EXHIBIT 1.1
STOCK PURCHASE AND RECAPITALIZATION AGREEMENT
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This Agreement this 26th day of June 2006 by and among BICO
Acquisition, Inc., a New York corporation and wholly owned subsidiary of Parent
("Buyer"); BICO, Inc., a Pennsylvania corporation ("Parent"); and MobiClear
Limited, a company incorporated pursuant to the laws of the United Kingdom (the
"Company").
RECITALS
A. The respective Boards of Directors of each of the Company; Buyer
and Parent, and a majority of the issued and outstanding stock of the Company
and Buyer, have approved and declared advisable the merger of the Company with
and into Buyer (the "Merger") and approved the Merger upon the terms and subject
to the conditions set forth in this Agreement, whereby each issued and
outstanding share of the common stock of the Company (a "Company Share" or,
collectively, the "Company Shares"), will be converted into 51.86538 shares of
common stock, $0.0001 par value, of Parent ("Parent Common Stock")(242,535,487
shares of Parent Common Stock in the aggregate) which, after giving effect to
the Merger and the Reverse Stock Split, shall equal, in the aggregate, 85% of
the total issued and outstanding common stock of Parent, and certain other
consideration as provided herein.
B. The respective Boards of Directors of the Company, Buyer and Parent
have determined that the Merger is in furtherance of and consistent with their
respective long-term business strategies and is fair to and in the best
interests of their respective stockholders.
C. It is intended that, for federal income tax purposes, the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code");
D. For financial accounting purposes, it is intended that the Merger
will be accounted for as a "purchase";
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
The Merger; Closing; Effect of Merger
SECTION 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement and in accordance with New York corporate law, as
amended (the "NYCL") and the company laws of the United Kingdom as amended (the
"UKCL"), at the Effective Time (as defined in Section 1.3 below), the Company
shall be merged with and into Buyer and the separate corporate existence of the
Company shall thereupon cease. Buyer shall be the surviving corporation in the
Merger (sometimes hereinafter referred to as the "Surviving Corporation"), and
the separate corporate existence of Buyer with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the merger,
except as set forth herein. The Merger shall have the effects specified in the
NYCL and the UKCL.
SECTION 1.2 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger and the consummation of the other
transactions contemplated hereby (the "Closing") shall take place at the offices
of Xxxxx & Xxxxxxx LLP 000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx 00000 on July 25, 2006
at 10:00 a.m. local time (or at such other date, time and place as the parties
hereto may agree).
SECTION 1.3 Effective Time. On the date of Closing, the Company and
Buyer will cause a Certificate of Merger (the "New York Certificate of Merger")
to be executed, acknowledged and filed with the Secretary of State of the State
of New York. On the date of Closing, the Company and Buyer will cause a
Certificate of Merger (the "UK Certificate of Merger") to be executed,
acknowledged and filed with Companies House in the United Kingdom. The Merger
shall become effective at the time when the New York Certificate of Merger has
been filed with the Secretary of State of the State of New York; and the UK
Certificate of Merger has been filed with Companies House in the United Kingdom
or, as otherwise agreed by the Company and Buyer (the "Effective Time").
SECTION 1.4 Certificate of Incorporation. The certificate of
incorporation of Buyer as in effect immediately prior to the Effective Time
shall be the certificate of incorporation of the Surviving Corporation (the
"Charter"), until duly amended as provided therein or by applicable law.
SECTION 1.5 By-Laws. The by-laws of Buyer in effect immediately prior
to the Effective Time shall be the by-laws of the Surviving Corporation (the
"By-Laws"), until thereafter amended as provided therein or by applicable law.
SECTION 1.6 Directors. The director of the Company shall, from and
after the Effective Time, be Lim Wong until his successor have been duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Charter and the By-Laws. As of the Effective Time, the
authorized number of directors comprising the Board of Directors of Parent shall
consist of not less than 3 and not more than 5 individuals. The following
individuals shall be elected to the Board Directors of Parent at the Effective
Time: (i) _______________(Chairman of the Board); (ii) ___________________; and
(iii)__________________________.
SECTION 1.7 Officers. The officer of the Company shall, from and after
the Effective Time, be Lim Wong until his successor have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Charter and the By-Laws. . As of the Effective Time, the
officers of Parent shall be appointed as follows: (i) _____________ (President),
_____________ (CEO, Secretary and Treasurer); and (ii) _____________ (Vice
President).
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SECTION 1.8 Effect on Capital Stock. At the Effective Time, as a
result of the Merger and without any action on the part of the holder of any
capital stock of Buyer:
(i) Merger Consideration. Each Company Share issued and
outstanding immediately prior to the Effective Time shall be converted into, and
become exchangeable for 51.86538 validly issued, fully paid and nonassessable
shares of Parent Common Stock (the "Parent Merger Shares" and the "Merger
Purchase Price") (242,535,487 shares of Parent Common Stock in the aggregate);
(ii) At the Effective Time, all Company Shares shall be canceled
and the Company shall cease to exist, and each certificate (a "Certificate")
formerly representing any Company Shares shall thereafter represent only the
right to receive the shares of Parent Common Stock into which such Company
Shares have been converted.
SECTION 1.9 Exchange of Certificates for Shares.
(a) Exchange. At Closing, Parent shall deliver or cause to be
delivered to each respective owner of Company Shares and in each of their
respective names certificates representing Parent Common Stock into which the
Company Shares that such shareholders owns are to be converted as set forth on
Schedule 1 attached hereto.
(b) Fractional Shares. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates pursuant to this Article I; no dividend or other
distribution by Parent and no stock split, combination or reclassification shall
relate to any such fractional share; and no such fractional share shall entitle
the record or beneficial owner thereof to vote or to any other rights of a
stockholder of Parent. In lieu of any such factional share, each holder of
Company Shares who would otherwise have been entitled thereto upon the surrender
of Certificate(s) for exchange pursuant to this Article I will be paid an
additional share of Parent Common Stock.
(c) Adjustments of Conversion Number. In the event that Parent
changes the number of shares of Parent Common Stock, issued and outstanding
prior to the Effective Time as a result of a reclassification, stock split
(including a reverse split), dividend or distribution, recapitalization, merger
(other than the Merger, Stock Purchase or the cancellation of options previously
granted by the Company), subdivision, or other similar transaction with a
dilutive effect, or if a record date with respect to any of the foregoing shall
occur prior to the Effective Time, the conversion number shall be equitably
adjusted.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and covenants to Buyer and Parent as
follows and acknowledges that Buyer and Parent are relying upon such
representations and warranties in connection with the Contemplated Transactions
(as hereinafter defined):
SECTION 2.1 Capitalization. The outstanding and issued capital stock
of the Company consists 3,741,000 shares of common stock (4,676,250 shares fully
diluted). Schedule 1 sets forth the name of each record and beneficial
shareholder of the Company (each a "Shareholder" and collectively the
"Shareholders") and the number of Company Shares held by each such person.
Except as set forth on Schedule 2.1, the Company does not and, at the Closing,
the Company will not, have outstanding any capital stock or other securities or
any rights, warrants or options to acquire securities of the Company or any
convertible or exchangeable securities and, other than Buyer pursuant to this
Agreement, no person has or, at Closing will have, any right to purchase or
otherwise acquire any securities of the Company. There are, and at Closing there
will be, no outstanding obligations of the Company to repurchase, redeem or
otherwise acquire any securities of the Company. All of the Company Shares are,
and at Closing will be, duly authorized, duly and validly issued, fully paid and
non-assessable, and none were issued in violation of any preemptive rights,
rights of first refusal or any other contractual or legal restrictions of any
kind.
SECTION 2.2 Title to the Shares. To the best of Company's knowledge
and information each Shareholder is the beneficial owner and holds good and
valid title to its Company Shares free and clear of any Lien. To the best of
Company's knowledge and information, upon consummation of the Contemplated
Transactions and the satisfaction of the conditions to Closing set forth herein,
Buyer will own all of the issued and outstanding shares of capital stock of the
Company, free and clear of any Lien. At the Closing, each Shareholder will
deliver the Company Shares to Buyer free and clear of any Lien, other than
restrictions imposed by the Securities Act of 1933, as amended, and applicable
securities Laws including the laws of the United Kingdom.
