Act and Regulation 51-3.13B, promulgated thereunder)
that permit(s) general solicitation and general advertising so long as
sales are made only to 'accredited investors'". Therefore, the UPCI
Common Stock may be issued without a restriction and may be freely
traded pursuant to Rule 504. This includes the issuance of the Escrow
Shares under the Purchase Agreement and the Security Shares and
Additional Security Shares under the Merger Agreement and the Purchase
Agreement.
D. The Merger and Section 3(a) of the Securities Act. Prior to
the Merger of Acquisition into UPCI, the UPCI Securities were issued by
UPCI to the Investor. Pursuant to the Merger, the UPCI Common Stock
will be canceled and AIDO will issue to the Escrow Agent (as defined in
the Purchase Agreement) Security Shares, and potentially in the future
Additional Security Shares, to replace the Escrow Shares and into which
the UPCI Debentures may be converted and delivered to the Investor or
its assigns pursuant to the terms of the Purchase Agreement and UPCI
Debentures. By virtue of operation of law and the Merger Agreement,
AIDO will assume and be responsible for all UPCI obligations, including
those of UPCI under and with respect to the UPCI Securities.
Section 3(a)(9) exempts any security exchanged by the issuer with
"its" security holders. The Commission has interpreted this language
as requiring that both the security issued and the security surrendered
in the exchange be those of the same issuer. According to Xxxxxxxxx
Xxxxx, Section 3(a)(9) is available for certain intracorporate
reorganizations where the exchange of securities is NOT made by the
ORIGINAL issuer, where the security issued is that of issuer B but the
security surrendered is that of what was issuer A.
There are two related No-Action Letters which are virtually
perfectly on point. Pacwest Bancorp, SEC No-Action Letter. 1979 WL
14720 (1979-1980 Transfer Binder) Fed. Sec. L. Rep. (CCH) Paragraph 82,
376 (October 24, 1979), and Pacwest Bancorp, SEC No-Action Letter 1979
WL 13112 (October 12, 1979).
At the time of the proposed merger into a wholly-owned subsidiary
of Pacwest Bancorp ("Pacwest"), First State Bank ("First State") had
issued and outstanding, debentures that were convertible into its
common stock. First State was to be the surviving company. Under the
merger agreement, Pacwest, a multibank holding company, and First State
were to enter into a supplemental indenture with the trustees providing
for the substitution of Pacwest common stock for First State common
stock as the underlying security into which the debentures were
convertible. Pacwest was to assume the obligation to issue its common
stock upon conversion of the debentures, but was not to assume the
obligations of First State to pay the debentures in accordance with
their terms. In relying on Section 3(a)(9) to exempt the issuance of
Pacwest common upon conversion of the debentures, counsel to Pacwest
presented two reasons why its client should be deemed the same issuer:
1. Pacwest should be deemed the issuer of the conversion
privilege that the debenture holders of First State possessed by reason
of the supplemental indenture; and
2. Pacwest should be considered as the issuer of the debentures
by assuming the obligations of First State with respect to conversion.
The SEC staff rejected both arguments and found Section 3(a)(9)
inapplicable. However, in a supplementary request to the staff,
Pacwest announced its intention to assume First State's obligation to
pay principal, interest, and premium, if any, on the debentures. On
these new facts, which the SEC staff noted were absent from the
original no-action request, the staff stated that Section 3(a)(9)
applied.
According to Xxxxxxxxx Xxxxx, the SEC staff continues to follow
the Pacwest position and allows a person who seeks Section 3(a)(9)
issuer status for obligations it did not originate but subsequently
assumes primary liability. The original issuer might be affiliated or
nonaffiliated with the new issuer. Under either circumstance, the
issuance of the parent's stock upon conversion of the subsidiary's debt
securities will constitute an exempted exchange.
Since AIDO will by operation of law and the Merger Agreement,
assume and be responsible for the payment of principal and interest on
the UPCI Debentures, the issuance of the AIDO Common Stock upon
conversion of the UPCI Debentures will constitute an exempt exchange.
Therefore, the subject transaction would be exempt from
registration, and the AIDO Securities, including the issuance of the
Security Shares and Additional Security Shares and the delivery of such
shares to the Investor or its assigns upon conversion of the UPCI
Debentures in accordance with the terms thereof, the Merger Agreement
and the Purchase Agreement will remain freely tradable.
E. Supporting Legal Opinion. Accordingly, based upon the above
we are of the opinion as follows with respect to the issuance of the
UPCI Securities and the AIDO Securities, including the Escrow Shares,
the Security Shares and the Additional Security Shares:
1. Assuming that the sale of the UPCI Securities (and the AIDO
Securities) does not exceed the aggregate amount of $1,000,000 (which
to our knowledge is correct based solely on our review of the Merger
Agreement, the Purchase Agreement and the UPCI Debentures), that the
facts given to us by management of both companies are true and correct,
and that the other conditions of Rule 504 and the applicable Colorado
Statutes (as they relate to the facts given to us) are met (which to
our knowledge is correct based solely on our review of the Merger
Agreement, the Purchase Agreement and the UPCI Debentures), the
issuance of the UPCI Securities will be exempt from registration
pursuant to Rule 504 of Regulation D and the applicable Colorado
Statutes. Consequently, when issued, the AIDO Securities may be issued
without a restrictive legend, may be delivered to the Investor or its
assigns in accordance with the Purchase Agreement and the UPCI
Debentures, and may be freely traded except by affiliates of either
company.