SECTION 2.3 Authority Relative to this Agreement. Following approval
of the Shareholders of the Company, the Company will have full power, capacity
and authority to execute and deliver each Transaction Document to which it is
or, at Closing, will be, a party and to consummate the transactions contemplated
hereby and thereby (the "Contemplated Transactions"). The execution, delivery
and performance by the Company of each Transaction Document and the consummation
of the Contemplated Transactions to which the Company is, or at Closing, will
be, a party will have been duly and validly authorized by the Company and no
other acts by or on behalf of the Company will be necessary or required to
authorize the execution, delivery and performance by the Company of each
Transaction Document and the consummation of the Contemplated Transactions to
which it is or, at Closing, will be, a party. This Agreement and the other
Transaction Documents to which the Company is a party have been duly and validly
executed and delivered by the Company and (assuming the valid execution and
delivery thereof by the other parties thereto) will constitute the legal, valid
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and binding agreements of the Company enforceable against the Company in
accordance with their respective terms, except as such obligations and their
enforceability may be limited by applicable bankruptcy and other similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought (whether at law or in
equity).
SECTION 2.4 No Conflicts; Consents. The execution, delivery and
performance by the Company of each Transaction Document to which it is a party
and the consummation of the Contemplated Transactions to which the Company is a
party, upon approval of the Shareholders will not: (i) violate any provision of
the articles or memorandum of association of the Company; (ii) require the
Company to obtain any consent, approval or action of or waiver from, or make any
filing with, or give any notice to, any Governmental Body or any other person,
except as set forth on Schedule 2.4 (the "Company Required Consents"); (iii)
violate, conflict with or result in a breach or default under (with or without
the giving of notice or the passage of time or both), or permit the suspension
or termination of, any material Contract (including any Real Property Lease) to
which the Company is a party or by which it or any of its assets is bound or
subject, or to the best of Company's knowledge and information result in the
creation of any Lien upon any of the Company Shares or upon any of the Assets of
the Company; (iv) violate any Order, any Law, of any Governmental Body against,
or binding upon, the Company or upon any of their respective assets or the
Business; or (v) violate or result in the revocation or suspension of any
Permit.
SECTION 2.5 Corporate Existence and Power. The Company is a company
duly organized, validly existing and in good standing under the laws of the
United Kingdom, and has all requisite powers, authority and all Permits required
to own and/or operate its Assets and to carry on the Business as conducted as of
the date hereof. Except as set forth on Schedule 2.5, the Company has no
Subsidiaries and does not directly or indirectly own any equity or other
interest or investment in any other person.
SECTION 2.6 Charter Documents and Corporate Records. The Company has
heretofore delivered to Buyer true and complete copies of the certificate of
incorporation and memorandum of association and minute books, or comparable
instruments, of the Company as in effect on the date hereof. The stock transfer
books of the Company have been made available to Buyer for its inspection and
are true and complete in all respects in accordance with their tenor.
SECTION 2.7 Financial Statements.
(a) Schedule 2.7A sets forth true, complete and correct copies of:
(i) the Company's reviewed financial statements as of and for the year ended
December 31, 2005 (the "Annual Statement"); (ii) the Company's financial
statements as of and for the three months ended March 31, 2006 (the "Interim
Statements"); and (iii) all management letters, management representation
letters and attorney response letters issued in connection with the Annual
Statement. The Annual Statement present fairly and accurately in all material
respects the financial position of the Company as of its date, and the earnings,
changes in stockholders' equity and cash flows thereof for the periods then
ended in accordance with GAAP, consistently applied. Each balance sheet
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contained therein or delivered pursuant hereto fully sets forth all consolidated
Assets and Liabilities of the Company existing as of its date which, under GAAP,
should be set forth therein, and each statement of earnings contained therein or
delivered pursuant hereto sets forth the items of income and expense of the
Company which should be set forth therein in accordance with GAAP.
(b) All financial, business and accounting books, ledgers, accounts
and official and other records relating to the Company have been properly and
accurately kept and completed, and the Company has no knowledge, notice belief
or information there are any material inaccuracies or discrepancies contained or
reflected therein.
SECTION 2.8 Liabilities. The Company has not incurred any Liabilities
since December 31, 2005 (the "Latest Balance Sheet Date") except (i) current
Liabilities for trade or business obligations incurred in connection with the
purchase of goods or services in the ordinary course of the Business and
consistent with past practice, and (ii) Liabilities reflected on any balance
sheet referred to in Section 2.7(a).
SECTION 2.9 Company Receivables. Except to the extent of the amount of
the allowance for doubtful accounts reflected in the Annual Statements, all the
Receivables of the Company reflected therein, and all Receivables that have
arisen since the Latest Balance Sheet Date (except Receivables that have been
collected since such date), are valid and enforceable Claims subject to no known
defenses, offsets, returns, allowances or credits of any kind, and constitute
bona fide Receivables collectible in the ordinary course of the Business except
as enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance or similar laws or principles of
equity affecting the enforcement of creditors rights generally.
SECTION 2.10 Absence of Certain Changes. (a) Since January 1, 2006 the
Company has conducted the Business in the ordinary course consistent with past
practice, except as disclosed on Schedule 2.10 hereof, and there has not been:
(i) Any material adverse change in the Condition of the Business;
(ii) Any damage, destruction or other casualty loss (whether or
not covered by insurance), condemnation or other taking affecting the Business
or the Assets
of the Company;
(iii) Any change in any method of accounting or accounting
practice by the Company;
(iv) Except for normal increases granted in the ordinary course
of business, any increase in the compensation, commission, bonus or other direct
or indirect remuneration paid, payable or to become payable to any officer,
stockholder, director, consultant, agent or employee of the Company, or any
alteration in the benefits payable or provided to any thereof;
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(v) Any material adverse change in the relationship of the
Company with its employees, customers, suppliers or vendors;
(vi) Except for any changes made in the ordinary course of
Business, any material change in any of the Company's business policies,
including advertising, marketing, selling, pricing, purchasing, personnel,
returns or budget policies;
(vii) Any agreement or arrangement whether written or oral to do
any of the foregoing.
(viii) The Company has no Liability that is past due except as
shown on the Annual Statements.
SECTION 2.11 Leased Real Property. (a) The Company has no fee
interest, purchase options or rights of first refusal in any real property and
the Company has no leasehold or other interest in any real property, except as
set forth on Schedule 2.11 (the "Leased Real Property"), and all leases
including all amendments, modifications, extensions, renewals and/or supplements
thereto (collectively, "Real Property Leases") are described on Schedule 2.11.
SECTION 2.12 Personal Property; Assets. The Company has good and valid
title to (or valid leasehold interest in) all of its personal property and
Assets, free and clear of all Liens, except the Permitted Liens and as indicated
on Schedule 2.12. The machinery, equipment, computer software and other tangible
personal property constituting part of the Assets and all other Assets (whether
owned or leased) are in good condition and repair (subject to normal wear and
tear) and are reasonably sufficient and adequate in quantity and quality for the
operation of the Business as previously and presently conducted. Schedule 2.12
contains a list and description of all tangible personal property owned or
leased by the Company with a book value (before depreciation) of $5,000 or more.
The Assets constitute all of the assets, which are necessary to operate the
Business of the Company as currently conducted.
SECTION 2.13 Contracts. (a) Schedule 2.13 sets forth an accurate and
complete list of all Contracts to which the Company is a party or by which it or
its Assets are bound or subject that: (i) cannot be canceled upon 30 days'
notice without the payment or penalty of less than One Thousand Dollars
($1,000); or (ii) involve aggregate annual future payments by or to any person
of more than Five Thousand Dollars ($5,000). True and complete copies of all
written Contracts (including all amendments thereto and waivers in respect
thereof) and summaries of the material provisions of all oral Contracts so
listed have been made available to Buyer.
(b) All Contracts to which the Company is a party are valid,
subsisting, in full force and effect and binding upon the Company and the other
parties thereto, in accordance with their terms, except that no representation
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or warranty is given as to the enforceability of any oral Contracts. To the best
of the Company's knowledge and belief, except as set forth on Schedule 2.13, the
Company is not in default (or alleged default) under any such Contract.
SECTION 2.14 Patents and Intellectual Property Rights. (a) Schedule
2.14 sets forth a list of each patent, trademark, trade name, service xxxx,
brand xxxx, brand name, and registered copyright as well as all registrations
thereof and pending applications therefor, and each license or other contract
relating thereto (collectively, the "Intellectual Property") owned or used in
connection with the Business by the Company and indicates, with respect to each
item of Company's Intellectual Property that is licensed by the Company, the
name of the licensor thereof and, with respect to oral Contracts, the terms of
such license relating thereto. To the Company's knowledge, the use of the
foregoing by the Company does not conflict with, infringe upon, violate or
interfere with or constitute an appropriation of any right, title, interest or
goodwill, including, without limitation, any intellectual property right,
patent, trademark, trade name, service xxxx, brand name, computer program,
database, industrial design, trade secret, copyright or any pending application
thereto of any other person and there have been no claims made and the Company
has not received any notice or otherwise know that any of the foregoing is
invalid or conflicts with the asserted rights of other Persons or have not been
used or enforced or have been failed to be used or enforced in a manner that
would result in the abandonment, cancellation or unenforceability of the
Intellectual Property, except as set forth on Schedule 2.14A.
(b) The Company owns or has rights to use all Intellectual Property,
know-how, formulae and other proprietary and trade rights necessary to conduct
the Business as it is now conducted. The Company has not forfeited or otherwise
relinquished any such Intellectual Property, know-how, formulae or other
proprietary right used in the conduct of the Business as now conducted.
(c) To the extent used in the conduct of the Business by the
Company, each of the licenses or other contracts relating to the Company's
Intellectual Property (collectively, the "Intellectual Property Licenses") is in
full force and effect and is valid and enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and there is no
notice or claim of default under any Intellectual Property License either by the
Company or, to the Company's knowledge, by any other party thereto, and to the
Company's knowledge, no event has occurred that with the lapse of time or the
giving of notice or both would constitute a default by the Company thereunder.
SECTION 2.15 Claims and Proceedings. There are no outstanding Orders
of any Governmental Body against or involving the Company, its Assets, the
Business, or the Company Shares. There are no actions, suits, claims or
counterclaims, examinations, Company Required Consents or legal, administrative,
governmental or arbitral proceedings or investigations (collectively, "Claims")
(whether or not the defense thereof or Liabilities in respect thereof are
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covered by insurance), pending or, to the best of the Company's knowledge,
threatened on the date hereof, against or involving the Company, its Assets, the
Business or the Company Shares.
SECTION 2.16 Taxes. (a) Except as set forth in Schedule 2.16:
(i) The Company has timely filed or, if not yet due but due
before Closing, will timely file all Tax Returns required to be filed by it for
all taxable periods ending on or before the date of Closing and all such Tax
Returns are or, if not yet filed, will be, upon filing, true, correct and
complete in all material respects;
(ii) the Company has paid, or if payment is not yet due but due
before Closing, will promptly pay when due to each appropriate Tax Authority,
all Taxes of the Company shown as due on the Tax Returns required to be filed by
it for all taxable periods ending on or before the date of Closing;
(iii) the accruals for Taxes currently payable as well as for
deferred Taxes shown on the financial statements of the Company as of the date
of the Annual Statement or the date of any financial statements delivered
hereunder: (A) adequately provide for all contingent Tax Liabilities of the
Company as of the date thereof; and (B) accurately reflect, as of the date
thereof, all unpaid Taxes of the Company whether or not disputed, in each case
as required to be reflected thereon in order for such statements to be in
accordance with GAAP;
(iv) no extension of time has been requested or granted for the
Company to file any Tax Return that has not yet been filed or to pay any Tax
that has not yet been paid and the Company has not granted a power of attorney
that remains outstanding with regard to any Tax matter;
(v) the Company has not received notice of a determination by a
Tax Authority that Taxes are currently owed by the Company (such determination
to be referred to as a "Tax Deficiency") and, to the Company's knowledge, no Tax
Deficiency is proposed or threatened;
(vi) all Tax Deficiencies have been paid or finally settled and
all amounts determined by settlement to be owed have been paid;
(vii) there are no Tax Liens on or pending against the Company or
any of the Assets, other than those which constitute Permitted Liens;
(viii) there are no presently outstanding waivers or extensions
or requests for a waiver or extension of the time within which a Tax Deficiency
may be asserted or assessed;
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(ix) no issue has been raised in any examination, investigation,
Company Required Consents, suit, action, claim or proceeding relating to Taxes
(a "Tax Company Required Consents") which, by application of similar principles
to any past, present or future period, would result in a Tax Deficiency for such
period;
(x) there are no pending or threatened Tax Audits of the Company;
(xi) the Company has no deferred intercompany gains or losses
that have not been fully taken into income for income Tax purposes;
(xii) there are no transfer or other taxes (other than income
taxes) imposed by any state on the Company by virtue of the Contemplated
Transactions; and
(xiii) no claim has been made by any Tax Authority that the
Company is subject to Tax in a jurisdiction in which the Company is not then
paying Tax of the type asserted.
(b) To the Company's knowledge, the Company has collected and
remitted to the appropriate Tax Authority all sales and use or similar Taxes
required to be collected on or prior to the date of Closing and has been
furnished properly completed exemption certificates for all exempt transactions
and has no information otherwise or notice of any claim by any government or
jurisdiction with regards thereto. The Company has maintained and has in its
possession all records, supporting documents and exemption certificates required
by applicable sales and use Tax statutes and regulations to be retained in
connection with the collection and remittance of sales and use Taxes for all
periods up to and including the date of Closing. With respect to sales made by
the Company prior to the date of Closing for which sales and use Taxes are not
yet due as of the date of Closing, all applicable sales and use Taxes payable
with respect to such sales will have been collected or billed by the Company and
will be included in the Assets of the Company as of the date of Closing.
SECTION 2.17 Compliance with Laws. The Company is not in violation of
any order, judgment, injunction, award, citation, decree, consent decree or writ
(collectively, "Orders") and to the best of the Company's knowledge, belief and
information, any Laws of any Governmental Bodies affecting the Company, the
Company Shares or the Business.
SECTION 2.18 Permits. The Company has obtained all licenses, permits,
certificates, certificates of occupancy, orders, authorizations and approvals
(collectively, "Permits"), and has made all required registrations and filings
with all Governmental Bodies, that are necessary to the ownership of the Assets,
the use and occupancy of the Leased Real Property, as presently used and
operated, and the conduct of the Business or otherwise required to be obtained
by the Company. All Permits required to be obtained or maintained by the Company
are listed on Schedule 2.18 and are in full force and effect; no violations are
or have been recorded, nor have any notices or violations thereof been received,
in respect of any Permit; and no proceeding is pending or threatened to revoke
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or limit any Permit; and the consummation of the Contemplated Transactions will
not (or with the giving of notice or the passage of time or both will not) cause
any Permit to be revoked or limited.
SECTION 2.19 Environmental Matters. To the best of the Company's
knowledge, belief and information, the Company is, and at all times has been, in
full compliance with, and has not been and is not in violation of or liable
under, any Environmental Law.
SECTION 2.20 Finders Fees. Other than as set forth in Section 4.7,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of the Company who might be
entitled to any fee or commission from the Company in connection with the
consummation of the Contemplated Transactions.
SECTION 2.21 Disclosure. Neither this Agreement, the Schedules hereto,
nor any reviewed or unaudited financial statements, documents or certificates
furnished or to be furnished to Buyer or Parent by or on behalf of the Company
pursuant to this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements contained herein or therein not misleading. There are no
events, transactions or other facts, which, either individually or in the
aggregate, may give rise to circumstances or conditions which would have a
material adverse effect on the general affairs or Condition of the Business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Buyer and Parent jointly and severally represent, warrant and covenant
to the Company as follows and acknowledge that the Company is relying upon such
representations and warranties in connection with the Contemplated Transactions:
SECTION 3.1 Authority Relative to this Agreement. Buyer and Parent
have full power and authority to execute and deliver each Transaction Document
to which they are or, at Closing, will be, a party and to consummate the
Contemplated Transactions. Following the approval of the boards of directors of
Parent and Buyer and the shareholders of the Buyer with respect to the
Contemplated Transactions, the execution, delivery and performance by Buyer and
Parent of each Transaction Document and the consummation of the Contemplated
Transactions to which they are or, at Closing, will be, a party have been duly
and validly authorized and approved by Buyer and Parent and no other acts by or
on behalf of Buyer or Parent are necessary or required to authorize the
execution, delivery and performance by Buyer and Parent of each Transaction
Document and the consummation of the Contemplated Transactions to which they are
or, at Closing, will be a party. This Agreement and the other Transaction
Documents to which Buyer and Parent are a party have been, duly and validly
executed and delivered by Buyer and Parent and (assuming the valid execution and
delivery thereof by the other parties thereto) constitutes, or will, at the
Closing, constitute, as the case may be, the legal, valid and binding agreements
of Buyer and Parent enforceable against each of them in accordance with their
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respective terms, except as such obligations and their enforceability may be
limited by applicable bankruptcy and other similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies is subject to the discretion of the court before which any
proceeding therefor may be brought (whether at law or in equity).