2. Assuming that the sale of the UPCI Securities (and the AIDO
Securities) does not exceed the aggregate amount of $1,000,000.00
(which to our knowledge is correct based solely on our review of the
Merger Agreement, the Purchase Agreement and the UPCI Debentures), that
the representations in the Purchase Agreement given to us are true and
correct, and that the other conditions of Rule 504 and the applicable
Colorado Statutes (as they relate to the facts given to us) are
met(which to our knowledge is correct based solely on our review of the
Merger Agreement, the Purchase Agreement and the UPCI Debentures), the
issuance of the UPCI Securities will be exempt from registration
pursuant to Rule 504 of Regulation D, the applicable Colorado Statutes,
and Section 3(a)(9) of the Securities Act. Consequently, when issued,
the AIDO Securities may be issued without a restrictive legend and may
be freely traded except by affiliates of either company. This would
also include the issuance of the Security Shares pursuant to the Merger
Agreement and of the Additional Security Shares pursuant to the
Purchase Agreement and the delivery of any such shares to the Investor
or its assigns pursuant to the Purchase Agreement and the UPCI
Debentures.
3. Accordingly, pursuant to Rule 504, the applicable Colorado
Statutes, and Section 3(a)(9) of the Securities Act, you may issue the
UPCI Securities and, subsequently, the AIDO Securities, without a
restrictive legend, and the UPCI Securities and the AIDO Securities
are, and will be, available for immediate resale by non-affiliates of
UPCI and AIDO.
4. Finally, that UPCI and AIDO, through their respective Board of
Directors, have taken all necessary and required corporate action to
cause the issuance and delivery of the Security Shares in accordance
with the Merger Agreement. Further, that the Security Shares and
Additional Security Shares when issued in accordance with the Merger
Agreement, the Purchase Agreement and this opinion, will be duly
authorized, validly issued and non-assessable.
Our above opinions are subject to the following qualifications:
1. Members of our firm are qualified to practice law in the State
of (Hawaii) and we express no opinion as to the laws of any
jurisdictions except for those of (California), the securities laws of
Colorado referred to herein and the United States of America referred
to herein. For the purposes of rendering this opinion, we have assumed
that if a court applies the laws of a jurisdiction (other than the
Colorado securities laws referred to herein) other than the laws of
(California), the laws of such other jurisdiction are identical in all
material respects to the comparable laws of the State of (California).
2. The opinions set forth herein are expressed as of the date
hereof and remain valid so long as the documents, instruments, records
and certificates we have examined and relied upon as noted above, are
unchanged and the assumptions we have made, as noted above, are valid.
This opinion is furnished by us as special securities and
acquisition counsel to UPCI and may only be relied upon by you and
Acquisition and in connection with the issue of Security Shares or
Additional Security Shares, by your transfer agent in connection with
any instruction letters from you to your transfer agent regarding their
authorization to issue shares of Security Shares or additional Security
Shares without restrictive legends. It may not be used or relied upon
by you for any other purpose or by any other person, nor may copies be
delivered to any other person, without in each instance our prior
written consent.
Please have all stock certificates issued in the name of the
Investor shown on Exhibit A delivered to the office of Gottbetter &
Partners, LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxx
Xxxxxxxxxx, Esq., as that firm is acting on behalf of the issuer as
closing escrow agent with respect to the transaction referred to
herein.
Very truly yours,
Hand & Hand
A Professional Corporation
EXHIBIT A
Principal Amount of
Name of Investor Purchase Price UPCI Convertible Debenture
HEM Mutual Assurance LLC $1,000,000 $1,000,000
Stock Certificate Denominations for the Security Shares:
4 certificates each for 5,000,000 shares
16 certificates each for 1,000,000 shares
15 certificates each for 500,000 shares
16 certificates each for 250,000 shares
16 certificates each for 100,000 shares
15 certificates each for 50,000 shares
15 certificates each for 10,000 shares
EXHIBIT 6.1(d)
Instruction Letter to Transfer Agent
January 20, 2004
Signature Stock Transfer, Inc.
0000 Xxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
RE: Advanced ID Corporation
Dear Sirs:
The purpose of this letter is to authorize Signature Stock
Transfer, Inc. to rely upon the attached legal opinion of Hand & Hand,
in connection with the issuance of 50,000,000 shares of Advanced ID
Corporation common stock. Jehu Hand is acting as special counsel to
Advanced ID Corporation on a complex business transaction.
Please do not hesitate to contact us for additional assistance
with this matter.
Sincerely yours,
ADVANCED ID CORPORATION
By:
Xxxxx Xxxxxxx, President
EXHIBIT 6.1(e)
AIDO ACQUISITION, INC.
OFFICER'S CERTIFICATE
I, Xxxx Xxxxx, being the President of AIDO Acquisition, Inc., a
Hawaii corporation (the "Company"), pursuant to Section 6.1(a) of that
certain Agreement and Plan of Merger (the "Merger Agreement"), dated as
of January 20, 2004, by and between the Company, Advanced ID
Corporation and Universal Pet Care, Inc., do hereby certify on behalf
of the Company that attached hereto is a copy of the resolutions duly
adopted by the Board of Directors of the Company authorizing the
execution, delivery and performance of the Merger Agreement and all
exhibits and documents related thereto by the Company and all other
necessary or proper corporate action to enable the Company to comply
with the terms thereunder.
IN WITNESS WHEREOF, I have executed this Officer's Certificate on
behalf of the Company this 20th day of January, 2004.
AIDO ACQUISITION, INC.
By:
Xxxx Xxxxx, President
EXHIBIT 6.1(f)
ADVANCED ID CORPORATION
OFFICER'S CERTIFICATE
I, Xxxxx Xxxxxxx, being the President of Advanced ID Corporation,
a South Dakota corporation (the "Company"), pursuant to Section 6.1(f)
of that certain Agreement and Plan of Merger, dated as of January 20,
2004, by and between the Company, AIDO Acquisition, Inc., and Universal
Pet Care, Inc. ("UPCI") (the "Merger Agreement"), do hereby certify on
behalf of the Company as follows:
1. The representations and warranties of the Company contained in
Section 4.1 of the Merger Agreement, as supplemented by the Schedules
attached thereto, were true, correct and complete in all material
respects when made (except for representations and warranties that
speak as of a specific date, which representations and warranties shall
be true, correct and complete in all material respects as of such date)
and are true, correct and complete in all material respects as at the
date hereof (except for representations and warranties that speak as of
a specific date, which representations and warranties shall be true,
correct and complete in all material respects as of such date).
2. The Company has satisfied in all material respects, all
covenants and agreements required to be satisfied by it under the
Merger Agreement on or prior to the date hereof except such as may have
become waived by UPCI in accordance with the Agreement.
IN WITNESS WHEREOF, I have executed this Officer's Certificate on
or behalf of the Company this 20th day of January, 2004.
ADVANCED ID CORPORATION
By:
Xxxxx Xxxxxxx, President
EXHIBIT 6.1(h)
AIDO ACQUISITION, INC.
OFFICER'S CERTIFICATE
I, Xxxx Xxxxx, being the President of AIDO Acquisition, Inc., a
Hawaii corporation (the "Company"), pursuant to Section 6.1(f) of that
certain Agreement and Plan of Merger, dated as of January 20, 2004, by
and between the Company, Advanced ID Corporation and Universal Pet
Care, Inc. ("UPCI") (the "Merger Agreement"), do hereby certify on
behalf of the Company as follows:
1. The representations and warranties of the Company contained in
Section 4.1 of the Merger Agreement, as supplemented by the Schedules
attached thereto, were true, correct and complete in all material
respects when made (except for representations and warranties that
speak as of a specific date, which representations and warranties shall
be true, correct and complete in all material respects as of such date)
and are true, correct and complete in all material respects as at the
date hereof (except for representations and warranties that speak as of
a specific date, which representations and warranties shall be true,
correct and complete in all material respects as of such date).
2. The Company has satisfied in all material respects, all
covenants and agreements required to be satisfied by it under the
Merger Agreement on or prior to the date hereof except such as may have
become waived by UPCI in accordance with the Agreement.
IN WITNESS WHEREOF, I have executed this Officer's Certificate on
or behalf of the Company this 20th day of January, 2004.
AIDO ACQUISITION, INC.
By:
Xxxx Xxxxx, President
EXHIBIT 6.2(a)
UNIVERSAL PET CARE, INC.
OFFICER'S CERTIFICATE
I, Jehu Hand, being the President and Chief Executive Officer of
Universal Pet Care, Inc., a Hawaii corporation (the "Company"),
pursuant to Section 6.2(a) of that certain Agreement and Plan of Merger
(the "Merger Agreement"), dated as of January 20, 2004, by and between
the Company, AIDO Acquisition, Inc. and Advanced ID Corporation, do
hereby certify on behalf of the Company that attached hereto is a copy
of the resolutions duly adopted by the Board of Directors of the
Company authorizing the execution, delivery and performance of the
Merger Agreement and all exhibits and documents related thereto by the
Company and all other necessary or proper corporate action to enable
the Company to comply with the terms thereunder.
IN WITNESS WHEREOF, I have executed this Officer's Certificate on
behalf of the Company this 20th day of January, 2004.
UNIVERSAL PET CARE, INC.