SECTION 3.2 No Conflicts; Consents. The execution, delivery and
performance by Buyer and Parent of each Transaction Document to which they are a
party and the consummation of the Contemplated Transactions to which Buyer and
Parent are a party does not and will not: (i) violate any provision of the
certificate of incorporation or by-laws of Buyer or Parent, as the case may be;
(ii) require Buyer or Parent to obtain any consent, approval or action of or
waiver from, or make any filing with, or give any notice to, any Governmental
Body or any other person, except as set forth on Schedule 3.2 (the "Buyer
Required Consents"); (iii) except as set forth in Schedule 3.2, violate,
conflict with or result in the breach or default under (with or without the
giving of notice or the passage of time), or permit the suspension or
termination of, any material Contract to which Buyer or Parent are a party or
any of them or any of their assets is bound or subject or result in the creation
or any Lien upon any of Parent Common Stock or upon any assets of Buyer or
Parent; or (iv) violate any Order or, to Buyer's knowledge, any Law of any
Governmental Body against, or binding upon, Buyer or Parent, or upon any of
their respective assets or businesses.
SECTION 3.3 Corporate Existence and Power of Buyer. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York, and has all requisite corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted. Other than the execution of this
Agreement, Buyer has not conducted any business of any nature.
SECTION 3.4 Corporate Existence and Power of Parent. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Pennsylvania, and has all requisite corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted.
SECTION 3.5 The Parent Common Stock. At the closing, the Parent Common
Stock will have been duly authorized by Parent and, when issued to Shareholders
pursuant to this Agreement, will be duly issued, fully paid and non-assessable
shares of Parent Common Stock. The Parent Common Stock, when issued pursuant
hereto: (i) will not be issued in violation of or subject to any preemptive
rights, rights of first refusal or, other than as set forth in this Agreement,
contractual restrictions of any kind; and (ii) will vest in Shareholders,
respectively, good title to Parent Common Stock free and clear of all Liens.
SECTION 3.6 Capitalization. The authorized capital stock of Parent
consists of: (i) 250,000,000,000 shares of common stock, $0.0001 par value.
Parent has; (i) 38,520,343,182 (June 20,2006) shares of common stock; and (ii)
no shares of convertible preferred stock; issued and outstanding and at the
Closing, Parent will not, have outstanding any capital stock or other securities
or any rights, warrants or options to acquire securities of Parent or any
convertible or exchangeable securities and, other than Buyer pursuant to this
Agreement, no person has or, at Closing will have, any right to purchase or
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otherwise acquire any securities of Parent. In addition, at the Closing
following the Reverse Stock Split (See Section 4.8), Parent will have 25,680,228
shares of common stock; and (ii) no shares of convertible preferred stock;
issued and outstanding There are, and at Closing there will be, no outstanding
obligations of Parent to repurchase, redeem or otherwise acquire any securities
of Parent. All of Parent Common Stock is, and at Closing will be, duly
authorized, duly and validly issued, fully paid and non-assessable, and none
were issued in violation of any preemptive rights, rights of first refusal or
any other contractual or legal restrictions of any kind. Pursuant to the order
of the United States Bankruptcy Court for the Western District of Pennsylvania;
In Re: BICO, INC., f/k/a Biocontrol Technology, Inc. Bankruptcy No. 03-23239-MBM
(the "Bankruptcy Court Order"), Parent has 32,405,032,288 shares of its common
stock which it may issue for working capital and other purposes (the "Bankruptcy
Shares"). In addition, pursuant to the Bankruptcy Court Order, Parent has
1,886,118,753 shares of its common stock which it may issue for certain debtor
obligations.
SECTION 3.7 Disclosure of Information. Parent has been given the
opportunity: (i) to ask questions of, and to receive answers from, persons
acting on behalf of the Company concerning the terms and conditions of the
Contemplated Transactions and the business, properties, prospects and financial
conditions of the Company; and (ii) to obtain any additional information (to the
extent the Company or any of the Shareholders possesses such information or is
able to acquire it without unreasonable effort or expense and without breach of
confidentiality obligations) necessary to verify the accuracy of information
provided about the Company.
SECTION 3.8 SEC Filings. Parent has filed with the SEC all forms,
reports, schedules, and statements that were required to be filed by it with the
SEC within the three (3) year period ending on the Effective Time, and
previously has furnished or made available to the Company accurate and complete
copies of all the SEC Documents. As of their respective dates, the SEC Documents
were prepared in accordance with the Exchange Act and the Securities Act and did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated in those documents or necessary to make the
statements in those documents not misleading, in light of the circumstances
under which they were made. As of their respective dates, these reports and
statements will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated in them or necessary to make the
statements in them not misleading, in light of the circumstances under which
they are made and these reports and statements will comply in all material
respects with all applicable requirements of the Exchange Act and the Securities
Act.
SECTION 3.9 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Parent
that are included or incorporated in the SEC Documents were prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as otherwise indicated in the notes to them) and fairly present the
consolidated financial position, results of operations, and cash flows from
operating, investing, and financing activities of Parent as of the dates and for
the periods indicated, except that the unaudited consolidated interim financial
statements in the SEC Documents are subject to normal year-end adjustments and
were prepared in accordance with the instructions to SEC Form 10-QSB and,
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accordingly, omit or condense certain footnotes and other information normally
included in financial statements prepared in accordance with GAAP. The
consolidated financial statements of Parent that are included or incorporated in
any subsequent report or statement that Parent mails to its shareholders
generally or files with the SEC during the period after the date of this
Agreement and before the Closing Date will be prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as otherwise
indicated in them, the notes to them, or any related report of Parent's
independent accountants) and will fairly present the financial information that
they purport to present, except that the unaudited, consolidated interim
financial statements will be subject to normal year-end adjustments and will
omit or condense certain footnotes and other information normally included in
financial statements prepared in accordance with GAAP.
SECTION 3.10 Charter Documents and Corporate Records. Each of Parent
and Buyer has heretofore delivered to the Company true and complete copies of
the certificate of incorporation, by-laws and minute books, or comparable
instruments, of Parent and Buyer as in effect on the date hereof. The stock
transfer books of Parent and Buyer have been made available to the Company for
its inspection and are true and complete in all respects.
SECTION 3.11 Liabilities. Except as set forth on Schedule 3.11, Parent
has not incurred any Liabilities since March 31, 2006 except those incurred in
the ordinary course of business which have been discharged.
SECTION 3.12 Absence of Certain Changes. (a) Since March 31, 2006,
Parent has conducted its business in the ordinary course consistent with past
practice and except as disclosed on Schedule 3.12 hereto there has not been:
(i) Any change in any method of accounting or accounting practice
by Parent;
(ii) Any increase in the compensation, commission, bonus or other
direct or indirect remuneration paid, payable or to become payable to any
officer, stockholder, director, consultant, agent or employee of Parent, or any
alteration in the benefits payable or provided to any thereof;
(iii) Any material adverse change in the relationship of Parent
with its employees, customers, suppliers or vendors;
(iv) Except for any changes made in the ordinary course of
business, any material change in any of Parent's business policies, including
advertising, marketing, selling, pricing, purchasing, personnel, returns or
budget policies;
(v) Any agreement or arrangement whether written or oral to do
any of the foregoing; and
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(vi) Parent has no Liability that is past due except as shown on
the financial statements as filed with the SEC.
SECTION 3.13 Contracts. (a) Schedule 3.13 sets forth an accurate and
complete list of all Contracts to which Parent is a party or by which it or its
assets are bound or subject that: (i) cannot be canceled upon 30 days' notice
without the payment or penalty of less than One Thousand Dollars ($1,000); or
(ii) involve aggregate annual future payments by or to any person of more than
Five Thousand Dollars ($5,000). True and complete copies of all written
Contracts (including all amendments thereto and waivers in respect thereof) and
summaries of the material provisions of all oral Contracts so listed have been
made available to the Company.
(b) All Contracts to which Parent is a party are valid, subsisting,
in full force and effect and binding upon Parent and the other parties thereto,
in accordance with their terms, except that no representation or warranty is
given as to the enforceability of any oral Contracts. To the best of Parent's
knowledge and belief, except as set forth on Schedule 3.13, Parent is not in
default (or alleged default) under any such Contract.
SECTION 3.14 Claims and Proceedings. There are no outstanding Orders
of any Governmental Body against or involving Parent, its assets or its
business. There are no Claims (whether or not the defense thereof or Liabilities
in respect thereof are covered by insurance), pending or, to the best of
Parent's knowledge, threatened on the date hereof, against or involving Parent,
its assets or its business except as are set forth on Schedule 3.14.