By:
Jehu Hand
President and Chief Executive Officer
EXHIBIT 6.2(b)
January 20, 2004
Advanced ID Corporation
0000 - 0 Xxxxxx XX, Xxxxx 00
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attn: Xxxxx Xxxxxxx, President
Gentlemen:
We have acted as counsel to Universal Pet Care, Inc., a Hawaii
corporation ("UPCI"), in connection with the Agreement and Plan of
Merger (the "Agreement") dated as of January 20, 2004, by and between
UPCI, Advanced ID Corporation (the "Company") and AIDO Acquisition,
Inc., a wholly owned subsidiary of the Company. The Agreement and all
other documents, instruments, agreements and certificates to be
delivered pursuant thereto are herewith referred to as the "Transaction
Documents."
In connection with this opinion, we have examined the Transaction
Documents and such other documents, agreements and records of UPCI as
in our judgment are necessary or appropriate to enable us to render the
opinions expressed below. In our examination of such documents, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to the
original documents of all documents submitted to us as copies, and we
have relied upon the aforesaid documents with respect to the accuracy
of material factual matters contained therein. We have also assumed,
without verification, the due authorization, execution and delivery by
each party thereto other than UPCI of each of the Transaction Documents
and that such agreements constitute the legal, valid and binding
obligations of such parties, and are enforceable against such parties
in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally or by the exercise of judicial discretion in accordance with
general principles of equity.
As to factual matters relevant to our opinion which were not
independently established, we have also relied, without independent
verification, on the representations and warranties of UPCI contained
in the Transaction Documents and in certificates furnished by officers
of UPCI in connection with the related transactions, copies of which
certificates are attached hereto.
In instances where we have expressed an opinion "to our
knowledge," the term "knowledge" refers to the actual knowledge of the
attorneys at our firm who have rendered legal services in connection
with the Agreement and related transactions, and we have not undertaken
any independent investigation or made inquiries of any outside third
parties with respect to such matters.
Based upon the foregoing and subject to the assumptions,
limitations, qualifications and exceptions stated herein, we are of the
opinion that:
(1) UPCI has been duly incorporated and is validly existing and
in good standing under the laws of the State of Hawaii.
(2) Based upon representations of UPCI, as of the date hereof and
after giving effect to the Closing (as defined in the Agreement), the
number of shares of capital stock that UPCI is authorized to issue is
(50,001,000) shares of common stock, par value $1.00 (the "Common
Stock") and its issued and outstanding capital stock consists of
(50,001,000) shares of Common Stock, (1,000 shares of which are held by
( )) and 50,000,000 of which are held in escrow pursuant
to the Purchase Agreement and will be canceled pursuant to the terms of
the Merger Agreement. All such outstanding shares of Common Stock have
been duly authorized and validly issued and are fully paid and non-
assessable. There are no outstanding rights, options, warrants or
other securities which may be convertible into equity securities of
UPCI other than the UPCI Debenture, which UPCI issued to HEM Mutual
Assurance LLC. There are no preemptive or other rights to subscribe
for or purchase any Common Stock or other securities of UPCI.
(3) UPCI has the full legal power and authority to enter into the
Agreement. The Agreement, and the completion of the transactions
contemplated thereby have been duly and validly authorized by all
necessary corporate action by UPCI. The Agreement has been duly and
validly executed and delivered by and on behalf of UPCI, is a valid and
binding Agreement of UPCI and is enforceable against UPCI in accordance
with its terms. No approval, authorization, order, consent,
registration, filing, qualification, license or permit of or with any
court, regulatory, administrative or other governmental body is
required for the execution and delivery of the Agreement by UPCI or the
completion of the transactions contemplated by the Agreement.
(4) The execution and performance of the Agreement, and the
consummation of the transactions therein contemplated, did not and will
not conflict with or violate any law, statute, judgment, decree, order,
rule or regulation of any court or governmental body (including the
Securities and Exchange Commission) having jurisdiction over UPCI.
(5) No action, suit, claim, investigation or proceeding is
pending or, to our knowledge, threatened against UPCI.
The opinions expressed herein are subject to the following
additional limitations, qualifications and exceptions:
(a) We disclaim any opinion as to (i) any provisions in any
documents which purport to waive any procedural due process rights, and
(ii) any provisions relating to choice of governing law, which choice
may depend upon factual circumstances and the laws of other
jurisdictions.
(b) We note that we are members of the bar of the State of
(California). To the extent that the governing law with respect to any
matters covered by this opinion is the law of any jurisdiction other
than the state of (California) or the federal securities law of the
United States, we have assumed that the law of such other jurisdiction
is identical to (California) law.
(c) We express no opinion on the validity, binding effect or
enforceability under the provisions of the Transaction Documents: (i)
which waive any rights afforded to any party thereto under any statute
or constitutional provision; (ii) which waive broadly or vaguely stated
rights or future rights, or waive certain rights or defenses to
obligations, in each case where such waivers are against statutes, laws
or public policy; (iii) that provide that injunctive relief or specific
performance may be available as a remedy for breach of any of the
Transaction Documents, or (iv) the breach of which a court of competent
jurisdiction concludes is not material or does not adversely affect the
non-breaching party.
(d) Insofar as the indemnity provisions of any of the Transaction
Documents may encompass indemnification with respect to violation of
law, enforcement thereof may be limited by public policies underlying
such laws.
(e) Our opinions on the binding effect and enforceability of any
obligation are subject to limitations resulting from the effects of:
(i) bankruptcy, insolvency, reorganization, receivership, moratorium,
fraudulent conveyance, arrangement and assignment for the benefit of
creditors laws and similar laws or judicially developed doctrines, and
(ii) general principles of equity, whether applied by a court of law or
a court of equity.
(f) We express no opinion on federal patent, copyright or
trademark, state trademark or other federal or state intellectual
property laws or regulations.
This opinion is given as of the date hereof and is necessarily
limited to the laws now in effect and the facts and circumstances known
to us on the date hereof, and we do not undertake or assume any
obligations, to review update or supplement this opinion to reflect any
facts, circumstances which may hereafter come to our attention or any
changes in laws which may hereafter occur.
These opinions are limited to the matters expressly stated herein
and are rendered solely for your benefit and may not be quoted or
relied upon for any other purpose or by any other person.
Very truly yours,
Hand & Hand, a Professional
Corporation
EXHIBIT 6.2(c)
January 20, 2004
Advanced ID Corporation
0000 - 0 Xxxxxx XX, Xxxxx 00
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attn: Xxxxx Xxxxxxx, President
Re: Supporting Legal Opinion for Request to Issue Free Trading
Securities Pursuant to Rule 504 for Advanced ID Corporation
Dear Sirs:
The undersigned has been retained as special securities and
acquisition counsel to Advanced ID Corporation, a South Dakota
corporation, ("AIDO") and Universal Pet Care, Inc., a Hawaii
corporation ("UPCI"). We can advise you that prior to the transactions
referred to herein, UPCI was not affiliated with AIDO.
The subject of this letter are securities to be issued by UPCI on
or about January 20, 2004, pursuant to a Convertible Debenture Purchase
Agreement ("Purchase Agreement") dated January 20, 2004 between UPCI
and the Investor (as defined below), to wit, the UPCI 1 percent
Convertible Debenture in the aggregate principal amount of Nine Hundred
Ninety Five Thousand Five Hundred Dollars ($995,500) (the "First
Debenture") and the UPCI 1 percent Convertible Debenture in the
aggregate principal amount of Four Thousand Five Hundred Dollars
($4,500) (the "Second Debenture"; and, together with the First
Debenture, the "UPCI Debentures"), together with the underlying shares
of the UPCI common stock, par value $1.00 (the "UPCI Common Stock"),
into which the UPCI Debentures are convertible, from time to time. The
Purchase Agreement also requires UPCI and/or its successor in interest,
to issue 50,000,000 shares of UPCI Common Stock as a "security stock"
(the "Escrow Shares") in support of the offer and sale of the UPCI
Debentures. The UPCI Debentures, the UPCI Common Stock and the Escrow
Shares may be referred to collectively herein as the "UPCI Securities."
The UPCI Debentures are to be issued to the accredited investor
listed on Exhibit A to this opinion, an accredited Colorado resident or
domiciliary (the "Investor"). Under and pursuant to the terms of the
UPCI Debentures and the Purchase Agreement, the Investor may elect to
convert all or some of the UPCI Debentures into the UPCI Common Stock.
Following the issuance of the UPCI Debentures on or about January
20, 2004, AIDO Acquisition, Inc., a (Hawaii) corporation
("Acquisition"), a wholly owned subsidiary of AIDO, will be merged with
and into UPCI (the "Merger") pursuant to the Agreement and Plan of
Merger dated as of January 20, 2004 by and among AIDO, Acquisition and
UPCI (the "Merger Agreement"). Pursuant to the Merger, the UPCI Common
Stock will be canceled and AIDO shall issue 50,000,000 shares of its
common stock, par value $0.01 per share (the "AIDO Common Stock") into
escrow pursuant to the terms of the Merger Agreement and the Purchase
Agreement as a "security stock" to replace the Escrow Shares (the
"Security Shares"). Up to all of the Security Shares and up to all of
any additional shares of AIDO Common Stock that may in the future be
issued and deposited into escrow by AIDO in accordance with the
Purchase Agreement (the "Additional Security Shares") may be released
from escrow from time to time to the Investor or its assigns to satisfy
AIDO's obligations upon conversion of the Debentures by the Investor or
its assigns in accordance with the terms of the Purchase Agreement and
the Debentures. This letter addresses the validity of the issuance of
the Security Shares and Additional Security Shares and the delivery of
the Security Shares and Additional Security Shares to the Investor or
its assigns from time-to-time in accordance with the Merger Agreement,
Purchase Agreement and UPCI Debentures. The UPCI Debentures, AIDO
Common Stock, Security Shares and Additional Security Shares, are
referred to collectively herein as the "AIDO Securities."