SECTION 3.15 Taxes. Except as set forth on Schedule 3.15: (a)
(i) Parent has filed or, if not yet due but due before Closing,
will timely file all Tax Returns required to be filed by it for all taxable
periods ending on or before the date of Closing and all such Tax Returns are or,
if not yet filed, will be, upon filing, true, correct and complete in all
material respects;
(ii) Parent has paid, or if payment is not yet due but due before
Closing, will promptly pay when due to each appropriate Tax Authority, all Taxes
of Parent shown as due on the Tax Returns required to be filed by it for all
taxable periods ending on or before the date of Closing;
(iii) the accruals for Taxes currently payable as well as for
deferred Taxes shown on the financial statements of Parent as of the date of the
Interim Statements or the date of any financial statements delivered hereunder:
(A) adequately provide for all contingent Tax Liabilities of Parent as of the
date thereof; and (B) accurately reflect, as of the date thereof, all unpaid
Taxes of Parent whether or not disputed, in each case as required to be
reflected thereon in order for such statements to be in accordance with GAAP;
(iv) no extension of time has been requested or granted for
Parent to file any Tax Return that has not yet been filed or to pay any Tax that
has not yet been paid and Parent has not granted a power of attorney that
remains outstanding with regard to any Tax matter;
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(v) Parent has not received notice of a Tax Deficiency and, to
Parent's knowledge, no Tax Deficiency is proposed or threatened;
(vi) all Tax Deficiencies have been paid or finally settled and
all amounts determined by settlement to be owed have been paid;
(vii) there are no Tax Liens on or pending against Parent or any
of the assets, other than those which constitute Permitted Liens;
(viii) there are no presently outstanding waivers or extensions
or requests for a waiver or extension of the time within which a Tax Deficiency
may be asserted or assessed;
(ix) no issue has been raised in any examination, investigation,
suit, action, claim or proceeding relating to Taxes which, by application of
similar principles to any past, present or future period, would result in a Tax
Deficiency for such period;
(x) there are no pending or threatened Tax Audits of Parent; (xi)
Parent has no deferred intercompany gains or losses that have not been fully
taken into income for income Tax purposes;
(xii) there are no transfer or other taxes (other than income
taxes) imposed by any state on Parent by virtue of the Contemplated
Transactions; and
(xiii) no claim has been made by any Tax Authority that Parent is
subject to Tax in a jurisdiction in which Parent is not then paying Tax of the
type asserted.
Each reference to a provision of the Code in this Section 3.16 shall be treated
for state and local Tax purposes as a reference to analogous or similar
provisions of state and local law.
(b) To Parent's knowledge, Parent has collected and remitted to the
appropriate Tax Authority all sales and use or similar Taxes required to be
collected on or prior to the date of Closing and has been furnished properly
completed exemption certificates for all exempt transactions and has no
information otherwise or notice of any claim by any government or jurisdiction
with regards thereto. Parent has maintained and has in its possession all
records, supporting documents and exemption certificates required by applicable
sales and use Tax statutes and regulations to be retained in connection with the
collection and remittance of sales and use Taxes for all periods up to and
including the date of Closing. With respect to sales made by Parent prior to the
date of Closing for which sales and use Taxes are not yet due as of the date of
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Closing, all applicable sales and use Taxes payable with respect to such sales
will have been collected or billed by Parent and will be included in the assets
of Parent as of the date of Closing.
SECTION 3.16 Compliance with Laws. Parent is not in violation of any
Orders and to the best of Parent's knowledge, belief and information, any Laws
of any Governmental Bodies affecting Parent or the Parent Common Stock.
SECTION 3.17 Environmental Matters. To the best of Parent's knowledge,
belief and information, Parent is, and at all times has been, in full compliance
with, and has not been and is not in violation of or liable under, any
Environmental Law.
SECTION 3.18 Finders Fees. Other than as set forth in Section 4.7,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of Parent who might be
entitled to any fee or commission from Parent in connection with the
consummation of the Contemplated Transactions.
ARTICLE IV
COVENANTS AND AGREEMENTS
The Company covenants to Buyer and Buyer and Parent, jointly and
severally, covenant to the Company that:
SECTION 4.1 Filings and Authorizations. The parties hereto shall
cooperate and use their respective best efforts to make, or cause to be made,
all registrations, filings, applications and submissions, to give all notices
and to obtain all governmental or other third party consents, transfers,
approvals, Orders and waivers necessary or desirable for the consummation of the
Contemplated Transactions in accordance with the terms of this Agreement
including without limitation the preparation of any SEC Documents required to be
filed with the SEC in connection with the transactions contemplated by this
Agreement; and shall furnish copies thereof to each other party prior to such
filing and shall not make any such registration, filing, application or
submission to which Buyer or the Company, as the case may be, reasonably objects
in writing. All such filings shall comply in form and content in all material
respects with applicable Law. The parties hereto also agree to furnish each
other with copies of such filings and any correspondence received from any
Governmental Body in connection therewith.
SECTION 4.2 Confidentiality. Each party hereto shall hold in strict
confidence, and shall use its best efforts to cause all of its officers,
employees, agents and professional counsel and accountants, (collectively,
"Representatives") to hold in strict confidence, unless compelled to disclose by
judicial or administrative process, or by other requirements of Law, all
information concerning any other party which it has obtained from such party
prior to, on, or after the date hereof in connection with the Contemplated
Transactions, and each party shall not use or disclose to others, or permit the
use of or disclosure of, any such information so obtained, and will not release
or disclose such information to any other person, except its Representatives who
need to know such information in connection with this Agreement and who shall be
17
advised of the provisions of this Section 4.2. The foregoing provision shall not
apply to any such information to the extent; (i) known by any party prior to the
date such information was provided to such party in connection with the
Contemplated Transactions; (ii) made known to such party from a third party not
in breach of any confidentiality requirement; or (iii) made public through no
fault of such party or any of its Representatives.
SECTION 4.3 Expenses. Buyer, Parent and the Company (for itself and on
behalf of each Shareholder) shall bear their respective expenses, in each case,
incurred in connection with the preparation, execution and performance of the
Transaction Documents and the Contemplated Transactions, including, without
limitation, all fees and expenses of their respective Representatives, and the
Company shall bear all the fees and expenses of any Company's Representatives.
SECTION 4.4 Tax Matters. The Company and Buyer shall reasonably
cooperate, and shall cause their respective Representatives reasonably to
cooperate, in preparing and filing all Tax Returns, including maintaining and
making available to each other all records necessary in connection with the
preparation and filing of Tax Returns, the payment of Taxes and the resolution
of Tax Audits and Tax Deficiencies with respect to all taxable periods. Refunds
or credits of Taxes that were paid by the Company with respect to any periods
shall be for the account of the Company.
SECTION 4.5 Further Assurances. At any time and from time to time
after the date of Closing, upon the reasonable request of any party hereto, the
other party(ies), shall do, execute, acknowledge and deliver, or cause to be
done, executed, acknowledged or delivered, all such further documents,
instruments or assurances, as may be necessary, desirable or proper to carry out
the intent and accomplish the purposes of this Agreement.
SECTION 4.6 Restricted Securities. The parties acknowledge and agree
that the Company Shares and Parent Common Stock being issued or transferred
pursuant to the Contemplated Transactions are being issued or transferred
pursuant to the exemption from the registration requirements of the Securities
Act of 1933, as amended (the "Securities Act") and constitute "restricted
securities" within the meaning of the Securities Act. Such securities may not be
transferred absent compliance with the provisions of the Securities Act, other
applicable Laws, and all stock certificates evidencing such securities shall
bear a legend to such effect and to the effect that such shares are subject to
the terms and provisions of this Agreement; provided, however, that it is
anticipated that for purposes of Rule 144 of the Securities Act, that the
holding period of Parent Common Stock for each shareholder of the Company shall
be determined to commence on the date of acquisition of the Company Shares (as
converted pursuant to this Agreement) for each such respective holder.
SECTION 4.7 Consulting Securities. The parties acknowledge and agree
that in consideration of certain consulting services performed for Buyer, Parent
and the Company, Parent shall issue shares of its common stock from the
Bankruptcy Shares to the following entities in the amounts as set forth (the
"Consulting Shares"): (i) Xxxxxx, Xxxxxx & Xxxxxxxxx Capital Corporation
7,133,397 shares; (ii) Topcast Management Limited 7,133,397 shares; and (iii)
Xxxxxxx Xxxxxxx 2,853,360 shares.
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SECTION 4.8 Parent Common Stock Reverse Stock Split. The parties
acknowledge and agree that prior to the consummation of the transactions
contemplated by this Agreement, Parent shall: cause a reverse stock split of the
Parent Common Stock of 1 share for 1,500 shares, or such other reverse stock
split ratio as the Company shall direct at least ten (10) days prior to the
Closing (the "Reverse Stock Split").