You have requested that we provide you with separate legal
opinions (i) covering the issuance of the Security Shares and any
Additional Security Shares to the effect that the UPCI Debentures and
the UPCI Common Stock, and the AIDO Securities, as the case may be, may
be issued without a restrictive legend and may be freely traded; and
(ii) covering the issuance of AIDO Common Stock as Security Shares and
Additional Security Shares pursuant to the terms of the Merger
Agreement, Purchase Agreement and the UPCI Debentures to the effect
that such shares (or any part thereof) may be issued and subsequently
delivered to the Investor or its assigns upon the receipt by AIDO of
any notices of conversion issued by the Investor or its assigns
pursuant to the terms of the Purchase Agreement and the UPCI Debentures
without a restrictive legend and may be freely traded. This opinion
covers any issuance of AIDO Securities and the delivery of the same to
the Investor or its assigns in accordance with the terms of the
Purchase Agreement, the Merger Agreement and the UPCI Debentures.
A. Basis for Supporting Legal Opinion. The following is the
basis for our supporting legal opinion for the requested issuance and
delivery of the UPCI Securities and the AIDO Securities free of any
restrictive legend.
1. Our review and analysis of Rule 504 of Regulation D of the
Securities Act of 1933 (the "Securities Act"), as revised, effective as
of April 7, 1999; the Colorado Securities Act of the Colorado Revised
Statutes as set forth in Article 51 (the "Colorado Act"); and the
Regulations contained therein (the "Colorado Regulations") which are
collectively referred to herein as the "Colorado Statutes", as they
apply to the proposed issuance of the UPCI Securities and the AIDO
Securities.
2. Our review and analysis of a resolution of the Board of
Directors of UPCI dated January 20, 2004.
3. Our review and analysis of a resolution of the Board of
Directors of AIDO dated January 20, 2004.
4. Our review of the Merger Agreement and the Certificate of
Merger to be filed pursuant to the Merger Agreement pursuant to which
Acquisition is to be merged with and into UPCI, pursuant to which UPCI
will survive as a wholly-owned subsidiary of AIDO , which review was
taken in connection with our analysis of Section 3(a)(9) of the
Securities Act.
5. Our review and analysis of the Purchase Agreement and the
Merger and discussions with representatives of UPCI and the Investor
that:
(a) the UPCI Securities are to be purchased by the Investor from
UPCI on or about January 20, 2004;
(b) at the time the UPCI Securities were purchased, and within
the contemplation of Regulation D of the Securities Act,
(i) UPCI was not a "reporting company";
(ii) UPCI was not an "investment company";
(iii) UPCI was not a development stage company that either
had no specific business plan or purpose or had indicated that its
business plan was to engage in a merger or acquisition with an
unidentified company or entity;
(iv) UPCI had not utilized Rule 504 within the last twelve
calendar months;
(v) the dollar amount of the offering of the UPCI Securities
(including the UPCI Securities) would not exceed $1,000,000.00; and
(vi) the Investor of the UPCI Securities qualifies as an
"accredited investor", the Investor was a bona fide resident of the
State of Colorado, and was not, prior to, nor would be subsequent to,
the Merger, an "affiliate" of UPCI, Acquisition or AIDO.
B. New Rule 504. On April 7, 1999, revisions to Rule 504 went
into effect which prohibit general solicitation and general advertising
of the offering by the issuer and which provide that securities issued
under the Rule will be restricted, unless certain specified conditions
are met. These conditions are:
1. The transaction is registered under a state law requiring
public filing and delivery of a disclosure document prior to sale; or
2. The securities are issued under a state law exemption that
permits general solicitation and general advertising so long as sales
are made only to "accredited investors" as the term is defined in
Regulation D.
Thus, if the securities are issued under a state law exemption
that permits general solicitation and general advertising (so long as
sales are made only to accredited investors), the securities are not
restricted under Rule 504.
C. Application of Colorado Statutes. The UPCI Securities are to
be purchased by a resident of Colorado (i.e., the Investor), who is an
accredited investor. Colorado Regulation 51-3.13B specifically exempts
from the securities registration requirements of Colorado Regulation
00-00-000 pursuant to Colorado Regulation 11-51-308(1)(p), offers and
sales made in reliance on Rule 504 of Regulation D if the securities
are sold only to "accredited investors" as the term is defined in Rule
501 of Regulation D of the Securities Act. Still further, this same
Regulation specifically permits general solicitation and advertising if
the securities are sold only to accredited investors.
Since the UPCI Common Stock will be sold to an accredited investor
pursuant to Rule 504, the UPCI Common Stock may be freely traded if it
is issued "(e)xclusively according to (a) state law exemption() from
registration (i.e., the Colorado Statutes consisting of Sec. 00-00-000
of the Colorado Act and Regulation 51-3.13B, promulgated thereunder)
that permit(s) general solicitation and general advertising so long as
sales are made only to 'accredited investors'". Therefore, the UPCI
Common Stock may be issued without a restriction and may be freely
traded pursuant to Rule 504. This includes the issuance of the Escrow
Shares under the Purchase Agreement and the Security Shares and
Additional Security Shares under the Merger Agreement and the Purchase
Agreement.