SECTION 4.9 Due Diligence. Prior to the Closing Date Parent and Buyer
agree that the Company shall be entitled, through its Representatives, to make
such investigation of the properties, businesses and operations of Parent and
Buyer, and such examination of the books, records and financial condition of
Parent and Buyer, as the Company reasonably deems necessary. Any such
investigation and examination shall be conducted at reasonable times, under
reasonable circumstances and upon reasonable notice. No investigation by Buyer
shall diminish or obviate any of the representations, warranties, covenants or
agreements of Parent or Buyer contained in this Agreement.
ARTICLE V
CONDITIONS TO CLOSING
SECTION 5.1 Conditions to the Obligations of the Parties. The
obligations of the Parties to consummate the Contemplated Transactions are
subject to the satisfaction of the following conditions:
(a) Liabilities of the Parent. The aggregate Liabilities of the
Parent shall not exceed One Hundred Thousand ($100,000.00) exclusive of fees and
out-of-pocket costs for transfer agent services in connection with the Reverse
Stock Split which shall not exceed $20,000.00.
(b) Consulting Shares. The Parent shall issue the Consulting Shares
as set forth in Section 4.7 hereof.
(c) No Injunction. No provision of any applicable Law and no Order
shall prohibit the consummation of the Contemplated Transactions.
(d) No Proceedings or Litigation. No Claim instituted by any person
(other than Buyer, the Company, Shareholders or their respective Affiliates)
shall have been commenced or pending against any Shareholder, the Company, Buyer
or any of their respective Affiliates, officers or directors, which Claim seeks
to restrain, prevent, change or delay in any respect the Contemplated
Transactions or seeks to challenge any of the terms or provisions of this
Agreement or seeks damages in connection with any of such transactions.
19
(e) Company Advance of Costs. Company shall, if reasonably
necessary, have advanced estimated costs associated with initiating legal,
administrative and accounting work on the Parent's 2nd Quarter 10QSB, costs
associated with the reverse stock split and ongoing out-of-pocket costs for
monthly transfer agent services and similar third party expenses.
SECTION 5.2 Conditions to the Obligations of the Company. The
obligations of the Company hereunder to consummate the Contemplated Transactions
are subject, at the option of the Company, to the fulfillment prior to or at the
Closing of each of the following further conditions:
(a) Performance. Buyer and Parent shall have performed and complied
in all material respects with all agreements, obligations and covenants required
by this Agreement to be performed or complied with by it at or prior to the
Closing Date.
(b) Representations and Warranties. The representations and
warranties of Buyer and Parent contained in this Agreement and in any
certificate or other writing delivered by Buyer and Parent pursuant hereto shall
be true in all material respects at and as of the Closing Date as if made at and
as of such time (except for those representations and warranties made as of a
specific date which shall be true in all material respects as of the date made).
(c) No Material Adverse Change. From the date hereof through the
Closing, there shall not have occurred any event or condition that has had or
could have a material adverse effect on Parent.
(d) Documentation. There shall have been delivered to the Company
the following:
(i) A certificate, dated the Closing Date, of the Chairman of the
Board and the President of Buyer and Parent confirming the matters set forth in
Section 5.2(a) (b) and (c) hereof;
(ii) Parent Common Stock certificates, registered in the name of
each Shareholder as set forth on Schedule 1 attached hereto, (with the
appropriate restrictive legends as applicable), evidencing satisfaction of the
Purchase Price in accordance with Section 1.8;
(iii) New York Certificate of Merger; and
SECTION 5.3 Conditions to the Obligations of Buyer and Parent. All
obligations of Buyer and/or Parent to consummate the Contemplated Transactions
hereunder are subject, at the option of Buyer and/or Parent, to the fulfillment
prior to or at the Closing of each of the following further conditions:
20
(a) Performance. The Company shall have performed and complied in
all material respects with all agreements, obligations and covenants required by
this Agreement to be performed or complied with by them at or prior to the
Closing Date.
(b) Representations and Warranties. The representations and
warranties of the Company, contained in this Agreement and in any certificate or
other writing delivered by the Company pursuant hereto shall be true in all
material respects at and as of the Closing Date as if made at and as of such
time (except for those representations and warranties made as of a specific date
which shall be true in all material respects as of the date made).
(c) No Material Adverse Change. From the date hereof through the
Closing, there shall not have occurred any event or condition that has had or
could have a material adverse effect on the Company.
(d) Documentation. There shall have been delivered to Parent and
Buyer the following:
(i) A certificate, dated the Closing Date, of the Chairman of the
Board, the President or Chief Financial Officer of the Company confirming the
matters set forth in Section 5.3(a) (b) and (c) hereof;
(ii) A certificate, dated the Closing Date, of the Secretary of
the Company certifying, among other things, that attached or appended to such
certificate: (i) is a true and correct copy of the Company's articles of
incorporation and all amendments thereto, if any, as of the date thereof
certified by Companies House; and (ii) is a true and correct copy of the
Company's memorandum of association as of the date thereof;
(iii) An executed release from each of Buyer, Parent, the Company
and the officers and directors of Parent which shall: (A) release the officers
and directors of Parent to pursue the business of commercially distributing an
internet enabled video telephone device, and sell advertising over the
webphones; and (B) mutually release the officers, directors of Parent from any
claims and obligations that may exist as of the consummation of the Merger
(other than those claims and obligations that the Company may have pursuant to
the terms of this Agreement;
(iv) UK Certificate of Merger; and
(v) Company Share certificates representing the number of Company
Shares duly endorsed in blank or accompanied by stock powers duly endorsed in
blank and in suitable form for transfer to Buyer by delivery.
21
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 Survival of Representations, Warranties and Covenants. (a)
Notwithstanding any right of Buyer and Parent fully to investigate the affairs
of the Company and the rights of the Company to fully investigate the affairs of
Buyer and Parent, and notwithstanding any knowledge of facts determined or
determinable by Buyer, Parent, or the Company, pursuant to such investigation or
right of investigation, Buyer, Parent, and the Company, have the right to rely
fully upon the representations, warranties, covenants and agreements of the
Company, and Buyer and Parent respectively, contained in this Agreement, or
listed or disclosed on any Schedule hereto or in any instrument delivered in
connection with or pursuant to any of the foregoing. All such representations,
warranties, covenants and agreements shall survive the execution and delivery of
this Agreement and the Closing hereunder. Notwithstanding the foregoing, all
representations and warranties of the Company and Buyer and Parent respectively,
contained in this Agreement, on any Schedule hereto or in any instrument
delivered in connection with or pursuant to this Agreement shall terminate and
expire twelve (12) months after the date of Closing.
(b) All representations and warranties of Buyer and Parent shall
terminate and expire twelve (12) months after the date of Closing; provided,
however, that the liability of Buyer and Parent shall not terminate as to any
specific claim or claims of the type referred to in Section 6.3 hereof, whether
or not fixed as to Liability or liquidated as to amount, with respect to which
Buyer and/or Parent has been given specific notice on or prior to the date on
which such Liability would otherwise terminate pursuant to the terms of this
Section 6.1(b), or which arise or result from or are related to a Claim for
fraud.
SECTION 6.2 Obligation of the Company to Indemnify. The Company agrees
to indemnify, defend and hold harmless Buyer and Parent (and their respective
directors, officers, employees, Affiliates, successors and assigns) from and
against all Claims, losses, Liabilities, Regulatory Actions, damages,
deficiencies, judgments, settlements, costs of investigation or other expenses
(including Taxes, interest, penalties and reasonable attorneys' fees and fees of
other experts and disbursements and expenses incurred in enforcing this
indemnification) (collectively, the "Losses") suffered or incurred by Buyer
and/or Parent, the Company, or any of the foregoing persons arising out of any
breach of the representations and warranties of the Company contained in this
Agreement, or of the covenants and agreements of Buyer or Parent contained in
this Agreement or in the Schedules or any other Transaction Document.
SECTION 6.3 Obligation of Buyer and Parent to Indemnify. Buyer and
Parent jointly and severally agree to indemnify, defend and hold harmless the
Company (and any heirs, successor or assignee thereof) from and against any
Losses suffered or incurred by the Company or any of the foregoing persons
arising out of any breach of the representations and warranties of Buyer or
Parent, or of the covenants and agreements of Buyer or Parent contained in this
Agreement or in the Schedules or any other Transaction Document.
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SECTION 6.4 Notice and Opportunity to Defend Third Party Claims. (a)
Within ten (10) days following receipt by any party hereto (the "Indemnitee") of
notice of any demand, claim, circumstance or Tax Audit which would or might give
rise to a claim, or the commencement (or threatened commencement) of any action,
proceeding or investigation that may result in a Loss (an "Asserted Liability"),
the Indemnitee shall give notice thereof (the "Claims Notice") to the party or
parties obligated to provide indemnification pursuant to Sections 6.2, or 6.3
(collectively, 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 defend, at its own expense
and with its own counsel, any Asserted Liability unless: (i) the Asserted
Liability includes a Claim seeking an Order for injunction or other equitable or
declaratory relief against the Indemnitee, in which case the Indemnitee may at
its own cost and expense and at its option defend the portion of the Asserted
Liability seeking equitable or declaratory relief against the Indemnitee, or
(ii) the Indemnitee shall have reasonably, and in good faith, after consultation
with the Indemnifying Party, concluded that: (x) there is a conflict of interest
between the Indemnitee and the Indemnifying Party which could prevent or
negatively influence the Indemnifying Party from impartially or adequately
conducting such defense; or (y) the Indemnitee shall have one or more defenses
not available to the Indemnifying Party but only to the extent such defense
cannot legally be asserted by the Indemnifying Party on behalf of the
Indemnitee. If the Indemnifying Party elects to defend such Asserted Liability,
it shall within ten (10) days (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
defense of such Asserted Liability. If the Indemnifying Party elects not to
defend the Asserted Liability, is not permitted to defend the Asserted Liability
by reason of the first sentence of this Section 6.4(b), fails to notify the
Indemnitee of its election as herein provided or contests its obligation to
indemnify under this Agreement with respect to such Asserted Liability, the
Indemnitee may pay, compromise or defend such Asserted Liability at the sole
cost and expense of the Indemnifying Party. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or compromise any
claim over the reasonable written objection of the other, provided that the
Indemnitee may settle or compromise any claim as to which the Indemnifying Party
has failed to notify the Indemnitee of its election under this Section 6.4(b) or
as to which the Indemnifying Party is contesting its indemnification obligations
hereunder. If the Indemnifying Party desires to accept a reasonable, final and
complete settlement of an Asserted Liability so that such Indemnitee's Loss is
paid in full and the Indemnitee refuses to consent to such settlement, then the
Indemnifying Party's liability to the Indemnitee shall be limited to the amount
offered in the settlement. The Indemnifying Party will exercise good faith in
accepting any reasonable, final and complete settlement of an Asserted
Liability. In the event the Indemnifying Party elects to defend any Asserted
Liability, the Indemnitee may participate, at its own expense, in the defense of
such Asserted Liability. In the event the Indemnifying Party is not permitted by
the Indemnitee to defend the Asserted Liability, it may nevertheless participate
at its own expense in the defense of such Asserted Liability. If the
Indemnifying Party chooses to defend any Asserted Liability, 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.
Any Losses of any Indemnitee for which an Indemnifying Party is liable for
indemnification hereunder shall be paid upon written demand therefor.
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SECTION 6.5 Limits on Indemnification. (a) Notwithstanding the
foregoing or the limitations set forth in Section 6.5(b) below, in the event
such Losses arise out of any fraud related matter on the part of any
Indemnifying Party, then such Indemnifying Party shall be obligated to indemnify
the Indemnitee in respect of all such Losses.
(b) The Company shall not be liable to indemnify Buyer pursuant to
Section 6.2 above and Parent and Buyer shall not be liable to indemnify the
Company pursuant to Section 6.3 above: (i) unless a Claims Notice describing the
loss is delivered to the Indemnifying Party within 6 months after the Closing
(except for Losses arising out of an Indemnifying Party's fraud); and; (ii) with
respect to special, consequential or punitive damages; or (iii) in respect of
any individual Loss of less than $10,000.
SECTION 6.6 Exclusive Remedy. The parties agree that the
indemnification provisions of this Article VI shall constitute the sole or
exclusive remedy of any party in seeking damages or other monetary relief with
respect to this Agreement and the Contemplated Transactions, provided that,
nothing herein shall be construed to limit the right of any party to seek: (i)
injunctive relief for a breach of this Agreement; (ii) legal or equitable relief
for a Claim for fraud; or (iii) indemnity under the bylaws of Parent if they are
or have been a director or officer of Parent or Buyer.
ARTICLE VII
SPECIFIC PERFORMANCE; TERMINATION
SECTION 7.1 Specific Performance. The Company, Parent, and Buyer
acknowledges and agrees that, if any of the Company, Parent, or Buyer fails to
proceed with the Closing in any circumstance other than those described in
clauses (a), (b), (c) or (d) of Section 7.2 below, the others will not have
adequate remedies at law with respect to such breach. In such event, and in
addition to each party's right to terminate this Agreement, each party shall be
entitled, without the necessity or obligation of posting a bond or other
security, to seek injunctive relief, by commencing a suit in equity to obtain
specific performance of the obligations under this Agreement or to xxx for
damages, in each case, without first terminating this Agreement. The Company,
Parent or Buyer specifically affirms the appropriateness of such injunctive,
other equitable relief or damages in any such action.
SECTION 7.2 Termination. This Agreement may be terminated and the
Contemplated Transactions may be abandoned at any time prior to the Closing:
(a) By mutual written consent of the Company and Buyer;
24
(b) By the Company if: (i) there has been a misrepresentation or
breach of warranty on the part of Buyer or Parent in the representations and
warranties contained herein and such misrepresentation or breach of warranty, if
curable, is not cured within thirty days after written notice thereof from the
Company; (ii) Buyer or Parent has committed a breach of any covenant imposed
upon it hereunder and fails to cure such breach within thirty days after written
notice thereof from the Company; or (iii) any condition to the Company's
obligations under Section 5.2 becomes incapable of fulfillment through no fault
of the Company and is not waived by the Company;
(c) By Parent or Buyer, if: (i) there has been a misrepresentation
or breach of warranty on the part of the Company in the representations and
warranties contained herein and such misrepresentation or breach of warranty, if
curable, is not cured within thirty days after written notice thereof from
Parent or Buyer; (ii) the Company has committed a breach of any covenant imposed
upon it hereunder and fails to cure such breach within thirty days after written
notice thereof from Parent or Buyer; or (iii) any condition to Parent's or
Buyer's obligations under Section 5.3 becomes incapable of fulfillment through
no fault of Parent or Buyer and is not waived by Parent and Buyer; and
(d) By the Company or by Parent or Buyer, if any condition under
Section 5.1 becomes incapable of fulfillment through no fault of the party
seeking termination and is not waived by the party seeking termination.
SECTION 7.3 Effect of Termination; Right to Proceed. Subject to the
provisions of Section 7.1 hereof, in the event that this Agreement shall be
terminated pursuant to Section 7.2, all further obligations of the parties under
this Agreement shall terminate without further liability of any party hereunder
except that: (i) the agreements contained in Section 4.2 shall survive the
termination hereof; and (ii) termination shall not preclude any party from
seeking relief against any other party for breach of Section 4.2. In the event
that a condition precedent to its obligation is not met, nothing contained
herein shall be deemed to require any party to terminate this Agreement, rather
than to waive such condition precedent and proceed with the Contemplated
Transactions.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. (a) Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally by
hand or by recognized overnight courier, or mailed (by registered or certified
mail, postage prepaid return receipt requested) as follows:
25
If to Buyer or Parent, one copy to:
BICO, Inc.
0 Xxxxxxx
Xxxx, Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Chairman and Chief Executive Officer of Parent
President of Buyer
With a copy to:
Law Office of Xxxx X. Xxxxxxxxx
00000 Xxx Xxxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
If to the Company, one copy to:
MobiClear Ltd.
Lynton House
7 - 00 Xxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Attention: Lim Wong
Managing Director
With a copy to:
Xxxxx & Xxxxxxx LL
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
(b) Each such notice or other communication shall be
effective when delivered at the address specified in Section 8.1(a). Any party
by notice given in accordance with this Section 8.1 to the other parties may
designate another address or person for receipt of notices hereunder. Notices by
a party may be given by counsel to such party.
SECTION 8.2 Entire Agreement. This Agreement (including the Schedules
and Exhibits hereto) and the collateral agreements executed in connection with
the consummation of the Contemplated Transactions contain the entire agreement
among the parties with respect to the subject matter hereof and related
transactions and supersede all prior agreements, written or oral, with respect
thereto.
SECTION 8.3 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Agreement may be amended, superseded, cancelled,
renewed or extended only by a written instrument signed by the Company, Parent
and Buyer. The provisions hereof may be waived in writing by the Company Parent
or Buyer, as the case may be. Any such waiver shall be effective only to the
extent specifically set forth in such writing. No failure or delay on the part
of any party in exercising any right, power or privilege hereunder shall operate
26
as a waiver thereof. Nor shall any waiver on the part of any party of any such
right, power or privilege, nor any single or partial exercise of any such right,
power or privilege, preclude any other or further exercise thereof or the
exercise of any other such right, power or privilege. Except as otherwise
provided herein, the rights and remedies herein provided are cumulative and are
not exclusive of any rights or remedies that any party may otherwise have at law
or in equity.