D. The Merger and Section 3(a) of the Securities Act. Prior to
the Merger of Acquisition into UPCI, the UPCI Securities were issued by
UPCI to the Investor. Pursuant to the Merger, the UPCI Common Stock
will be canceled and AIDO will issue to the Escrow Agent (as defined in
the Purchase Agreement) Security Shares, and potentially in the future
Additional Security Shares, to replace the Escrow Shares and into which
the UPCI Debentures may be converted and delivered to the Investor or
its assigns pursuant to the terms of the Purchase Agreement and UPCI
Debentures. By virtue of operation of law and the Merger Agreement,
AIDO will assume and be responsible for all UPCI obligations, including
those of UPCI under and with respect to the UPCI Securities.
Section 3(a)(9) exempts any security exchanged by the issuer with
"its" security holders. The Commission has interpreted this language
as requiring that both the security issued and the security surrendered
in the exchange be those of the same issuer. According to Xxxxxxxxx
Xxxxx, Section 3(a)(9) is available for certain intracorporate
reorganizations where the exchange of securities is NOT made by the
ORIGINAL issuer, where the security issued is that of issuer B but the
security surrendered is that of what was issuer A.
There are two related No-Action Letters which are virtually
perfectly on point. Pacwest Bancorp, SEC No-Action Letter. 1979 WL
14720 (1979-1980 Transfer Binder) Fed. Sec. L. Rep. (CCH) Paragraph 82,
376 (October 24, 1979), and Pacwest Bancorp, SEC No-Action Letter 1979
WL 13112 (October 12, 1979).
At the time of the proposed merger into a wholly-owned subsidiary
of Pacwest Bancorp ("Pacwest"), First State Bank ("First State") had
issued and outstanding, debentures that were convertible into its
common stock. First State was to be the surviving company. Under the
merger agreement, Pacwest, a multibank holding company, and First State
were to enter into a supplemental indenture with the trustees providing
for the substitution of Pacwest common stock for First State common
stock as the underlying security into which the debentures were
convertible. Pacwest was to assume the obligation to issue its common
stock upon conversion of the debentures, but was not to assume the
obligations of First State to pay the debentures in accordance with
their terms. In relying on Section 3(a)(9) to exempt the issuance of
Pacwest common upon conversion of the debentures, counsel to Pacwest
presented two reasons why its client should be deemed the same issuer:
1. Pacwest should be deemed the issuer of the conversion
privilege that the debenture holders of First State possessed by reason
of the supplemental indenture; and
2. Pacwest should be considered as the issuer of the debentures
by assuming the obligations of First State with respect to conversion.
The SEC staff rejected both arguments and found Section 3(a)(9)
inapplicable. However, in a supplementary request to the staff,
Pacwest announced its intention to assume First State's obligation to
pay principal, interest, and premium, if any, on the debentures. On
these new facts, which the SEC staff noted were absent from the
original no-action request, the staff stated that Section 3(a)(9)
applied.
According to Xxxxxxxxx Xxxxx, the SEC staff continues to follow
the Pacwest position and allows a person who seeks Section 3(a)(9)
issuer status for obligations it did not originate but subsequently
assumes primary liability. The original issuer might be affiliated or
nonaffiliated with the new issuer. Under either circumstance, the
issuance of the parent's stock upon conversion of the subsidiary's debt
securities will constitute an exempted exchange.
Since AIDO will by operation of law and the Merger Agreement,
assume and be responsible for the payment of principal and interest on
the UPCI Debentures, the issuance of the AIDO Common Stock upon
conversion of the UPCI Debentures will constitute an exempt exchange.
Therefore, the subject transaction would be exempt from
registration, and the AIDO Securities, including the issuance of the
Security Shares and Additional Security Shares and the delivery of such
shares to the Investor or its assigns upon conversion of the UPCI
Debentures in accordance with the terms thereof, the Merger Agreement
and the Purchase Agreement will remain freely tradable.
E. Supporting Legal Opinion. Accordingly, based upon the above
we are of the opinion as follows with respect to the issuance of the
UPCI Securities and the AIDO Securities, including the Escrow Shares,
the Security Shares and the Additional Security Shares:
1. Assuming that the sale of the UPCI Securities (and the AIDO
Securities) does not exceed the aggregate amount of $1,000,000 (which
to our knowledge is correct based solely on our review of the Merger
Agreement, the Purchase Agreement and the UPCI Debentures), that the
facts given to us by management of both companies are true and correct,
and that the other conditions of Rule 504 and the applicable Colorado
Statutes (as they relate to the facts given to us) are met (which to
our knowledge is correct based solely on our review of the Merger
Agreement, the Purchase Agreement and the UPCI Debentures), the
issuance of the UPCI Securities will be exempt from registration
pursuant to Rule 504 of Regulation D and the applicable Colorado
Statutes. Consequently, when issued, the AIDO Securities may be issued
without a restrictive legend, may be delivered to the Investor or its
assigns in accordance with the Purchase Agreement and the UPCI
Debentures, and may be freely traded except by affiliates of either
company.