SECTION 8.4 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State without regard to
the conflict of laws rules thereof.
SECTION 8.5 Consent to Jurisdiction. Each of the parties hereto
irrevocably and voluntarily submits to personal jurisdiction in the State of New
York and in the Federal courts in such state in any action or proceeding arising
out of or relating to this Agreement and agrees that all claims in respect of
such action or proceeding may be heard and determined in any such court. If for
any reason the Federal courts in such state will not entertain such action or
proceeding, then the parties hereto irrevocably and voluntarily submit to
personal jurisdiction in the state courts located in the State of New York in
any action or proceeding arising out of or relating to this Agreement and agree
that all claims in respect of any action or proceeding may be heard and
determined in any such court. Each of the parties further consents and agrees
that such party may be served with process in the same manner as a notice may be
given under Section 8.1. The parties hereto agree that any action or proceeding
instituted by any of them against any other party with respect to this Agreement
will be instituted exclusively in the United States District Court for the
District of New York, or alternatively, in the State courts located therein. The
Company, Buyer and Parent irrevocably and unconditionally waive and agree not to
plead, to the fullest extent permitted by law, any objection that they may now
or hereafter have to the laying of venue or the convenience of the forum of any
action or proceeding with respect to this Agreement in any such courts.
SECTION 8.6 Binding Effect; No Assignment. This Agreement and all of
its provisions, rights and obligations shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors, heirs and
legal representatives. This Agreement may not be assigned (including by
operation of Law) by any party hereto without the express written consent of
Buyer (in the case of assignment by the Company) or the Company (in the case of
assignment by Buyer or Parent) and any purported assignment, unless so consented
to, shall be void and without effect.
SECTION 8.7 Exhibits. All Exhibits and Schedules attached hereto are
hereby incorporated by reference into, and made a part of, this Agreement.
SECTION 8.8 Severability. If any provision of this Agreement for any
reason shall be held to be illegal, invalid or unenforceable, such illegality
shall not affect any other provision of this Agreement, this Agreement shall be
amended so as to enforce the illegal, invalid or unenforceable provision to the
maximum extent permitted by applicable law, and the parties shall cooperate in
good faith to further modify this Agreement so as to preserve to the maximum
extent possible the intended benefits to be received by the parties.
27
SECTION 8.9 Counterparts. The Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
SECTION 8.10 Third Parties. Except as specifically set forth or
referred to herein, nothing herein express or implied is intended or shall be
construed to confer upon or give to any person other than the parties hereto and
their permitted heirs, successors, assigns and legal representatives, any rights
or remedies under or by reason of this Agreement or the Contemplated
Transactions.
ARTICLE IX
DEFINITIONS
SECTION 9.1 Definitions. The following terms, as used herein, have the
following meanings:
"Affiliate" of any person means any other person directly or
indirectly through one or more intermediary persons, controlling, controlled by
or under common control with such person.
"Agreement" or "this Agreement" shall mean, and the words "herein",
"hereof" and "hereunder" and words of similar import shall refer to, this
agreement as it from time to time may be amended.
"Assets" shall mean all cash, instruments, properties, rights,
interests and assets of every kind, real, personal or mixed, tangible and
intangible, used or usable in the Business.
The term "audit" or "audited" when used in regard to financial
statements shall mean an examination of the financial statements by a firm of
independent certified public accountants in accordance with generally accepted
auditing standards for the purpose of expressing an opinion thereon.
"Business" shall mean the ownership and operation of the business of
the Company.
"Condition of the Business" shall mean the financial condition,
prospects or the results of operations of the Business, the Assets or the
Company.
28
"Contract" shall mean any contract, agreement, indenture, note, bond,
lease, conditional sale contract, mortgage, license, franchise, instrument,
commitment or other binding arrangement, whether written or oral.
The term "control", with respect to any person, shall mean the power
to direct the management and policies of such person, directly or indirectly, by
or through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
"GAAP" shall mean generally accepted accounting principles in effect
on the date hereof (or, in the case of any opinion rendered in connection with
an audit, as of the date of the opinion) as set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession of the
United States.
"Governmental Bodies" shall mean any government, municipality or
political subdivision thereof, whether federal, state, local or foreign, or any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality or public body, or any court, arbitrator,
administrative tribunal or public utility.
"knowledge" with respect to: (a) any individual shall mean actual
knowledge of such individual; and (b) any corporation shall mean the actual
knowledge of the directors and executive officers of such corporation; and
"knows" has a correlative meaning. The terms "any Shareholder's knowledge," and
"Shareholder's knowledge," including any correlative meanings, shall mean the
knowledge of any Shareholder.
"Laws" shall mean any law, statute, code, ordinance, rule, regulation
or other requirement of any Governmental Bodies.
"Liability" shall mean any direct or indirect indebtedness, liability,
assessment, claim, loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, actual or potential, contingent or otherwise
(including any liability under any guaranties, letters of credit, performance
credits or with respect to insurance loss accruals).
"Lien" shall mean any mortgage, lien (including mechanics,
warehousemen, laborers and landlords liens), claim, pledge, charge, security
interest, preemptive right, right of first refusal, option, judgment, title
defect, covenant, restriction, easement or encumbrance of any kind.
"person" shall mean an individual, corporation, partnership, joint
venture, limited liability company, association, trust, unincorporated
organization or other entity, including a government or political subdivision or
an agency or instrumentality thereof.
29
"Receivables" shall mean as of any date any trade accounts receivable,
notes receivable, sales representative advances and other miscellaneous
receivables of the Company.
"SEC" means the United States Securities and Exchange Commission.
"SEC Documents" means all forms, notices, reports, schedules,
statements, and other documents filed by Parent with the SEC within the three
years from the Effective Time, whether or not constituting a "filed" document,
and includes all proxy statements, registration statements, amendments to
registration statements, periodic reports on Forms 10-KSB, 10-QSB, and 8-K, and
annual and quarterly reports to shareholders.
"Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") shall mean: (i)(A) any net income, gross income, gross receipts,
sales, use, ad valorem, transfer, transfer gains, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, rent, recording,
occupation, premium, real or personal property, intangibles, environmental or
windfall profits tax, alternative or add-on minimum tax, customs duty or other
tax, fee, duty, levy, impost, assessment or charge of any kind whatsoever
(including but not limited to taxes assessed to real property and water and
sewer rents relating thereto), together with; (B) any interest and any penalty,
addition to tax or additional amount imposed by any Governmental Body (domestic
or foreign) (a "Tax Authority") responsible for the imposition of any such tax
and interest on such penalties, additions to tax, fines or additional amounts,
in each case, with respect to any party hereto, the Business or the Assets (or
the transfer thereof); (ii) any liability for the payment of any amount of the
type described in the immediately preceding clause (i) as a result of a party
hereto being a member of an affiliated or combined group with any other person
at any time on or prior to the date of Closing; and (iii) any liability of a
party hereto for the payment of any amounts of the type described in the
immediately preceding clause (i) as a result of a contractual obligation to
indemnify any other person.
"Tax Return" shall mean any return or report (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to any Tax Authority.
"Transaction Documents" shall mean, collectively, this Agreement, and
each of the other agreements and instruments to be executed and delivered by all
or some of the parties hereto in connection with the consummation of the
transactions contemplated hereby.
SECTION 9.2 Interpretation. Unless the context otherwise requires, the
terms defined in this Agreement shall be applicable to both the singular and
plural forms of any of the terms defined herein. All accounting terms defined in
this Agreement, and those accounting terms used in this Agreement except as
otherwise expressly provided herein, shall have the meanings customarily given
thereto in accordance with GAAP as of the date of the item in question. When a
reference is made in this Agreement to Sections, such reference shall be to a
Section of this Agreement unless otherwise indicated. The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. The use of the neuter gender
herein shall be deemed to include the masculine and feminine genders wherever
necessary or appropriate, the use of the masculine gender shall be deemed to
include the neuter and feminine genders and the use of the feminine gender shall
30
be deemed to include the neuter and masculine genders wherever necessary or
appropriate. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this Stock
Purchase and Recapitalization Agreement as of the date set forth above.
BUYER:
BICO ACQUISITION, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxxx
President
PARENT:
BICO, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxxx
Chairman and
Chief Executive Officer
THE COMPANY:
MOBICLEAR LIMITED
By: /s/ Lim Wong
---------------------------------
Lim Wong
Managing Director
32