2. Assuming that the sale of the UPCI Securities (and the AIDO
Securities) does not exceed the aggregate amount of $1,000,000.00
(which to our knowledge is correct based solely on our review of the
Merger Agreement, the Purchase Agreement and the UPCI Debentures), that
the representations in the Purchase Agreement given to us are true and
correct, and that the other conditions of Rule 504 and the applicable
Colorado Statutes (as they relate to the facts given to us) are
met(which to our knowledge is correct based solely on our review of the
Merger Agreement, the Purchase Agreement and the UPCI Debentures), the
issuance of the UPCI Securities will be exempt from registration
pursuant to Rule 504 of Regulation D, the applicable Colorado Statutes,
and Section 3(a)(9) of the Securities Act. Consequently, when issued,
the AIDO Securities may be issued without a restrictive legend and may
be freely traded except by affiliates of either company. This would
also include the issuance of the Security Shares pursuant to the Merger
Agreement and of the Additional Security Shares pursuant to the
Purchase Agreement and the delivery of any such shares to the Investor
or its assigns pursuant to the Purchase Agreement and the UPCI
Debentures.
3. Accordingly, pursuant to Rule 504, the applicable Colorado
Statutes, and Section 3(a)(9) of the Securities Act, you may issue the
UPCI Securities and, subsequently, the AIDO Securities, without a
restrictive legend, and the UPCI Securities and the AIDO Securities
are, and will be, available for immediate resale by non-affiliates of
UPCI and AIDO.
4. Finally, that UPCI and AIDO, through their respective Board
of Directors, have taken all necessary and required corporate action to
cause the issuance and delivery of the Security Shares in accordance
with the Merger Agreement. Further, that the Security Shares and
Additional Security Shares when issued in accordance with the Merger
Agreement, the Purchase Agreement and this opinion, will be duly
authorized, validly issued and non-assessable.
Our above opinions are subject to the following qualifications:
1. Members of our firm are qualified to practice law in the State
of (California) and we express no opinion as to the laws of any
jurisdictions except for those of (California), the securities laws of
Colorado referred to herein and the United States of America referred
to herein. For the purposes of rendering this opinion, we have assumed
that if a court applies the laws of a jurisdiction (other than the
Colorado securities laws referred to herein) other than the laws of
(California), the laws of such other jurisdiction are identical in all
material respects to the comparable laws of the State of (California).
2. The opinions set forth herein are expressed as of the date
hereof and remain valid so long as the documents, instruments, records
and certificates we have examined and relied upon as noted above, are
unchanged and the assumptions we have made, as noted above, are valid.
This opinion is furnished by us as special securities and
acquisition counsel to UPCI and may only be relied upon by you and
Acquisition and, in connection with the issue of Security Shares or
Additional Security Shares, by your transfer agent in connection with
any instruction letters from you to your transfer agent regarding their
authorization to issue shares of Security Shares or Additional Security
Shares without restrictive legends. It may not be used or relied upon
by you for any other purpose or by any other person, nor may copies be
delivered to any other person, without in each instance our prior
written consent.
Please have all stock certificates issued in the name of the
Investor shown on Exhibit A delivered to the office of Gottbetter &
Partners, LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxx
Xxxxxxxxxx, Esq., as that firm is acting on behalf of the issuer as
closing escrow agent with respect to the transaction referred to
herein.
Very truly yours,
Hand & Hand
A Professional Corporation
EXHIBIT A
Principal Amount of
Name of Investor Purchase Price UPCI Convertible Debenture
HEM Mutual Assurance LLC $1,000,000 $1,000,000
Stock Certificate Denominations for the Security Shares:
4 certificates each for 5,000,000 shares
16 certificates each for 1,000,000 shares
15 certificates each for 500,000 shares
16 certificates each for 250,000 shares
16 certificates each for 100,000 shares
15 certificates each for 50,000 shares
15 certificates each for 10,000 shares
EXHIBIT 6.2(e)
UNIVERSAL PET CARE, INC.
OFFICER'S CERTIFICATE
I, Jehu Hand, being the President and Chief Executive Officer of
Universal Pet Care, Inc., a Hawaii corporation (the "Company"),
pursuant to Section 6.2(e) of that certain Agreement and Plan of
Merger, dated as of January 20, 2004, by and between the Company, AIDO
Acquisition, Inc. and Advanced ID Corporation ("AIDO") (the "Merger
Agreement"), do hereby certify on behalf of the Company as follows:
1. The representations and warranties of the Company contained in
Section 4.2 of the Merger Agreement, as supplemented by the Schedules
attached thereto, were true, correct and complete in all material
respects when made (except for representations and warranties that
speak as of a specific date, which representations and warranties shall
be true, correct and complete in all material respects as of such date)
and are true, correct and complete in all material respects as at the
date hereof (except for representations and warranties that speak of a
specific date, which representations and warranties shall be true,
correct and complete in all material respects as of such date).
2. The Company has satisfied in all material respects, all
covenants and agreements required to be satisfied by it under the
Merger Agreement on or prior to the date hereof except such as may have
become waived by AIDO in accordance with this Agreement.
IN WITNESS WHEREOF, I have executed this Officer's Certificate on
behalf of the Company this 20th day of January 2004.
UNIVERSAL PET CARE, INC.
By: /s/Jehu Hand
Jehu Hand
President and Chief Executive
Officer
{00066126.2 / 0813-003} C-1
